Analyses of U.S. and Japanese Management Processes Associated with New Product Success and Failure in High and Low Familiarity Markets

As detailed in the pages of JPIM and other publications, considerable research effort has been devoted to identifying the preconditions for new product success. Studies of Japanese and U.S. new product development (NPD) practices have shown that such factors as sales and marketing expertise, technical expertise, decentralized decision making, R&D/marketing integration, project manager competency, and support from senior management can play key roles in influencing new product success. As William Souder and X. Michael Song point out, however, previous studies have not examined Japanese management practices across a range of environments. They also suggest that the similarities and differences between U.S. and Japanese NPD practices require more in-depth exploration. To help address these issues, they describe the results of a study involving 15 U.S. firms and 15 Japanese firms. Each participating firm provided information about two successful products and two unsuccessful products. Their conceptual model groups the various factors that influence new product success into three general classes: NPD climate, expertise, and management functions. In this model, a firm's level of familiarity with its target market moderates these influences. For example, greater expertise may be necessary to succeed in an unfamiliar market. Each participating firm in the study provided information about one successful product and one failure targeted for high familiarity markets; the other two products from each firm were targeted for low familiarity markets. The U.S. and Japanese models developed in this study exhibit some marked differences from one another. In a familiar market, the U.S. model emphasizes sales and marketing expertise and competent project managers. Under conditions of low market familiarity, this basic model is supplemented with high degrees of R&D/marketing integration, senior management involvement, and decentralization. In this way, the U.S. models reflect a degree of flexibility in adapting the approach to match the prevailing market conditions. In contrast, the two Japanese models of new product success (under low and high familiarity) point to a more invariant system. In other words, the findings from this study reinforce the notion that successful management of NPD requires careful consideration of the firm's environment. Practices that have been proven successful in a particular culture and market environment may not be directly transferable to another setting.     

Success Through Customer-Driven New Product Development: A Comparison of U.S. and New Zealand Small Entrepreneurial High Technology Firms

Although high-tech, entrepreneurial firms may be small in size, they often play a large role in developing innovative products and thus spurring economic growth. Managers from firms of all sizes may gain useful insights by examining the new-product development (NPD) practices of these small, technology-based firms. And in an era of increasingly global competition, those managers can benefit from understanding the NPD practices of firms from various countries. William Souder, David Buisson, and Tony Garrett contribute to that understanding by describing the results of a study that compares the relative NPD proficiency of small, technology-based firms in the United States and New Zealand. The firms participating in the study (26 from the U.S. and 29 from N.Z.) operate in rapidly growing, highly competitive markets characterized by evolving customer needs. The participating companies share similar goals: creating technically superior products with unique features for emerging markets, with the ultimate goal of becoming the product and market leaders within their respective industries. Despite these similarities, the study reveals several important differences between the U.S. and N.Z. participants. Overall, the N.Z. respondents had higher levels of NPD performance than those of their U.S. counterparts. In particular, the relationship marketing and customer-focused NPD practices of the N.Z. firms set them apart from the U.S. firms. Top-level managers from the N.Z. participants report higher levels of satisfaction than their U.S. counterparts with the results of their NPD efforts. The results of the study indicate that repondents from the two countries differ in terms of the focus of their NPD mangement systems and the manner in which they strive to achieve success. For the U.S. firms in the study, their NPD management systems focus on the characteristics of the project manager. The N.Z. respondents place greater emphasis on marketing skills and NPD proficiencies. The results suggest that the higher levels of NPD performance acheived by the N.Z. firms in the study arise from greater insights into their users' needs, together with better capabilities for acting on those insights.     

Research Note: A Comparison of the Financial Characteristics of U.S. and Japanese Electronics Firms

The growing U.S. trade deficit with Japan has provided the motivation for a number of comparative studies of U.S. and Japanese business firms in recent years. In this study, the financial characteristics of U.S. and Japanese electronics firms are compared using multivariate analysis of variance (MANOVA) method. The findings indicate that the financial characteristics of U.S. and Japanese electronics firms are significantly different.     

