Hanson, Nicole Lynn (2015-08). Essays on New Product Development in Emerging Markets. Doctoral Dissertation. Thesis uri icon

abstract

  • Global firms are increasingly moving new product development (NPD) to large emerging markets, such as India and China. In my dissertation, I study two potential NPD strategies that a global firm can pursue when entering an emerging market- (1) Shifting NPD and (2) Partnering NPD. Using a uniquely compiled panel dataset, I estimate the effect of such NPD strategies on shareholder value. In the first essay, I examine the determinants of short-term abnormal returns to a global firm's NPD shift to an emerging market using internal resources. Investment amount (relative local employee size) is not significantly related to short-term abnormal returns. However, the effect of investment amount and relative local employee size are moderated by employee quality emphasis, costs savings emphasis, development scope and prior profitability. Employee quality emphasis has a positive moderating effect on both investment amount-- and relative local employee size-- short-term abnormal return relationships. Cost savings emphasis has a positive moderating effect on the investment amount--short-term abnormal returns relationship, but no effect on relative local employee size. Development scope (prior profitability) has a positive (negative) moderating effect on the investment amount-abnormal returns relationship. In the second essay, I investigate the determinants of the effect of NPD partnering in an emerging market on short-term abnormal returns. NPD partnering consists of a global firm engaging in NPD with a local firm through an alliance, a joint venture, or an acquisition. The findings provide actionable insights. I find that mentioning cost savings as a reason for partnering leads to negative abnormal returns. In contrast, highlighting the quality of the partner's local employees leads to positive abnormal returns. Interestingly, the global firm's past profitability moderates these main effects in the opposite direction. Furthermore, financial leverage has a negative effect on the short-term abnormal returns to an NPD partnership announcement. That is, the greater the global firm's debt is relative to equity, the lower the abnormal returns are to the NPD partnership. However, a cost savings emphasis alleviates this negative effect.
  • Global firms are increasingly moving new product development (NPD) to large emerging markets, such as India and China. In my dissertation, I study two potential NPD strategies that a global firm can pursue when entering an emerging market- (1) Shifting NPD and (2) Partnering NPD. Using a uniquely compiled panel dataset, I estimate the effect of such NPD strategies on shareholder value.

    In the first essay, I examine the determinants of short-term abnormal returns to a global firm's NPD shift to an emerging market using internal resources. Investment amount (relative local employee size) is not significantly related to short-term abnormal returns. However, the effect of investment amount and relative local employee size are moderated by employee quality emphasis, costs savings emphasis, development scope and prior profitability. Employee quality emphasis has a positive moderating effect on both investment amount-- and relative local employee size-- short-term abnormal return relationships. Cost savings emphasis has a positive moderating effect on the investment amount--short-term abnormal returns relationship, but no effect on relative local employee size. Development scope (prior profitability) has a positive (negative) moderating effect on the investment amount-abnormal returns relationship.

    In the second essay, I investigate the determinants of the effect of NPD partnering in an emerging market on short-term abnormal returns. NPD partnering consists of a global firm engaging in NPD with a local firm through an alliance, a joint venture, or an acquisition. The findings provide actionable insights. I find that mentioning cost savings as a reason for partnering leads to negative abnormal returns. In contrast, highlighting the quality of the partner's local employees leads to positive abnormal returns. Interestingly, the global firm's past profitability moderates these main effects in the opposite direction. Furthermore, financial leverage has a negative effect on the short-term abnormal returns to an NPD partnership announcement. That is, the greater the global firm's debt is relative to equity, the lower the abnormal returns are to the NPD partnership. However, a cost savings emphasis alleviates this negative effect.

publication date

  • August 2015