Modeling New Product Screening Decisions

A variety of systematic procedures have been proposed to manage the task of evaluating potential new products at various stages of the development process. Kenneth Baker and Gerald Albaum have chosen to contrast the performance of several different types of screening models using the actual evaluations of 86 new product managers employed by 76 Fortune 500 companies. Managers were briefed on six lighting products actually developed by another manufacturer, and they evaluated all six products using 33 criteria. The screening models were used to predict the success or failure of each of the product concepts, and these predictions were compared to the actual results experienced by the original manufacturer. Thus, the study provides insights on the accuracy of screening models.     

Risk factors in accepted and rejected new industrial products

Faced with limited and increasingly expensive resources, managers in most industrial product companies are constantly confronted with the difficult task of choosing which new product opportunities to accept for development funding and which to reject. Their decision is made even more difficult because of both the high failure rates and high development costs typical of high-technology industrial products, both during development and after market introduction. This research identifies some critical dimensions of risk in potential new product opportunities. This is an important step toward identifying the most relevant dimensions of government incentives for research and development assistance, as well as an aid to managers attempting to recognize and deal with the greatest risks in the new product opportunities they face.     

Consequences of New Product Development Speed: A Meta‐Analysis

Five meta‐analyses previously have been published on the topic of new product development involving the concept of new product development speed. Three of these studies have investigated antecedents to new product development success, of which just one was new product development speed. The other two studies used new product development speed as the dependent variable, and analyzed antecedents to achieving speed. This article extends previous empirical generalizations in this domain by using a meta‐analytic methodology to understand the link between new product development speed and new product success at a more granular level. Specifically, it considers the relationship with different dimensions of success as measured overall or compositely, operationally (i.e., the process measures of decreasing development costs and proficiently managing market entry timing and the product measures of technical product performance and product competitive advantage), and relative to external success outcomes (i.e., customer based and financial success). While the results indicate that, in general, new product development speed is associated with improving success outcomes, those relationships may diminish or even disappear depending upon a number of methodological design decisions and research contexts. A subsequent meta‐analysis of the antecedents of development speed provides a more holistic picture of development speed. These results are broadly consistent with those produced by another recent meta‐analytic investigation of the issue. Together, these findings have important implications for academics pursuing further research in this domain, as well as for managers considering implementing a program to increase new product development speed.     

PERSPECTIVE: Cross‐Functional Integration in Spanish Firms

Published studies of new product development in Spain provide conflicting evidence regarding the role of cross‐functional integration in new product success. One possible explanation for these results is the use of idiosyncratic scales for measuring the level of cross‐functional integration. This study adopts the scale items used in a previous study and replicates that research process using data collected from managers of 134 Spanish companies involved in new product development. Findings confirm the appropriateness of these scales in a Spanish context and the importance of cross‐functional integration to new product success in Spanish firms. No support is found for the hypothesis that participative management is positively correlated with the level of cross‐functional integration. Cross‐functional integration is found to be negatively related to goal incongruity and positively related to top‐management support for integration.     

Do New Product Development Managers in Large or High-Market-Share Firms Perceive Marketing-R&D Interface Principles Differently?

