Antecedents and Consequences of Reflexivity in New Product Idea Screening*

Pre‐development activities, such as new product idea screening, are considered to play an important role in innovation success. At the screening stage, a management team evaluates new product and service ideas and makes a first go/no‐go decision under high levels of uncertainty and ambiguity. Paying more attention to the decision‐making process in the screening stage appears important because too rigorous a use of rigid evaluation criteria and inflexible methods have been shown to have an adverse effect on market performance of novel products. The present study proposes and tests a model of team‐level antecedents and consequences of reflexivity—the explicit evaluation and discussion of working methods, tools, and criteria within a team. Recently, researchers have proposed that cognitive style and leadership style are major antecedents of decision‐making performance. This study posits that reflexivity offers an explanation of how transformational leadership and cognitive style can eventually affect decision‐making performance in the context of new product idea screening. Results of a survey among 126 top managers from large international firms show that the positive effects of transformational leadership and procedural rationality on the effectiveness and efficiency of screening decision making are largely mediated by reflexivity at the team level. This suggests that screening teams can improve their decision making in the following ways: committee chairs are advised to stimulate openness, develop a stop‐and‐think attitude among screening committee members, and support argument‐based discussion in order to adapt available decision tools, models, and checklists whenever needed. The paper concludes with implications, limitations of the study, and suggestions for further research.     

Switching Costs in Two‐Sided Markets

In many markets, there are switching costs and network effects. Yet the literature generally deals with them separately. This paper bridges the gap by analyzing their interaction (or ‘indirect bargain’) in a dynamic two‐sided market. It shows that in the symmetric equilibrium, the classic result that the first‐period price is U‐shaped in switching costs does not emerge, but instead switching costs always intensify the first‐period price competition. Moreover, an increase in switching costs on one side decreases the first‐period price on the other side. Policies that ignore these effects may overestimate the extent to which switching costs can reduce welfare.     

Extending Lead‐User Theory: Antecedents and Consequences of Consumers' Lead Userness*

Lead users are found to come up with commercially attractive user innovations and have been shown to be a highly promising source of innovation for new product development tasks. According to lead‐user theory, these users are defined as being ahead of an important market trend and experiencing high benefits from innovating. The present article extends lead‐user theory by exploring the antecedents and consequences of consumers' lead userness in the course of three studies on extreme sports communities. Regarding antecedents, it uncovers that field‐related variables (consumer knowledge and use experience) as well as field‐independent personality variables (locus of control and innovativeness) help explain an individual's lead userness. These variables might therefore be used as a proxy to identify the rare species of lead users. With regard to consequences, it uncovers that lead users demonstrate innovative behavior not only by creating new product ideas but also by adopting new commercial products more heavily and faster than ordinary users. This highlights the idea that lead users might not only be valuable to idea‐generation processes for radically new concepts; instead, they might also be relevant to more general issues in the marketing of new products.     

New Product Portfolio Management Decisions: Antecedents and Consequences

This research employs organizational information processing theory to propose and examine the antecedents and consequences of new product portfolio management (NPPM) decisions. Understanding NPPM decisions is an important research area because these decisions affect firm profitability but are difficult to make because of limited reliable information. Recent survey results of Product Development and Management Association members and other NPPM professionals suggest nearly half of initial new product ideas are chosen to advance through the new product development (NPD) pipeline via informal processes. Thus, managers wield considerable influence in NPPM. Yet only limited research quantitatively examines how NPPM decisions impact performance and the role of manager dispositions. Using as the research context a marketing simulation exercise conducted with mid‐level managers, this research reveals important insights into the impact of the three NPPM dimensions—value maximization, balance, and strategic fit—on NPD and firm performance. The analysis suggests a critical role for the NPPM dimension of balance as it is the single dimension impacting performance. However, value maximization is relevant as a criterion for competing because, overall, managers see this dimension as important. At the same time, managers are cautioned in their use of strategic fit as it appears this dimension may constrain innovative choices. Furthermore, three manager dispositions proposed from organizational information processing theory—directive leadership style, need for cognition, and risk perceptions—all influence NPPM dimensions. Managers are recommended to consider the personality traits of managers involved in NPPM decisions to ensure thorough consideration of all dimensions.     

