Performance of Global New Product Development Programs: A Resource-Based View

Gaining a competitive edge in today's turbulent business environment calls for a commitment by firms to two highly interrelated strategies: globalization and new product development (NPD). Although much research has focused on how companies achieve NPD success, little of this deals with NPD in the global setting. The authors use resource‐based theory (RBT)—a model emphasizing the resources and capabilities of the firm as primary determinants of competitive advantage—to explain how companies involved in international NPD realize superior performance. The capabilities RBT model is used to test how firms achieve superior performance by deploying organizational capabilities to take advantage of key organizational resources relevant for developing new products for global markets. Specifically, the study evaluates (1) organizational NPD resources (i.e., the firm's global innovation culture, attitude to resource commitment, top‐management involvement, and NPD process formality); (2) NPD process capabilities or routines for identifying and exploiting new product opportunities (i.e., global knowledge integration, NPD homework activities, and launch preparation); and (3) global NPD program performance. Based on data from 387 global NPD programs (North America and Europe, business‐to‐business), a structural model testing for the hypothesized mediation effects of NPD process capabilities on organizational NPD resources was largely supported. The findings indicate that all four resources considered relevant for effective deployment of global NPD process capabilities play a significant role. Specifically, a positive attitude toward resource commitment as well as NPD process formality is essential for the effective deployment of the three NPD process routines linked to achieving superior global NPD program performance; a strong global innovation culture is needed for ensuring effective global knowledge integration; and top‐management involvement plays a key role in deploying both knowledge integration and launch preparation. Of the three NPD process capabilities, global knowledge integration is the most important, whereas homework and launch preparation also play a significant role in bringing about global NPD program success. Tests for partial mediation suggest that too much process formality may be negative and that top‐management involvement requires careful focus.     

Managing New Product Development Teams in a Globally Dispersed NPD Program

Globalization is a major market trend today, one characterized by both increased international competition as well as extensive opportunities for firms to expand their operations beyond current boundaries. Effectively dealing with this important change, however, makes the management of global new product development (NPD) a major concern. To ensure success in this complex and competitive endeavor, companies must rely on global NPD teams that make use of the talents and knowledge available in different parts of the global organization. Thus, cohesive and well‐functioning global NPD teams become a critical capability by which firms can effectively leverage this much more diverse set of perspectives, experiences, and cultural sensitivities for the global NPD effort. The present research addresses the global NPD team and its impact on performance from both an antecedent and a contingency perspective. Using the resource‐based view (RBV) as a theoretical framework, the study clarifies how the internal, or behavioral, environment of the firm—specifically, resource commitment and senior management involvement—and the global NPD team are interrelated and contribute to global NPD program performance. In addition, the proposed performance relationships are viewed as being contingent on certain explicit, or strategic, factors. In particular, the degree of global dispersion of the firm's NPD effort is seen as influencing the management approach and thus altering the relationships among company background resources, team, and performance. For the empirical analysis, data are collected through a survey of 467 corporate global new product programs (North America and Europe, business‐to‐business). A structural model testing for the hypothesized effects was substantially supported. The results show that creating and effectively managing global NPD teams offers opportunities for leveraging a diverse but unique combination of talents and knowledge‐based resources, thereby enhancing the firm's ability to achieve a sustained competitive advantage in international markets. To function effectively, the global NPD team must be nested in a corporate environment in which there is a commitment of sufficient resources and where senior management plays an active role in leading, championing, and coordinating the global NPD effort. This need for commitment and global team integration becomes even more important for success as the NPD effort becomes more globally dispersed.     

Success in Global New Product Development: Impact of Strategy and the Behavioral Environment of the Firm