Management Practices Influencing New Product Success and Failure in the United States and Scandinavia: A Cross-Cultural Comparative Study

This comparative cross-cultural study of United States (U.S.) and Scandinavian telecommunications products found both similarities and differences in the successful new product development (NPD) management practices within the U.S. and Scandinavia. Proficiencies in conducting development, marketing, and customer service activities were identified as important to NPD success in both Scandinavia and the U.S. However, differences between the U.S. and Scandinavia were found with regard to the importance of research and development/marketing integration and project manager competency, with these aspects being more important to NPD success in the U.S. Additional differences between Scandinavia and the U.S. were found in the successful NPD strategies for entering familiar versus unfamiliar markets, with the Scandinavian systems being more oriented toward product design strategies. The overall results characterized U.S. NPD management systems as product-market oriented, task focused, and project management driven. By comparison, the Scandinavian NPD management systems were characterized as product-service oriented, driven by enduring interpersonal relationships and socially oriented to helping others. These characterizations were found to be consistent with dissimilarities in the national cultures of the U.S. and Scandinavia, suggesting that some core NPD management principles may be generally important to success, whereas others may be culturally dependent. The importance of recognizing these differences is pointed out in a discussion of their implications for NPD theory and practice in today's global economy. © 1999 Elsevier Science Inc.     

Marketing/R&D Interaction in New Product Development: Implications for New Product Success Rates

A growing body of literature has evolved which deals with the interaction between marketing and R&D in new product development. Much of this research, unfortunately, fails to associate various variables with new product success levels. Thus, it cannot suggest consensus guidelines for marketing's involvement to increase the performance levels of new products in the market place. Richard Hise, Larry O'Neal, A. Parasuraman and James McNeal report results of their analysis of the new product development procedures of 252 large manufacturing companies. The authors conclude that collaborative efforts between marketing and R&D during the actual designing of new products appear to be a key factor in explaining the success levels of new products, that management effort should focus on the design stage of the new product development process rather than on the earlier and later stages and that R&D's contributions cannot be ignored while decisions are made about marketing's role in developing new consumer and industrial products.     

The Role of Market Information in New Product Success/Failure

Although no single variable holds the key to new product performance, many of the widely recognized success factors share a common thread: the processing of market information. Understanding customer wants and needs ultimately comes down to a company's capabilities for gathering and using market information. And another well-acknowledged success factor the integration of marketing, R&D, and manufacturing focuses on the sharing of information. In other words, a firm's effectiveness in market information processing—the gathering, sharing, and use of market information—plays a pivotal role in determining the success or failure of its new products. Brian D. Ottum and William L. Moore describe the results of a study that examines the relationship between market information processing and new product success. They also explore the organizational factors that facilitate successful processing of market information, and thus offer ideas for better managing the development of new products. The respondents—marketing, R&D, and manufacturing managers from Utah-based computer and medical device manufacturers—provided information about 58 new products, including equal numbers of successes and failures. The survey responses reveal strong relationships between product success and market information processing, with success most closely linked to information use. In other words, the gathering and sharing of information are important, but only if the information is used effectively. In 80 percent of the product successes studied, the respondents ultimately possessed and used a greater than average amount of market information. And in 75 percent of the failures, the respondents knew less than average about the market at project inception, and gathered or used less than the average amount of market information during the project. For the projects in this study, the integration of marketing, R&D, and manufacturing contributed not only to the sharing and use of information, but also to overall project success. However, the results of the study suggest that the way in which a project is organized plays only an indirect role in determining new product success—most likely by improving the processing of market information. From a managerial perspective, the most important variables identified in the study are market information shared, market information used, and financial success.     

Success and Failure in New Industrial Services

The critical role of innovation has long been recognized in physical goods; however, the development of innovative services has received much less attention. The research described here reports on an early major study of success and failure in new industrial services. Building on her integration of two literatures on new product innovation and services marketing, Ulrike de Brentani reports how companies measure new service performance and the factors which are associated with success. She reports that new industrial services share some important success factors with physical goods, such as the firm's market orientation, a formal service development process, project synergy and a truly superior new service offering. Yet she finds that firms must adjust their approach to the distinctive character of services, including customer perceptions of service quality, features that successfully differentiate services in competitive terms and cost reduction.     