Tying in Two‐Sided Markets with Multi‐Homing: Corrigendum and Comment

We identify two issues in Choi's [2010] paper on tying in two‐sided markets published in this Journal, and provide solutions to both of them. First, we point out that the equilibrium in the absence of tying requires more restrictive conditions and does not satisfy a natural equilibrium refinement criterion. We offer an alternative timing structure that validates the equilibrium derived in Choi [2010] under the conditions provided there. Second, we show that his equilibrium analysis with tying ignores a profitable deviation. We rectify this analysis under our alternative timing structure and derive the (mixed‐strategy) equilibrium with tying. We also show by means of simulations that tying is welfare‐enhancing whenever it is profitable, which is consistent with the main finding in Choi [2010].     

Antecedents and Consequences of Creativity in Product Innovation Teams

The generation of creative ideas and their manifestation as new products (NPs) are fundamental innovation activities of product innovation teams. Despite the importance of generating creative ideas at the fuzzy front end of the product innovation process, our understanding of antecedents and consequences of creativity of product innovation teams is limited. Drawing on Shane and Ulrich's organization design perspective of innovation, this study aims at examining the intermediary role of creativity as a critical link between team dynamics and product competitive advantage. In this study, the authors focus on NP and marketing program (MP) creativity in product innovation teams. They develop and empirically test a model that examines how internal and external team dynamics influence NP and MP creativity, and how NP and MP creativity affect product competitive advantage as a strategic innovation outcome. The study uses 206 matched responses from senior managers and product team leaders in high‐tech manufacturing firms in the United States to avoid common‐method bias. The authors use maximum likelihood estimation in a structural equation model to empirically test the proposed model. They find that two separate dimensions of creativity—novelty and meaningfulness—are differentially affected by team dynamics. For example, NP novelty as a result of divergent process is predominantly influenced by external team factors such as market‐based reward system and planning process formalization. On the other hand, NP meaningfulness as a result of convergent process is dominantly influenced by internal team factors such as social cohesion and superordinate identity. In addition, MP novelty is determined by social cohesion, superordinate identity, planning process formalization, and encouragement to take risks, while MP meaningfulness is influenced by social cohesion and planning process formalization. Our findings also suggest that NP novelty and meaningfulness, but not MP novelty and meaningfulness, play important intermediary roles in determining product competitive advantage. This study contributes to narrowing the important gap in the literature by examining the effect of team dynamics on creativity and by linking creativity to strategic innovation outcomes. Our study suggests that a firm's ability to manage team dynamics toward generating creative NPs and MPs constitutes a dynamic capability that can provide a competitive advantage over the competition.     

Antecedents and Consequences of Unlearning in New Product Development Teams

Unlearning, which first appeared almost 30 years ago as a subprocess of the organizational learning process, has received only limited attention in the literature. Rather than building on empirical research, the existing scholarship is largely anecdotal, aimed at reviewing the literature and generating new insights. Further, unlearning studies tend to analyze the organizational level and neglect smaller units such as work groups and teams. To address this gap in the understanding of unlearning, this article empirically investigates unlearning in work groups in general and new product development (NPD) teams in particular. This study, based on the literature of organizational memory and change, operationalized team unlearning as changes in beliefs and routines during team‐based projects and then discussed the importance of unlearning behavior in NPD teams. Specifically it was argued that unlearning guards beliefs and routines against rigidity to cope with environmental turbulence. This is of particular note when rigid product development procedures and group beliefs inhibit the reception and evaluation of new market and technology information and reduce the value of perceived new information. To test the antecedents and consequences of the team unlearning model, 319 NPD teams were investigated. Using structural equation modeling, it was found that (1) team crisis and anxiety have a direct impact on team unlearning; (2) environmental turbulence also has a direct impact on both team crisis and anxiety and team unlearning; and (3) after team beliefs and project routines have changed, implementing new knowledge or information positively affects new product success. Specifically, the findings revealed that changes in team members' collective beliefs in accordance with environmental changes and the in‐process planning or adjustment of project work activities and procedures as the projects evolve enable teams to develop and launch new products successfully. Also, results indicated that team crisis and anxiety in NPD projects assist team members in revising their previous beliefs and routines when project teams are performing in turbulent environments. This article suggests that managers can enhance team unlearning by (1) creating a sense of urgency by introducing an artificial crisis; and (2) avoiding the groupthink phenomena by bringing in an outsider to challenge existing policies and procedures, and training the team on lateral thinking. In addition, managers can plan project activities in a flexible manner that allows changes as the project evolves to facilitate team unlearning. However, managers should also be cautious when promoting team unlearning. Without careful and considerable evaluation, change in beliefs and routines can cause information/knowledge loss.     

