Incremental And Radical Product Innovation And Its Evaluation Method Study

New product development(NPD), as a driving force of corporation's long-term development, has long drawn many scholars' attention while how to evaluate the value of new product development has also been a hot issue of scholars from both home and abroad. Meeting such a tendency, the paper researches the type of product innovation and the method of evaluating the value of new product development.It firstly on the basis of reviewing the existing literature, sum up the characters of the incremental innovation and radical innovation, point out the role of different innovations in corporation's development, analyse the challenge and revelation of management.Additionally, from the perspective of different innovation types of new product development, it selects 145 medicine and electric information companies in Chinese A stock market as sample, takes the source data from listed company's 2002 annual report and carrying out empirical study on the relationship of listed company's basic organizational character, incremental innovation as well as radical innovation. The result of the empirical study shows that among the listed companies, larger firms tend to implement incremental innovation but the performance of those firms doesn't increase by introducing incremental innovation while smaller firms are not always inclined to radical innovation; the earlier firms are on the list, the larger the proportion of incremental innovation is and the smaller that of radical innovation; the manage team's average age of the listed companies has lightly positive correlation with the proportion of incremental innovation to all innovation investment, and lightly negative correlation with the proportion of radical innovation to all innovation investment.In the end, the paper compares the different methods for the evaluation of new product development's value. Adopting Black—scholes model and Geske model which is usually used to evaluate compound options, it studies the evaluation of three-phase radical product innovation's value which in turn improves the theory of product innovation.At present, researches on the relationship of new product development and the type of product innovation , and use the real option to evaluate new product development's value which carried out by scholars are relatively weak, the paper's work supply a gap on relational field, as well makes academic guides for the rule of new product development, strengthening enterprises' competitive advantage and lower the failure probability during enterprise growth.