Economic perspectives on the development of complex products for increasingly demanding customers

Earl, Peter E. and Wakeley, Tim (2010) Economic perspectives on the development of complex products for increasingly demanding customers. Research Policy, 39 8: 1122-1132. doi:10.1016/j.respol.2010.05.006

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Author Earl, Peter E.
Wakeley, Tim
Title Economic perspectives on the development of complex products for increasingly demanding customers
Journal name Research Policy   Check publisher's open access policy
ISSN 0048-7333
Publication date 2010-10
Sub-type Article (original research)
DOI 10.1016/j.respol.2010.05.006
Volume 39
Issue 8
Start page 1122
End page 1132
Total pages 11
Place of publication Amsterdam, Netherlands
Publisher Elsevier
Collection year 2011
Language eng
Formatted abstract
Rival firms produce products with a variety of characteristics. It is typically assumed that consumers purchase those products that most closely match their ideal set of characteristics. Orthodox production theory economics offers no analysis of how to divide limited product development budgets between different characteristics. Furthermore, orthodox consumer economics assumes buyers make compensatory trade-offs between different product characteristics; this approach ignores problems caused by bounded rationality that, in complex choice environments, leads buyers to formulate simplifying heuristics such as hierarchical (non-compensatory) preferences over characteristics. An integrative analytical framework is developed, drawing upon orthodox economics, behavioural economics and evolutionary economics. Implications for the relationship between incremental product development and the firm's evolving capabilities are emphasized.

Keyword Behavioural
Characteristics
Heuristics
Hierarchical
Preferences
Capabilities
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2011 Collection
School of Economics Publications
 
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Citation counts: TR Web of Science Citation Count  Cited 6 times in Thomson Reuters Web of Science Article | Citations
Scopus Citation Count Cited 5 times in Scopus Article | Citations
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Created: Sun, 19 Sep 2010, 00:02:09 EST