Entrepreneurial firms’ network competence,technological capability,and new product development performance

Successfully developing new products is critical to an entrepreneurial firm’s continued success. Based on the resource management model, this study aims to answer the key research question: how entrepreneurial firms leverage network competence and technological capability to enhance their new product development (NPD) performance in a turbulent environment. Using data collected from 134 entrepreneurial firms in China, we investigate the performance effects of network competence and technological capability, and the moderating effects of technological turbulence and market turbulence. Our findings show that network competence has a positive impact on NPD performance and technological capability plays a mediating role between network competence and NPD performance. Technological turbulence enhances the performance effects of network competence and technological capability; market turbulence advances the performance effect of network competence, but fails to exert significant negative impact on that of technological capability. We discuss managerial implications of our findings and offer directions for future research.     

Understanding the role of service innovation behavior on business customer performance and loyalty

Providing new services to customers gives firms a competitive advantage in the market. Consequently, firms strive to develop innovative service that delivers new value propositions to customers and leads to customer satisfaction and the acquisition of new customers. The authors investigate the relationship between the innovative behavior of service providers, business customer performance, and business customer loyalty in the safety industry. The study's results show that technology-oriented and co-creation-oriented innovative behavior leads to business customer performance. Business customer performance is closely related to recommendations and re-contracts. Moreover, the degree of safety involvement has a moderate effect between service innovation and business customer performance. The findings have important theoretical and managerial implications for service innovation for researchers as well as service providers.     

Analyzing the Effects of Market and Resource Orientations on Innovative Outcomes in Times of Turbulence*

Innovation and new product success are often a core precursor to superior performance. Although research has examined the resource‐based view (RBV) and market orientation (MO) individually, limited research has evaluated and compared their effect on innovation and new product success in one study. Furthermore, relative to MO, comparatively less research has been conducted to evaluate the relationship between organizational learning (OL) and the RBV to examine their effects on a firm's ability to innovate and succeed. The purpose of this paper is to investigate the role of environmental variables (i.e., market turbulence and technological turbulence) on the relationship between two strategic orientations and performance and to extend a previous study. Specifically, it aims to evaluate whether a focus on the customer or the firm will impact innovation, product quality, new product success, financial performance, and customer value in settings of varying environmental turbulence. Data were collected from more than 200 senior executives. LISREL was applied to evaluate the relationships under examination. Interaction effects were assessed using a nested goodness‐of‐fit strategy using a multiple‐group solution. Results depicted significant relationships between organizational learning and both resource and market orientations. Significant relationships also emerged between each strategic orientation and various performance indicators. Interaction effects were observed for market turbulence on customer value and market orientation as well as for resource orientation (RO) on innovation in times of high technological turbulence. The paper concludes with a review of theoretical and managerial implications to stimulate further debate. These results suggest that managers seeking innovation and new product success cannot afford to ignore the environment and do so at their peril. The provision of customer value is essential for positive financial performance. Thus, management needs to monitor environmental contexts so that they are able to adjust their investment in market orientation and the requisite processes that enable its implementation. Conversely, the effects of RO on performance are more robust across industry conditions, presenting an alternative avenue for management to achieve market superiority. The paper concludes with a review of theoretical and managerial implications to stimulate further debate.     

Customer and Supplier Involvement in Design: The Moderating Role of Incremental and Radical Innovation Capability

More and more firms are leveraging design as a resource to gain the upper hand in today's competitive business market. To this end, this study draws on the resource‐based view (RBV) of the firm to examine the relationship between customer and supplier involvement in the design process and new product performance. The research also extends the RBV to a contingency lens by introducing product innovation capability (incremental and radical) as a moderator to draw the boundary conditions of the impact of customer/supplier involvement in design on new product performance. Using data collected from Canadian high‐tech companies, the findings provide strong support for the hypotheses in that customer involvement in design helps new product performance under high incremental innovation capability but harms new product performance under high radical innovation capability. In contrast, supplier involvement in design was beneficial to new product performance under both high incremental and radical innovation capability. The managerial implications for the role of design under different innovation capabilities are discussed.     

