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.     

Exploring the Nonlinear Impact of Organizational Integration on New Product Market Success

This article explores the nonlinear relationship between organizational integration and new product market success (NPMS). The concept of organizational integration was measured by assessing the degree of integration among various groups of people involved in the development of new products including new product development (NPD) teams that are typically the focal points of NPD efforts. New product market success was measured by examining four often‐used measures of NPD success. The mail survey research approach was used to gather empirical data from NPD managers in three major industries. The data gathered from this survey process were used as the basis from which to extract information to address this study's major research questions, which include: (1) How is the degree of new product market success related to the nonlinear degree to which groups of people (including NPD teams) integrate during NPD processes? and (2) How is the degree of new product market success related to the nonlinear degree to which separate groups of people (e.g., customers, suppliers, and functional departments) integrate during NPD processes? This study found that high levels of organizational integration (overall organizational integration and supplier organizational integration) during NPD processes are associated with high levels of new product market success. Additionally, this study found that the relationship between new product market success and organizational integration (customer organizational integration and functional organization integration) during NPD processes exhibit nonlinear, U‐shaped relationships. Therefore, the first important finding of this study confirms that various forms of organizational integration impact in a positive way the market success of new products. This suggests that management responsible for all NPD projects should consciously integrate important groups of people to support such developments. This study's findings also confirm and imply that new product developers in the studied industries should integrate marketing and research and development (R&D) over the duration of the NPD process. This suggests that new product managers must be proactive to assure that members of NPD teams are actively engaged with groups of supporting people within and outside new‐product–producing organizations. Unlike prior research, a major finding of this study suggests that the association between organizational integration and new product market success does not form inverted U‐shaped relationships. Data from this research imply that new product market success is linearly influenced by overall and supplier organizational integration. However, this study's data suggest that new product market success is nonlinearly influenced by customer and functional organizational integration. This study's data suggest that when customer organizational integration and/or functional organizational integration is increased, new product market success can be increased at a rate which is greater than a linear rate.     

Determinants of integrated product development diffusion

Integrated product development (IPD) is an approach for developing new products focused on the early and active involvement of design, manufacturing, marketing and other key new product development (NPD) stakeholders in order to achieve cross-functional integration and concurrent execution of various NPD activities. The benefits of IPD are well known in both the academic literature and popular press, including significant reductions in NPD cycle time and costs. However, in spite of these benefits, for the majority of manufacturing organizations, IPD is not used on 100% of NPD projects. This research develops a model of the organizational contextual factors influencing the diffusion of IPD in organizations. Results of surveying 269 NPD managers indicate that the complexity of certain IPD practices and support for IPD directly influence IPD diffusion, while an innovative organizational climate and the complexity of the organization's NPD activities indirectly influence IPD diffusion through IPD support.     

A multilevel investigation of factors influencing creativity in NPD teams

Understanding creativity in the context of a new product development (NPD) team is of paramount importance, especially in the high-technology industry where creativity is a key resource. Building on the mood-as-input model, this study examines how contextual factors (organizational support and organizational control) moderate the relationship between team affective tone and team creativity. The data collected comprise 343 sets of responses involving 106 NPD teams drawn from high-technology firms. The results of this study show that negative affective tone relates positively to team creativity when organizational support is high and organizational control is low, but the linkage between positive affective tone and team creativity as moderated by context factors is found to be insignificant. This article likewise includes research limitations, future research directions, and theoretical and managerial implications.     