Product innovation and the trend toward globalization are two important dimensions driving business today, and a firm's global new product development (NPD) strategy is a primary determinant of performance. Succeeding in this competitive and complex market arena calls for corporate resources and strategies by which firms can effectively tackle the challenges and opportunities associated with international NPD. Based on the resource‐based view (RBV) and the entrepreneurial strategic posture (ESP) literature, the present study develops and tests a model that emphasizes the resources of the firm as primary determinants of competitive advantage and, thus, of superior performance through the strategic initiatives that these enable. In the study, global NPD programs are assessed in terms of three dimensions: (1) the organizational resources or behavioral environment of the firm relevant for international NPD—specifically, the global innovation culture of the firm and senior management involvement in the global NPD effort; (2) the global NPD strategies (i.e., global presence strategy and global product harmonization strategy) chosen for expanding and exploiting opportunities in international markets; and (3) global NPD program performance in terms of shorter‐ and longer‐term outcome measures. These are modeled in antecedent terms, where the impact of the resources on performance is mediated by the NPD strategy of the firm. Based on data from 432 corporate global new product programs (North America and Europe, business‐to‐business, services and goods), a structural model testing for the hypothesized mediation effects was substantially supported. Specifically, having an organizational posture that, at once, values innovation plus globalization, as well as a senior management that is active in and supports the international NPD effort leads to strategic choices that are focused on making the firm truly global in terms of both market coverage and product offering. Further, the two strategies—global presence and global product harmonization—were found to be significant mediators of the firm's behavioral environment in terms of impact on performance of global NPD programs.     

Examining Proactive Strategic Decision‐Making Flexibility in New Product Development

While strategic flexibility is widely accepted as a prerequisite for a firm's success, its application in strategic decision making to a firm's new product development (NPD) activities is limited to only a few studies. Furthermore, many organizations still have difficulties creating proactive strategic flexibility in their decision‐making processes. Past research studies have largely ignored the relationship between strategic decision‐making flexibility and firms' resources and/or capabilities and success in the context of NPD. This study advances strategic flexibility by adopting the proactive approach of NPD decision‐making flexibility and by examining its role in translating organizational resources and capabilities into NPD success. This study draws upon the resources, capabilities (i.e., flexibility), and performance framework to show how proactive strategic decision‐making flexibility plays a crucial role in developing new products that can create new opportunities and comply with market needs. Therefore, this research aims to (1) develop an operational definition of strategic decision‐making flexibility and (2) propose a framework to understand the drivers and the subsequent new product performance outcomes of strategic decision‐making flexibility. This study adopts the proactive perspective of strategic decision‐making flexibility and defines it as a capability that enables firms to develop NPD strategies to respond to future changes in the environment. The analysis, based on data collected from 103 European firms, shows that that the effects of long‐term orientation, strategic planning, internal commitment, and innovative climate on proactive strategic decision‐making flexibility are significant. The findings indicate specifically the roles of both champions and gatekeepers, who infuse a firm's knowledge with a clear understanding of its resources, constraints, and market needs, thereby enhancing decision makers' motivation to behave proactively to precipitate transformation. The results also reveal a positive association between proactive strategic decision‐making flexibility and NPD performance outcomes. As such, strategic flexibility provides firms with an ability to adapt to changing environments and to create new market opportunities, product, and technological arenas, and to deliver successful new products. When firms open new market, technological, and product arenas, they can easily foresee their new demands and changes and successfully deliver new products, meeting customer needs/demands, and offering benefits such as quality, cost, and timeliness. This study therefore provides a valuable reference point for future research in strategic decision‐making flexibility in NPD.     

Benchmarking the Firm's Critical Success Factors in New Product Development

Managing new product development (NPD) is, to a great extent, a process of separating the winners from the losers. At the project level, tough go/no-go decisions must be made throughout each development effort to ensure that resources are being allocated appropriately. At the company level, benchmarking is helpful for identifying the critical success factors that set the most successful firms apart from their competitors. This company- or macro-level analysis also has the potential for uncovering success factors that are not readily apparent through examination of specific projects. To improve our understanding of the company-level drivers of NPD success, Robert Cooper and Elko Kleinschmidt describe the results of a multi-firm benchmarking study. They propose that a company's overall new product performance depends on the following elements: the NPD process and the specific activities within this process; the organization of the NPD program; the firm's NPD strategy; the firm's culture and climate for innovation; and senior management commitment to NPD. Given the multidimensional nature of NPD performance, the study involves 10 performance measures of a company's new product program: success rate, percent of sales, profitability relative to spending, technical success rating, sales impact, profit impact, success in meeting sales objectives, success in meeting profit objectives, profitability relative to competitors, and overall success. The 10 performance metrics are reduced to two underlying dimensions: program profitability and program impact. These performance factors become theX-and Y-ax.es of a performance map, a visual summary of the relative performance of the 135 companies responding to the survey. The performance map further breaks down the respondents into four groups: solid performers, high-impact technical winners, low-impact performers, and dogs. Again, the objective of this analysis is to determine what separates the solid performers from the companies in the other groups. The analysis identifies nine constructs that drive performance. In rank order of their impact on performance, the main performance drivers that separate the solid performers from the dogs are: a high-quality new product process; a clear, well-communicated new product strategy for the company; adequate resources for new products; senior management commitment to new products; an entrepreneurial climate for product innovation; senior management accountability; strategic focus and synergy (i.e., new products close to the firm's existing markets and leveraging existing technologies); high-quality development teams; and cross-functional teams.     

