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New Product Development Flexibility In A Competitive Environment, Janne Kettunen, Yael Gruksha-Cockayne, Zeger Degraeve, Bert De Reyck

Research Collection Lee Kong Chian School Of Business

Managerial flexibility can have a significant impact on the value of new product development projects. We investigate how the market environment in which a firm operates influences the value and use of development flexibility. We characterize the market environment according to two dimensions, namely (i) its intensity, and (ii) its degree of innovation. We show that these two market characteristics can have a different effect on the value of flexibility. In particular, we show that more intense or innovative environments may increase or decrease the value of flexibility. For instance, we demonstrate that the option to defer a product launch …