It’s in the Mix: How Firms Configure Resource Mobilization for New Product Success

This paper aims to deepen the understanding about when and how the mobilization of resources through strong and weak ties in a focal firm’s network can affect new product success. It addresses two significant gaps in the literature. While prior research has advanced the understanding of how factors around tie strength, resource mobilization, and environmental characteristics relate to new product development, it has yet to offer a more holistic understanding of the interconnected structures and the interplay among these factors. Furthermore, limited insights exist about how firms could utilize resource mobilization approaches in different environmental contexts to enhance new product success. Building on resource dependence theory, this paper contributes to prior work by adopting configuration theoretical considerations and performing an empirical investigation to identify necessary and sufficient conditions for new product success. Based on data from a survey of 354 managers from manufacturing and services firms in the United Kingdom, the study conducts a configurational comparative study based on fuzzy‐set Qualitative Comparative Analysis to examine configurations of strong‐tie and weak‐tie resource mobilization approaches within particular environmental contexts for new product success. The findings reveal alternative, equifinal configurations for new product success, and add to the existing body of work by connecting the notions of network ties, resource mobilization, and context dependence, as well as by developing an integrative framework to explain the interplay of remote and proximate conditions for new product success. For management practice, this study offers guidance in describing and diagnosing business contexts that enhance new product success, and in identifying resource mobilization action repertoires to capitalize on these contexts.     

The Roles of Marketing and Industrial Design in Discontinuous New Product Development*

Radical or “discontinuous” products based on new technological breakthroughs are playing an ever‐increasing role in the success of firms. However, little research has been conducted that investigates the roles of marketing and industrial design (ID) in the development of these types of products. Further, past research has tended to overlook the role that industrial design, and the impact of the marketing‐industrial design interaction, can have on the development of discontinuous new products. Frequently, the term design is used broadly or is equated with engineering; thus, while the marketing–research and development (R&D) interaction is studied, the marketing–ID as well as the industrial design–R&D relationships are not considered. This article examines the roles of marketing and industrial design in the product development process for discontinuous innovations. Specifically, questions concerning how and the degree to which marketing and industrial design are integrated into the development process are investigated. The investigation employs multiple methods, or triangulation, in order to secure an in‐depth understanding of the roles of these disciplines. In the course of examining these questions, key factors influencing industrial design and marketing involvement are identified and preliminary models are examined. The research, which was conducted in two phases, employed a mixed‐method, multiple sample design. The methods used included a survey, field observation study, and depth‐interviewing. Data were collected from three different samples: R&D managers, project team members (including personnel from various disciplines—marketing, R&D, industrial design, engineering, etc.), and industrial design managers. The use of the different data sources and sampling of various groups of managers was employed in order to provide a rich context for investigating the research questions of interest. In addition, a preliminary analysis of factors (e.g., degree of product discontinuity, product innovation objectives, process discontinuity, process formality) identified in the first phase was conducted, and these relationships were explored further in the second phase of the research. Findings across the two phases of this research suggest that the development of discontinuous new products involves a process that is different from more conventional new product development—particularly as it concerns the roles of marketing and industrial design. The high degree of discontinuity inherent in such projects, along with the strong R&D orientation often surrounding them, results in delayed involvement of marketing and ID, as well as altering their roles in the new product development (NPD) process. Factors such as the degree of product discontinuity (DPD), process discontinuity (PCD), and process formality (PF) seemed to exert a differential influence on the involvement of marketing and ID. Although their roles and involvement are altered in discontinuous new product development, this research suggests that marketing and ID roles in this context involve increased challenges with respect to validation of key assumptions and product application directions. Additionally, managers operating in this development context need to explicitly consider the influence of factors such as discontinuity level in undertaking NPD projects with respect to how it affects the execution of industrial design and marketing activities.     

The Dimensions of Industrial New Product Success and Failure in State Enterprises in the People's Republic of China

Michael Song and Mark Parry examine the dimensions of new product success and failure in state enterprises in the People's Republic of China by conducting a principal components analysis of 77 statements developed by Cooper that describe possible characteristics of a new product. Their analysis yielded 16 significant components. Next, stepwise discriminant analysis determined which dimensions were significantly correlated with project success and failure. Six dimensions emerged as significant correlates of success in the initial discriminant analysis and in 30 split-half replications. These six dimensions concerned the product selection criteria of market potential, competitive intensity, relative product advantage, and fit with the technical and production capabilities of the enterprise. The findings have implications for enterprise managers, state authorities, and foreign partners in Chinese joint ventures.     

