Soaking It Up: Absorptive Capacity in Interorganizational New Product Development Teams

Prior research has acknowledged the importance of an organization's absorptive capacity—the ability to acquire new knowledge and information, assimilate, transform, and exploit it—for innovation purposes. Because innovations are usually developed by project teams, this suggests that absorptive capacity, as a construct, may also be usefully applied at the team level. Consequently, this study developed a measure for team‐level absorptive capacity, investigated the potential influencing factors, and examined its relationship to team effectiveness in terms of product innovativeness in an interorganizational context. Specifically, building on the theory of homophily and information and decision‐making theories, three factors (social‐category similarity, work‐style similarity, and knowledge complementarity between the recipient and the partner organization teams) were identified as likely antecedents of team absorptive capacity. The hypotheses were tested on data from 98 interorganizational new product development teams and included responses from team members, team leaders, and team‐external managers. With regard to the antecedents of team absorptive capacity in interorganizational settings, the results showed a significant positive association with partners' work‐style similarity and an inverted U‐shaped relationship with partners' knowledge complementarity. Social‐category similarity was not significantly associated with team absorptive capacity. We also examined whether team absorptive capacity was related to interorganizational team effectiveness and found a significant positive relationship between team absorptive capacity and product innovativeness. The study demonstrates that absorptive is indeed related to team effectiveness outcomes in an interorganizational context, which underlines the importance of team‐level absorptive capacity for product innovation management and suggests paying more attention to the lower levels of absorptive capacity.     

Vertical and Horizontal Cross‐Ties: Benefits of Cross‐Hierarchy and Cross‐Unit Ties for Innovative Projects

Social networks are an important driver for successful innovation, both at the individual level as well as the organizational level. Recent research has also shaped that networks within teams can enhance performance. Innovative project teams are embedded in an organizational context, however, and teams typically consist of people with expertise from diverse backgrounds, and from different units. Team members may have ties to other teams, business units, and hierarchical levels. Although it seems clear that such ties can influence team performance, remarkably little research has focused on what is here referred to as vertical and horizontal cross‐ties. Previous research may have ignored the possibility that vertical and horizontal bridging ties may have different performance outcomes. Although the literature suggests that diversity of input, or horizontal cross‐unit ties will benefit team performance and innovativeness, there is reason to believe that ties to higher levels in the organization might have an effect on project team performance and innovativeness too. This article in particular studies the role of vertical cross‐hierarchy ties. In an exploratory analysis combining quantitative and qualitative results, it is distinguished between horizontal cross‐unit and vertical cross‐hierarchy ties and their contribution to new business development (NBD) project performance, thereby making a substantial contribution to both academic literature and managerial practice. Our study is based on a multiple case‐study approach of several NBD project teams in a large European financial service provider. Our results show that successful innovation project teams are characterized by a large number of cross‐unit ties in combination with a large number of cross‐hierarchical ties compared with less successful project teams. Additionally, proof is found that vertical cross‐hierarchy ties should be concentrated rather than scattered across project members.     

Integration of Finance with Marketing and R&D in New Product Development: The Role of Project Stage

While the interfaces of marketing, research and development (R&D), and manufacturing in product development have been extensively studied, no large‐scale empirical study has focused on finance's role in the product development team. The present research investigates the role of finance in cross‐functional product development teams, thereby extending existing research on cross‐functional integration in product development. A set of hypotheses is tested with a survey of 389 project team leaders and top management team members from companies in the United States, Australia, New Zealand, Germany, and Austria. The findings suggest that the integration of finance in cross‐functional teams positively impacts project performance and that the importance of the finance interface depends on the project development stage and the innovativeness of the product developed. The results indicate that the R&D–finance interface is most critical at the early stage of a project, while the marketing–finance interface is most important at the late stage, and that the integration between R&D and finance is especially useful in the development of less innovative products.     

Empowering leadership in R&D teams: a closer look at its components,process, and outcomes

Empowering leadership in R&D teams has gained increasing popularity as it provides a balance between autonomy and control, encourages member participation and self‐leadership, and benefits creativity and innovation. This research examined the unique influences of two behavior components of empowering leadership: group‐focused empowering leadership and differentiated individual‐focused empowering leadership on R&D team's processes and team effectiveness. Using data from 54 R&D teams, we found that group‐focused empowering leadership is strongly related to intra‐team collaboration, which in turn is positively related to both team innovativeness and performance. Differentiated individual‐focused empowering leadership, however, is positively related to intra‐team competition.     