Procedural Justice Climate in New Product Development Teams: Antecedents and Consequences

With the increasing interest in the concept of justice in the group behavior literature, the procedural justice (PJ) climate attracts many researchers and practitioners from different fields. Nevertheless, the PJ climate is rarely addressed in the new product development (NPD) project team literature. Specifically, the technology and innovation management (TIM) literature provides little about what the PJ climate is, its nature and benefits, and how it works in NPD project teams. Also, few studies investigate the antecedents and consequences of the PJ climate in NPD teams enhancing the understanding of this concept from a practical perspective. This paper discusses the PJ climate theory in a NPD team context and empirically demonstrates how team members' positive collective perceptions of a PJ climate can be developed and how a PJ climate influences a project's performance in NPD teams. In particular, team culture values including employee orientation, customer orientation, systematic management control, innovativeness, and social responsibility were investigated as antecedents, and team learning, speed to market, and market success of new products were studied as outcomes of PJ climate in this paper. By studying 83 NPD project teams it was found on the basis of using partial least squares (PLS) method that (1) the level of employee, customer and innovativeness orientation as well as systematic management control during the project had a positive impact on developing a PJ climate in an NPD team; (2) a PJ climate positively affects team learning and product development time (i.e., speed to market); and (3) team learning and speed to market mediate the relations between the PJ climate and new product success (NPS). Based on the findings, this paper suggests that managers should enhance the PJ climate and team culture in the project team to enhance team learning and to develop products faster. In particular, managers should (1) open a discussion forum among people and create a dialogue for people who disagree with the other project team members rather than dictating or emposing others ideas to them, (2) facilitate information searching and collecting mechanisms to make decisions effectively and to clarify uncertainties, and (3) allow team members to challange project‐related ideas and decisions and modify them with consensus. Also, to enhance the PJ climate during the project, managers should (1) respect and listen to all team members' ideas and try to understand why they are sometimes in opposition, (2) define team members' task boundaries and clarify project norms and project goals, and (3) set knowledge‐questioning values by facilitating team members to try out new ideas and seek out new ways to do things.     

Consequences of New Product Development Speed: A Meta‐Analysis

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

Antecedents and Consequences of Goal Incongruity on New Product Development in Five Countries: A Marketing View

This article examines an important challenge to effective cross-functional integration: goal incongruity among marketing, research and development (R&D), and manufacturing in new product development. We examine the effect of this incongruity as perceived by the marketing function on three components of cross-functional integration: the harmony of cross-functional relationships, the quality of cross-functional information, and the level of cross-functional involvement. We also examine how two types of managerially controllable variables affect goal incongruity: (1) factors that motivate functions to develop common goals; and (2) factors that facilitate the formation of such goals. We give special attention to the effect of national culture on the formation of common goals. Data collected from marketing managers in 1,083 firms in five culturally distinct areas—-the United States, Great Britain, Japan, Hong Kong (a special administrative region of China), and mainland China—are used to test the hypothesized relationships. Our results underscore the importance of people-side issues, and of national culture, in cross-functional integration. Perceived goal incongruity among marketing, R&D, and manufacturing impairs all three components of cross-functional integration. In United States and British firms, goal incongruity generally is attributed to motivational factors and in Japan and Hong Kong to facilitative factors. Finally, our results show that the two types of managerially controllable variables interact. For example, joint rewards and job rotation strengthen each other's tendency to reduce goal incongruity in all five samples. This suggests that job rotation promotes the development of joint goals more effectively when it is accompanied by a joint reward system.     