Does importer involvement contribute to product innovation? The role of export market factors and intra-firm coordination

Relying on insights from resource dependence and information processing theory, this study analyzes the extent to which an importer's involvement influences product innovation at the industrial exporter firm. We consider two modes of involvement, collecting importer's feedback and importer integration in the product development effort. We propose that the relationship between importer involvement and product innovation is contingent upon the level of inter-functional coordination within the development firm, and contextual factors related to the export market. Data were collected from export companies participating in different international business-to-business markets. Results show that firms with high inter-functional coordination achieved higher leverage from importer feedback, but obtain no impact from importer integration in product development (PD). Contextual factors affect the relationship between importer involvement and product innovation: importer feedback affects product innovation in environments with intense competition and low technological turbulence. Importer integration in PD has a significant effect on product innovation in environments with low competitive intensity and high technological turbulence. This study contributes to a better understanding of the conditions that allow an exporter firm to create value through external relationships. Theoretical and managerial implications of these findings are discussed.     

It Won't Fit! For Innovative Products,Sometimes That's for the Best

The degree of overlap (i.e., fit) between product development organizations' resources and the product development projects pursued has powerful performance implications. Drawing on organizational learning theory and the resource‐based view, this research conceptualizes and empirically tests the interrelationships between the levels of fit, innovativeness, speed to market, and financial new product performance. After reviewing the research literature relevant to resource fit and new product performance, the level of innovativeness is posited to be an important moderating and mediating factor, which is validated by analysis of data gathered from 279 product developing firms. Technological fit has a negative direct effect on both technological and market innovativeness, while the use of existing marketing resources (i.e., a high degree of marketing fit) positively impacts technological innovativeness. This suggests, consistent with findings from market orientation research, that a deep, long‐held customer understanding can promote technological innovativeness. The moderating hypotheses proposed are also well supported: First, a high degree of marketing fit has a more positive impact on performance for market innovative products (e.g., products which address a new target market or use a nontraditional channel for the firm). Drawing on a deep customer understanding is more critical to performance for market innovative products. Conversely, the benefits of marketing fit are limited where market innovativeness is lacking. Interestingly, the counterpart moderating role of technological innovativeness on technological fit's performance effect is not significant; the level of technological innovativeness does not significantly impact the performance impact of technological fit. There are also significant moderating effects across dimensions. Our results show that the financial benefit of using existing marketing resources is lessened for technologically innovative products. Technological innovations necessitate drastic adaptation of marketing resources (i.e., channel and brand); firms drawing only on existing marketing resources for a technologically innovative new product will incur reduced profit. Similarly, the positive implications of using existing technological resources are limited for products which are highly market innovative. Generally, resource fit is seen to have an (oft‐overlooked) dark side in product development, though several of our findings suggest that marketing resources are more flexible than are technological resources.     

The Moderating Role of Tangibility in Synchronous Innovation in Services

A synchronous pattern of innovation as between technological and management innovation, for example, can help firms improve their performance. This article explores this idea with respect to servitizing companies that introduce service delivery innovation as a means of gaining competitive advantage. It finds that the degree of tangibility, an indicator of the firm’s position on the product–service continuum, affects whether and how managers recognize the need for management innovation when introducing service delivery innovation. Using a socio‐technical perspective in conjunction with insights from managerial cognition, the relationship between management innovation and two central types of service delivery innovation—technological and customer interface—is examined. Tangibility shapes the managerial cognitive structures that are related to the enterprise’s technical and social subsystems in a paradigm that is capable of demonstrating contrasting effects. Technological delivery innovation is related to management innovation in firms with high tangibility. Customer interface delivery innovation, on the other hand, relates to management innovation in firms with low tangibility. This study uses a sample of diverse firms with varying degrees of tangibility to provide support for this theory.     

