Aligning Marketing and Purchasing for new value creation

The objective of this study is to explore how changes in organizing the alignment between Marketing and Purchasing (M&P) might be linked to new value creation. The issue of value creation and the specific role of inter-functional cooperation have been examined in depth in the marketing literature. However, the relationship between Marketing and Purchasing alignment and value creation has received only limited attention, even though the emerging role of purchasing is increasingly recognized. This work aims to address this gap using the analytical framework by Bocconcelli and Tunisini (2012) as a basis and adopting a process perspective. Specifically it intends to explore i) how companies over time manage the alignment of M&P and under which conditions/triggers; ii) whether different types of emerging organizational alignments between purchasing and marketing might result in different types of new value creation. To address these research objectives a qualitative methodology based on multiple-case study research is adopted. Four cases of mechanical firms – two large and two medium-sized – have been examined in depth. Results show that two trajectories – interactive alignment of M&P and structural alignment of M&P – have been implemented and that these paths are related respectively to value creation processes in terms of optimizing product delivery and managing product and solutions development. Market pressure and new competences are assessed as main relevant drivers, while organizational culture emerges as a meaningful barrier. Therefore this works provides a theoretical and empirical contribution further developing in a process perspective the analysis of M&P alignment and its effects on value creation. Results have also clear implications for practice: M&P alignment is necessary and beneficial for value creation. Changes, however, require time, organizational resources and a stronger awareness within the company.     

Processes and integration in the interaction of purchasing and marketing: Considering synergy and symbiosis

Effective integration of both purchasing and marketing functions is central to effective value creation and alignment of an organization with its business environment. Rapidly changing environments create gaps in the value creation process that compromises the delivery of value to the customer and risk misalignment of value propositions to their needs. Despite the clear imperative for research in this area, the extant literature is partial and delivers limited coherence. Ours is a theoretical article that—in drawing on previous literature—introduces the new work collected in this special issue and considers this against our own empirical evidence. We present a framework that maps out the landscape of internal organizational integration with a particular emphasis on purchasing and marketing integration. Implications for theory and managers are explored.     

Antecedents of functional integration during new product development: The purchasing–marketing link

In response to different economic and business trends, companies are becoming increasingly dependent on external resources and capabilities as they seek to cater for an ever more complex and challenging demand. Such dependence has led an important group of scholars to draw attention to the inevitable integration of the purchasing and marketing functions. We stress here the need for such integration during new product development, and seek the mechanisms that may promote purchasing–marketing integration. Accordingly, this study describes two essential components underlying the concept of purchasing–marketing integration, and tests the effect of different integration mechanisms gathered from the literature on these two components. The model is tested on a sample of 141 Spanish industrial companies. Our results show that each one of these integration mechanisms varies in its effectiveness in promoting each key component of purchasing–marketing integration. Taking these asymmetric effects into account is crucial for selecting the appropriate purchasing and marketing integration devices within companies.     

Cross-functional integration in the sustainable new product development process: The role of the environmental specialist

Companies in the twenty-first century are exposed to a variety of pressures to respond to environmental issues, and responding to these pressures affects several aspects of business such as purchasing, marketing and logistics. Managers increasingly view sustainability as a complement to their corporate agendas, or even as an opportunity. It is important to understand how firms integrate environmental issues into their businesses and how these integration strategies affect performance. The process of sustainable new product development (SNPD) is a key strategic focus to achieve economic and environmental sustainability. This paper examines the integration of environmental specialists into new product development teams that are composed of other functional specialists including marketing, manufacturing, and R&D personnel, and its impact on SNPD project performance across three stages: concept development, product development, and product commercialization. We empirically test our theoretical model using a sample of 219 firms from a range of business-to-business industries. We present evidence that integrating an environmental specialist into a new product team has a positive influence on SNPD project performance beyond what the traditional members of such a team would accomplish. We analyze this relationship across the stages of SNPD to obtain a clearer picture of the effects of this integration. In particular, the integration of the environmental specialist was more effective on SNPD project performance in the final stage of the SNPD process when the product was being launched; this effect is even greater for high-innovative projects.     

