Product Quality as a Determinant of Product Innovation: an Empirical Analysis of the Global Automotive Industry

摘要

Manufacturing firms innovate to satisfy consumer demand, increase market share, increase profits, and thereby remain competitive in the global market. Theoretically, potential determinants of innovation have been systematically totalled to confirm the internal and external sources of innovation capability. This study aims to clarify the relationship between product quality and product innovation. Considering the patenting activities and product quality of global vehicle manufacturers, regression analyses demonstrate that automakers actively engage in product innovation if they produce high-quality products. Furthermore, this investigation also indicates that automakers of different nationalities will generate significantly different levels of product innovations, namely: Asian automakers issued more patents than their European and US competitors. This study indicates that product quality determines product innovation.