Launch Strategy and New Product Performance: An Empirical Examination in The Netherlands

Although previous research has investigated the concept and contents of new product performance, there is still no consensus about the managerial decisions that constitute a launch strategy and how such decisions impact new product performance. The research objective for the present investigation is to assess the impact of launch strategy and market characteristics on new product performance and to test the stability of this impact across consumer and industrial products. Data were collected on 272 consumer and industrial new products in The Netherlands through a mail questionnaire approach. We based our definition of a launch strategy on an extensive literature review and interviews with managers. Our conceptualization of new product performance represented two dimensions, namely, market acceptance and product performance. The market acceptance dimension reflects the new product's market position and sales levels. The product performance dimension refers to the quality and technical performance level of the new product. This richer specification of the dependent variable provides a better view on which launch decisions impact which dimensions of new product performance. The impact of launch strategy was higher for market acceptance than for product performance, overall and for both consumer and industrial subsamples separately. In line with results from recent studies, overall, market acceptance is influenced by the product's innovativeness, timing of market entry, breadth of assortment, branding, pricing, the objective of increasing market penetration, and competitor reactions. Product performance is influenced by the product's innovativeness, breadth of assortment, and by the objective of using an existing market. Analyzing the consumer and industrial products separately showed that the general picture of launch decisions and their impact on the dependent variables was comparable across the total sample and both subsamples, indicating that heterogeneous samples in new product launch research may not cause major interpretation problems. Second, the analyses revealed that some launch decisions are more important in attaining new product success for consumer products than for industrial products, and vice versa. While these decisions do not lead to contradicting results in the samples, they show that some decisions may be especially relevant for only consumer or industrial products. We discuss research and managerial implications of the results.     

Knowledge relatedness and the performance of multibusiness firms

This study examines corporate performance effects of cross‐business knowledge synergies in multibusiness firms. It synthesizes the resource‐based view of diversification and the economic theory of complementarities to conceptualize cross‐business knowledge synergies in terms of the relatedness and the complementarity of knowledge resources across business units of the multibusiness firm. The study hypothesizes that corporate performance is improved when the firm simultaneously exploits a complementary set of related knowledge resources across its business units. In a sample of 303 multibusiness firms, the study finds that synergies arising from product knowledge relatedness, customer knowledge relatedness, or managerial knowledge relatedness do not improve corporate performance on their own. Synergies arising from the complementarity of the three types of knowledge relatedness significantly improve both market‐based and accounting‐based performance of the multibusiness corporation. Copyright © 2004 John Wiley & Sons, Ltd.     

All experience is not created equal: learning,adapting, and focusing in product portfolio management

This study explores the contingencies relating firm experience to product development capabilities, focusing on experience type (breadth versus depth) and timing (prior versus concurrent). Results from empirical tests in the U.S. mutual fund industry offer two primary findings. First, firms increase proficiency at adapting their processes to address new opportunities as they accumulate experience in entering new niches, but face initial hurdles broadening their experience base. Second, concurrent learning is capacity constrained, as product quality increases in the number of products introduced simultaneously in one niche, but quality decreases as the firm's concurrent portfolio of new products broadens. Jointly, these findings highlight that dynamic capabilities are built through prior adaptation experience and that management of a product development portfolio is an important managerial capability. Copyright © 2011 John Wiley & Sons, Ltd.     

Structural vs. relational embeddedness: social capital and managerial performance

This paper examines the impact of managers' social capital on managerial performance. Two dimensions of social capital are compared—the structural embeddedness (i.e., configuration) of a manager's network of work relations and the relational embeddedness (i.e., quality) of those relations. Based on a sample of 120 product and sales managers in a Fortune 100 pharmaceutical firm, this paper presents evidence indicating that both elements of social capital influence managerial performance, although in distinct ways: structural embeddedness plays a stronger role in explaining more routine, execution‐oriented tasks (managerial sales performance), whereas relational embeddedness plays a stronger role in explaining new, innovation‐oriented tasks (managerial performance in product and process innovation). This research considers resource exchanges within firms as key to value creating behaviors and contributes a deeper understanding of how social capital influences productive resource exchanges. Copyright © 2005 John Wiley & Sons, Ltd.     