The effects of buyer-supplier's collaboration on knowledge and product innovation

Drawing on marketing and management literature, this study investigates integration mechanisms between channel members. Specifically, the research framework is built upon the buyer-supplier gray-box integration approach, knowledge-based view, and agency theory. This study identifies and compares the effects of two gray-box integration mechanisms, namely supplier task involvement and joint planning, on two kinds of knowledge acquisition. I find that both supplier task involvement and joint planning positively influence manufacturers' product knowledge acquisition and end customer knowledge acquisition. Supplier task involvement has a stronger effect on knowledge acquisition than joint planning. The relationships between integration mechanisms and knowledge acquisition are contingent upon supplier incentives. Furthermore, this study also extends the literature by comparing the effects of two different kinds of knowledge on product innovation performance. Even though both product and end customer knowledge lead to better product innovation performance, end customer knowledge has a stronger effect than product knowledge on product innovation performance. Theoretical and managerial implications are discussed at the end.     

Managerial ties and firm performance in an emerging economy: Tests of the mediating and moderating effects

Although the literature documents the direct effects of managerial ties on firm performance, the empirical results are divergent and inconclusive. To explain these disparities, this study (1) develops and tests a model that establishes the role of external resource acquisition as a salient mediating mechanism through which managers’ business and political ties influence firm performance; and (2) examines the moderating role of environmental turbulence that further explains the impact of managerial ties on resource acquisition (the mediator). Results from a survey of 253 firms in China indicate that resource acquisition plays a partial mediating role in the relationships between the two sub-dimensions of managerial ties and firm performance. Environmental turbulence shows a curvilinear (i.e., inverted U-shaped) moderating effect on the business ties–resource acquisition relationship, whereas it dampens the positive effect of political ties on resource acquisition. Theoretical and managerial implications are discussed.     

Dimensions of uncertainty and their moderating effect on new product development project performance

In this study, we measure the dimensions of uncertainty, starting from the definitions constructed for and generally used in innovation projects. We then evaluate their direct and indirect effects on the performance of product and service development projects. Four dimensions of uncertainty are delimited with satisfactory validity and reliability, suggesting a differential moderating effect of the four types of uncertainty (technical and project uncertainty, market uncertainty, fuzziness and complexity) depending on the performance dimension (effectiveness and efficiency) and co‐moderator (project methods and human resource adequacy). Of the four dimensions explored, technical and project, and market uncertainty are true moderators and have the largest interactive effect, fuzziness has a strong direct effect on both performance dimensions whereas complexity weakly directly influences effectiveness. The latter two also influence the relations between performance and the factors related to human resources and project management methods.     

The moderating role of competence specialization in the effect of external R&D on innovative performance

This paper studies the functional specialization of SMEs’ technological competence and its moderating role in the effect of external R&D on their innovative performance. Technological competence consists of many functional dimensions such as basic research, product architecture, process construction, testing, and evaluation, which constitute a sequence of innovation tasks. The specialization of technological competence allows SMEs to utilize economies of specialization in R&D, enhance their bargaining power and appropriability conditions in the process of external R&D, and attract promising R&D partners. However, competence specialization may hamper SMEs’ capabilities to coordinate and integrate diverse external R&D projects. Using a sample of SMEs in Korean manufacturing industries, we find the following results. First, competence specialization positively moderates the effect of external R&D on SMEs’ innovative performance. Second, the positive moderating effect of competence specialization diminishes as the share of external R&D increases. Third, the moderating effect of competence specialization differs across industries depending on the degree of market dominance by a few large firms (i.e., market concentration) and the novelty of technologies pursued by SMEs in each industry.     

How Should Customers Be Integrated for Effective Interorganizational NPD Teams? An Input–Process–Output Perspective

Interorganizational new product development (NPD) teams with business customers are rapidly becoming more prevalent; yet the drivers of such cooperations at the team level remain unclear to practitioners and researchers alike. This study proposes an input–process–output model in which various characteristics of interorganizational teams affect NPD team effectiveness through the mediating construct of NPD team cooperation. Furthermore, various moderators, reflecting the supplier's dependence on the customers (customer power and customer participation) and the supplier's environmental uncertainty (market dynamism and technological turbulence), affect the strength of the underlying relationships. The results show that customer power positively affects the relationship between intrapersonal team characteristics and team cooperation. In addition, a negative moderation occurs in interpersonal characteristics. Customer participation exhibits opposing moderating effects. Regarding the supplier's environmental uncertainty, market dynamism and technological turbulence strengthen the relationships under consideration.     

