Exploring New Product Development Project Review Practices*

Most organizations use new product development (NPD) processes that consist of activities and review points. Activities basically solve problems and gather and produce information about the viability of successfully completing the project. Interspersed between the development activities are review points where project information is reviewed and a decision is made to either go on to the next stage of the process, stop it prior to completion, or hold it until more information is gathered and a better decision can be made. The review points are for controlling risk, prioritizing projects, and allocating resources, and the review team typically is cross‐disciplinary, comprising senior managers from marketing, finance, research and development (R&D), or manufacturing. Over the past four decades, research has greatly advanced knowledge with respect to NPD activities; however, much less is known about review practices. For this reason, the present paper reports findings of a study on NPD project review practices from 425 Product Development & Management Association (PDMA) members. The focus is on three decision points in the NPD process common across organizations (i.e., initial screen, prior to development and testing, and prior to commercialization). In this paper, the number of (1) review points used, (2) review criteria, (3) decision makers on review committees and the proficiency with which various evaluation criteria are used are compared across incremental and radical projects and across functional areas (i.e., marketing, technical, financial). Furthermore, the associations between these NPD review practices and new product performance are examined. Selected results show that more review points are used for radical NPD projects than incremental ones, and this is related to a relatively lower rate of survival for radical projects. The findings also show that the number of criteria used to evaluate NPD projects increases as NPD projects progress and that the number of review team members grows over the stages, too. Surprisingly, the results reveal that more criteria are used to evaluate incremental NPD projects than radical ones. As expected, managers appear to more proficiently use evaluation criteria when making project continuation/termination decisions for incremental projects; they use these criteria less proficiently during the development of radical projects, precisely when proficiency is most critical. At each review point, technical criteria were found to be the most frequently used type for incremental projects, and financial criteria were the most commonly used type for radical ones. Importantly, only review proficiency is significantly associated with performance; the number of review points, review team size, and number of review criteria are not associated with new product performance. Furthermore, only the coefficient for proficiently using marketing criteria was significantly related to new product program performance; the proficiency of using financial and technical information has no association with performance. Finally, across the three focal review points of the NPD process in this study, only the coefficient for proficiency at the first review point, (i.e., the initial screen) is significantly greater than zero. The results are discussed with respect to research and managerial practice, and future research directions are offered.     

Interpartner Legitimacy in the Alliance Development Process*

abstract We propose a framework to understand interpartner legitimacy in strategic alliances. Interpartner legitimacy is the mutual acknowledgment by the alliance partners that their actions are proper in the developmental processes of the alliance. We argue that interpartner legitimacy is needed for cooperation to achieve alliance objectives. We propose three types of interpartner legitimacy – pragmatic, moral, and cognitive legitimacy – and discuss the dynamics of these three types in the formation, operation, and outcome stages of alliance development. Further, we discuss the salience of interpartner legitimacy in different alliance types. Finally, we derive propositions for further research, and discuss strategies that alliance managers can adopt to develop interpartner legitimacy.     

Dynamics of international integration of government securities’ markets

This paper investigates the dynamics of international government bond market integration in six of the G7 economies over two decades leading up to the global crisis. It examines whether such integration had been significant; the extent to which integration at the short and long end of the yield curve differed; the nature of such integration; and the extent of the decoupling of the long rates from short rates. These issues are investigated using the rigorous smooth-transition copula-GARCH model framework. The results show that integration at the long end of the yield curve had been increasing, had become pronounced, and was significantly greater than at the short end. Decoupling between the short and long end of the yield curve was notable, with important implications for the efficacy of monetary policy in the period before the crisis.     

Implications of bank ownership for the credit channel of monetary policy transmission: Evidence from India

Using bank-level data from India, we examine the impact of ownership on the reaction of banks to monetary policy, and also test whether the reaction of different types of banks to monetary policy changes is different in easy and tight policy regimes. Our results suggest that there are considerable differences in the reactions of different types of banks to monetary policy initiatives of the central bank, and that the bank lending channel of monetary policy is likely to be much more effective in a tight money period than in an easy money period. We also find differences in impact of monetary policy changes on less risky short-term and more risky medium-term lending. We discuss the policy implications of the findings.     

Small Firm Capital Structure and the Syndicated Loan Market

We show that small firms using syndicated loans for their mid- and long-term financial needs have significantly higher leverage than firms that do not borrow in this market. This difference cannot be attributed to firm characteristics like the availability of growth opportunities, asset tangibility, R&D spending, profitability and net sales that are known to influence capital structure. We also find that the capital structure of other firms that borrow in the syndicated loan market is not different from those that do not. We show that already highly leveraged small firms are more likely to borrow in the syndicated loan market than other firms. The higher debt in the capital structure of small firms that rely on syndicated loans consequently can be attributed to the availability of capital rather than demand for capital, as shown more generally by Faulkender and Petersen (Rev Financ Stud 19(1):45?C79, 2006).     