Managing innovative R&D teams

Successful R&D groups not only generate innovative ideas, but also transfers these newly created concepts through the organizational system for economic gain. While innovation is not a random process, managers often argue that R&D performance is hard to measure and even more difficult to manage. An exploratory field study into technology-oriented R&D environments determines the principle factors that influence innovation-based performance of R&D teams. The results identify specific barriers and drivers to innovative team performance and provide insight into the type of an organizational environment and managerial leadership that is conducive to innovative R&D team performance. The data further suggest that many of the performance variables have their locus outside the R&D organization. Yet, managerial leadership style, both at the R&D team level and at senior management, has significant impact on creativity that ultimately affects R&D performance.     

Factors affecting the management of interdisciplinary research in the pharmaceutical industry

The author uses the results of recent published behavioural research on team effectiveness as a framework to analyse the problems of managing R&D in pharmaceutical development. The research points to a large number of factors as having a potential impact on managing such R&D which is inescapably multi- or inter-disciplinary in nature. Some such factors may originate outside the team, some within. External factors include organizational climate, R&D decision-making environment, system maturity and organizational form (type of matrix); internal factors include span of responsibility of team members, disciplinary differentiation, task uncertainty, extent of fulfilment of Belbin roles and a significant requirement for flexibility of style on the part of the manager.
The author's conclusion is that achieving effective management of R&D teams in the pharmaceutical R&D environment requires attention to all these factors. The extent to which integration of different disciplines is achieved is symptomatic of the degree to which these factors are understood and attended to.     

R&D team diversity and performance in hypercompetitive environments

Research summary : This article examines the effects of an R&D team's composition on its performance outcomes in hypercompetition. The fundamental feature of firms in hypercompetitive settings is that they are constantly challenged to improve their competitiveness in a relentless race to outperform one another. Analyzing a unique data set from the Formula 1 motorsport racing industry, we find an inverse U‐shaped relationship between team diversity in task‐related experience and performance an important result that diverges from well‐established theories developed in more stable environments. Fundamentally, we show that the role of R&D team experience diversity varies depending on the size of the organizations in which R&D teams operate. While we find a moderating effect for firm age, this effect is not as robust as that of firm size. Managerial summary : This article examines the relationship between R&D team composition and performance in fast‐moving environments. Firms in these environments are constantly challenged to improve their competitiveness by outperforming one another. Analyzing a unique data set from the Formula 1 motorsport racing industry, we find that a team's diversity in job‐related experience increases its performance up to a certain extent. Once R&D teams become too diverse, performance decreases because communication and coordination become more difficult. We also show that the role of R&D team diversity varies depending on the size of the organizations in which R&D teams operate. Overall, our findings provide several novel implications for the strategy, innovation, and team literatures. Copyright © 2016 John Wiley & Sons, Ltd.     

Good Cop–Bad Cop: Trust,Control, and the Lure of Integration

Based on a longitudinal case study of four interorganizational product development collaborations, this paper identifies a lure to cross‐functional integration that has hereto been neglected. In particular, findings suggest that when the buyer firm separates the Research and Development (R&D) Department from the Procurement Department, the two departments play a good cop–bad cop strategy toward the supplier. Thereby, they are able to foster a high level of goodwill trust between R&D personnel of the collaborating firms, while procurement personnel maintain a high level of formal control. Using an intricate sample design with polar cases, the study shows that cross‐functional integration of the two departments hampers interorganizational goodwill trust at the benefit of formal control. The findings offer a way forward for managers seeking to reap the benefits of collaboration, while limiting their exposure to the associated risks.     