Inconclusive Innovation “Returns”: A Meta‐Analysis of Research on Innovation in New Product Development*

This research on studies that have empirically examined the construct innovation provides a meta‐analysis of the marketing, management, and new product literatures. The study extends previous meta‐analytic works by drawing on 70 independent samples from 64 studies (published from 1970 to 2006) with a total sample size of 12,921. The overall objective is to propose a synthesized model that includes technological turbulence, market turbulence, customer orientation, competitor orientation, organizational structure, innovation, and new product performance. Six baseline hypotheses were developed and tested. The goal is not only to derive empirical generalizations from these literatures but also to investigate sources of inconsistencies in the findings. Four substantive and two methodological artifacts were tested to determine whether they moderate model relationships (i.e., whether the effect sizes differ for any of the six baseline hypotheses). The potential moderators were project versus program level of analysis, the nature of change required by the innovation, service versus product, country of the data's origin, continuous versus categorical measurement, and the number of scales used. From a theoretical perspective, the results corroborated the resource‐based view framework regarding the determinants and the performance outcome of innovation. New product performance (the performance outcome) is a direct consequence of innovation, and this effect is stronger when the data are collected from Western countries. This relationship holds regardless of whether the level of analysis is the new product program versus project or whether the innovation is a product or a service, a robust result relevant to researchers and managers alike. As for the determinants of innovation, the results were as follows. While market turbulence is overall not a direct antecedent to innovation, technological turbulence is overall positively related (especially when market discontinuities are considered or when the data are collected from Asian countries). Customer orientation encourages new product innovation overall, but especially at the program (as opposed to project) level in Western countries. The effect of competitor orientation is also positive. The results for either orientation construct or either turbulence construct held whether the level of analysis was project versus program or whether services versus products were examined. However, the relationship of mechanistic organizational structures to innovation, although positive in the overall sample, did vary by product (positive) versus service (negative).     

Incentive Mechanisms,Entrepreneurial Orientation,and Technology Commercialization: Evidence from China's Transitional Economy*

Scholars view entrepreneurial orientation as an essential element of high‐performing firms. The extant research has focused extensively on the construct development related to and performance implications of entrepreneurial orientation. Prior research has also identified the significant positive impact of entrepreneurial orientation on technology commercialization. The research community has, however, yet to examine critical antecedents of entrepreneurial orientation and to investigate relevant antecedents and consequences of entrepreneurial orientation in transitional settings such as that of China. Most Chinese firms are embracing significant changes in governance incentive mechanisms as China deepens the economic reform. The extant literature provides limited insight as to how incentive mechanisms such as chief executive officer (CEO) ownership and turnover may affect firm entrepreneurial orientation in China's transitional setting. Furthermore, given the significant changes and uncertainty in the market place, China provides an ideal laboratory to examine the influence of technological turbulence on the relationship between entrepreneurial orientation and technology commercialization. Aimed at filling in these glaring gaps, this study develops a conceptual model, with institutional theory as its underpinning, to examine the relationships among governance incentive mechanisms, entrepreneurial orientation, technological turbulence, and technology commercialization. The empirical results from a sample of 607 Chinese firms reveal several important findings. The CEO ownership has a significant positive effect on entrepreneurial orientation, and CEO turnover frequency has an inverse U curvilinear impact on entrepreneurial orientation. Furthermore, entrepreneurial orientation positively affects technology commercialization, with technological turbulence positively moderating this relationship. This study makes several important contributions. First, the present article brings into sharper focus the differing impacts of CEO ownership and CEO turnover on entrepreneurial orientation. The theoretical deliberation and empirical testing offer useful insights into the formation process of entrepreneurial orientation. Second, the examination of the moderating effect of technological turbulence provides additional richness to the extant literature. In addition, different from prior studies, this study was conducted under China's transitional economy context. By integrating unique institutional arrangements and the turbulent technological environment, two key characteristics of China's transitional economy setting, the study broadened and deepened understanding of key antecedents and consequences of entrepreneurial orientation. The article also discusses managerial implications of the findings and suggests directions for future research.     

