Technology versus Design Innovation's Effects on Sales and Tobin's Q : The Moderating Role of Branding Strategy

This research investigates the impacts on firm performance of (1) technology versus design innovation and (2) their potentially synergistic interaction. Synergies could arise from complementarities, in particular the utilization of technology innovation as a platform for design innovations. Both sales and T obin's q are examined as dependent performance variables, with sales tapping consumer responses and T obin's q reflecting investor responses. Moderation by branding strategy (i.e., C orporate B randing versus M ixed B randing versus H ouse of B rands) is analyzed because innovation may impact performance differently depending on branding strategy. Advertising effects, the number of new product introductions, their interaction, R&D expenditures, operating margins, and firm size are also modeled as covariates. The results show that all main and interaction effects are significant in at least one of the branding groups, and that moderation of model paths by branding strategy was pervasive. Overall, except for technology innovation → T obin's q, C orporate B randing coefficients for technology innovation, design innovation, and their interaction were almost always significantly different from M ixed B randing and H ouse of B rands coefficients, which were not significantly different from each other . Since M ixed B randing and H ouse of B rands proved very similar, these groups were combined under “ N on‐ C orporate.” First, for technology innovation , the impact on both sales and Tobin's q for C orporate B randing was less than or equal to N oncorporate. Noteworthy was that the technology innovation → T obin's q relationship was equal across all branding strategies ; technology innovation appears to be key for investors. Second, for design innovation , the impact for C orporate B randing was positive while for N oncorporate it was null; the same pattern was observed for sales and T obin's q. Third, for the interaction , the impact for C orporate B randing was significantly less than the positive impacts for N oncorporate. For N oncorporate, the marginal impact of design innovation on sales or T obin's q increased with the level of technology innovation . For C orporate B randing however, there was no interaction in the case of sales and a negative interaction for T obin's q. Thus, the marginal impact of design innovation on T obin's q decreased with increasing levels of technology innovation . These decreasing marginal effects could reflect limits to corporate brand name extensions, as perceived by investors.