Early supplier integration: the dual role of purchasing in new product development

Interest in early supplier integration in new product development (NPD) has increased as an open innovation approach has become more common in firms. To support supplier integration, the purchasing function of a firm can assume a new ‘dual’ role: contributing to NPD while also managing overall costs. Previous research has offered few insights into how the purchasing function should best be organised so that it will fulfil this dual role. This paper reports on the results of a consortial benchmarking study in which an industry–academic consortium visited and analysed six best‐practice firms. The findings describe how innovative firms organise their purchasing function, distinguishing between ‘advanced sourcing’ and ‘life‐cycle sourcing’ units. The results include the tools that these firms use, such as regular innovation meetings with suppliers and technology roadmaps linking firm strategy, innovation strategy and sourcing strategies. The paper also recommends that researchers shift from a narrow focus on a single project to a broader consideration of supplier and organisational issues in NPD.     

The integration between marketing and purchasing in the traceability process

This paper provides an overview of the implications of integrating marketing and purchasing offered by traceability. The research offers some evidence of the adoption of different traceability approaches by actors along the supply chain, illustrating the relevance of the traceability issue and how traceability can be exploited. The paper presents findings from a case analysis process of five actors in the fashion industry. This industry has experienced strong integration between industrial and retail functions and relevant changes in the organisation of production networks (global shift of production to new industrialized countries and emerging markets) which place emphasis on the traceability topic. Traceability emerges as a complex concept that concerns the sharing of information about the product and production processes along the supply chain in BTB networks up to the consumers in the final market. The issue analysed focuses on organising, with a discussion of two different uses of traceability: traceability as a tool for inter-organisational control and traceability as a tool for market power. The two approaches give rise to different implications at the individual company and business network levels. The traceability process has intraorganisational consequences in terms of contents, technologies and actors involved in its implementation. These consequences are different according to the role played by the process.     

A Model of Supplier Integration into New Product Development*

In many industries, firms are looking for ways to cut concept‐to‐customer development time, to improve quality, and to reduce the cost of new products. One approach shown to be successful in Japanese organizations involves the integration of material suppliers early in the new product development cycle. This involvement may range from simple consultation with suppliers on design ideas to making suppliers fully responsible for the design of components or systems they will supply. While prior research shows the benefit of using this approach, execution remains a problem. The processes for identifying and integrating suppliers into the new product development (NPD) process in North American organizations are not understood well. This problem is compounded by the fact that design team members often are reluctant to listen to the technology and cost ideas made by suppliers in new product development efforts. We suggest a model of the key activities required for successful supplier integration into NPD projects, based on case studies with 17 Japanese and American manufacturing organizations. The model is validated using data from a survey of purchasing executives in global corporations with at least one successful and one unsuccessful supplier integration experience. The results suggest that (1) increased knowledge of a supplier is more likely to result in greater information sharing and involvement of the supplier in the product development process; (2) sharing of technology information results in higher levels of supplier involvement and improved outcomes; (3) supplier involvement on teams generally results in a higher achievement of NPD team goals; (4) in cases when technology uncertainty is present, suppliers and buyers are more likely to share information on NPD teams; and (5) the problems associated with technology uncertainty can be mitigated by greater use of technology sharing and direct supplier participation on new product development teams. A supplier's participation as a true member of a new product development team seems to result in the highest level of benefits, especially in cases when a technology is in its formative stages.     