Customer interactivity and new product performance: Moderating effects of product newness and product embeddedness

Understanding customer needs which drive significant product innovation is particularly challenging for new product development (NPD) organizations. Research has addressed how organizations benefit from interacting with customers, but more conceptualization is needed into the dimensions of the customer interaction process. In a business-to-business (B2B) setting, customer interactivity is conceptualized as a multi-dimensional construct consisting of bidirectional communications, participation, and joint problem solving during NPD projects. Drawing upon organizational information processing theory, customer interactivity is hypothesized to be positively related to customer information quality when developing highly innovative products, but not when developing modifications or extensions of existing products. Another condition affecting this relationship studied is the embeddedness of the new product in the customer's business environment. Customer interactivity is hypothesized to be positively related to information quality for highly embedded product, but not for low embedded product. Results from a sample of NPD organizations in several B2B industries support these hypotheses. The study contributes to the marketing literature and practice by identifying important dimensions of the customer interaction process which lead to more proactive organizations, and identifying two moderating conditions of the customer interactivity and NPD performance relationship.     

Small business industrial buyers' price sensitivity: Do service quality dimensions matter in business markets?

One of the major obstacles to effective pricing emanates from difficulties experienced in predicting business buyers' price sensitivity. With a view to obviating these obstacles, this study examines the effect of five key physical distribution service quality dimensions on price sensitivity from the perspective of small and medium retail buyers. Based on a survey of 233 cellular phone retailers in China, the authors articulate how the five salient service quality dimensions exert either direct effects on price sensitivity or indirect impacts through perceived value and customer satisfaction. Theoretical and managerial implications are also provided for effective retailer relationship management, profitability improvement, and customer segmentation in distribution channels.     

Differential Potency of Factors Affecting Innovation Performance in Manufacturing and Services Firms in Australia

Whether or not industrialized nations are experiencing a fundamental shift from a manufacturing- to a service-based economy may be a matter of debate. However, the service sector is clearly growing at an explosive rate, particularly in comparison with manufacturing. With this in mind, we need to better understand how the successful development of new services differs from that of new products. Such understanding requires identifying the critical success factors for new service development (NSD), as well as contrasting them with the factors underlying successful new product development (NPD). Kwaku Atuahene-Gima describes the results of a study comparing the innovation activities of Australian services firms and manufacturers. The study explores managers' perceptions of the factors necessary for successful NSD and NPD. In addition to comparing the differing perceptions of managers of services firms and manufacturers, the study highlights implications of these differences for managers striving for improved NSD. Services and manufacturing firms focus on similar factors for improving innovation performance. However, the relative importance of those factors depends on the type of firm. The critical factor for services—the importance accorded to innovation activity in the firm's human resource strategy—ranks third in importance for manufacturers. Manufacturers focus primarily on product innovation advantage and quality. In contrast, service innovation advantage and quality ranks third in importance for service firms. Surprisingly, technology synergy is found to have a negative effect on new service performance. If a new service is a close fit with a firm's current technologies, competitors will likely be able to quickly imitate the new service. As a result, NSD efforts based on technology synergy will not provide a competitive advantage. Compared to manufacturers, successful service firms must place greater emphasis on the selection, development, and management of employees who work directly with the customer. Through effective self management, these contact personnel shape the quality of the customer relationship. In addition, their close contact and potentially long-term relationships with customers make such employees an important source of new ideas in the firm's NSD process. Such relationships also cast contact personnel in a make-or-break role in the launching of new services.     

Managerial trust in new product development projects: its antecedents and consequences

This research examines the impacts of relationship-based antecedents (e.g., procedural justice) and character-based antecedents (e.g., transactional leadership) on managerial trust in new product development (NPD) teams. The moderating impact of environmental turbulence on team performance is also investigated. Using data from 107 NPD projects in Turkey, we find that procedural justice, distributive justice, and transformational leadership are significantly related, and conflict is negatively related to managerial trust. We also find that managerial trust is significantly related to product success and team learning under both high and low environmental conditions, but it is significantly related to speed-to-market only under high-turbulent conditions. We conclude by discussing the theoretical and managerial implications.     