The drivers of success in new-product development

Why are some new products so successful and some companies outstanding performers in new-product development? The article identifies success factors from numerous research studies into NPD (new-product development) performance in industry. Three categories of success drivers have been defined. First, success drivers, that explain the success of individual new-product projects, are more tactical: They capture the characteristics of new product projects, such as certain executional best practices (building in voice-of-customer; doing the front-end homework; and adopting a global orientation for the project), and well as the nature of the product itself (a compelling value proposition, for example). A second category is drivers of success at the business level: They include organizational and strategic factors, such as the business's innovation strategy and how the firm makes its R&D investment decisions; how it organizes for NPD; climate and culture; and leadership The third category of success divers identified is the systems and methods the firm has in place for managing NPD, for example gating systems, Agile development approaches, and ideation methods. The details of each of these 20 success drivers, along with their managerial implications, are outlined in the article.     

Corporate Culture and Commitment: Impact on Performance of International New Product Development Programs

To achieve success in today's competitive environment, firms increasingly must develop new products for international markets. To this end, they must leverage and must coordinate broad creative capabilities and resources, which often are diffused across geographical and cultural boundaries. Recent writings in the globalization and in the new product development (NPD) literatures suggest that certain “softer” dimensions that define the behavioral environment of the firm—that is, the firm's organizational culture and management commitment—can have an important impact on the outcome of these complex and risky endeavors. But what comprises these dimensions and what type of behavioral environment scenario is linked to high performance in the international NPD effort of firms has not been articulated clearly. This research focuses on these softer dimensions, with the objective of understanding and idengifying their specific makeup as well as their relationship to the outcome of international NPD programs. Based on an integration of three literatures—organizational, new product development, and globalization—the present study develops a research instrument, comprising 18 behavioral environment measurement items as well as several outcome measures, that is administered to a broad empirical sample of goods and services firms active in NPD for international markets. Using empirical results from 252 international NPD programs, three key dimensions are idengified: (1) the innovation/globalization culture of the firm; (2) the commitment of sufficient resources to the NPD program; and (3) top management involvement in the international NPD effort. These dimensions are used to derive four clusters of firms, where each grouping represents a distinctly different behavioral environment scenario. In a preliminary analysis, it is ascertained that other aspects of the firm such as “degree of internationalization,” location of the respondent to the NPD center, and other company parameters do not form the basis of cluster membership. By linking measures of performance to the four behavioral clusters, findings are developed that clearly support this study's hypothesis that international NPD outcomes are associated with the softer behavioral environment dimensions. Scenario performance ranges from “very high” to “very low” and appears to be linked clearly to the dimensions studied. The lower‐performing firms tended to emphasize positively only one, or sometimes two, of the three dimensions. The “best performers” were found to be firms with a “positive balanced” approach to international NPD, where all three behavioral environment dimensions are supported strongly. In other words, firms in this scenario have an open and innovative global NPD culture, they ensure that sufficient resources are committed to the NPD program, and their senior managers play an active and involved role in the international NPD effort. Given this evidence of a direct link between behavioral environment and international NPD performance, the present study's findings suggest some important messages for managers charged with the development of new products for international markets.     

Perspective—Riding the Wind: Managing New Product Development in an Age of Change

