The influence of local search and performance heuristics on new design introduction in a new product market

This study develops and tests three sets of predictions concerning new design introduction during the initial period of ferment in a new product market. We root our predictions most directly in the evolutionary economic concepts of local search and performance heuristics. First, we argue that new entrants will introduce most designs that are new to a product market during an initial period of ferment. Second, we argue that local search will lead most product market incumbents that introduce second or subsequent designs after their entry to introduce designs that are similar to those incorporated in their existing products. Third, we argue that firms selling products based on designs that are losing aggregate share in the market will be likely to introduce products based on new designs, while firms losing market share to firms that are selling the same Ž . design are unlikely to introduce new designs. Our empirical analysis examines the magnetic resonance imaging MRI subfield of the diagnostic imaging equipment industry between 1980 and 1986, a period that begins with the introduction of the first MRI design and ends with the emergence of widely accepted design characteristics. The results support the argument that local search and performance heuristics, along with other market factors and business characteristics, influence design introduction during a period of ferment. q 1998 Elsevier Science B.V. All rights reserved.