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.     

Product Innovativeness Dimensions and Their Relationships with Product Advantage,Product Financial Performance,and Project Protocol

A considerable body of research informs the relationship of product innovativeness with firm and environmental variables as well as the impact of product innovativeness on product financial success. While providing significant insight, the extant literature exhibits conflicting findings that raise questions as to how, specifically, product innovativeness contributes to product financial performance. This study ties together several streams of research related to the product innovativeness construct to enhance understanding of the product innovativeness—product financial performance relationship. The product innovativeness construct is deconstructed by conceptualizing the relationships among three dimensions of product innovativeness: technological discontinuity, marketing discontinuity, and customer discontinuity. Product innovativeness is distinguished from product advantage, and the relationships among product innovativeness dimensions, product advantage, and product financial performance are empirically tested. The results reveal that, indeed, product innovativeness consists of three separate dimensions that exhibit no or moderate correlations with product advantage. Furthermore, product advantage positively and marketing discontinuity negatively influence product financial performance. Finally, the study also examines how project protocols impact the product innovativeness dimensions. Project protocols, also known as product definitions, describe the general parameters a new product should exhibit (i.e., target segments, product functions and features, base technology, pricing, communication and distribution channels, and required resources) as well as the priorities of the general parameters. Because they guide product design and set priorities and have been found to be a dominant driver of product financial performance, project protocols are important. The present study enhances understanding of how project protocols influence the dimensions of product innovativeness, finding that project protocols positively impact product financial performance indirectly through product advantage and marketing discontinuity.     

Decomposing Product Innovativeness and Its Effects on New Product Success

Does product innovativeness affect new product success? The current research proposes that the ambiguity in findings may be due to an overly holistic conceptualization of product innovativeness that has erroneously included the concepts of product advantage and customer familiarity. This article illustrates how the same measures have often been used to assess product advantage with product innovativeness and product innovativeness with customer familiarity. These paired overlaps in measurement use are clarified in this research, which decomposes dimensions of product innovativeness along conceptual lines into distinct product innovativeness, product advantage, and customer familiarity constructs. To further support this decomposition, structural equation modeling is used to empirically test the distinctions. The measurement model supports the conceptual separation, and the path model reveals contingent effects of product innovativeness. Although product innovativeness enhances product advantage, a high level of innovativeness reduces customer familiarity, indicating that product innovativeness can be detrimental to new product success if customers are not sufficiently familiar with the nature of the new product and if innovativeness fails to improve product advantage. This exercise in metric development also reveals that after controlling for product advantage and customer familiarity, product innovativeness has no direct effect on new product profitability. This finding has strong implications for firms that mistakenly pursue innovation for its own sake. Consideration of both distribution and technical synergy as driving antecedents demonstrates how firms can still enhance new product success even if an inappropriate level of innovativeness is present. This leads to a simple but powerful two‐step approach to bringing highly innovative products to market. First, firms should only emphasize product innovativeness when it relates to the market relevant concepts of product advantage and customer familiarity. Second, existing technical and distribution abilities can be used to enhance product quality and customer understanding. Distribution channels in particular should be exploited to counter customer uncertainty toward newly introduced products.     

Synergy,environmental context,and new product performance: A review based on manufacturing firms

This study adopts a meta-analytic approach to review the effects of technology synergy, marketing synergy and environmental context on new product performance by aggregating the empirical evidence documented in studies published from 1979 to 2011. Based on this aggregation, the results from a structural equation analysis show that (a) increasing technology and marketing synergies improves new product performance and the performance effect of marketing synergy is stronger than that of technology synergy; (b) increasing technology synergy enhances product advantage, which increases new product performance, whereas increasing marketing synergy does not; (c) increasing technology and marketing synergies may hinder product innovativeness; and (d) improving product innovativeness increases new product performance through product advantage. These findings suggest that ignoring the intermediary roles of product advantage and innovativeness may lead to an incomplete understanding of the relationships among technology and marketing synergies, environmental context, and new product performance. The results also demonstrate that technological turbulence affects new product performance through product innovativeness and advantage; in contrast, market intensity has a direct effect on new product performance. Future studies can examine the relationships among synergy, product effectiveness, and new product performance by constructing a mediated moderation or moderated mediation framework based on the environmental context.     