Ambidextrous Idea Generation—Antecedents and Outcomes*

Ambidexterity, defined as the capability to develop both incremental and radical innovations, is an important driver of firm success. Idea generation is an essential starting point for both types of innovation. Therefore, this study investigates whether ambidextrous idea generation, defined as the capability to actively generate both incremental and radical ideas, affects new product development (NPD) success. Analyses on the Comparative Performance Assessment Study (CPAS) data, which includes data from 453 companies distributed over 24 countries, demonstrate that ambidextrous idea generation does indeed affect NPD program success. Consequently, this study also investigates which antecedents foster ambidextrous idea generation. The innovation paradox concept predicts that achieving ambidexterity requires overcoming paradoxical antecedents. Therefore, we tested whether combinations of financial and breakthrough orientations (the paradox of strategic emphasis), a formal innovation process and an innovation culture (the paradox of innovation drivers), tight and loose customer coupling (the paradox of customer orientation), and internal development and external collaboration (the paradox of openness) affects ambidextrous idea generation. The results show that only customer orientation and openness have the expected inverted u‐shaped effect. These finding are in line with construal level theory, which predicts that the organizational characteristics that influence idea‐generation activity must be at the same construal level to have the desired effect. The contribution of this study is twofold. First, the analyses indicate that ambidextrous idea generation has significant repercussions for the entire NPD program. Second, the results show that resolving innovation paradoxes only has an effect if the construal level of the paradox and the activity match. This finding indicates an important boundary condition for the innovation paradox concept.     

New Product Preannouncement as a Signaling Strategy: An Audience‐Specific Review and Analysis*

Firms in various industries with highly competitive environments use new product preannouncement (NPP) as one of the most effective and popular signaling tools. Preannouncements can bring both benefits and costs to firms. Extant research has studied NPP from different perspectives and tackled the questions, “Should a new product be preannounced and when?” and “What information should be preannounced and why?” However, the benefits and costs of preannouncements from an audience‐specific perspective are less well understood. It is important to notice that benefits and costs of a preannouncement vary among different audiences and firms need to apply group‐specific weights in assessing the overall benefits and costs prior to making new product preannouncements. The purpose of this article is to review the existing literature on new product preannouncements for commonly observed marketing problems and to develop a general approach focusing on the target audiences and the incentives in sending signals to each audience and the impacts of these signals. This paper first reviews the literature on marketing‐related NPP issues as well as the determinants and effects of various factors on NPP decisions. Then, it discusses the phenomenon of new product preannouncements linked to other marketing and economics problems: (1) product development and positioning; (2) product diffusion and adoption; (3) firm value; (4) vaporware and antitrust litigations; and (5) consumer welfare. In addition, this paper divides the target audience of the new product preannouncement into four groups: customers, competitors, investors, and distributors. Based on current signaling theory, it proposes an audience‐specific framework to analyze the determinants, incentives, and impact of new product preannouncements. The proposed approach may provide more comprehensive insights on NPP strategies to managers and industrial decision makers. Finally, the paper suggests a number of future research directions from four different perspectives (i.e., customer, firm, government/industry, and methodology).     

Antecedents and Consequences of Information Technology Usage in NPD: A Comparison of Dutch and U.S. Companies*

