First to market: Is technological innovation in new product development profitable in health care industries?

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.ijpe.2010.05.004 Byline: Jenny Y. Xin, Andy C.L. Yeung, T.C.E. Cheng Keywords: Technological innovation; New product development; Event study Abstract: Do innovative products incorporated advanced technologies help firms improve operating performance? In this study we traced the operating performance of 168 publicly traded manufacturing firms in the USA that announced technologically innovative products in two major industries from the health care domain, namely pharmaceuticals and medical instruments. We employed the event-study methodology and collected objective financial data from Compustat. We found that technologically innovative products have a statistically significant positive effect on operating performance. The median abnormal increase in return-on-assets ranged from 2.20% to 7.07% over a four-year period. The median abnormal increase in return-on-sales ranged from 4.16% to 4.70% and the median abnormal increase in sales-over-assets ranged from 5.85% to 7.38%. Author Affiliation: Department of Logistics and Maritime Studies, M637, Li Ka Shing Tower, The Hong Kong Polytechnic University, Hung Hom, Kowloon, HKSAR, China Article History: Received 1 July 2009; Accepted 26 March 2010