A critical look at technological innovation typology and innovativeness terminology: a literature review

A plethora of definitions for innovation types has resulted in an ambiguity in the way the terms ‘innovation’ and ‘innovativeness’ are operationalized and utilized in the new product development literature. The terms radical, really‐new, incremental and discontinuous are used ubiquitously to identify innovations. One must question, what is the difference between these different classifications? To date consistent definitions for these innovation types have not emerged from the new product research community. A review of the literature from the marketing, engineering, and new product development disciplines attempts to put some clarity and continuity to the use of these terms. This review shows that it is important to consider both a marketing and technological perspective as well as a macrolevel and microlevel perspective when identifying innovations. Additionally, it is shown when strict classifications from the extant literature are applied, a significant shortfall appears in empirical work directed toward radical and really new innovations. A method for classifying innovations is suggested so that practitioners and academics can talk with a common understanding of how a specific innovation type is identified and how the innovation process may be unique for that particular innovation type. A recommended list of measures based on extant literature is provided for future empirical research concerning technological innovations and innovativeness.

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Dimensions of Knowledge: Comparing Asian and Western MNEs in China

This study compares knowledge and its performance effects between Asian and Western MNEs in the People's Republic of China. It examines knowledge differences along four dimensions including technological skills, organizational capabilities, marketing knowledge, and environment familiarity between two groups. The discriminant analysis of the survey data containing 178 MNE sub-units in China suggests that Asian MNEs are inferior in technological and organizational competencies but superior in host country-specific knowledge such as marketing tactics and environmental familiarity, compared to Western counterparts. Despite such differences, knowledge in all four dimensions is found to enhance financial returns and overall performance for sample firms no matter where they come from. The logic underlying the dominance of Asian MNEs in China's FDI, from economic, cultural, and institutional perspectives, is also highlighted.     

Beyond the firm's initial declaration: Are preannouncements of new product introductions and withdrawals alike?

Previous preannouncement research has primarily focused on product preannouncements regarding the firm's intention to introduce a new product and, for the most part, has ignored preannouncements that update the status of new product introductions (e.g., delays in launch dates and cancellation of new product programs). This study's goal is to examine if different factors influence preannouncements of new product introductions (NPIs) versus new product withdrawals or delays (NPWs). A model of six antecedents that could influence a firm's propensity to issue NPIs and NPWs is developed and tested using a sample of 265 CEOs and Presidents from manufacturers of new products. Three of the antecedents are organizational in nature; specifically, first mover predisposition, firm information interactivity, and reputation building. Also, the effects of two environmental constructs, industry innovativeness and competitive hostility, are examined. Finally, the model incorporates the effect of buyer involvement on a firm's propensity to issue NPIs and NPWs. The results indicate that NPIs and NPWs are very alike regarding their antecedent factors. Reputation building, defined as a firm's tendency to pursue a high profile leadership position within its industry, and buyer involvement are the primary motivators of a firm's propensity to issue both NPWs and NPIs. Future directions for research include the development of a normative preannouncement framework and the examination of NPIs and NPWs as nonadvertising forms of marketing communication targeted at numerous audiences such as buyers, employees, channel members, industry influencers (e.g., business and trade related press), and investors.     

Technological Innovativeness as a Moderator of New Product Design Integration and Top Management Support

Many war stories, as well as a number of empirical research studies, point to the value of design integration and top management support in new product development (NPD) efforts, where design integration is conceptualized as the coordination of product and process design activities performed by various organizational groups. However, some emerging evidence suggests that these aspects of program management are not equally valuable in all NPD contexts. Furthermore, the benefits of these approaches may not extend to all dimensions of NPD performance. This article addresses these issues as they relate to technological innovativeness. The author reports the results of a research study designed to (1) assess the direct contributions of design integration and top management support to several dimensions of NPD performance, and (2) identify potential moderating influences of technological innovativeness on these direct effects. A survey of 136 NPD projects drawn from firms representing most of the major U.S. manufacturing industries provides data for the study. The overall goals of the study were to amplify our understanding of management's role in NPD and to further the development of contingency theory explaining new product success. The results indicate that design integration is positively associated with higher design quality in NPD, but it is not significantly linked with better financial performance. In addition, design integration appears to be an important influence on achieving NPD time goals, but only in cases of high technological innovativeness. This result suggests that increased design integration produces its greatest impacts when development processes are full of uncertainty. Top management support is positively associated with better time‐based performance, design quality, and financial performance on the whole. However, a significant interaction effect suggests that high levels of top management support are ineffective in securing good financial performance in high technologically innovative environments. Other forces appear to be at work in these circumstances, making top management support less important. The article discusses the implications of these findings for management practice, a contingency‐oriented view of NPD processes, and future research.     