The Effects of Environmental Turbulence on New Product Development Strategy Planning

Managers need guidance on how to cope with turbulent environments in order to improve corporate performance. Research on environmental turbulence has suggested that firms adopt a less centralized, more organic structure in dynamic, uncertain environments. Little work has been done specifically, however, on how environmental turbulence affects strategy planning for new product development (NPD). In this article, we specify a baseline model with firm innovativeness, market orientation and top management risk taking as antecedents to NPD speed and corporate strategic planning; these in turn are modeled as antecedents to NPD program (not project) performance. Two conceptualizations of the role of environmental turbulence are examined: (1) that market turbulence and technological turbulence are additional direct antecedents to NPD program performance; and (2) that the baseline model is moderated by turbulence (that is, that the strengths of the paths differ depending on levels of turbulence). A cross-sectional survey methodology including four diverse industries [automotive, electronics, publishing, and manufacturing/research and development (R&D) laboratories] was used to test the hypotheses. The latter conceptualization is supported. In particular, the paths from innovativeness to strategic planning and from risk taking to NPD speed are significantly greater in highly turbulent environments. A set of managerial recommendations and implications are provided. First, managers must recognize the possible improvements in new product performance by actively including NPD personnel in corporate strategic planning and also by involving corporate planners in NPD activities. Second, managers also should recognize that turbulent environments heighten the need to make risky investments, and sometimes, risky decisions; risk-taking decisions ought to be encouraged in such environments.     

New Product Strategy, Structure, Process, and Performance in the Telecommunications Industry

A continuous flow of new products is the lifeblood for firms that hope to remain competitive in high-technology industries such as telecommunications. Faced with rapidly shrinking product life cycles, these firms must aggressively pursue the quest for more effective new product development (NPD). Ongoing success in such industries is dependent on choosing the right mix of new product strategy, organizational structure, and NPD processes. Rather than considering the interrelationships among these success factors, however, most previous studies of NPD have examined these issues individually. This shortcoming is compounded by the fact that past studies of NPD have typically cut across industry lines. Gloria Barczak addresses these problems by proposing that a firm's choice of new product strategy, structure, and process are interrelated, as are the effects of those choices on NPD performance. Because these choices and their effects also may be dependent on the unique characteristics of the industry in which a firm competes, her study focuses exclusively on firms in a specific, high-technology industry, telecommunications. The study finds that no single NPD strategy, in and of itself, stands out as being better than any other for the telecommunications industry. Instead, it appears that a company's focus should be on ensuring the best possible fit between its chosen NPD strategy and its corporate goals and capabilities. In keeping with the current focus on cross-functional teams, the study results indicate that project teams and R&D teams are the most effective means for organizing NPD efforts in the telecommunications industry. Perhaps not surprisingly, R&D teams are more important for first-to-market firms than they are for fast followers and late entrants. An R&D team provides the technical skills necessary for playing the role of pioneer. Regardless of the firm's NPD strategy and structure, the presence of a product champion is an important element in the success of new product efforts. In an era of rapid, technological advances, idea generation and screening efforts are essential to the success of telecommunications firms. To ensure that they do not fall into the trap of introducing technology for technology's sake, pioneering and fast-follower firms in particular must recognize the importance of staying in touch with their markets. Such market-oriented activities as customer prototype testing and concept definition and testing can help these firms ensure that their technological developments are in line with customer needs and requirements.     

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.     

The Impact of Market Orientation, Product Advantage, and Launch Proficiency on New Product Performance and Organizational Performance