The roles of R&D team leaders in Korea: a contingent approach

This study empirically examines the relationship between the role of R&D project leaders and their team performance using data from 87 project teams in 6 R&D organizations in Korea. The results reveal that:
(1) R&D project leaders played five different roles in performing their jobs – strategic planner, team builder, gatekeeper, technical expert, and champion;
(2) All but the champion role of a leader is positively related with project team performance;
(3) However, this relationship between the role of leader and project team performance varies according to the characteristics of R&D project teams and their tasks.
Specifically, it becomes important for a leader to focus less on the team building role as the team gets older. The team building role of a leader, however, is more important for higher performance of relatively certain R&D projects, while for uncertain R&D projects, the strategic planning role appears to be more crucial. Based on these results, this study discusses several managerial and theoretical issues related to the role of a leader in R&D project teams.     

A Closer Look at Cross‐functional R&D Cooperation for Innovativeness: Innovation‐oriented Leadership and Human Resource Practices as Driving Forces

Because cross‐functional research and development (R&D) cooperation appears to drive innovation, many firms have invested considerably in it. However, despite substantial efforts to improve information and communication infrastructures or to bring departments in closer proximity with one another, structural investments often fail to produce the desired positive impact on cross‐functional R&D cooperation. This failure may arise because firms undertaking these structural investments do not manage their employees adequately. Extant research acknowledges the importance of motivating and enabling members of the R&D function to cooperate with other functions. Yet empirical studies investigating the relative importance of leadership and different human resource (HR) practices for enhancing cross‐functional R&D cooperation are scarce. Drawing on the resource‐based view and organizational support theory, this study investigates how innovation‐oriented leadership and HR practices might support members of the R&D function and encourage cross‐functional R&D cooperation, which enhances product program innovativeness. Specifically, members of the R&D function who are supported in their innovation efforts through innovation‐oriented leadership and HR practices should reciprocate for the support they receive by intensifying their cross‐functional cooperation to achieve greater product program innovativeness. Relying on multi‐informant data from 125 firms with assessments from marketing and R&D managers, this study shows that innovation‐oriented leadership and HR practices have different effects on cross‐functional R&D cooperation. A structural equation modeling‐based analysis of the hypothesized relationships reveals that innovation‐oriented leadership, rewards, and training and development have considerable positive effects. In contrast, recruitment does not drive cross‐functional R&D cooperation. Because firms usually operate in dynamic markets, and increasingly acquire relevant information from customers when generating innovations, this study also considers market‐related dynamism and customer integration as important contingency factors. For firms facing market‐related dynamism and those relying on customer integration, leadership and training and development are particularly effective for enhancing cross‐functional R&D cooperation. By integrating two theoretical perspectives, this study not only advances knowledge on the antecedents of cross‐functional R&D cooperation, but also helps explain differences in their relative effectiveness. Furthermore, it both adds to the discussion of whether monetary rewards are appropriate means to foster innovation and challenges existing assumptions about the role of recruiting for innovation.     

The perilous leap between exploration and exploitation

Research summary : R&D‐based exploration and exploitation are necessary in order for firms to have sustainable competitive advantage. Yet, transitioning between these orthogonal types of R&D is considered profound organizational change. Building on recent research showing that compact, significant changes in R&D expenditure is an antecedent to the transition between explorative and exploitative R&D, I show that this leap between exploration and exploitation is quite hazardous. The magnitude of changes in R&D expenditure, whether increases or decreases, is positively associated with organizational failure. Firms maintaining higher levels of absorptive capacity are more capable of surviving the leap from R&D‐based exploitation to exploration, and firms that do not use reductions in R&D expenditure to manipulate short‐term earnings performance are more likely to survive the leap from exploration to exploitation. Managerial summary : In order to survive and thrive, innovative companies must be able to exploit their existing competencies, and to explore for new ones once those current competencies decline in value. However, transiting from one form of innovation to the other is difficult because the skills required to explore are fundamentally opposed to those required to exploit. In this article, I describe how difficult this leap between exploration and exploitation can be. I show that the move between R&D‐based exploration and exploitation is related to organizational failure. In addition, firms that are superior learners are more likely to survive the leap from exploitation to exploration, and firms that are not cutting R&D expenditure to manipulate earnings are more likely to survive the leap from exploration to exploitation. Copyright © 2015 John Wiley & Sons, Ltd.     

