Advantages of time-based new product development in a fast-cycle industry

The authors study the impact of time-based product development on sustainable market share gains in a high-technology computer component industry. Three dominant firms, with international new product development and manufacturing facilities, have introduced more than 200 new products into this fast-cycle market in a five-year period. The authors systematically examine the leads and lags at critical stages of the product development process: concept generation, prototype completion, and volume production. Their main finding is that lead-time advantage affects market share positively, albeit differentially, at each stage. The benefit of lead-time gain is greatest at the volume production stage, followed by the concept generation stage. The authors also develop a new notion of lead-time threshold-a time period in which if a competitor catches up, no market share gain is achieved by the firm that introduces the product first. They endogenously estimate the magnitude of the threshold for each stage of the product development process, observing that a significant threshold is present at both the concept generation and volume production stages. Finally, the structure of the development process, which differs across the firms in the market, affords significant differential ability to catch up with competitors.