Decoupling Novelty from R&D: The Importance of Marketing Innovation for Performance

Conventional wisdom ties successful innovation primarily to technological R&D. In this paper, we introduce the concept of marketing innovation in which novelty originates separately from the innovative design, packaging, pricing, promotion, and/or distribution of technologically unchanged products and services. We argue that marketing innovation may significantly increase a firm’s innovation performance. Further, we posit that investments in marketing and technological innovation are substitutes because of resource constraints and a compounding of risks. We propose that the substitutive relationship is especially pronounced in small firms and high-tech industries. Based on the analysis of a dataset of 866 firms from a diverse set of industries in Germany, we find empirical support for our hypotheses, suggesting that novelty can in fact be decoupled from R&D