Transformational leadership and gatekeeping leadership: The roles of norm for maintaining consensus and shared leadership in team performance

This study focuses on shared leadership in Japanese R&D teams. The effects of both transformational and gatekeeping leaderships of formal leaders on shared leadership are examined. Moreover, the effect of shared leadership on R&D team performance is examined. Hypotheses are tested with a sample of 654 researchers working in 119 R&D industrial research teams in Japan. Results show that transformational leadership has a negative effect on shared leadership through the norm for maintaining consensus such that it positively influences the norm, which in turn negatively influences shared leadership. In contrast, gatekeeping leadership has a direct as well as an indirect positive impact on shared leadership through the norm for maintaining consensus such that it negatively influences the norm, which in turn negatively influences shared leadership. In addition, this study finds that shared leadership positively influences R&D team performance. These results suggest that leadership displayed by team members and that by formal leaders significantly influences team performance. The results are discussed in the context of the unique Japanese work environment.     

Social capital and innovation in R&D teams: the mediating roles of psychological safety and learning from mistakes

The relationship between social capital and R&D team innovation has received increasing attention in the literature. However, little is known about the mechanisms between the two. This study aims to narrow the gap by investigating the mediating roles of psychological safety and learning from mistakes between the three dimensions of social capital and innovation at team level. Our sample comprised 151 R&D teams with 585 members from nine Chinese high‐tech companies. The results showed that psychological safety and learning from mistakes (LFM) partially mediated the relationship between the structural and cognitive capital and innovation in R&D teams, and fully mediated the relationship between the relational capital and innovation in R&D teams. We further discussed subsequent managerial implications and future research directions.     

Diversity is strategy: the effect of R&D team diversity on innovative performance

Diversity in the workplace has attracted significant interest in organisations that want to attract and retain talented employees. Breakthrough innovation requires a wider knowledge base, and organisations increasingly rely on multidisciplinary R&D teams to identify scientific developments that bridge gaps and reduce time to market. However, research on the performance implications of R&D team diversity remains limited and the empirical evidence inconsistent. This paper investigates the impact of surface and deep-level diversity on R&D teams’ innovative performance and how diversity dimensions interact to drive innovation. We find supportive evidence that R&D team characteristics influence innovation outcomes, confirming our hypothesising that diversity is a valuable strategy for an organisation to pursue as it provides greater cognitive ability. Each diversity facet however has its own distinct effects depending on the novelty of innovation and industry. Yet, diversity is not solely positive and excessive heterogeneity could be detrimental to R&D team performance. Our findings suggest that high diversity in gender or skills in cognitively diverse teams might be negative attributes to take into consideration. Senior managers and organisations should therefore consider the appropriate mix of capabilities to benefit from creativity in diverse R&D teams and avoid possible conflict and distrust associated with diversity.     

Product Development and Learning in Project Teams: The Challenges Are the Benefits*

The value of teams in new product development (NPD) is undeniable. Both the interdisciplinary nature of the work and industry trends necessitate that professionals from different functions work together on development projects to create the highest‐quality product in the shortest time. Understanding the conditions that facilitate teamwork has been a pursuit of researchers for nearly a half century. The present paper reviews existing literature on teams and team learning in organizational behavior and technology and innovation to offer insights for research on NPD teams. Building on prior work, the organizational benefits of NPD teams are summarized, and five attributes of these teams are identified that hinder attainment of their potential: (1) project complexity; (2) cross‐functionality; (3) temporary membership; (4) fluid team boundaries; and (5) embeddedness in organizational structures. It is argued here that effective management of these five attributes allows not only organization‐level benefits but also team‐level benefits in the form of new capabilities and team member resilience. The critical roles of leadership and of communication and conflict management training are then highlighted as strategies for overcoming the challenges to team effectiveness in NPD as well as for realizing five team benefits: (1) project management skills; (2) broad perspective; (3) teaming skills; (4) expanded social network; and (5) boundary‐spanning skills. The paper concludes with a discussion of the implications of these ideas for conducting future team research.     