New product development (NPD) has never been more challenging or rewarding than it is today. With the dawning of the new millennium, new product developers now find themselves in an “age of change,” the likes of which the world has never known. The rate of change is numbing, if not stupefying for many business people. With the winds of change blowing at near gale force intensity levels, this is clearly a time for NPD professionals to pursue new product and market strategies that are anchored on sound business fundamentals. This article begins with a brief review of the Product Development & Management Association's 1998 International Research Conference held in Atlanta. The theme for the conference was “Achieving Excellence in New Product Development and Management.” The article then offers a reflective look at seven NPD themes that could dominate new millennium business thinking and offer guidance to those seeking new product success. The article's first theme discusses why NPD is increasing in importance. The second theme outlines key NPD building blocks which NPD champions must bolster for new product success. The third theme explores the value in conceptualizing NPD output in items of “turns per decade.” The fourth theme champions the notion that continuous quality improvement is an integral part of NPD's contribution to a firm. The fifth theme explains why product elimination is an essential element in the innovation process. Theme number six reminds readers that fun and optimism are essential and commonly overlooked ingredients for sustaining NPD achievement. The seventh theme states that product development professionals build credibility and successful careers by delivering on promises made. Innovation opportunities embedded within each theme are explored from both firm‐level and individual developer‐level perspectives. In building the case for their themes, the authors initially provide a rationale for NPD's growing stature and importance. Then they suggest NPD strategies that firms can implement with high likelihood of success. The article concludes with suggested actions that individual developers can undertake to bolster their own careers while simultaneously strengthening the NPD profession.     

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.     

The Effects of Decentralization in Strategy‐Making and National Culture on NPD Portfolio Planning

Traditionally, the understanding among scholars and practitioners has been that a portfolio of NPD projects is the expression of a firm's strategy and thus it must support the strategy. In keeping with this view, the current study focuses on new product development (NPD) portfolio planning, which is defined as a firm's effort to formulate portfolio decisions using a defined innovation strategy. Connecting portfolio decisions to a defined innovation strategy has been associated with higher innovation success. Surprisingly, empirical research indicates that portfolio decisions do not always support the company's innovation strategy. Furthermore, during recent years, an increasing number of authors underscore the importance of responsiveness and adaptability in portfolio decision‐making. The current study addresses these two issues by examining a direct effect of decentralization in strategy‐making on NPD portfolio planning, and a moderating effect of decentralization in strategy‐making on the relationship between NPD portfolio planning and NPD program success. The study also examines the influence of national culture on the proposed relationships. The theoretical model was tested using data from the 2012 PDMA Comparative Performance Assessment Study. Findings indicate that NPD portfolio planning positively influences NPD program success. Also, results revealed inverted U‐shaped direct and moderating effects, respectively, of decentralization in strategy‐making on NPD portfolio planning, and of decentralization in strategy‐making on the relationship between NPD portfolio planning and NPD program success. With regard to the moderating effect of national culture, results indicate that uncertainty avoidance does not moderate the relationship between NPD portfolio planning and NPD program success. Nonetheless, we found significant moderating effects of individualism and power distance on the curvilinear relationship between decentralization in strategy‐making and NPD portfolio planning.     

Measuring Development Performance in the Electronics Industry

Within a year or so, the computer you purchased last month will probably be obsolete. For a manufacturer faced with such short product life-cycles, the performance of the new product development (NPD) function can determine whether the firm itself is relegated to the scrap heap. With such a close link between NPD performance and a firm's overall success, we need to do more than simply ensure that individual projects are well managed; we need to assess NPD's overall contribution to the company's business performance. Christoph Loch, Lothar Stein, and Christian Terwiesch develop a two-step model for measuring the performance of the NPD function. In this model, development output performance is the direct driver of business success. In other words, the output and the productivity of the NPD function directly affect a company's profitability and sales growth. Development output performance is driven by development process performance—that is, the operational management of development projects. Using data from the “Excellence in Electronics” project (a joint research effort of Stanford University, the University of Augsburg, and McKinsey & Co.), the two-step model is applied to a sample of 95 business units operating in three international electronics industries: consumer/small products, computers/communications, and industrial measurement/large systems. This analysis has two main objectives: identifying the key measures of development output performance and their contribution to business success; and identifying the important measures of development process performance and their contributions to development output performance. Development productivity, measured by development expense intensity, is the clearest predictor of business success. In other words, you can't buy a competitive advantage by pouring more money into R&D. Success comes from more efficient NPD, not simply outspending the competition. In the computer industry, design-to-cost has a positive effect on profitability growth, and design quality has a positive influence on sales growth. The factors underlying development process performance are much more dependent on the nature of competition in each industry. For example, because competition in the large systems industry still focuses primarily on technical competence, design-to-cost efforts in this industry lag behind those of the computer industry. Important measures of development process performance for all industry segments examined in the study include supplier involvement in the design, early prototyping, a team-based development organization, the use of team rewards, and value engineering.     