Strategic Alignment and New Product Development: Drivers and Performance Effects

Strategic alignment is widely accepted as a prerequisite for a firm's success, but insight into the role of alignment in, and its impact on, the new product development (NPD) process and its performance is less well developed. Most publications on this topic either focus on one form of alignment or on one or a limited set of NPD performance indicators. Furthermore, different and occasionally contradictory findings have been reported. NPD scholars have long argued for the importance of fit between context and NPD activities. However, this body of literature suffers from the same weakness: most publications have a limited scope and the findings are not always consistent with results reported previously. This study addresses these deficiencies by examining (1) the effects of various internal and external factors on different forms of alignment, and (2) the effects of these forms of alignment on a set of NPD performance indicators. Strategic planning and innovativeness appear to affect technological, market, and NPD‐marketing alignment positively. Environmental munificence is negatively associated with NPD‐marketing alignment, but has no effect on the two other forms of alignment. Technological change has a positive effect on technological alignment, a negative effect on NPD‐marketing alignment, but no effect on market alignment. These findings suggest that internal capabilities are more likely to be associated with the development of strategic alignment than environmental factors are. Furthermore, technological and NPD‐marketing alignment affect NPD performance positively, while market alignment does not have any significant performance effects.     

Collaborating for New Product Development: Selecting the Partner with Maximum Potential to Create Value

The partner selection process in the formation stages of collaborative new product development (NPD) is a neglected topic. The present study investigated the partner selection processes to ascertain the potential of creating competitively advantageous products through collaboration. The goal was to develop a process theory of partner selection for collaborative NPD alliances using a theory development approach. The literatures on NPD, interfirm knowledge transfer and generation, and interorganizational relationships were tapped. These literatures motivated the approach and the research questions. Parallel with the analysis of the literature, a series of case study interviews were conducted with managers currently in collaborative dyads. Managers' inputs were used (1) to guide the theory development process and (2) to validate the relevance of the literature-based assertions. The method of narrative analysis for building theory from case studies was adopted: Multiple indicators were collapsed into single constructs, and recurring sequences or divergences were analyzed. This resulted in the unveiling of phases in the partner selection process. The study's findings suggest that technological alignment of the partners triggered the partner-evaluation process. This phase was followed, in order, by the strategic alignment and relational alignment phases. These later phases were as important as the initial phase in ensuring the transfer and integration of critical know-how and in creating product value through collaboration. In addition to clarifying the definition of codevelopment alliances, this study reveals a comprehensive theoretical model of the technological, strategic, and relational aspects of partner selection in codevelopment alliances, as well as the order in which these aspects are practiced.     

Effects of Supplier and Customer Integration on Product Innovation and Performance: Empirical Evidence in Hong Kong Manufacturers

While the beneficial impacts of supplier and customer integration are generally acknowledged, very few empirical research studies have examined how an organization can achieve better product performance through product innovation enhanced by such integration. This paper thus examines the impact of key supplier and customer integration processes (i.e., information sharing and product codevelopment with supplier and customer, respectively) on product innovation as well as their impact on product performance. It contributes to existing literature by asking how such integration activities affect product innovation and performance in both direct and indirect ways. After surveying 251 manufacturers in Hong Kong, this study tested the relationships among information sharing, product codevelopment, product innovativeness, and performance with three control variables (i.e., company size, type of industry, and market certainty). Structural equation modeling with correlation and t‐tests was used to test the hypothesized research model. The findings indicate a direct, positive relationship between supplier and customer integration and product performance. In particular, this study verifies that sharing information with suppliers and product codevelopment with customers directly improves product performance. In addition, this study empirically examines the indirect effects of supplier and customer integration processes on product performance, mediated by innovation. This has seldom been attempted in previous research. The empirical findings show that product codevelopment with suppliers improves performance, mediated by innovation. However, the sampled firms cannot improve their product innovation by sharing information with their current customers and suppliers as well as codeveloping new products with the customers. If the adoption of supplier and customer integration is not cost free, the findings of this study may suggest firms work on particular supplier and customer integration processes (i.e., product codevelopment with suppliers) to improve their product innovation. The study also suggests that companies codevelop new products only with new customers and lead users instead of current ones for product innovation. For managers, this study has demonstrated that both information sharing and product codevelopment affect performance directly and indirectly. Managers should put more emphasis on these key processes, especially when linked with product innovation. Managers should consider involving their suppliers and customers in the early stages of design. Information sharing with suppliers is also important in product development. As suggested by this study, extensive effort on supplier and customer integration should be made to directly augment current product performance and product innovation at the same time.     