Help or Hindrance? Causal Ambiguity and Supplier Involvement in New Product Development Teams

Suppliers are increasingly being involved in interorganizational new product development (NPD) teams. Successful management of this involvement is critical both to the performance of the new product and to meeting the project's goals. Yet the transfer of knowledge between buyer and supplier may be subject to varying degrees of causal ambiguity, potentially limiting the effect of supplier involvement on performance. Understanding the dynamics of causal ambiguity within interorganizational product development is thus an important unanswered empirical question. A theoretical model is developed exploring the effect of supplier involvement practices (supplier involvement orientation, relationship commitment, and involvement depth) on the level of causal ambiguity experienced within interorganizational NPD teams, and the subsequent impact on time to competitor imitation, new product advantage, and project performance. The model also serves as a test of the paradox that causal ambiguity both inhibits imitation by competitors, but adversely affects organizational outcomes. Survey data collected from 119 research and development‐intensive manufacturing firms in the United Kingdom largely support these hypotheses. Results from structural equation modeling show that supplier involvement orientation and long‐term relationship commitment lower causal ambiguity within interorganizational NPD teams. The results also shed light on the causal ambiguity paradox showing that causal ambiguity during interorganizational NPD decreases both product and project performance, but has no significant effect on time to competitor imitation. Instead, competitor imitation is delayed by the extent to which the firm develops a new product advantage within the market. A product development strategy based upon maintaining interfirm causal ambiguity to delay competitor imitation is thus unlikely to result in a sustainable competitive advantage. Instead, managers are encouraged to undertake supplier involvement practices aimed at minimizing the level of knowledge ambiguity in the NPD project, and in doing so, improve product and project‐related performance.     

Investigation of Factors Contributing to the Success of Cross-Functional Teams

Although recent empirical research shows that most firms have implemented cross‐functional teams for the majority of the new product development projects undertaken, they are still finding it hard to ensure that these teams are successful in completing the new product development task. In this article, the author first reviews the vast literature on cross‐functional new product development teams to uncover the array of factors that have previously been demonstrated or hypothesized to relate to cross‐functional team success, when measured at the project level. He then analyzes the responses of 112 new product development professionals to determine which factors are more frequently mentioned as leading to project success. In looking at how to achieve successful teams, many factors have been suggested in the literature by a number of different researchers. The author suggests a model of these factors that divides them into three categories that help achieve success. Setting the stage for product development by developing appropriate project goals, empowering the team with the needed decision‐making power, assigning the appropriate human resources, and creating a productive climate should be related to fostering team success. Of these four factors, appropriate project goals is mentioned most often as being associated with success, followed by empowerment. Several specific team behaviors, including cooperation, commitment to the project, ownership of the project, and respect and trust among team members, also have been posited to contribute to team success. Of these, this research finds that cooperation is mentioned most often as being associated with success, followed by commitment and ownership. Finally, a number of researchers have suggested that team leaders, senior managers, and champions provide enabling support to cross‐functional teams in achieving success. Team leadership is the most frequently mentioned enabler, according to these findings, followed by senior management support. The author's results also show that increased use of cross‐functional teams in new product development is related to higher project success. However, achieving cross‐functional team success appears to be more complicated than previously thought. For example, across the set of factors identified in this research, the most frequently mentioned is obtaining the team behavior of cooperation. Setting appropriate project goals, a stage‐setting step that is completed early in the project, follows closely in relative importance. Finally, providing good team leadership as an enabler is the third most frequently mentioned factor in achieving success. This suggests that companies must work in all dimensions to maximize the probability of achieving team success.     

Proactive/Responsive Market Orientation and Marketing—Research and Development Integration

The level of integration between the marketing and research and development (R&D) functions may be gauged by degree of communication, information sharing, and collaboration between the functions during the new product development process. This article examines how a firm's strategic choice regarding market orientation may influence the relationship between marketing and R&D personnel, and how this relationship may affect organizational success. Under examination are both the responsive form of market orientation, in which a firm focuses on immediate customer needs and tends to be market driven, and the proactive form, in which the firm focuses on future market needs and tends to be invention driven. It is theorized that responsive market orientation will be more positively related to marketing‐R&D integration due to the market‐driven nature of the orientation. Conversely, it is theorized proactive market orientation will be more positively related to organizational success than responsive market orientation due to the innovation‐driven nature of the orientation. The study was implemented via a Web‐based survey and data analysis was performed using structural equation modeling techniques. The results of this study provide empirical evidence that both proactive and responsive market orientation exhibit a positive relationship with marketing–R&D integration, indicating that both forms of market orientation may lead to closer collaboration between the marketing and R&D functions. Despite the assumption that a proactive orientation is driven by innovation and technology in which R&D may play a more significant role, there is evidence that a high degree of synergy is developed between the groups when the focus is on future market needs. A market‐driven responsive orientation by necessity requires high integration between departments to commercialize products in a timely manner to meet current market needs. Proactive market orientation exhibits a positive relationship with market performance, whereas responsive market orientation does not. The result may show evidence of the “new product paradox," whereby developing products to address immediate market needs may result in lower market performance because the new products may be replacements for obsolete offerings or are actually cannibalizing sales of existing products.     