When Product Development Performance Makes a Difference: A Statistical Analysis in the Electronics Industry

Throughout the pages of JPIM and other publications, researchers and practitioners devote considerable effort to identifying the dimensions of new-product development (NPD) performance that relate most closely to business success. Although we may hope to unveil a set of universal truths about the relationship between NPD performance and business success, the relevant NPD performance measures appear to depend on the industry in which a firm competes. In fact, Christian Terwiesch, Christoph Loch, and Martin Niederkofler suggest that the overall relevance of NPD performance to business success depends on the firm's competitive market environment. In a study of 86 business units operating in 12 different electronics industries worldwide, they develop a market contingency framework for understanding the impact of NPD performance on a firm's profitability. Their study uses data from the “Excellence in Electronics” project, a joint research effort by Stanford University, the University of Augsburg, and McKinsey & Co. They describe market context in terms of three dimensions: market share, market growth, and external stability—that is, the average product life cycle duration in the market. Looking at all 86 business units in the study, they find that industry membership accounts for 23% of the variance in profits, with 18 percent of the variance determined by industry profitability and 5% by the three dimensions of market context. For the firms in the study, development performance has the most significant effect in slow-growth markets and in markets with long product life cycles. In these stable industries, low development intensity, product line freshness, and technical product performance increase profitability. The results indicate that NPD performance plays a much more important role for explaining the profitability of dominant firms than that of the low-market-share firms in the study. NPD performance explains 30% of the profitability variance among the high-market-share business units in the study, but none of the variance for the low-market-share business units. Although the profitability of the smaller firms in the study is driven primarily by the industry environment, these firms can compete on the basis of superior technical performance.     

The Role of Sales in NPD: An Investigation of the U.S. Health‐Care Industry

The new product development (NPD) literature emphasizes that the success of new products strongly depends on a firm's capability to understand customer needs and translate them into new products. Because of their close relationships with customers, salespeople are in the ideal position to connect the firm's NPD efforts to its customers. The extant literature on the role of sales in NPD focuses on either sales’ contribution to generating new product ideas or the adoption of new products by salespeople, while a systematic study of sales’ contribution during all NPD stages is lacking. In addition, the role of sales is typically studied in isolation, while in practice, the role of sales depends on the relationship between sales and marketing. This article addresses these gaps in the literature by reporting on an empirical investigation of the role of sales during the entire NPD process in the U.S. health‐care industry, taking into account the complexities of the sales‐marketing dynamic. The article is based on interviews with 21 sales and 15 marketing informants from the U.S. health‐care industry, both pharmaceutical firms (selling drugs to physicians) and device manufacturing firms. Our findings highlight how salespeople are distant from NPD process during the discovery stage. Salespeople are focused on selling to customers, and marketing keeps sales distant from the NPD process. During the development stage, sales is still only indirectly involved in NPD through its relationship with marketing. During commercialization, however, marketing takes the driver's seat and strongly involves sales in the various (pre)launch activities. But while salespeople are mostly indirectly involved in NPD, sales managers have a closer relationship with sales and are more directly involved. The findings also show how the involvement of sales is influenced by characteristics of the health‐care industry. Thus, this article contributes to our understanding of the role of sales in NPD by integrating theoretical perspectives from the sales‐marketing interface literature into the NPD literature.     

Antecedents and Consequences of Cross-Functional Cooperation: A Comparison of R&D, Manufacturing, and Marketing Perspectives

By breaking down the walls among the R&D, manufacturing, and marketing functions, techniques such as concurrent engineering and quality function deployment can pave the way to more effective new product development (NPD). Recognizing the benefits of such cross-functional efforts, practitioners and researchers have examined the interrelationships among various groups in the NPD process, paying particularly close attention to the R&D–marketing interface. However, manufacturing also plays an important role in NPD. Consequently, any thorough exploration of the relationship between cross-functional cooperation and NPD success must consider manufacturing's perspective. X. Michael Song, Mitzi M. Montoya-Weiss, and Jeffrey B. Schmidt provide such a balanced perspective in a study of cross-functional cooperation during NPD in Mexican high-tech firms. Notwithstanding the differing functional goals, objectives, and reward systems present in R&D, manufacturing and marketing, they hypothesize that all three functions recognize that successful NPD requires crossfunctional cooperation. In particular, they expect that representatives of these three functional groups will share similar perceptions, regarding both the drivers and the consequences of cross-functional cooperation. The survey results support the hypothesis that R&D, manufacturing, and marketing professionals share the same perceptions, regarding the drivers and the consequences of cross-functional cooperation. Respondents from all three groups view internal facilitators as the drivers of cross-functional cooperation. In other words, regardless of their functional area, the survey respondents believe that the strongest, most direct effects on cross-functional cooperation and NPD performance come from a firm's evaluation criteria, reward structures, and management expectations. Respondents perceive these internal facilitators as having a greater effect on cross-functional cooperation than that of external forces such as market competitiveness and technological change. In fact, contrary to expectations, the respondents do not view these external forces as having a significant effect on cross-functional cooperation or NPD performance. And contrary to persistent reports about friction between technical and nontechnical personnel, all three groups perceive a strong, positive relationship between cross-functional communication and NPD performance.     