Integration planning for technology intensive acquisitions

Rapid technological change, growing technological complexity and shortening product life cycles increasingly force companies to source technologies externally. One means of building up competencies and fostering innovation based on external resources such as knowledge is through the acquisition of technology-based companies. However as literature and practice have shown, technologically motivated and intensive acquisitions are highly vulnerable to failure. One of the main reasons for this value destruction lies in the miscarried and inappropriate integration of the technology-based company after the acquisition.
Based on eight in-depth case studies on technology intensive acquisitions in multi-national technology-based companies this paper aims to identify the main causes of failure in internalizing external knowledge during the integration of technology intensive acquisitions. It was derived that a lack of integrative decision-making, of systemic processes and of a holistic change of both companies during the integration hinders successful knowledge sourcing through acquisitions. Based on these findings, a concept for integration planning which is tailored towards the specific characteristics of technology intensive acquisitions is proposed. This concept is embedded in the acquisition process and encompasses the development of an appropriate integration strategy and the determination, assessment and planning of the required integration projects thus fostering successful knowledge sourcing.     

Integrating Knowledge and Knowledge Processes: A Critical Incident Study of Product Development Projects

Various scholars have argued that knowledge processes in organizations are integrally linked in practice. The extant literature though treats them separately and thereby disregards the interactions and tensions between them. A result of this way of studying knowledge processes is that little is known about their relative importance and how they work together. This paper addresses this gap in the literature through a critical incident study of knowledge processes in product development projects of high‐tech small firms. The paper starts off with a conceptual framework comprised of four knowledge processes—knowledge creation, knowledge application, knowledge integration, and knowledge retention—and their interactions. From the framework, three hypotheses are derived concerning the importance of these types of knowledge processes and their interactions, which in turn guide the empirical research. The hypotheses were tested in a retrospective study of 58 critical incidents in product development projects of 16 high‐tech small firms in the Netherlands. Data were collected through semi‐structured interviews using the critical incident interviewing technique. Interviewees were asked to “relive” and describe particular successful and unsuccessful examples of product development projects in the past. The analysis of the interview data focused upon whether there are differences between successful and unsuccessful projects in the types of knowledge processes and interactions that are performed. After coding all data into the various types of knowledge processes and interactions of the framework, t‐tests were used to test for significance of differences. The findings indicate that the difference between success and failure in these projects lies primarily in the extent to which knowledge integration and integration between knowledge processes have taken place. These findings demonstrate that, of the four knowledge processes, knowledge integration had the most significant impact on product development project success. The study demonstrates furthermore that higher degrees of interactions between knowledge processes were also associated with project success. Despite the limitations of this study, these results provide empirical support for the claim that integration is a key factor in organizations in general and in innovation projects in particular. For academics, this suggests further research on knowledge integration, and integration between knowledge processes, is warranted. For practitioners, it means that integration is a key process to be considered when choosing and executing new product development projects.     

Demand chain alignment competence — delivering value through product life cycle management

This paper endorses demand chain alignment as a competence that supports effective product life cycle (PLC) management. Demand chain alignment integrates the demand creation (historic domain of marketing) and demand fulfilment processes (domain of supply chain management), to develop and to deliver products that convey superior customer value while deploying resources efficiently. So far, the relationship between demand chain alignment and PLC management has only been addressed from an operations and demand/supply chain perspective, but not from a marketing perspective. Three research propositions, on the relationship between both concepts, are derived from a literature review and applied to a case study from a global player in the tobacco industry. The findings do not support the current view that the product life cycle is a market-oriented classification variable for demand chain strategies. Instead, demand chain alignment needs to link customer needs-based segments with the supply chain. Moreover, PLC management and demand chain alignment have a mutually reinforcing relationship, in which PLC management can facilitate the competence development, ensures a dynamic perspective and, at the same time, benefits from aligned demand creation and fulfilment processes. Based on the findings, a model integrating demand chain alignment and PLC management is proposed.     