Some scholars have suggested recently that a market‐oriented culture leads to superior performance, at least in part, because of the new products that are developed and are brought to market. Others have reinforced this wisdom by revealing that a market‐oriented culture enhances organizational innovativeness and new product success, both of which in turn improve organizational performance. These scholars do not reveal, however, through which new product development (NPD) activities a market‐oriented culture is converted into superior performance. To determine how critical NPD activities are for a market‐oriented firm to achieve superior performance, our study uses data from 126 firms in The Netherlands to investigate the structural relationships among market orientation, new product advantage, the proficiency in new product launch activities, new product performance, and organizational performance. We focus on product advantage—because product benefits typically form the compelling reasons for customers to buy the new product—and on the launch proficiency—as the launch stage represents the most costly and risky part of the NPD process. Focusing on the launch stage also is relevant because it is only during the launch that it will become evident whether a market orientation has crystallized into a superior product in the eyes of the customer. The results provide evidence that a market orientation is related positively to product advantage and to the proficiency in market testing, launch budgeting, launch strategy, and launch tactics. Product advantage and the proficiency in launch tactics are related positively to new product performance, which itself is related positively to organizational performance. Market orientation has no direct relationship to new product performance and to organizational performance. An important implication of our study is that the impact of a market orientation on organizational performance is channeled through the effects of a market orientation on product advantage and launch proficiency; subsequently through the effects of product advantage and the proficiency in launch tactics on new product performance; and finally through the effect of new product performance on organizational performance. These channeling effects are much more subtle and complex than the direct relationship of market orientation on organizational performance previously assumed. Another implication of our study is that the impact of a market orientation on performance occurs through the launch activities rather than being pervasive to all organizational processes and activities. A reason for this finding may be that NPD is the one element of the marketing mix that predominantly is the responsibility of the firm, whereas promotion and distribution often are in control of organizations outside the firm (e.g., advertising agencies, major retailers) and whereas the channel or the market often dictates the price. Both implications provide ample opportunities for further research on market orientation and NPD.     

An Examination of Collaboration in High-Technology New Product Development Processes

For more than a decade, researchers have explored the benefits of eliminating organizational boundaries between participants in the new product development (NPD) process. In turn, companies have revamped their NPD processes and organizational structures to deploy cross-functional teams. These efforts toward interfunctional integration have produced a more responsive NPD process, but they don’t represent the endgame in the quest for more effective NPD. What’s next after the interfunctional walls come down?Pointing out that many high-tech firms have already taken such steps as integrating customers and suppliers into the NPD process, Avan Jassawalla and Hemant Sashittal suggest that such firms need to go beyond integration and start thinking in terms of collaboration. Using information from a study of 10 high-tech industrial firms, they identify factors that seem to increase cross-functional collaboration in NPD, and they develop a conceptual framework that relates those factors to the level of cross-functional collaboration achieved in the NPD process.Compared to integration, collaboration is described as a more complex, higher intensity cross-functional linkage. In addition to high levels of integration, their definition of cross-functional collaboration includes the sense of an equal stake in NPD outcomes, the absence of hidden agendas, and a willingness on the part of participants to understand and accept differences while remaining focused on the organization’s common objectives. Collaboration also involves synergy—that is, the NPD outcomes exceed the sum of the capabilities of the individual participants in the NPD process.Their framework suggests that structural mechanisms such as cross-functional teams can provide significant increases in NPD-related interfunctional integration. However, high levels of integration do not necessarily equate to high levels of collaboration. Characteristics of the organization and the participants also affect the level of collaboration. For example, achieving a high level of collaboration depends on participants who contribute an openness to change, a willingness to cooperate, and a high level of trust. Their framework also points to key organizational factors that affect the level of collaboration—for example, the priority that senior management gives to NPD and the level of autonomy afforded to participants in the NPD process.     

Antecedents and consequences of the strategic orientations in new product development: The case of Chinese manufacturers

The objective of the present study is to advance the understanding of the role of the strategic orientation of the firm for successful new product development (NPD), in the context of Chinese manufacturing firms. Through field research accompanied by a review of the related literature, this study identifies customer orientation and technology orientation as crucial strategic components that are important to successful new product development. This research proposes a conceptual model of strategic orientations, in which firm-internal (organizational support) and -external (environmental turbulence) factors are expected to influence strategic orientations, which, in turn, impact NPD performance. The model is tested using data collected from a large-scale survey of 232 manufacturing firms in China. The results largely support the hypotheses derived from the conceptual model. First, organizational support and environmental turbulence have a positive influence on the implementation of strategic orientations. Second, the two strategic orientations show a different pattern of performance implications.     