This study examines information technology (IT) usage for new product development (NPD) in a global context. Specifically, this research seeks to ascertain the factors that influence IT usage and the relationship between IT usage and new product performance in two different countries—the United States and the Netherlands. The interest here is in discovering if, and how, these relationships may be different depending on the country within which the NPD effort is undertaken. Employing a mail survey methodology, the present study uses data from a sample of U.S. practitioner members from the Product Development & Management Association (PDMA) and new product managers from Dutch manufacturing companies to examine the effect of IT infrastructure, IT embeddedness, NPD process formalization, colocation, outsourcing of NPD projects, and length of time on the job on the extent of IT usage. The data are also used to explore the impact of IT usage on speed to market and market performance. The results indicate that IT embeddedness and NPD process formalization positively influence IT usage in both the United States and the Netherlands. Colocation and length of time on the job are negatively associated with IT usage only in Dutch firms. Similarly, outsourcing of NPD projects is positively related to IT usage only in U.S. firms. Finally, IT usage has a positive relationship with speed to market in the Netherlands and with market performance in the United States. An important implication of the present study is that IT usage does impact speed to market and market performance, confirming anecdotal evidence. However, these relationships are not the same in each country. Moreover, the antecedents to IT usage also vary by country. Thus, the precursors and consequences of IT usage in NPD are context specific. Another implication of this research is that unless IT is embedded into the NPD process, it is unlikely that the benefits of IT will come to fruition. Finally, this study suggests that as firms use more globally dispersed teams for NPD and outsource more of their development activities, IT usage is likely to increase to facilitate communication and cooperation.     

Reducing Ongoing Product Design Decision‐Making Bias*

The objective of this exploratory study is to add to our understanding of ongoing product design decision‐making to reduce eventual decision‐making bias. Six research questions are formulated with the aim to establish if and how functional membership and informal patterns of communication within an organization influence whether and why employees are willing to engage in product design modifications. We selected as a field site for our study an industrial company that had an internal research and product development operations and where the employees were located on the same site. A three‐step approach within the manufacturing case company was designed: (1) In‐depth interviews were carried out with managers and employees; (2) a survey questionnaire was sent out to all employees involved with a specific product that is subject to potential design modifications; and (3) a post hoc group feedback session was organized to further discuss our findings with the management. First, analysis of the nine in‐depth interviews establishes a taxonomy of product design decisions involving four types of criteria; product‐related, service‐related, market‐related, and feasibility‐related criteria explain why employees would engage or not in product design modifications. Second, it is demonstrated that functional membership has a significant influence on the concern for these decision‐making criteria as well as on the decision to proceed or not with product design modifications. In other words, functional membership influences whether and why employees are more or less willing to make product design modifications. In this manufacturing company, a global industrial player, the differences in concern appear especially for service‐ and market‐related criteria and pertain particularly to the research and development (R&D) and service function. Overall, even though the perceived performance of the specific product under study did not differ significantly among the different departments, it is observed that R&D employees were significantly less in favor of proceeding with product design modifications than other employees were. Third, using UCINET VI software, we provide some explanations for this finding. It is shown that informal patterns of communication (i.e., employee degree centrality) operate a situational opportunity to make modifications to an existing product and a cognitive opportunity influencing the decision to modify product design following an inverted U‐shaped function. Ultimately, we derive practical guidelines for an ideal product–team composition to reduce product design decision‐making bias.     

Responsive and Proactive Market Orientation and New‐Product Success*

What is the relationship between market orientation and new‐product success? This important question has not been examined adequately to date because the concept of market orientation has been measured too narrowly. The concept of market orientation implies both responsive market orientation, which addresses the expressed needs of customers, and proactive market orientation, which addresses the latent needs of customers—that is, opportunities for customer value of which the customer is unaware. In the numerous market orientation–performance studies to date, the measure of market orientation has consisted virtually entirely of behaviors related to satisfying customers' expressed needs rather than satisfying their latent needs as well. The present study extends the measurement of market orientation to match the full scope of the concept—to measure both responsive market orientation and proactive market orientation. Using data from a sample of technologically diverse businesses, the present study develops a measure of proactive market orientation, refines the extant measure of responsive market orientation, and analyzes the relationship of a business's responsive and proactive market orientation to its new‐product success. The study findings imply that for any business to create and to sustain new‐product success, a responsive market orientation is not sufficient and, thus, that a proactive market orientation plays a very important positive role in a business's new‐product success. These findings make intuitive sense. For if in developing its new products a business relies solely on what customers state as their new product needs, the business is very vulnerable economically. Such a business is vulnerable not only for relying on customers' best guesses for new products, many or most of which may have little long‐term economic value for either party, but also to competitors' parallel new product responses and the inevitable resulting price competition. A business that relies solely on customers' expressed needs to develop its new products creates no new insights into value‐adding opportunities for the customer and thereby creates little or no customer dependence and foundation for customer loyalty. The important role for proactive market orientation in new‐product success is intuitively obvious—and is supported empirically in this study.     