In the quest for successful innovation, the importance of the R&Dlmarketing interface is virtually unquestioned. For many organizations, however, effective integration of technical and marketing functions is difficult, if not impossible. Despite seemingly widespread understanding of fundamental new product principles, some companies still manage to gain a larger share of the market than their competitors. This raises the question of whether managers in more successful companies have special insights into R&D'/'marketing interface principles that give them an edge over their competitors. To gain a better understanding of managers' perceptions of new product principles defined in the academic literature, Ted Haggblom, Roger J. Calantone, and C. Anthony Di Benedetto conducted a survey of 687 nonacademic members of the Product Development and Management Association. The basis for the survey was a set of 78 product management principles compiled from a search of more than 500 books and articles from various disciplines. From this survey, 14 of the 78 principles were selected as relevant to the study reported in this article. The principles discussed in this article involve such issues as resistance to change, short-term orientation, communication and trust between marketing and technical people, the effect of centralized decision-making on innovation, the importance of open communication flows, senior management's role in the R&D I marketing interface, and the necessity of a product champion. The primary quesstion addressed in this study is whether managers from successful companies perceive these principles differently from managers of less successful firms. The study provides partial support for the proposition that managers' perceptions of these new product principles depend on their company's success. In other words, the survey results suggest that managers in companies with higher market shares tend to agree more strongly with these principles than their counterparts in less successful firms. The study also explores the relationship between firm size and agreement with these principles of new product success. Specifically, the study assesses whether the perceptions of managers from smaller, more entrepreneurial companies differ from those of managers in larger companies. Although managers from small and large firms may view these principles from different perspectives, there were no statistically significant differences in the perceptions of managers from small and large firms.     

Company Competencies as a Network: The Role of Product Development

Product development managers and academics like to assure themselves and each other that new product development is one of the most critical areas of company competence and contributes positively to company success. But does top management agree? Because if they do not, the consequences will heavily influence the resource allocation to product development and career possibilities of new product developments manager. This study examines how top managers view the importance of product development relative to other central competence areas. Although asking managers about their perception is one way of evaluating the importance, its contribution to company success is another important measure. In this study, the impact of product development, relative to other important competence areas, is measured to assess further how critical product development is for overall company success.The authors investigate these matters in a survey of top managers in 513 Danish production companies. Ten areas important for achieving company objectives are identified. These are product development, market intelligence, production management, strategy and vision, sales, market responsiveness, promotion, internal co-operation, image, and supply management. Product development is rated a fairly important competence as it ranks number four, with sales, market responsiveness, and production management ranking numbers one to three. Yet a distressing negative impact on overall company success is found for product development proficiency, whereas success is positively related to production management, image, and differentiation of products. Further analysis reveals that product development contributes positively to success by enabling product differentiation and enhancing promotion proficiency. Influenced by and influencing many other competencies, product development is found to be a central competence.Results support a nonfunctional and broad perspective of how bundles of competences interact and impact on success and establish a positive overall contribution to product development.     

Navigating the new product development process

The quest for success in new product development (NPD) requires management to navigate complex processes. This study presents empirical evidence of the evaluative criteria used by well-experienced NPD managers from the UK and the Netherlands to control performance at different gates of the NPD process. The emerging usage patterns suggest that these criteria are aligned to the specific requirements of each stage in the process. This allows for detection of problems and initiation of adjustments that increase the chance for overall success of the new product. Based on these findings, recommendations are provided for managers to safeguard strategically the performance of their NPD efforts.     

Measuring New Product Success: The Difference that Time Perspective Makes

Management is often criticized for overemphasizing short-term profits at the expense of long-term growth. On the other hand, although numerous studies have explored the factors underlying new product success and failure, such studies rarely distinguish between short- and long-term success. In fact, little research has been conducted to explore the relationship between a company's time perspective and its choice of criteria for measuring new product success. For that matter, little consensus exists as to just what we mean by the term success. Expanding on work done by a PDMA task force on measurement of new product success and failure, Erik Jan Hultink and Henry S.J. Robben identify 16 core measures of new product success. In a survey of large Dutch companies, they explore managers' perceptions of new product success, hypothesizing that the importance attached to each of the 16 core measures depends on the company's time perspective. For example, they propose that criteria such as development cost and speed-to-market are more important in the short term, and return-on-investiment (ROI) is more important in the long term. The study also examines the type of market served, the innovation strategy, and the perceived innovativeness of the company's products. It is hypothesized that these factors will influence the importance the company attaches to the core measures of new product success. For example, it is expected that speed-to-market is probably more important for technological innovators than for fast imitators or cost minimizers. The findings support the hypothesis that the firm's time perspective influences the perceived importance of the core measures of success. For the short term, the respondents emphasize product-level measures such as speed-to-market and whether the product was launched on time. In the long term, the focus is on customer acceptance and financial performance, including attaining goals for profitability, margins, and ROI. Four factors are perceived as being equally important for short-term and long-term success: customer satisfaction, customer acceptance, meeting quality guidelines, and product performance level. Customer satisfaction was found to be the most important measure, regardless of a company's time perspective. Contrary to expectations, the perceived importance of the 16 core measures does not differ on the basis of the type of market, the innovation strategy, or the product's perceived innovativeness. In addition, the firm's functional orientation—technology push or market pull—does not affect the importance attached to the core measures of new product success.     