“Squeezing R&D”: A Study of Organizational Slack and Knowledge Creation in NPD,Using the SECI Model

During new product development (NPD), functional areas such as marketing, R&D, and manufacturing work together to understand customer needs, create product concepts, and solve technical issues. NPD is dependent on the creation of new knowledge and the interplay between tacit knowledge (knowledge that is difficult to articulate and codify) and explicit knowledge (knowledge that can be codified and documented). Knowledge creation requires time and resources, and the dichotomy facing senior management is how much spare capacity in NPD teams—so‐called organizational slack—is appropriate. Too much organizational slack and precious development resources will be wasted; but when slack is eliminated, there is a danger that knowledge creation will be severely hindered. There have been very few studies of organizational slack at the project level, and so the aim of our research was to examine the impact of changes in organizational slack on knowledge creation in NPD projects. Six projects were studied at two companies, over a two‐year period. Multiple sources of data were used to determine how changes in organizational slack impacted knowledge creation, which was operationalized using Nonaka's socialization, externalization, combination, and internalization (SECI) model. It was found that the creation of knowledge in NPD projects is susceptible to changes in organizational slack. A significant finding was that every time there were changes in organizational slack, there was always some impact on knowledge creation. Increased slack enabled knowledge creation; but, importantly, the impacts of decreasing organizational slack were often very negative and disrupted the work of NPD teams, particularly at the end of projects. Managers who feel that “squeezing R&D” is important should think again—their action might disrupt knowledge creation and compromise innovation.     

Organizing for new product development speed and the implications for organizational stress

This study examines the effects of bureaucratic structure and organizational control on new product development (NPD) speed. It also examines the effects of NPD speed on organizational stress. The empirical findings from 130 US manufacturing companies can be summarized as follows. Formalized structures and centralized structures have a negative impact on invention speed. Formal controls have a positive impact on innovation speed. Informal controls have a positive impact on both invention speed and innovation speed. Invention speed has a positive impact on organizational stress and innovation speed has a negative impact on organizational stress.     

Can You Hear Me Now? Communication in Virtual Product Development Teams*

Globalization and technological advances are driving organizations to extend the boundaries of new product development (NPD) teams from traditional colocated settings to dispersed or virtual settings. Virtual NPD teams have a wide array of information and communication technologies (ICTs) at their disposal. ICTs allow team members to communicate and collaborate as they cope with the opportunities and challenges of cross‐boundary work. The purpose of this paper is to explore ICT use by members of virtual NPD teams. This study presents an exploratory test and integration of two competing perspectives of media use in virtual teams: media capacity theories and social dynamic media theories. Specifically, this paper examines the role of task type, organizational context, and ICT type as critical contingency variables affecting ICT use. It also examines how different patterns of ICT use relate to individual perceptions of team performance. The findings from this study of 184 members of virtual NPD teams in three global firms suggest that communication via ICTs in virtual NPD teams is contingent on a range of factors.     

Customer Empowerment in New Product Development*

The traditional new product development (NPD) model, in which companies are exclusively responsible for coming up with new product ideas and for deciding which products should ultimately be marketed, is increasingly being challenged by innovation management academics and practitioners alike. In particular, many have advocated the idea of democratizing innovation by empowering customers to take a much more active stake in corporate NPD. This has become feasible because the Internet now allows companies to build strong online communities through which they can listen to and integrate thousands of customers from all over the world. Extant research has provided strong arguments that indicate that customer empowerment in NPD enables firms to develop better products and at the same time to reduce costs and risks if customers in a given domain are willing and able to deliver valuable input. Customer empowerment, however, not only affects the firm's internal NPD processes as reflected in the products that are ultimately marketed. Instead, it might also affect the way companies are perceived in the marketplace (by customers who observe that companies foster customer empowerment in NPD). This paper provides the first empirical study to explore how customers from the “periphery” (i.e., the mass that does not participate) perceive customer empowerment strategies. Customer empowerment in NPD is conceptualized along two basic dimensions: (1) customer empowerment to create (ideas for) new product designs; and (2) customer empowerment to select the product designs to be produced. Therefore, customers may be empowered to submit (ideas for) new products (empowerment to create) or (2) to “vote” on which products should ultimately be marketed (empowerment to select). In the course of two experimental studies using three different product categories (T‐shirts, furniture, and bicycles) both customer empowerment dimensions (as well as its interaction) are found to lead to (1) increased levels of perceived customer orientation, (2) more favorable corporate attitudes, (3) and stronger behavioral intentions. These findings will be very useful to researchers and managers interested in understanding the enduring consequences of customer empowerment in NPD. Most importantly, the results suggest that empowerment strategies might be used to improve a firm's corporate associations as perceived by the broad mass of (potential) customers. In particular, marketers might foster customer empowerment as an effective means of enhancing perceived customer orientation. Customers will in turn provide rewards, as they will form more favorable corporate attitudes and will be more likely to choose the products of empowering as opposed to nonempowering companies, ceteris paribus. Customer empowerment thus constitutes a promising positioning strategy that managers can pursue to create a competitive advantage in the marketplace.     

