Same difference ? Why audiences fail to recognize distinctiveness in new products

New products and technologies, which are often underappreciated by mainstream audiences, represent potential opportunities for entrepreneurial audiences with contrarian perspectives. Yet little is known about what makes an audience good at rewarding the unfamiliar—and, indeed, whether this even matters. Even if audiences favor products with contrarian principles of value-creation, lack of prior familiarity with related products still makes audiences less capable of appreciating some aspects of distinctiveness than others. It does not hinder audiences from recognizing ostensive design choices that distinguish new products from prior ones, but it does hinder audiences from recognizing distinctive functional principles behind design choices. Original quantitative and qualitative data collected from the text of tens of thousands of letters between patent examiners and applicants provide a window on perceptions about the distinctiveness of design choices in new technologies and functional principles behind design choices. I show that greater distance from an examiner’s prior experience reduces the likelihood of rejections due to lack of distinctive choices but increases the likelihood of rejections due to lack of distinctive functional principles. Qualitative evidence provides insights about the hypothesized micromechanisms: because of incomplete understandings of interactive complexity, examiners overlook ways in which functional principles from prior technologies do not carry over additively when combined with other design choices. Quantitatively, these kinds of oversights are more likely when a technology is farther from an examiner’s prior experience, and examiners are more likely to reverse rejections that involve these oversights.