Customization of Product Technology and International New Product Success: Mediating Effects of New Product Development and Rollout Timeliness

Offering a standardized product for different country markets may enable companies to accomplish fast product development and multicountry rollout, whereas also enjoying substantial cost benefits. However, not all manufacturers serving multicountry markets can adopt a standardized product strategy. Where technological requirements, standards, and approval procedures vary substantially across countries, manufacturers invariably must adapt the product's technology to fit individual country requirements. Extensive customization may lead to longer new product development and rollout times and increase the likelihood of delays in the entire project, hence adversely affecting overall new product outcome. This study examines the relationships between product technology customization, the timeliness in completion of both the new product development effort and international market launches, and new product success. The study that reports on new product launches across European markets, is based on personal interviews with senior managers in 30 multinational companies. The authors show that timeliness in new product development and timeliness in rolling out the new product into different country markets mediate the link between product technology customization and overall new product success. Customization of product technology increases the likelihood of delays in the completion of new product development projects and multicountry rollout. Additionally, the timeliness in new product development mediates the relationship between product technology customization and timeliness in international new product rollout. This means that if the NPD project runs behind schedule, a fault‐free multicountry rollout program becomes increasingly unlikely, as problems encountered during product development spillover into the rollout program. The results imply that international product managers must assign greater priority to assessing the relative advantages of customizing new product technology and to consider the timing implications for both the NPD effort and subsequent rollout. Managers must set realistic schedules and allocate sufficient resources to ensure both tasks can be accomplished within planned time scales. Finally, managers should not underestimate the complexities and time involved in customizing new product technologies, including the completion of disparate country technical approval procedures.     

Innovative versus incremental new business services: Different keys for achieving success

In companies where new product development plays an important strategic role, managers necessarily contend with a portfolio of projects that range from high technology, new‐to‐the‐world, innovations to relatively simple improvements, adaptations, line extensions, or imitations of competitive offerings. Recent studies indicate that achieving successful outcomes for projects that differ radically in terms of innovativeness requires that firms adjust their NPD practices in line with the type of new product project they are developing. Based on a large‐scale survey of managers knowledgeable about new product development in their firm, this study focuses on new business‐to‐business service projects in an attempt to gain insights about the influence of product innovativeness on the factors that are linked to new service success and failure. The research results indicate that there are a small number of “global” success factors which appear to govern the outcome of new service ventures, regardless of their degree of newness. These include: ensuring an excellent customer/need fit, involving expert front line personnel in creating the new service and in helping customers appreciate its distinctiveness and benefits, and implementing a formal and planned launch program for the new service offering. Several other factors, however, were found to play a more distinctive role in the outcome of new service ventures, depending on how really new or innovative the new service was. For low innovativeness new business services, the results suggest that managers can enhance performance by: leveraging the firm's unique competencies, experiences and reputation through the introduction of new services that have a strong corporate fit; installing a formal “stage‐gate” new service development system, particularly at the front‐end and during the design stage of the development process; and ensuring that efforts to differentiate services from competitive or past offerings do not lead to high cost or unnecessarily complex service offerings. For new‐to‐the‐world business services, the primary distinguishing feature impacting performance is the corporate culture of the firm: one that encourages entrepreneurship and creativity, and that actively involves senior managers in the role of visionary and mentor for new service development. In addition, good market potential and marketing tactics that offset the intangibility of “really new” service concepts appear to have a positive performance effect.     