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.     

Resource Dedication and New Product Performance: A Resource‐Based View

Corporate investments in new product development (NPD) initiatives are strategically effective activities that are instrumental in contributing to new product performance. Given that a fundamental nature of product development is the ability to exploit new product opportunities, the authors investigate the firm‐level impact that corporate investments in knowledge workers and financial NPD resources have on new product performance. They track the resource dedication and new product financial performance of 41 firms over a seven‐year period. Our results provide evidence that financial investments have a contemporaneous return on investment while knowledge worker investments provide companies with both contemporaneous and carryover returns. When formulating strategy and making NPD resource allocation decisions, managers must remain cognizant of the time‐dependent nature of resource investments, the need for persistent investment, and the resulting performance impact.     

Information technology tool use frequency in new product development: The effect of stage-specific use frequency on performance

Drawing from the Resource-based View of the firm and based on prior literature, we examine two organizational factors that top management can control (‘executive champion for IT’ and ‘formalized ROI for IT’) for enhancing information technology (IT) tool use during new product development (NPD). Further, we investigate the subsequent effects of IT tool use on NPD task proficiency and performance. Moreover, research on IT use in NPD has matured enough to suggest that the effect of IT tool use on outcomes should be examined with a decompositional approach in order to flesh out the nuances on consequences. Hence, adopting a phase-based approach, we examine the differences in the effects at three separate NPD stages: discovery, development, and commercialization. The model is empirically tested with data collected from large-sized Japanese firms. The results of structural equation modeling show that executive champion for IT positively influences tool usage in all three stages, and formalized ROI for IT has positive effect on enhancing NPD task proficiency in discovery and development. Further, IT tool use frequency enhances NPD task proficiency with varying effect sizes in all three stages, highest in discovery and lowest in commercialization. Finally, concurring with prior literature, task proficiency is found to affect NPD performance positively. Based on these findings, we discuss theoretical and managerial implications as well as provide specific suggestions for future research.     

Product Development and Learning in Project Teams: The Challenges Are the Benefits*

The value of teams in new product development (NPD) is undeniable. Both the interdisciplinary nature of the work and industry trends necessitate that professionals from different functions work together on development projects to create the highest‐quality product in the shortest time. Understanding the conditions that facilitate teamwork has been a pursuit of researchers for nearly a half century. The present paper reviews existing literature on teams and team learning in organizational behavior and technology and innovation to offer insights for research on NPD teams. Building on prior work, the organizational benefits of NPD teams are summarized, and five attributes of these teams are identified that hinder attainment of their potential: (1) project complexity; (2) cross‐functionality; (3) temporary membership; (4) fluid team boundaries; and (5) embeddedness in organizational structures. It is argued here that effective management of these five attributes allows not only organization‐level benefits but also team‐level benefits in the form of new capabilities and team member resilience. The critical roles of leadership and of communication and conflict management training are then highlighted as strategies for overcoming the challenges to team effectiveness in NPD as well as for realizing five team benefits: (1) project management skills; (2) broad perspective; (3) teaming skills; (4) expanded social network; and (5) boundary‐spanning skills. The paper concludes with a discussion of the implications of these ideas for conducting future team research.     