Legitimacy‐Seeking Mechanisms in Product Innovation: A Qualitative Study*

Product innovation research adopts a rational choice perspective to examine resource allocation decisions for product innovation. This research emphasizes strategic alignment between the innovation and the organization as the key factor shaping these decisions. In contrast, organizational research suggests that to access resources, product innovations have to be perceived as legitimate by corporate sponsors. Legitimacy is rooted in alignment with the prevalent corporate norms, beliefs, and cultural model. Adopting an institutional perspective and relying on an in‐depth case study of three product innovations, this study explores legitimacy‐seeking behavior in product innovation. The findings indicate that the rational perspective emphasized in most product innovation research is complemented by efforts to seek both moral and cognitive legitimacy to resource product innovation. The study clarifies the critical role that the organizational context plays in triggering legitimacy‐seeking behavior. The analysis unpacks legitimacy‐seeking behavior, revealing patterns of legitimating mechanisms (lobbying, relationship building, and gathering feedback) that are deployed as part of legitimacy strategies (conforming, selecting, and manipulating) to achieve a range of legitimacy outcomes (pragmatic, moral, and cognitive). The analysis reveals the existence of a hierarchy of legitimacy outcomes as actors prioritize one type of legitimacy versus another. The study also finds interdependencies between mechanisms and strategies to reinforce particular outcomes as legitimacy‐seeking behavior evolves over time.     

Modified Stage‐Gate® Regimes in New Product Development*

The purpose of this research was to explore the nature of the Stage‐Gate^®process in the context of innovative projects that not only vary in new product technology (i.e., radical versus incremental technology) but that also involve significant new product development technology (i.e., new virtual teaming hardware‐software systems). Results indicate that firms modify their formal development regimes to improve the efficiency of this process while not significantly sacrificing product novelty (i.e., the degree to which new technology is incorporated in the new offering). Four hypotheses were developed and probed using 72 automotive engineering managers involved in supervision of the new product development process. There was substantial evidence to creatively replicate results from previous benchmarking studies; for example, 48.6% of respondents say their companies used a traditional Stage‐Gate^®process, and 60% of these new products were considered to be a commercial success. About a third of respondents said their companies are now using a modified Stage‐Gate^®process for new product development. Auto companies that have modified their Stage‐Gate^®procedures are also significantly more likely to report (1) use of virtual teams; (2) adoption of collaborative and virtual new product development software supporting tools; (3) having formalized strategies in place specifically to guide the new product development process; and (4) having adopted structured processes used to guide the new product development process. It was found that the most significant difference in use of phases or gates in the new product development process with radical new technology occurs when informal and formal phasing processes are compared, with normal Stage‐Gate^®usage scoring highest for technology departures in new products. Modified Stage‐Gate^®had a significant, indirect impact on organizational effectiveness. These findings, taken together, suggest companies optimize trade‐offs between cost and quality after they graduate from more typical stage‐process management to modified regimes. Implications for future research and management of this challenging process are discussed. In general, it was found that the long‐standing goal of 50% reduction in product development time without sacrificing other development goals (e.g., quality, novelty) is finally within practical reach of many firms. Innovative firms are not just those with new products but also those that can modify their formal development process to accelerate change.     

Sufficient Decisions in Multi‐Sided and Multiproduct Markets

We show that in many models where firms make multiple decisions, analysis can be made more tractable by re‐formulating the model into one in which each firm makes a single choice, which we call a sufficient decision. The transformation allows application of standard techniques in these settings, including pass‐through for tax incidence and upward pricing pressure for merger analysis. The transformation works because the assumption of profit maximization links the firms’ decisions together. Examples include models of monopoly and oligopoly in two‐sided markets, where a natural sufficient decision may be the number of transactions that the firm facilitates, and multiproduct markets.