Factors Affecting New Product Success: Cross-Country Comparisons

Although considerable effort has been devoted to identifying the factors that contribute to new product success and failure, plenty of work remains to be done in this area. For example, many studies of this subject focus on companies in specific parts of the world (in particular, North America, Europe, and Japan). It remains to be seen whether the findings from these studies apply to the new product development (NPD) efforts of companies in other regions, let alone on a global basis. Sanjay Mishra, Dongwook Kim, and Dae Hoon Lee address this issue in a study of the factors that contribute to the success or failure of NPD efforts in South Korean firms. To explore the question of whether a global set of success factors can be identified, they compare their findings with those of similar studies conducted in Canada and China. Classifying these countries in terms of stages of economic development (with China and Canada at opposite extremes and Korea in the middle), they expect to find the greatest dissimilarities in their comparisons of China and Canada. Marketing managers from 144 Korean firms provided in formation about 288 successful and unsuccessful products. Their responses indicate that the factors most closely related to new product outcomes in Korea are market intelligence, product-firm compatibility, the nature of the new product idea (for example, whether the product idea was market derived, whether the product specifications were clearly defined by the marketplace), launch effort, and general characteristics of the new product venture (such as the product's innovativeness to the market and its technical complexity). Several of these factors were emphasized in studies of Canadian and Chinese NPD success, though respondents to those studies also highlighted the importance of the product offering and proficiency of formal NPD activities. Contrary to expectations, China and Canada show the greatest similarity among the three countries studied, in terms of the relative importance of the various NPD success factors. On the other hand, China and Korea are more similar in terms of the effects of the variables studied. In other words, if a variable is related to new product failure in Korea, that variable is most likely also related to failure in China. Although some similarities are evident among all three countries, the findings in this study do not point toward a single, global formula for NPD success.     

Information Use in New Product Development: An Initial Exploratory Empirical Investigation in the Chemical Industry*

In‐depth interviews with product developers and product development software providers in a previous qualitative phase of research uncovered eight general types of information that are used across the new product development process (strategic, project management, financial, market and customer, wants and needs, technical, competitor, and regulatory information) and three general approaches to managing information in the process (project‐centric, functionally oriented, and fully distributed). This paper presents a second phase of research trying to understand the role that managing knowledge and information plays in developing new products and achieving NPD success. This research phase empirically investigates use of the eight types of information across three general phases of the NPD process in the chemical industry using 81 mail survey responses from marketing and new product development professionals. Respondents were asked to indicate the degree to which each of the eight information types was used in each of the following general phases of new product development: the fuzzy front end, development, and testing and launch. The respondents also provided information on new product development success, information management system sophistication, and innovation strategy. This research makes several contributions to new knowledge. First, this research suggests that information management in product development is even more complex than initially posited in Zahay et al. (2004) , with each of the eight types of information identified being used in each of the three phases of development. Unexpectedly, for all but one type of information use is higher in later stages of the NPD process, even though use of several kinds of information early in the project is associated with increased success. Thus, managers may need to encourage teams to start gathering information from outside the firm earlier than is currently the norm. Second, the results suggest that more sophisticated information management systems are indeed associated with increased use of various different types of information, as expected. Third, more sophisticated information management systems are more highly associated with success than less sophisticated information management systems. These results are important, as most new product development information management systems are limited in their ability to handle complex and non‐quantitative information such as customer wants and needs, as well as strategic, competitor, and regulatory information. However, being able to transmit information on these issues is associated with increased firm performance and project success from these data. Thus, firms need to figure out how to improve their ability to manage and use non‐quantitative information more effectively.     

