The Year After a Company Whose Success Depends on Product Innovation has a Profitable Year

Question: The year after a company whose success depends on product innovation has a profitable year, it invests more cash in its research and development department to attempt to generate innovations that can ensure future success. Therefore, companies whose success depends on product innovation should generate more innovations during the years following profitable years of business than during years following unprofitable years of business.

Which of the following, if true about a company whose success depends on product innovation during the year after a profitable year, casts the most serious doubt on the conclusion drawn above?

1. Its employees ask for higher wages than they do at other times.
2. Its management participates more in research and development and makes process alterations.
3. Its research and development team members propose more project ideas that the company does not have time to act on than usual.
4. Its management increases monetary team rewards for successful innovation.
5. Its innovations increase in quantity, but have a higher rate of failure when applied to the market.

“The year after a company whose success depends on product innovation has a profitable year” – is a GMAT critical reasoning topic. This GMAT Critical Reasoning topic has been taken from the book ‘Manhattan prep GMAT Critical Reasoning 6th Edition’. In this particular topic, candidates are asked to select the option that makes the same error as the author. In this question, the candidates need to provide an option that supports the error provided in the passage. GMAT critical reasoning tests the logical and analytical skills of the candidates. Critical reasoning in GMAT requires candidates to find the argument's strengths and weaknesses or the logical flaw in the argument.  The GMAT CR section contains 10 -13 GMAT critical reasoning questions out of 36 GMAT verbal questions.

Answer: B
Explanation: This is a GMAT critical reasoning question. An assumption is an implied hypothesis. This is a pseudo-syllogistic argument, so we need to check the fact and opinions to get to some conclusion:

Option A: Incorrect 

From Option A, it can be stated that when a company incurs higher profits due to sustained and effective innovations in its research and development, it is possible to increase the wages of employees. It only strengthens the argument considering that higher wages imply higher engagement of employees and more innovations in the R&D. 

Option B: Correct 

Here, Option B can talks mainly about about process alterations in the system of innovations rather than generation of innovations by the management in the R&D department. This stands completely different and weakens the conclusion that talks about generating innovations for more success. Hence, Option B casts the most doubt on the conclusion drawn above. 

Option C: Incorrect 

Here, option C also talks about the Reseach and development team proposing ideas for investing in the department for more product innovation which does not necessarily imply generating more innovations. hence, Option C is irrelevant. 

Option D: Incorrect 

Here Option D talks about how increasing team rewards monetraily can increase innovations and it only strengthens the argument for success of innovations rather than casting doubt on the conclusion. Hence, Option D is irrelevant. 

Option E: Incorrect 

Here, Option E is more of a negative remark regarding the failure of the company if innovations are induced in higher quantity when applied in a market. This implies a possibility for failure of innovation but not necessarily. Hence, Option E although being negative does not cast doubt on the conclusion drawn. 

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