Externally Directed and Internally Directed Market Launch Management: The Role of Organizational Factors in Influencing New Product Success

Introducing new products remains a critical challenge for managers. Consumer acceptance of new products is key to new product success and requires the effective implementation of market launch activities. The present study describes the relationship between different types of market launch activities and market‐related, time‐related, and financial market launch success. The study's framework extends previous work on launch management by complementing the view that launch activities are predominantly outwardly directed with the notion that launch management can also be inwardly directed. More specifically, launch activities can both target customers as the external audience, for example, via communication and pricing, and address an internal audience, such as management and sales personnel, for example, using departmental coordination or employee incentives. The study also sets out to investigate how situational factors impact the relative effectiveness of both externally directed and internally directed launch activities in engendering successful new product launches. In particular, product newness, technology drivers, and firm size are considered as relevant variables. Structural equation analysis of data on 178 new products across industries provide empirical evidence that market launch success depends on the intensity of both externally directed and internally directed market launch activities. With regard to the overall impact of internally directed activities, the findings confirm that organizational factors and antecedents indeed play a critical role in new product launch and its respective performance with internally directed activities having an even stronger impact on time‐related and financial success than outwardly directed instruments. Specifically, these internal activities are often viewed as idiosyncratic resources that are hard for competitors to observe and are therefore more difficult—if not impossible—to replicate compared to externally directed activities in market launch. The paper clearly pinpoints that the successful launch of new products is a complex task that also necessitates the implementation of internally directed launch activities. Fast market penetration requires coordination among the different internal players as well as support from top management. Furthermore, the financial objectives of the market launch can only be met if employees and executives both receive the necessary incentives and support to effectively execute the new product introduction. The study also demonstrates that moderators impact the strength of the effectiveness of these two different types of market launch activities. This research provides important implications for launch management by advocating that the two foci on external and internal constituencies should not be pursued in isolation but that instead, the opposite is true.     

Applying Industrial Design and Cost Engineering to New Product Development in Early‐Stage Firms

For early‐stage firms, successful commercialization of each new product is critically important, given the shortage of financial resources, the limited product portfolio, and small staffs typical of such firms. This paper investigates two key contributing factors for new product success in entrepreneurial firms: designing products that are appealing to target users in both form and function and designing products that can be manufactured at an attractive margin so that the new enterprise can generate much needed positive cash flow. These two practices—industrial design and cost engineering—are well studied in the context of larger, established corporations but have not been explored in the context of new ventures. This study focuses on the intensity of individual and combined adoption of design and cost engineering as measured by product development efficiency and effectiveness. The study was conducted on a homogeneous sample of early‐stage firms that develop physical, assembled products where design plays a role. The data collection focused only on the first product developed by each firm respectively. The results show that when implemented together, industrial design and cost engineering enhance both the effectiveness and efficiency of new product development in early‐stage firms, to greater effect than each does individually. Intensive individual adoption of practices had a negative impact on development efficiency measures such as development cost and duration. Only cost engineering individually had a beneficial impact on development effectiveness as measured by product margins. When combined, these two practices had a beneficial impact on both development duration and cost for the company's first commercial product, thereby reducing time‐to‐market and precious cash expenditures while maximizing project breakeven timing. The most successful firms in the study achieved a balance between creative innovation and cost discipline in the NPD process with third‐party design and manufacturing resources. It was found that integrating third‐party design firms into the development process can challenge, simplify, and add additional creative resources to the core entrepreneurial team, maximizing the ability to catalyze beneficial tension between creativity and cost discipline.     

New Trends in U.S. Industrial Concentration

Using weighted concentration ratios for the entire economy, I argue that industrial concentration decreased in the U.S. from 1960 to the early1980s and then began to increase. This rise in the last two decades of the 20th century offsets any counteracting affectsstemming from the growth of use of information technology in production or from imports and appears due primarily to the impact of the merger wave starting in the mid 1980s. I also considerbriefly the relationship between increasing market concentrationand a change in market competition,taking into account the expansion of e-commerce.     

Japanese and British Companies Compared: Contributing Factors to Success and Failure in NPD

The success or failure of a new product is an issue of continuing concern to management in the 1990s. Little research, however, has been conducted on this issue from a British perspective. In this article, Scott Edgett, David Shipley and Giles Forbes report the findings of an investigation into success and failure in Japanese- and British-owned firms that conduct business in the United Kingdom. The results from this comparative study illustrate that new product failure rates are still high, with the Japanese firms only marginally outperforming British owned firms.     

