It is widely believed among researchers as well as practitioners that there is a link between new product newness, or innovativeness, and benefits to the firm developing and marketing a product; more innovative products are generally expected to create more profit and growth. However, research findings are conflicting—positive-, negative-, and no-relationship have been reported between product newness and benefits by different researchers. Moreover, most research has been confined to hardware products. Software is a different kind of product. It is marked by low industry entry barrier, low marginal cost of production, intense competition for quick market leadership, subject to increasing rate of return, et al. An ever larger part of investments in new products consist of computer software, software that is used in PCs, control industrial processes and give products like mobile phones, cameras and cars new features. To what extent newness gives benefits in software development is however still un-researched. Thus, the purpose this study was formulated as: To explore effect of newness of new software products on the benefits to the firms. To fulfill this research purpose, first we had to find out “What are the relevant elements of (i) newness, and (ii) benefits of new products” in the context of firms that develop and market computer software products? This part of the study is reported in Part I. In a second step the effect of product newness on benefits was investigated quantitatively. This part of the study is reported in Part II. Part I is based upon semi-structured in-depth interviews of managers responsible for seven new software products in firms from Finland, India, Sweden and the US. Supplementary secondary data were collected from archival sources to write case descriptions of each software product. Within- and cross-case inductive analysis of seven-case database led to identification of relevant elements of newness and benefits. As newness elements, distribution technology, and complementary technological-, and marketing-resources were found to be vital; as benefits element, non-monetary benefits of new products stood out. Part II reports a quantitative study involving 321 Swedish software firms. Data were collected through a Web-survey, using a questionnaire based on findings of Part I, and analyzed through Factor Analysis and Structural Equation Modeling. Findings indicate that marketing fit, and technological familiarity enhance product-level benefits, whereas technological fit, and familiarity enhance firm-level benefits. From the three environmental factors only aggressive marketing practices was found to be of significance. Neither switching costs nor computer mediated transactions was found to have any moderating role on product newness and new product benefits relationship. Overall, this study extends previous research in the area of product newness-new product benefits and fills the gap in the literature (i) by developing grounded measures for operationalizing new product newness and benefits concepts in the context of software product firms, and (ii) by identifying significant elements of new product newness that affect new product benefits. By limiting to a particular industry, this study provides useful findings—for both researches of new product development, and for managers in software firms—such as marketing fit, and technological familiarity enhance product-level benefits, whereas technological fit, and technological familiarity enhance firm-level benefits.

Abstract The present thesis analyses different software supplier types and the development of supplier firms in the context of the Finnish ICT cluster, which underwent rapid growth in the 1990s. The central brand-owner firms in the cluster have been accompanied by a high number of smaller industrial supplier firms that base their business on serving their large customer organisations. The research to date on the ICT cluster has largely focused on understanding the development and purchasing strategies of the large customer firms and thus does not provide a sufficient basis for understanding how supplier firms in the cluster operate and develop. It is this gap that the present study undertakes to address. The thesis begins by building a theoretical framework that identifies the main factors affecting the development of industrial supplier firms. The inner context of the framework is based on the resource-based view of the firm and the capability approach, while the outer context rests on principles drawn from theories of evolutionary economics. Supplier development is analysed as a change from one firm type to another. The empirical part of the thesis consists of a quantitative and a qualitative study. The former identifies five software supplier types and elaborates a typology capturing their main features, e.g., key resources, capabilities and operating logic. The latter then applies the theoretical framework in analysing the development of four software supplier firms within the ICT cluster. The empirical analysis generates a number of propositions on the development of software supplier firms that together constitute a description of the firms' typical development path and the most significant resources and capabilities enabling the development identified. The software suppliers' change from providing customised software services towards independent production of software products was found to be extremely difficult. The thesis concludes with a discussion of strategy-level choices that are relevant in managing this type of development.