EMERGING EQUITY MARKETS: GROWTH, BENEFITS, AND POLICY CONCERNS

Since the mid-1980s, stock market activity has increased substantiallyin many developing countries. This article first examines themain characteristics of emerging stock markets and illustratesthe evolution of equity prices in these markets during the lastdecade. It then discusses the reasons for the markets' growthand assesses the extent to which they have been affected bydomestic policies and external factors. The authors discussthe likely benefits of these markets, the effects any abruptcorrection in stock prices could have for the economy, and theways in which these markets can be made more efficient.      

The Effect of SEC-Ordered Suspensions on Returns, Volatility, and Trading Volume

This study evaluates the effect of SEC-ordered suspensions on securities' returns, volatility, and trading volume during 1963–1987. It is found that there is a permanent devaluation of these securities during the suspension. This result, however, is sensitive to the announced reason for the suspension. Both the variance and the trading volume are found to be substantially higher than normal in the presuspension period. This trend continues in the immediate postsuspension period. The variance and volume levels return to more normal levels only at a much later date. We conclude that trading suspensions are not associated with the immediate elimination of unusual market activity.     

Traffic law enforcement in Hyderabad, India

The aim of the study was to understand traffic law enforcement (TLE) carried out by the police to reduce non-compliance with traffic laws on the roads of Hyderabad city in India for 2001-2003. The Traffic Police database of citations issued to drivers who violated traffic laws in Hyderabad was analysed for the years 2001-2003 to describe the TLE activities of the police, to describe and compare the TLE activities for the different types of vehicles and to compare the TLE activities for the 3 years. The violations were classified in five categories - those related to driving, parking, vehicle, document and others; and TLE into safety and other TLE. A total of 646 161 traffic-law violations were registered in 2001, 904 447 in 2002 and 964 275 in 2003 for Hyderabad. Driving and parking violations were the most common violations registered in all 3 years, with parking violations slightly higher in 2001 (43.5%) and driving violations slightly higher in 2002 (35%) and 2003 (36.4%). Auto-rickshaws (three-wheel commercial passenger vehicles) accounted for the highest violations registered in 2001 (41.4%) whereas motorized two-wheelers had the highest registered violations in 2002 (35.5%) and 2003 (33.2%). Safety TLE activity (detecting and registering driving violations) was only one-third of all the TLE activity performed by the police in the 3 years, and disobeying traffic signals was the most common violation registered under safety TLE. Indian rupees 50 (US$1.1) were collected by way of a fine in 87% of the cases registered. Age and gender of the violators were not recorded in the database. These data can be used for planning, monitoring and evaluating TLE in Hyderabad. These can help identify traffic control and human factors that could lead to traffic noncompliance, and help identify priorities for improving road safety. These data indicate a need to enhance the safety TLE activity of the police, to make TLE more visible in Hyderabad, and to assess the effectiveness of the current legal action as deterrence to improve road safety. Recommendations to enhance TLE within the given resources of the police are made. More effort is needed towards systematic collection and analysis of data on TLE in India to facilitate long-term improvements in TLE for safer roads.     

Strategies to fight low-cost rivals

Companies find it challenging and yet strangely reassuring to take on opponents whose strategies, strengths, and weaknesses resemble their own. Their obsession with familiar rivals, however, has blinded them to threats from disruptive, low-cost competitors. Successful price warriors, such as the German retailer Aldi, are changing the nature of competition by employing several tactics: focusing on just one or a few consumer segments, delivering the basic product or providing one benefit better than rivals do, and backing low prices with superefficient operations. Ignoring cutprice rivals is a mistake because they eventually force companies to vacate entire market segments. Price wars are not the answer, either: Slashing prices usually lowers profits for incumbents without driving the low-cost entrants out of business. Companies take various approaches to competing against cut-price players. Some differentiate their products--a strategy that works only in certain circumstances. Others launch low-cost businesses of their own, as many airlines did in the 1990s--a so-called dual strategy that succeeds only if companies can generate synergies between the existing businesses and the new ventures, as the financial service providers HSBC and ING did. Without synergies, corporations are better off trying to transform themselves into low-cost players, a difficult feat that Ryanair accomplished in the 1990s, or into solution providers. There will always be room for both low-cost and value-added players. How much room each will have depends not only on the industry and customers' preferences, but also on the strategies traditional businesses deploy.