The Impact Of Cost Reduction Approaches On Product Innovation Speed

In hypercompetitive environment, product innovation speed has become one business-level strategy as important as cost and product quality. Therefore, it is of theoretical significance to clarify the relationship between product innovation speed and the other two strategies. Porter's typology on business-level strategy has proved to be too general to be effective. Today's highly competitive environment calls for a more specific study of business-level strategies. The current study mainly examines how specific strategies for cost leadership affect product innovation speed and the conditions under which the former are executed in combination with the latter. Specifically, this research theoretically explained why product innovation speed should be incorporated into business-level strategy framework, the definition of product innovation speed and every specific strategy for cost leadership. Based on these theories and definitions, this research proposed five hypotheses and tested them with content analysis.The main findings of this research are as follows:Firstly, in the increasingly hypercompetitive environment, product innovation speed is of important strategic significance and shall be considered at the strategy-level by firms.Secondly, according to the empirical research, economy of scale has negative impact on product innovation speed; economy of smartness and economy of slimness have positive impact on product innovation speed; economy of simplicity and economy of spread have no significant effect on product innovation speed in general.The main contributions of this research include:Firstly, unlike previous studies focusing on how to increase product innovation speed from the perspective of management engineering, this research incorporated product innovation speed into business-level strategy framework and emphasized its strategic significance.Secondly, on the basis of Weng Junyi (2006,2007)'s proposal of specific strategy theory, this research explored the impact of five specific strategies for cost leadership on product innovation speed and the conditions under which they are combined.Thirdly, in terms of methodology, this research adopted content analysis in measurement and hypotheses testing.Theoretically, this study not only expanded research domain of specific strategy theory, but also provided empirical support. Practically, this study also provided theoretical foundation for firms to improve product innovation speed at the strategy level and decide the trade-off between each specific strategy for cost leadership and product innovation speed.