文档介绍：Alina B. Sorescu & Jelena Spanjol
Innovation’s Effect on Firm Value and
Risk: Insights from Consumer
Packaged Goods
What is the relationship between innovation and firm value? Does the type of innovation make a difference? To
answer these questions, the authors examine how breakthrough and incremental innovations affect three different
facets of firm performance: normal profits, economic rents, and total firm risk. They argue that each of these metrics
is of independent interest to shareholders and managers and that examining one without the others results in an
plete picture of the true financial value of innovation. Using data on more than 20,000 new products from
consumer packaged goods industries, the authors find that breakthrough innovation is associated with increases
in both normal profits and economic rents and that, on average, each breakthrough innovation in the sample is
associated with an increase in firm value of $ million. Breakthrough innovation is also associated with increases
in the risk of the innovating firm, but this higher risk is offset by above-normal stock returns. In contrast, incremental
innovation is associated with increases in normal profits only and has no impact on economic rents or firm risk.
Keywords: innovation, shareholder value, firm risk, marketing strategy, marketing–finance interface
any executives hold an unwavering belief in inno- sen to focus on quantity find themselves lamenting their
vation as a strategic imperative, counting on inno- decision: “There’s actually an innovation glut. The real
Mvation to spur growth and yield positive financial shortage is profits”(Schrage 2000, p. 225). Moreover, some
returns. However, profitable innovation remains an elusive authors decry the riskiness of innovation and even caution
goal. Chief executive officers (CEOs), such as Sun managers that “going after breakthrough innovations may
Microsystems’ Jonathan Schwartz (2006), recognize inno- be glamorous, but m