The impact of marketing capability, operations capability and diversification strategy on performance: A resource-based view

Using resource-based view (RBV) of the firm as a theoretical backdrop; we aim to find out the relative impact of a firm's functional capabilities (namely, marketing and operations) and diversification strategies (product/service and international diversification) on financial performance. We hypothesize that this linkage depends on the firm's relative efficiency to integrate its resource-capabilities-performance triad. Using archival data of 102 UK based logistics companies, we find marketing capability is the key determinant for superior financial performance. This study highlights that a market-driven firm is likely to have better business performance than a firm focusing solely on operational capabilities. Also, firms are better off when they focus on a narrow portfolio of products/services for the clients and concentrate on a diverse geographical market. Our findings provide a new perspective to model a firm's functional capabilities and diversification strategy on its financial performance and offer a benchmarking tool to improve resource allocation decisions.     

Market orientation and new-to-the-world products: Exploring the moderating effects of innovativeness, competitive strength, and environmental forces

Recently, there has been a keen research interest in exploring the relationship between market orientation and new product development. The empirical results, however, are mixed, and this means that we do not fully understand these linkages. Furthermore, research concerning the antecedents of new-to-the-world products has focused on the study of a single product. However, it is of obvious interest for organizations to understand what drives a firm's overall performance in the exercise of developing very innovative products. In this empirical study, the authors take a component-wise approach to investigate the effects of market orientation in new-to-the-world product innovation, and examine how other variables interplay with market orientation to affect product development. Firstly, the findings show that both customer and competitor orientations, together with interfunctional coordination, are important drivers of a firm's new-to-the-world product innovation. Secondly, the results indicate that the components of market orientation are differentially moderated by a firm's innovativeness, competitive strength, and also by environmental forces.     

New Product Strategies of Large, Dominant Product Manufacturing Firms: An Exploratory Analysis

Although researchers have expended considerable effort exploring the links between new product strategy and firm-level performance, most studies of this subject focus on small- to medium-sized firms. Compared to smaller firms, however, large companies typically maintain broader portfolios of products and have easier access to capital markets. Such fundamental differences suggest the need for closer examination of the relationship between new product strategy and the performance of large firms. Based on a study of 459 new products introduced during a 5-year period, Richard W. Firth and V. K. Narayanan profile the new product strategies of 18 large companies. They examine the methods used to acquire new products (internal development or external sources) as well as three dimensions of each firm's new product introductions: newness of embodied technology, newness of market application, and innovativeness in the market. In other words, these profiles identify the degree to which a firm's new product introductions involve core technologies and markets that are new to the firm, as well as the degree to which the market views these products as innovative. Because new product strategy is an investment decision, the study also examines the relationship between these strategic profiles and two facets of firm-level performance: risk and return. The study identifies five archetypes of new product strategy: Innovators, who produce innovative products by using their existing resources; Investors in Technology, who focus on expanding their technological base. Searching for New Markets, firms that venture into unfamiliar markets by introducing products closely aligned with those in their existing portfolios; Business as Usual, firms that rely on existing technologies and products to serve existing markets; and Middle-of-the-Road, firms content to introduce new products rated as low to moderate along all three dimensions of the strategic profile. For new products closely aligned with their core markets and technologies, the firms in this study typically rely on internal development. To introduce products involving new technologies or market applications, they turn to acquisition from external sources. Firms that emphasized market innovativeness in their new product introductions enjoyed higher returns than less innovative firms. And contrary to conventional wisdom, they gained this advantage without an accompanying increase in risk. In other words, continual innovation might provide a large firm with the means for achieving higher returns without higher risk.     

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.     

Measuring innovativeness for the adoption of industrial products

This study evaluates two traditional methods of segmenting industrial markets based on firm innovativeness. There are two distinct innovativeness measures used in the literature. The first innovativeness measure is based on the time of adoption of a single product. Segmenting an industrial market based in this measure was found to be predictive of a firm's relative time of adoption of related products. The second innovativeness measure is based on the usage of multiple products at a single point in time. Segmentation based on this measure captured the degree of adoption or usage of a new product. However, neither of these measures captured both the time of adoption and the degree of adoption constructs of innovativeness. Therefore, a third innovativeness measure is proposed here which is a hybrid of the two traditional measures. This composite measure captured both innovativeness constructs.     

The Effect of Multiknowledge Individuals on Performance in Cross‐Functional New Product Development Teams*

This study examines the effect of multiknowledge individuals (especially those possessing both marketing and technological knowledge) on performance in cross‐functional new product development teams. A survey of 62 cross‐functional teams shows that the proportion of multiknowledge individuals has an indirect positive effect through information sharing on product innovativeness and a direct positive effect on time efficiency of new product development teams.     