Customer-Driven Product Development Through Quality Function Deployment in the U.S. and Japan

Quality Function Deployment is a tool for bringing the voice of the customer into the product development process from conceptual design through to manufacturing. It begins with a matrix that links customer desires to product engineering requirements, along with competitive benchmarking information, and further matrices can be used to ultimately link this to design of the manufacturing system. Unlike other methods originally developed in the U.S. and transferred to Japan, the QFD methodology was born out of Total Quality Control (TQC) activities in Japan during the 1960s and has been transferred to companies in the U.S. This article reports on the results of a 1995 survey of more than 400 companies in the U.S. and Japan using QFD. The research questions investigated in this study were developed both inductively from QFD case studies in the U.S. and Japan and deductively from the literature. The reported results are in part counterintuitive. The U.S. companies reported a higher degree of usage, management support, cross‐functional involvement, use of QFD driven data sources, and perceived benefits from using QFD. For the most part, the main uses of QFD in the U.S. were restricted to the first matrix (“House of Quality”) that links customer requirements to product engineering requirements and rarely was this carried forward to later matrices. U.S. companies were more apt to use newly collected customer data sources (e.g., focus groups) and methods for analyzing customer requirements. Japanese companies reported using existing product data (e.g., warranty) and a broader set of matrices to a greater extent. The use of analytical techniques in conjunction with QFD (e.g., simulation, design of experiments, regression, mathematical target setting, and analytic hierarchy process) was not wide spread in either country. U.S. companies were more likely to report benefits of QFD in improving cross‐functional integration and better decision‐making processes compared to Japanese companies. Possible reasons for these cross‐national differences as well as their implications are discussed.     

Japanese/U.S. technological competitiveness and strategic alliances in the biotechnology industry

This paper analyzes the reasons for Japanese/U.S. collaborations in the biotechnology industry, and considers the question of whether such alliances pose a threat to the North American industry. Japan's technological competitiveness in biotechnology is examined in terms of its strengths and perceived weaknesses. Ways in which Japan is attempting to overcome these weaknesses are identified. As well, the strengths and weaknesses of the North American biotechnology industry are assessed. The paper concludes with recommendations for government and R&D managers on how to preserve U.S. competitiveness. R&D managers must keep abreast of their techno-global competitive environments. While organizations can enter into alliances to improve their competitiveness they must be aware of the dangers of collaboration, and to benefit from their alliances they must enhance their organizational learning. Organizations must be aware of the pitfalls of alliance formation, and any alliance must be viewed in its national context. Last, but not least, managers must be more effective in their management of the processes of technological innovation.     

Manufacturing and firm performance in technology-intensive industries: U.S. and Japanese DRAM experience

Firm-specific limits on capacity development rates (rates at which firms are able to increase output rate to design capacity) can affect firm performance in important ways, especially for firms involved in technological competition which introduce products relatively early. A simple model in which capacity development rates act in this way is developed and tested using data from semiconductor memory products (DRAMs). These results are used to estimate the ex post impact of increasing U.S. capacity development limits to the higher Japanese levels in the important 64 K DRAM generation.     

Comparing U.S. and Japanese corporate-level operating performance using financial statement data

This study uses financial statement data restated to a similar reporting basis to compare the operating performance of U.S. and Japanese companies, identifying possible strategic and environmental explanations for the differences observed. Comparisons are made for U.S. and Japanese samples as a whole, for groups of Japanese firms (keiretsu v. nonkeiretsu), and for 11 industries. The results show that neither country appears to generate systematically higher profit margins, but that U.S. firms turnover assets other than inventory more quickly and therefore have higher rates of return on assets. More intensive examination of these results suggests that environmental factors, such as cultural or structural differences, are the primary causes of the observed differences in the data analyzed.     

Cross-Pacific internationalization of R&D by U.S. and Japanese firms

Efforts by MNCs to develop coordinated international R&D networks have taken place from different historical bases of internationalization and in the context of differing trends in the role of R&D within the corporation, as the cross-Pacific R&D investment in leading U.S. and Japanese firms in the electronics industry shows. Japanese firms, although they espouse a strategy of 'localization', are establishing wholly-owned R&D centres in the U.S. with highly specialized technology mandates that to be used by the company must be networked with their parent organizations. U.S. firms rely on joint ventures or wholly-owned labs with a wider array of technologies that face strong pulls to a local orientation. The patterns are somewhat out of line with the models of internationalization each side is espousing.