Should Firms Consider Employee Input in Reward System Design? The Effect of Participation on Market Orientation and New Product Performance

Will increasing employee participation in reward decisions increase new product performance by first increasing a firm's level of market orientation? Literature offers limited insight to the effects of listening to employees regarding reward system design and whether this may influence market orientation implementation and new product performance. This paper provides research to fill the gap by examining the relationship between participation‐based reward systems, market orientation, and new product performance. Based on expectancy theory, a conceptual model was developed suggesting that participation‐based rewards will increase market orientation by considering employees' desires regarding performance rewards. To test the model, a mixed method was used to collect data. First, in‐depth interviews were conducted with managers from 11 different firms to verify the proposed model. Then a multi‐industry sample of managers from 290 firms was surveyed to maximize generalizability of the results. Data were analyzed using structural equation modeling techniques to simultaneously fit the measurement and structural models. The findings show that market orientation significantly impacts objective new product performance and mediates the relationship between participation‐based rewards and objective new product performance. Participation‐based rewards positively affect market orientation but surprisingly affect new product performance negatively, while positively moderating the relationship between market orientation and new product performance. The results suggest that managers should include employee input in designing reward systems. However, managers should also be careful of how much input they allow employees in determining their rewards and goals as more input will improve market orientation or responding to information collected by, and disseminated throughout the firm, and that, in turn, will improve some types of new product performance. However, the direct effect of employee input can decrease new product performance suggesting that there may be a trade‐off between various success measures of new products developed and introduced by the firm.     

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.     

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.     

An investigation of the use of global, virtual, and colocated new product development teams

This paper presents the results of an investigation of differences between global, virtual and colocated new product development (NPD) teams. Specifically, we examined whether and how these three types of teams differed in terms of usage, challenges, and performance. A survey of PDMA members was undertaken to collect the data. Out of 103 firms participating in the survey, 54 had used or were using global teams for some of their NPD efforts. Overall, we found that the use of global teams in our respondent firms is rapidly increasing. Our respondents indicated that by the year 2001, approximately one out of every five NPD teams in their companies are likely to be global. However, our respondents also expect that their companies will be using multiple types of teams that is, global, virtual, and colocated, to develop their new products. Our findings also suggest that global teams generally face greater behavioral and project management challenges than either colocated or virtual teams. Global team performance is also lower than the performance of virtual or colocated teams. Are these challenges associated with poorer performance? In examining this question, our results suggest that greater project management challenges are associated with lower performance, for all three types of teams. Surprisingly, behavioral challenges were not associated with performance for any team type. Our results suggest that firms face different problems associated with managing each type of NPD team—global, virtual and colocated. To effectively manage each type of team may, in turn, require that companies and their managers employ different solutions to these different problems. Additionally, companies may find that the preparation they provide to their managers and team members to work in these different team environments may also need to be different. Further research is clearly needed to address these managerial implications.     

PDMA Success Measurement Project: Recommended Measures for Product Development Success and Failure

Success is not just elusive; it is also multifaceted and difficult to measure. A firm can assess the success or failure of a development project in any (or all) of many terms, including customer satisfaction, financial return, and technical advantage. To complicate matters, success may be measured not only at the level of the individual project, but also at the program level. With so many variables to consider and so many stakeholders involved, managers face a difficult challenge just deciding which measures are useful for measuring product development success. Recognizing that no single measure suffices for gauging the success of every product development project, Abbie Griffin and Albert L. Page hypothesize that the most appropriate set of measures for assessing project-level success depends on the project strategy. For example, the objectives (and thus, the success criteria) for a new product that creates an entirely new market will differ from those of a project that extends an existing product line. Similarly, they hypothesize that the appropriate measures of a product development program's overall success depend on the firm's innovation strategy. For example, a firm that values being first to market will measure success in different terms from those used by a firm that focuses on maintaining a secure market niche. To test these hypotheses, product development professionals were presented with six project strategy scenarios and four business strategy scenarios. For each project strategy scenario, participants were asked to select the four most useful measures of project success. For each business strategy scenario, participants were asked to choose the set of four measures that would provide the most useful overall assessment of product development success. The responses strongly support the idea that the most appropriate measures of project-level and program-level success depend on the firm's project strategy and business strategy, respectively. For example, customer satisfaction and customer acceptance were among the most useful customer-based measures of success for several project strategies, but market share was cited as the most useful customer-based measure for projects involving new-to-the-company products or line extensions. At the program level, firms with a business strategy that places little emphasis on innovation need to focus on measuring the efficiency of their product development program, while innovative firms need to assess the program's contribution to company growth.     