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.     

The use of information technology tools in new product development phases: Analysis of effects on new product innovativeness, quality, and market performance

Extant research has largely ignored empirically examining how information technology (IT) affects new product effectiveness. Using the knowledge-based theory as a foundation, this study examines if, and how, particular IT tools used in the discovery, development, and commercialization phases of the new product development (NPD) process influence NPD effectiveness dimensions, namely, market performance, innovativeness, and quality of a new product. Based on data collected from NPD managers in the US and Canada, the findings indicate that specific IT tools contribute to various measures of new product effectiveness differently. Moreover, the results show the positive effect of these IT tools in different phases of the NPD process. This suggests that with regard to NPD, a decompositional approach that examines the role of IT within each phase of the NPD process is best. Based on these findings, the authors discuss theoretical and managerial implications of the study and suggest paths for future research. Managerially, some interesting results of our study are that decision support systems, file transfer protocols, and concept testing tools would significantly improve NPD effectiveness regardless of the phase they are used.     

Two Sides of the Same Coin: How Do Different Dimensions of Product Program Innovativeness Affect Customer Loyalty?

Conventional wisdom holds that innovativeness has essentially positive performance implications. However, empirical research reveals mixed findings regarding customer‐related responses to innovation, as distinct dimensions—such as product newness and meaningfulness—may generate responses in different manners. This study introduces a multidimensional conceptualization of innovativeness at the program level, thereby enlarging the customary perspective by considering both positive and negative customer responses to innovativeness. Drawing on information economics, this study suggests that product program meaningfulness fosters customer loyalty, whereas product program newness undermines customer loyalty. In addition, the study examines mechanisms that might buffer the negative newness–loyalty relationship and explores enablers of the positive meaningfulness–loyalty effect by considering a brand's association with innovativeness and customer integration. Empirical support for the proposed effects comes from a multi‐industry sample with 180 triadic cases from business‐to‐business companies, which includes assessments from marketing, and research and development managers as well as customers. Moderated regression analysis was applied to test the hypotheses. The results indicate a negative effect of product program newness on customer loyalty and a positive effect of product program meaningfulness. Further, a brand's close association with innovativeness reduces the negative effect of product newness, and integrating customers into the value‐creating process fosters the loyalty effect of product meaningfulness. This study offers a potential explanation for the ambiguity created by equivocal empirical results regarding customer responses to innovativeness. The study also shows that offering more innovations does not necessarily make customers loyal. Instead, managers should mitigate the negative effects of product program newness.     

A Closer Look at Cross‐Functional Collaboration and Product Innovativeness: Contingency Effects of Structural and Relational Context

This study applies a contingency perspective to examine how the intra‐organizational context influences the relationship between cross‐functional collaboration and product innovativeness. It focuses on the role of (1) formal, structural factors directly controllable by top management decisions and (2) more intangible, relational factors as potential enhancements of the firm's ability to convert cross‐functional collaboration into product innovativeness. A study of 232 firms confirms the hypotheses, finding that the relationship between cross‐functional collaboration and product innovativeness is stronger for higher levels of decision autonomy and shared responsibility (structural context) and social interaction, trust, and goal congruence (relational context). In addition, a post‐hoc analysis using a configurational approach to organizational contingencies reveals that organizations' relational context is more potent than their structural context for converting cross‐functional collaboration into product innovativeness. The study's implications and future research directions are discussed.     

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.     

Measuring New Product Portfolio Innovativeness: How Differences in Scale Width and Evaluator Perspectives Affect its Relationship with Performance

Portfolio innovativeness is a central variable in innovation management. However, the impact of portfolio innovativeness on new product development (NPD) performance is unclear, which may partly be due to the construct's multifaceted nature. Different facets may reflect different degrees of innovativeness and may have different relationships with performance. In addition, firm members with different functional backgrounds may perceive and thus assess these facets differently, which again may influence the performance effect of portfolio innovativeness. Based on a sample of 746 CEOs and marketing as well as technology professionals from 117 firms and using Item Response Theory (IRT), a multifaceted scale of portfolio innovativeness, whose facets are able to cover the entire innovativeness spectrum, is developed. In addition, it is shown that the performance impact of portfolio innovativeness is dependent on the facets included in the scale, and on the specialization of the professional assessing the facets. Inverted U‐shaped performance effects are found when the scale covers the entire spectrum of innovativeness, and linear positive or zero effects with different types of more narrowly modeled scales. Inverted U‐shaped performance effects are also found when technology professionals assess the facets, while the assessments by marketing professionals lead to linear positive effects.