Social networking relationships,firm‐specific managerial experience and firm performance in a transition economy: A comparative analysis of family owned and nonfamily firms

The effect of social networking relationships, firm‐specific managerial experience, and their interactions on performance between family owned and nonfamily firms are studied. Using data from 106 organizations in Ghana, the findings show that family owned firms benefit more from networking relationships with bureaucratic officials than do nonfamily firms. However, nonfamily firms benefit more from networking relationships with community leaders and firm‐specific managerial experience than do family owned firms. Networking relationships with politicians impede performance for nonfamily firms. Nonfamily firms are better able than family owned firms to use their firm‐specific managerial experience to manage the resources and capabilities obtained from networking relationships with community leaders to create value. Moreover, firm‐specific managerial experience attenuates the detrimental effects of networking with politicians for both types of firms. Copyright © 2012 John Wiley & Sons, Ltd.     

Firm and destination-specific export costs: The case of the Swedish food sector

This paper focuses on sunk export costs in the Swedish food and beverage sector. Its purpose is threefold. First, it investigates whether the estimation of the importance of sunk costs is sensitive to persistence bilateral (firm-destination) effects such as specific market knowledge compared to firm-specific effects such as managerial skills or product quality. Second, it analyses the effects of firm and market characteristics on firms’ export decisions. Third, it tests whether the importance of sunk costs varies with destination as well as firm characteristics. The main results are: (1) that firm-destination effects are more important than general, unobserved firm characteristics, (2) that more productive and larger firms are more likely to export and that firms’ expectations from exporting increase with market size and exchange rate stability, and (3) that the importance of sunk export costs varies with firm and market characteristics.     

Adoption of New Products by the Sales Force: The Construct, Research Propositions, and Managerial Implications

Some firms take salesforce commitment to any new product as a given, seemingly adopting the attitude, “If we build it, they will sell.” However, management has no guarantee of salesforce commitment to a new product. For various reasons, salespeople may fail to sell a new product, or they may engage in dysfunctional behavior during the selling process—for example, misrepresenting the product's benefits to gain short-term sales. Ensuring salesforce adoption of a new product requires careful consideration of the characteristics of the product, the competitive environment, the firm, and the members of the salesforce. In other words, managers who hope to engender support for a new product would do well to view the salespeople as a first line of customers. Successfully launching a new product to the company's salesforce requires the same high levels of creativity, energy, and managerial insight as does the product's launch into the marketplace. Consequently, managers and researchers need to examine more closely the factors underlying the successful launch of a new product to a firm's salesforce. As a first stop toward gaining greater insight into those factors, Kwaku Atuahene-Gima develops a model for exploring the characteristics that affect new-product adoption by the salesforce. His model suggests that a salesperson's commitment to a new product depends, to a large extent, on the salesperson's learning style, performance orientation, and problem-solving style. For example, he proposes that, compared to their colleagues with systematic problem-solving styles, salespeople with intuitive problem-solving styles are more likely to adopt a new product and are less likely to engage in dysfunctional behavior in the selling process. The model also suggests that the salesforce's perceptions of the firm's commitment to new products, tolerance for failure, and attitude toward intradepartmental conflict during the product development process play key roles in determining whether the salesforce will take an active, positive approach to selling the new product. For example, a firm that views occasional failures as opportunities for learning and growth offers an environment in which salespeople can accept the risks that selling a new product entails. The proposed model also takes into account the moderating effects of the product's innovativeness, the intensity of market competition, and the type of sales control systems that the firm uses.     

Salesperson competitive intelligence and performance: The role of product knowledge and sales force automation usage

This research models and tests the relationship between a salesperson's product knowledge, competitive intelligence behaviors (SCIB), and performance. Moreover, the research examines how a salesperson's use of a sales force automation (SFA) system influences the knowledge–SCIB–performance relationship. Our model and empirical evidence suggest that a salesperson's product knowledge influences performance indirectly through SCIB, and that this indirect influence is moderated by salesperson SFA use. Results show that the indirect positive influence of salesperson product knowledge on salesperson performance through SCIB is attenuated as SFA use increases, and enhanced when SFA use decreases. Theoretical and managerial implications are presented, followed by a discussion of limitations and future research.     