Book Reviews

The first review describes a book devoted to the value and conduct of customer visits. The reviewer recommends it as especially valuable for practitioners in firms producing goods and services for business-to-business markets. The second review covers a book devoted to the integration of process design and development. Our reviewer finds that the book provides valuable coverage of an important but frequently overlooked aspect of product development. The third review covers a book of particular value to manufacturers. Although lacking in specific examples, the authors' experience is persuasive in addressing key issues that overlap points covered in the book discussed in the preceding review. The fourth review examines a book about competitive positioning. The book has value for those needing an introduction to this important topic. This issue also reviews two books of special interest to academics teaching and conducting research in the area of product innovation. The first offering is essentially a comprehensive review of the growing literature on how technology can improve collaborative work among individuals or groups. It covers theoretical foundations, conceptual paradigms, empirical research to date, and an agenda for future research. The next book is an advanced but relatively user-friendly text covering all facets of the new product development process. It is loaded with examples and cases and draws on a wide range of concepts and methodologies from the marketing and general management literature.     

The Marketing–R&D Interface: Do Personality Factors Have an Impact?

The marketing–R&D interface is generally regarded as the most critical functional interface in the new product development process. A great deal of discussion has recently taken place over which of these two areas should dominate product development. Only recently has the issue of how to foster a successful marketing—R&D interface been the topic of empirical investigation. George Lucas and Alan Bush present results of a study which addresses individual differences, in particular, personality differences, between the two areas as an influence on their integration and resultant new product success level. The results are largely consistent with findings from the occupational choice literature. These findings provide some preliminary suggestions for top management in its attempt to maximize positive outcomes from this critical business process.     

Exploring the Nonlinear Impact of Organizational Integration on New Product Market Success

This article explores the nonlinear relationship between organizational integration and new product market success (NPMS). The concept of organizational integration was measured by assessing the degree of integration among various groups of people involved in the development of new products including new product development (NPD) teams that are typically the focal points of NPD efforts. New product market success was measured by examining four often‐used measures of NPD success. The mail survey research approach was used to gather empirical data from NPD managers in three major industries. The data gathered from this survey process were used as the basis from which to extract information to address this study's major research questions, which include: (1) How is the degree of new product market success related to the nonlinear degree to which groups of people (including NPD teams) integrate during NPD processes? and (2) How is the degree of new product market success related to the nonlinear degree to which separate groups of people (e.g., customers, suppliers, and functional departments) integrate during NPD processes? This study found that high levels of organizational integration (overall organizational integration and supplier organizational integration) during NPD processes are associated with high levels of new product market success. Additionally, this study found that the relationship between new product market success and organizational integration (customer organizational integration and functional organization integration) during NPD processes exhibit nonlinear, U‐shaped relationships. Therefore, the first important finding of this study confirms that various forms of organizational integration impact in a positive way the market success of new products. This suggests that management responsible for all NPD projects should consciously integrate important groups of people to support such developments. This study's findings also confirm and imply that new product developers in the studied industries should integrate marketing and research and development (R&D) over the duration of the NPD process. This suggests that new product managers must be proactive to assure that members of NPD teams are actively engaged with groups of supporting people within and outside new‐product–producing organizations. Unlike prior research, a major finding of this study suggests that the association between organizational integration and new product market success does not form inverted U‐shaped relationships. Data from this research imply that new product market success is linearly influenced by overall and supplier organizational integration. However, this study's data suggest that new product market success is nonlinearly influenced by customer and functional organizational integration. This study's data suggest that when customer organizational integration and/or functional organizational integration is increased, new product market success can be increased at a rate which is greater than a linear rate.     