Selecting Influential Business-to-Business Customers in New Product Development: Relational Embeddedness and Knowledge Heterogeneity Considerations

This study examines how the most influential business‐to‐business (B2B) customers, both existing and potential, involved in providing input to a new product development (NPD) project influence new product advantage. As the relational literature suggests, involving customers who have had close and embedded relationships with a firm's new product organization, such as a firm's largest customers, and customers who have been involved in past collaborative activities, should lead to the development of superior products. To the contrary, the innovation literature suggests that a firm may become too close to its large, embedded customers resulting in less innovation and in lower performing products. Also, the relationship between the heterogeneity of the knowledge of the most influential customers and new product advantage is examined. A contingency perspective is hypothesized such that the degree of product newness sought in the project moderates the effects of both relational embeddedness and knowledge heterogeneity on new product advantage. Empirical findings from a sample of 137 NPD projects support this contingency view. For projects seeking to develop incremental products, where the product being developed is an extension or an enhancement to an existing product, new product advantage tended to be higher in projects using embedded or homogeneous customers. For incremental projects, projects using less‐embedded or heterogeneous customers tended to have lower product performance. For projects following a highly innovative product strategy, new product advantage tended to be higher in projects that involved heterogeneous customers. These heterogeneous customers provided NPD projects with a diversity of perspectives, competencies, and experiences that fostered significant product innovations. The study contributes to the literature by empirically testing relational and innovation theories in NPD projects and by providing evidence on the importance of relational embeddedness and knowledge heterogeneity in selecting influential customers in NPD projects.     

The external knowledge sourcing process in multinational corporations

Research summary: We study the processes through which multinational corporations (MNCs) identify and make use of external sources of knowledge. Based on a seven‐year longitudinal study of one MNC's overseas scouting unit, we show how a simple one‐directional “channelling” process gradually gave way to three higher value‐added processes, labelled “translating,” “matchmaking,” and “transforming.” Building on these insights, we develop an integrative framework, defining the conditions under which each of the four processes is likely to transpire, and showing how the stock of social capital held by the scouting unit allows it to perform increasingly high value‐added activities over time. Implications for the MNC, external knowledge sourcing, and boundary‐spanning literatures are discussed. Managerial summary: Over the years, many multinational corporations (MNCs) have created overseas “scouting” units to tap into new ideas and opportunities in leading‐edge markets, but with mixed outcomes. In this study, we describe the development of a European telecom firm's scouting unit in Silicon Valley during the 2000s, focusing on the specific approaches used by the scouting managers to build effective connections between Silicon Valley start‐ups and the firm's business units back in Europe. We identify four distinct approaches for different types of opportunities, and we observe a clear sequencing of effort over time as the scouting managers built the necessary capabilities and credibility. Copyright © 2015 John Wiley & Sons, Ltd.     

Enabling open innovation in small‐ and medium‐sized enterprises: how to find alternative applications for your technologies

A critical success factor in the practice of Open Innovation is the timely identification of opportunities for out‐licensing a firm's technologies outside its core business. This can be particularly challenging for small‐ and medium‐sized enterprise (SMEs), because of their focussed business portfolio, specialized knowledge basis, and limited financial resources that can be devoted to innovation activities. The paper illustrates a quick and easy‐to‐use methodology for the identification of viable opportunities for out‐licensing a firm's technologies outside its core business. The method uses established TRIZ instruments in combination with non‐financial weighting and ranking techniques and portfolio management tools. It has been developed by the authors in collaboration with an Italian SME working in the packaging industry.     

