[Abstract]
According to a recent statistical research of The Organization for Economic Co-operation Development (OECD), the trends of business innovation activities fosters marketing innovation in addition to traditional product innovation, process innovation, and organizational innovation. While the importance of the marketing innovation of companies in global developed markets has been realized, empirical studies on the topic are somewhat limited in numbers.
In this study, we performed an empirical analysis in the perspective of incremental and radical innovation of products focusing on the four key elements of marketing innovation framework, i.e. price, product, positioning and promotion (a.k.a. 4P¡¯s). Adapting the data of Korean Innovation Survey 2008 (KIS-2008) done by Science and Technology Policy Institute (STEPI), incremental and radical innovation were classified considering the existence of innovation in large corporations and small to medium-sized enterprises (SME). Identified explanatory variables were the size of company, the fund size of research and development (R&D) projected including outsourced ones, the number of employees in R&D groups, the competency of technology innovation primarily determined by the existence of independent research groups, the use of government supports, and so on. We applied Logit for the statistical model and then employed marginal probability effect, and simulation analysis as the follow-up analysis. The result is as follow:
First, while statistically significant explanatory variables were not found in the cases of large corporations for incremental innovation, some were found to be significant in the cases of SME; the use of government marketing supports, the number of employees in R&D, the size of operating profit, and the life cycle of flagship products.
Second, only one explanatory variable, the total number of employees, were found to be statistically significant in the case of large corporations for radical innovation. However, many were found to be significant in the case of SME; total number of employees, the amount of gross sales, the existence of R&D groups, the amount of operating profit, and the life cycle of flagship products.
Third, the distinct differences of large corporation and SME were also confirmed in the follow-up simulation analysis.
This study is significant in that it attempts to divide product innovation into incremental and radical innovation subtypes and statistical analysis on the two subtypes of innovation is performed in the framework of marketing innovation.