Product quality alignment and business unit performance

Over the past decade, new strategic approaches to the management of product quality have become prime drivers of product and process innovation and change in many firms. However, many firm's product quality improvement efforts have failed to deliver anticipated business performance benefits. Implementation problems are generally viewed as significant factors in explaining such failures. Further, the literature suggests that firms' views of product quality are often very different from those of their customers. However, to date this issue has received little empirical attention. The objective of this research was to examine the causes and performance outcomes of product quality alignment ‐ differences between firms' views of the product quality they deliver and customer views of the product quality delivered to them. We conducted exploratory interviews with quality and marketing managers aimed at developing a grounded understanding of the nature, antecedents and consequences of product quality alignment. These fieldwork insights were combined with the existing literature to delineate the central product quality alignment construct and develop specific hypotheses concerning the antecedents and performance consequences of product quality alignment at the SBU‐level. Using data from a mail survey of multiple key informants (general managers, quality managers and marketing managers), we tested hypothesized relationships using a structural equation model methodology. Our quantitative findings provide empirical evidence that product quality alignment positively affects business unit performance. Our data also suggest that the degree to which quality goals spanning customer‐focused and internally‐oriented criteria influence decision‐making and actions taken is positively associated with product quality alignment. Further, our data indicate that while the use of marketing tools in developing and executing product quality improvement efforts is positively associated with product quality alignment, no such association is observed with more commonly recommended TQM tools. Our results also suggest that effective interfunctlonal interactions between quality and marketing functions (higher levels of interfunctional connectedness and lower levels of interfunctional conflict) are positively associated with product quality alignment. Overall, our results suggest that product quality alignment is an important concept in understanding product quality improvement‐performance linkages at the SBU level and that minimizing mis‐alignment may be an appropriate focus for management attention.     

Involving purchasing in new product development

Purchasing is evolving into a strategic business activity and thus also a potential contributor to the successful development of new products. However, the literature on the involvement of purchasing in new product development (NPD) is sorely lacking. We conducted an exploratory study to investigate purchasing's involvement in NPD, the drivers of this involvement and the influence on new product success. We conducted telephone interviews with purchasing and NPD managers from 43 firms. The results show that firms differ in the extent to which they involve purchasing in NPD and that higher involvement has a positive effect on NPD performance. R&D managers can use the results to design a more effective purchasing–R&D interface and increase the success of NPD.     

Understanding the role of marketing-purchasing collaboration in industrial markets: The case of Russia

This study aims to investigate the role of interfunctional collaboration between marketing and purchasing functions in industrial companies. Interfunctional collaboration is considered as a measure of the internal alignment and partnership between departments in the firm, which in turn contributes to the creation of sustainable advantages via improved external partnerships and facilitating demand chain integration. We test the impact of customer orientation as well as the interactions between departments (specifically marketing and purchasing) as collaboration antecedents, and analyze the direct impact of marketing-purchasing collaboration on business performance. The model is tested on a sample of 148 industrial companies in Russia with two key respondents in each firm, incorporating the purchasing as well as the marketing perspective. The results show that marketing-purchasing collaboration mediates the effects of interfunctional interaction as well as customer orientation on business performance. Alternative model testing shows that the direct effects of these antecedent constructs on performance are non-significant in the context of Russian industrial companies.     

Significant Issues for the Future of Product Innovation

In recognition of JPIM's eleventh year of publication, the editor-in-chief solicited a series of thoughtful contributions from members of the editorial board. Members were asked to reflect upon changes and opportunities that they see influencing our profession during the coming decade. In this issue, Chris Voss examines our growing recognition of the interdependence of a variety of business processes: product innovation, product development, process innovation, technology acquisition, industrial design, total quality management, and quality function deployment. He supports the need to establish tighter linkages among these important elements of a successful new products program, which he labels "total innovation management." Like earlier contributions, this short essay is designed to introduce new perspectives. It is not essential that you agree with the recommendations, but we hope that you are stimulated as you reflect on the included issues.