A contemporary justice perspective on dual ladders for R&D professionals

Research and development (R&D) professionals play a key role in companies' innovation performance. Whereas prior research has indicated the potential benefits of dual ladder career systems to retain and motivate R&D professionals, there is a lack of knowledge regarding the design properties of dual ladders that facilitate such positive effects. The purpose of this study is to address this research gap by exploring how organizations can design dual ladders to enhance R&D professionals' organizational commitment and career satisfaction. Drawing on contemporary justice theory, we point to two factors integral for the successful application of dual ladders: the perceived equality of the technical ladder and the transparency of the dual ladder. These factors are related to R&D professionals' organizational commitment and career satisfaction. Furthermore, this study investigates whether these relationships are moderated by R&D professionals' age and self‐directedness in career management as well as firm size. The hypotheses are tested in a cross‐level study with 9 heads of R&D departments, 32 human resource managers, and 382 R&D professionals from 32 organizations. Based on the analyses, this study finds positive relationships between the perceived equality and the transparency of the dual ladder with R&D professionals' organizational commitment and career satisfaction. In addition, the findings show that the effects of the perceived equality of the technical ladder on R&D professionals' career satisfaction are weaker at high levels of self‐directed career management. The study contributes by developing theory on the consequences of dual ladders' design properties and moderating influences thereon. Thus, this research has implications for the literature on innovation management by expanding the knowledge on the interplay between career management and the human side of innovation.     

Spurring Cross‐Functional Integration for Higher New Product Performance: A Group Effectiveness Perspective*

Spurring integration among functional specialists so they collectively create successful, or high‐performing, new products is a central interest of innovation practitioners and researchers. Firms are increasingly assembling cross‐functional new product development (NPD) teams for this purpose. However, integration of team members' divergent orientations and expertise is notoriously difficult to achieve. Individuals from distinct functions such as design, marketing, manufacturing, and research and development (R&D) are often assigned to NPD teams but have contrasting backgrounds, priorities, and thought worlds. If not well managed, this diversity can yield unproductive conflict and chaos rather than successful new products. Firms are thus looking for avenues of integrating the varied expertise and orientations within these cross‐functional teams. The aim of this study is to address two important and not fully resolved questions: (1) does cross‐functional integration in NPD teams actually improve new product performance; and if so, (2) what are ways to strengthen integration? The study began by developing a model of cross‐functional integration from the perspective of the group effectiveness theory. The theory has been used to explain the performance of a wide range of small, complex work groups; this study is the first application of the theory to NPD teams. The model developed from this theory was then tested by conducting a survey of dual informants in 206 NPD teams in an array of U.S. high‐technology companies. In answer to the first research question, the findings show that cross‐functional integration indeed contributes to new product performance as long conjectured. This finding is important in that it highlights that bringing together the skills, efforts, and knowledge of differing functions in an NPD team has a clear and coveted payoff: high‐performing new products. In answer to the second question, the findings indicate that both intra‐ (or internal) and extra‐ (or external) team factors contribute and codetermine cross‐functional integration. Specifically, social cohesion and superordinate identity as internal team factors and market‐oriented reward system, planning process formalization, and managerial encouragement to take risks as external team factors foster integration. These findings underscore that spurring integration requires addressing the conditions inside as well as outside NPD teams. These specialized work groups operate as organizations within organizations; recognition of this in situ arrangement is the first step toward better managing and ensuring rewards from team integration. Based on these findings, managerial and research implications were drawn for team integration and new product performance.