PERSPECTIVE: Trends and Drivers of Success in NPD Practices: Results of the 2003 PDMA Best Practices Study*

Since 1990, the Product Development & Management Association (PDMA) has sponsored best practice research projects to identify trends in new product development (NPD) management practices and to discern which practices are associated with higher degrees of success. The objective of this ongoing research is to assist managers in determining how to improve their own product development methods and practices. This paper presents results, recommendations, and implications for NPD practice stemming from PDMA's third best practices study, which was conducted in 2003. In the eight years since the previous best practices study was conducted, firms have become slightly more conservative in the portfolio of projects, with lower percentages of the total number of projects in the new‐to‐the‐world and new‐to‐the‐firm categories. Although success rates and development efficiencies have remained stable, this more conservative approach to NPD seems to have negatively impacted the sales and profits impact of the new products that have been commercialized. As formal processes for NPD are now the norm, attention is moving to managing the multiple projects across the portfolio in a more orchestrated manner. Finally, firms are implementing a wide variety of software support tools for various aspects of NPD. NPD areas still seriously in need of improved management include idea management, project leadership and training, cross‐functional training and team communication support, and innovation support and leadership by management. In terms of aspects of NPD management that differentiate the “best from the rest,” the findings indicate that the best firms emphasize and integrate their innovation strategy across all the levels of the firm, better support their people and team communications, conduct extensive experimentation, and use numerous kinds of new methods and techniques to support NPD. All companies appear to continue to struggle with the recording of ideas and making them readily available to others in the organization, even the best. What remains unclear is whether there is a preferable approach for organizing the NPD endeavor, as no one organizational approach distinguished top NPD performers.     

Interaction Orientation and Product Development Performance for Taiwanese Electronics Firms: The Mediating Role of Market‐Relating Capabilities

While academics and practitioners are increasingly aware of the value of including the customer in new product development (NPD), processes for doing so effectively remain unclear. Therefore, this study explores the process through which a firm's interaction orientation (the ability to effectively interact with customers) influences product development performance. Drawing on the resource‐based view, this study develops a research model in which two market‐relating capabilities—market‐linking and marketing capabilities—mediate the effect of interaction orientation on product development performance. The validity of this model is examined by analyzing primary data gathered from 167 Taiwanese electronics companies. The model results provide support for a process link between interaction orientation, market‐relating capabilities, and product development performance, such that a firm's capabilities enable the conversion of customer‐based resources into productive new product outcomes. More specifically, the interaction orientation–product development speed relationship is mediated by both marketing and market‐linking capabilities, while the interaction orientation–product innovativeness relationship is partially mediated by marketing capability. That is, interaction orientation has indirect effects on product innovativeness and product development speed by strengthening both marketing and market‐linking capabilities that in turn improve product development performance. In addition, the results suggest that a firm's interactive rationality moderates the relationship between interaction orientation and marketing capability. Overall, this study enhances our understanding of how firms achieve superior product development performance by developing effective customer interaction. The findings of this study provide important strategic insights into NPD.     

Drivers and Pathways of NPD Success in the Marketing–External Design Relationship

Marketing often cooperates with external design in the new product development (NPD) process. While this relationship is crucial for NPD success and is a typical case of interorganizational collaboration between a business‐oriented function (marketing) and a creative partner (external design), a comprehensive understanding of this relationship remains lacking. As the NPD field evolves to open systems that have changed concepts like functional integration into interorganizational integration, this study contributes to NPD literature by developing an integrated conceptual framework leading to a model of drivers and pathways of NPD success in the marketing–external design relationship. Building on the literature on NPD, design management and relationship marketing, and on nine dyadic case studies from the luxury fragrance and cosmetics industry, a content analysis was conducted, enriched by a crisp‐set qualitative comparative analysis (QCA). This research confirms several NPD success drivers suggested in the literature and reveals three new drivers: source of design expertise, designer brand commitment, and number of NPD stages involving designer. The first new driver (source of design expertise) impacts the relationship process, which then impacts NPD success, while the other two drivers (designer brand commitment, and number of NPD stages involving designer) directly influence NPD success. The paper also identifies the pathways of NPD success, showing that contact authority and designer brand commitment are necessary conditions for NPD success, especially when combined with a high number of NPD stages involving designer or a previous relationship. The results also indicate that pathways of NPD success may differ according to the source of design expertise. From a managerial perspective, this study provides recommendations to managers to select the right design partner and choose from a range of drivers and pathways to devise more effective ways to work with external designers, thereby leading to NPD success.