How Formal Control Influences Decision‐Making Clarity and Innovation Performance

Implementing formal planning instruments such as the stage‐and‐gate‐type system (SGS) and project management (PM) have long been seen as the key to new product development (NPD) success. They create the structure needed for managing NPD activities, supporting coordination among functional groups, reducing uncertainty and error, and assuring time and cost efficiency. But recent research presents ambiguous results, suggesting that SGS and PM as formal controls can also have a negative effect. Integrating ideas from three literatures—i.e., NPD management, organization control theory, and technical control theory—the present study assesses NPD programs in terms of three perspectives: (1) the formal control mechanisms used for managing NPD programs—specifically SGS, which is mainly seen as a higher organizational level approach used for guiding and implementing a portfolio of NPD projects, and PM, which is a precise formal control mechanism relevant for managing specific problems at a single project level; (2) the immediate outcome of the application of formal controls, i.e. decision‐making clarity (DMC); and (3) degree of NPD innovativeness, a key contingency hypothesized to impact the efficacy of formal controls. For the empirical analysis, data are collected through a survey of 162 corporate NPD programs (Austria and Denmark, manufactured goods and services) where a total of 1274 respondents provide information relevant to their position. Hierarchical regression analysis is used to test the relationships. Results indicate that the performance effect of NPD formal control is fully mediated by DMC. Further, of the six hypothesized outcome relationships, four are fully supported. Both SGS and PM are effective systems for managing NPD when degree of innovativeness is not taken into account. PM, however, loses its efficacy at higher degrees of NPD program innovativeness while SGS continues to work at achieving positive DMC at the radical end of the innovativeness spectrum. Analysis of interaction effects indicates that for more innovative NPD programs, best results are achieved when companies implement an interactive system of both SGS and PM, where the two systems complement each other.     

Does Strategic Planning Enhance or Impede Innovation and Firm Performance?*

Does strategic planning enhance or impede innovation and firm performance? The current literature provides contradictory views. This study extends the resource‐advantage theory to examine the conditions in which strategic planning increases or decreases the number of new product development projects and firm performance. The authors test the theoretical model by collecting data from 227 firms. The empirical evidence suggests that more strategic planning and more new product development (NPD) projects lead to better firm performance. Firms with organizational redundancy benefit more from strategic planning than firms with less organizational redundancy. Increasing R&D intensity boosts both the number of NPD projects and firm performance. Strategic planning is more effective in larger firms with higher R&D intensity for increasing the number of NPD projects. The results reported in this study also consist of several findings that challenge the traditional views of strategic planning. The evidence suggests that strategic planning impedes, not enhances, the number of NPD projects. Larger firms benefit less, not more, from strategic planning for improving firm performance. Larger firms do not necessarily create more NPD projects. Increasing organizational redundancy has no effect on the number of NPD projects. These empirical results provide important strategic implications. First, managers should be aware that, in general, formal strategic planning decreases the number of NPD projects for innovation management. Improvised rather than planned activities are more conducive to creating NPD project ideas. Moreover, innovations tend to emerge from improvisational processes, during which the impromptu execution of NPD activities without planning spurs “thinking outside the box,” which enhances the process of creating NPD project ideas. Therefore, more flexible strategic plans that accommodate potential improvisation may be needed in NPD management since innovation‐related activities cannot be planned precisely due to the unexpected jolts and contingencies of the NPD process. Second, large firms with high levels of R&D intensity can overcome the negative effect of strategic planning on the number of NPD projects. Specifically, a firm's abundant resources, when allocated and deployed for NPD activities, signal the high priority and importance of the NPD activities and thus motivate employees to acquire, collect, and gather customer and technical knowledge, which leads to creating more NPD projects. Finally, managers must understand that managing strategic planning and generating NPD project ideas are beneficial to the ultimate outcome of firm performance despite the adverse relationship between strategic planning and the number of NPD projects.