NSD Processes and Practices in Experiential Services*

This paper examines new service development (NSD) in a distinctive set of services: experiential services. Organizations delivering experiential services place the customer experience at the core of the service offering. They focus on the experience of customers when interacting with the organization rather than just the functional benefits following from the products and services delivered. Increasingly, organizations are recognizing that managing customer experiences is a powerful way of differentiating from competitors, establishing emotional connections, and increasing customer loyalty. Studying experiential services sheds light on this highly intangible type of services and, by representing an extreme end of the service spectrum, can advance the knowledge on the wider area of new product and service development. This paper addresses three research questions: (1) What are the processes and practices used in the development and design of experiential services? (2) How are these processes and practices similar to or distinct from established NSD practices? (3) How do these findings reflect on the wider area of NSD? The study concentrates on five dimensions of NSD: (1) the process; (2) market research; (3) tools and techniques; (4) metrics and performance measurement; and (5) organization. For each of these areas propositions are formulated and refined with empirical data. Using the case research methodology, empirical data were collected in 17 case companies: experiential service providers, design agencies, and consultancies known for focusing on the customer experience. The main method of data collection was interviews with those involved in experiential service design, such as founders, executives, or experienced designers. The case data revealed a number of practices specific to experiential services. These include a strong emphasis on gathering customer insights, in several cases obtained through empathic research and ethnographic research techniques. Other specific practices for experiential services include mapping customer journeys or touchpoints and storytelling. The case study companies also revealed a trade‐off between relatively formal, tight methodologies and more flexible, loose methodologies in NSD. More research is required to investigate the contingency factors surrounding tight or loose methodologies. The results also revealed the use of more broadly used NSD practices, such as a systematic NSD process, multiple performance measures, cross‐functional teams, and front‐line involvement. The observations from this study are captured in a set of seven propositions concerning NSD in experiential services. Reflecting on NSD in general, this study highlights the important role of service process innovation compared with service product innovation and the importance of continuous innovation requiring NSD processes and practices that are more flexible, iterative, and nonlinear. The study also supports the argument that different types of services may require different NSD processes and practices.     

When Is Open Innovation Beneficial? The Role of Strategic Orientation

Various scholars have accomplished a great deal to better understand open innovation effectiveness. Case studies have detailed its performance effects, while other studies showed the effectiveness of an aspect of open innovation, such as collaboration with third parties, external technology commercialization, and cocreation. Though most studies report a positive relation between open innovation and innovation performance, some studies indicate possible negative effects. This has resulted in a call for research on what kind of organizational context suits open innovation best. This study therefore addresses two questions: (1) does performing open innovation activities lead to increased innovation performance, and to which aspects of innovation performance is open innovation most strongly related? (2) what is the moderating impact of various kinds of strategic orientation on the relation between open innovation and innovation performance? In this study, we investigate three types of strategic orientations: entrepreneurial orientation, market orientation, and resource orientation. In a survey among 223 Asian service firms, we first develop and test a comprehensive measurement scale for open innovation that captures the entire range of open innovation activities, including outside‐in activities, inside‐out activities, and coupled activities. The final scale comprises of 10 items and indicates to what extent a firm has implemented open innovation activities. Next, we study the relation between open innovation and innovation performance. The results indicate that performing open innovation activities is significantly and positively related to all four dimensions of innovation performance: new product/service innovativeness, new product/service success, customer performance, and financial performance. The impact of open innovation is not limited to a particular aspect of innovation performance; it positively affects a broad range of innovation performance indicators. Though open innovation is positively related to all four dimensions of innovation performance, the effect sizes are not equal. The impact on new service innovativeness and financial performance is relatively stronger. Regarding the influence of a firm's strategic orientation, we find that all significant moderation effects are positive. This suggests that, in general, having a more explicit strategic orientation enhances the effectiveness of open innovation. When comparing the three strategic orientations, entrepreneurial orientation strengthens the positive performance effects of open innovation significantly more than market orientation and resource orientation do. In turn, market orientation has a significantly stronger moderation effect than resource orientation. These findings provide empirical evidence of the context dependency of open innovation. Especially an entrepreneurial orientation, which is associated with proactive and entrepreneurial processes, seems to create a fertile setting for open innovation.