Best Practices for New Product Pricing: Impact on Market Performance and Price Level under Different Conditions

To date, research on new product pricing has predominantly been approached as a choice between market skimming and penetration pricing. Despite calls for research that addresses other complexities in new product pricing, empirical research responding to these calls remains scarce. This paper examines three managerial price‐setting practices for new products, i.e., value‐informed, competition‐informed, and cost‐informed pricing. By engaging in these practices, managers can develop and compare quantifications in order to attain an introduction price for the product. The authors draw on consumer price perception literature, Monroe's pricing discretion model, and numerical cognition literature to develop hypotheses about the impact of price‐setting practices on new product market performance and price level. By studying the effects on market performance and price level, the paper provides insights that may help explain the growth of new products and address the problems of underpricing. The hypotheses are tested in a management survey of 144 production and service companies. The results indicate which pricing practices are superior for the achievement of either higher market performance or higher prices in specific product and market conditions. Whereas value‐informed pricing has an unambiguous positive impact on relative price level and market performance, the results also suggest that in many cases engaging in value‐informed pricing is not enough. The effects of cost‐informed and competition‐informed pricing may differ depending upon the objective (market performance or higher prices), product conditions (product advantage and relative product costs), and market condition (competitive intensity). Engaging in inappropriate pricing practices leads to a decline in new product performance. Moreover, bad pricing practices make the positive effect of product advantage on the outcome variables disappear. The latter finding suggests that companies can jeopardize their efforts and investments in the new product development process if they engage in the wrong price‐setting practices. The findings imply that managers should consider different factors in new product pricing. First, when launching a new product, they should determine their explicit pricing objective, either stressing market performance or a higher price level. To determine the most appropriate pricing practices, however, they should next assess their situation in terms of product advantage, relative product costs, and competitive intensity. Together with the pricing objective, these conditions determine the best pricing practice. On a higher level, the findings imply that companies should invest in knowledge development in order to engage in the appropriate pricing practices for each product launch.     

Is the future static or dynamic? The role of culture on escalation of commitment in new product development

Escalation of commitment in new product development has been studied extensively for the last four decades but the impact of culture on the escalation phenomenon remains largely unexplored. This study investigates how culture impacts the decision to escalate or deescalate commitment to new products. Americans are analytic thinkers whereas Chinese tend to be holistic thinkers. When it comes to decision making, analytic thinkers focus on field independent and abstract factors and believe that future is linear and static, whereas holistic thinkers focus more on contextual factors and believe that future is dynamic and nonlinear. Hence, Chinese are more likely to escalate their commitment relative to Americans on receiving a negative performance report in the new product development process. A lab experiment using weekend MBA students and managers was used to test this underlying hypothesis. The findings confirmed that analytical thinkers use fewer factors than holistic thinkers in making new product decisions, and that Chinese managers are more likely to escalate their commitment relative to American managers. The decision to escalate or de-escalate was moderated by perceived product innovativeness.     

Sensitivity of new industrial product risk to R&D incentives

Incentives for research and development have frequently been a feature of government policy to increase the level or alter the direction of new product development activity in industrial product companies. Conceptually, these incentives may be viewed as "risk-modifiers they may encourage managers to undertake innovation projects where the potential payoffs may be attractive, but where some dimensions of risk are perceived as too high to proceed. This research explores the sensitivity of different dimensions of risk faced by managers to incentives of different kinds, at different levels. Implications are cited for different types of R&D incentives aimed at these different dimensionsof risk.