How do international joint ventures create shareholder value?

This study attempts to identify conditions under which announcements of international joint venture (JV) formation lead to increases in shareholder value of participating U.S. firms. It does so by combining the singular theoretical foci of previous work on the topic and specifying previously unconsidered, but conceptually important, influences on firms' expected JV performance. The study's findings indicate support for the hypothesized effect of variables in partners' task‐related, competitive, and structural context(s), but not those in these firms' partner‐related and institutional context(s). Specifically, partner–venture business relatedness, the pursuit of R&D‐oriented activity, greater equity ownership, and large firm size, all are found to have a positive impact on firms' JV‐based value creation. Although this study finds support for the performance impact of firm‐level competition, the direction of this impact is contrary to that hypothesized. No support is found for hypothesized effect of partner–partner business relatedness, previous JV experience, partners' relative firm size, (national) cultural relatedness, and JV host country political risk. Copyright © 2000 John Wiley & Sons, Ltd.     

Managerial compensation and corporate spinoffs

Research summary : This article investigates how corporate spinoffs affect managerial compensation. These deals are found to improve the alignment of spinoff firm managers' incentive compensation with stock market performance, especially among spinoff firm managers that used to be divisional managers of the spun‐off subsidiary, and particularly when the spun‐off subsidiary performs better than or is unrelated to its parent firm's remaining businesses. By contrast, incentive alignment does not improve for the parent firm managers running the divesting companies. This finding appears to be driven by a significant post‐spinoff increase in these managers' incentive compensation, the magnitude of which is inversely related to governance quality in their firms. Together, these results elucidate how spinoffs influence managerial compensation in diversified firms and the companies they divest. Managerial summary : This article explores how spinoffs affect incentive alignment: the correlation between incentive compensation and stock market performance. The incentive alignment of spinoff firm managers improves following these deals. These gains are the largest when spinoff firm managers used to be divisional managers of the spun‐off subsidiary and when the spun‐off subsidiary performs better than or is unrelated to the other businesses in the parent firm. By contrast, incentive alignment does not improve for parent firm managers. Instead, the level of these managers' incentive compensation rises significantly post‐spinoff, and the magnitude of this increase is inversely related to governance quality in these firms. Together, these results shed light on the ways in which spinoffs influence managerial compensation in diversified firms and in the companies they divest. Copyright © 2015 John Wiley & Sons, Ltd.     

Increase in takeover protection and firm knowledge accumulation strategy

Research summary : We argue that the extent to which a firm faces takeover threats affects its knowledge structure. In particular, takeover threats may lead to managers' reluctance to adopt a strategy toward firm‐specific knowledge accumulation because implementing this strategy requires them to acquire specialized skills, which are at risk under takeover threats. Conversely, takeover protection leads to an increase in firm‐specific knowledge. Further, the relationship between takeover protection and firm‐specific knowledge is positively moderated by managerial ownership, which helps align managerial interests with those of shareholders. But the relationship is negatively moderated by managerial tenure, as long‐tenured managers have already committed to their firms. Using a differences‐in‐differences method with Delaware antitakeover rulings in the mid‐1990s as an exogenous shock, we found results supporting these arguments. Managerial summary : We examined how changes in the Delaware antitakeover rulings in mid‐1990s affected the knowledge structure of firms incorporated in Delaware. We reasoned that with a greater level of takeover protection, top managers of those firms incorporated in Delaware felt higher job security, thus providing them stronger incentives to make strategic decisions toward the development of firm‐specific knowledge and to make corresponding human capital investments in specialized skills. Empirically, firms incorporated in Delaware were found to have an increase in the level of firm‐specific knowledge in their knowledge structure after the mid‐1990s. Furthermore, our analysis suggests that the role of takeover protection on top manager incentives is particularly salient when the managers are awarded with more company shares and when the managers have shorter organizational tenure. Copyright © 2015 John Wiley & Sons, Ltd.     

Acquisition vs. internal development as modes of market entry

An established firm can enter a new product market through acquisition or internal development. Predictions that the choice of market entry mode depends on ‘relatedness’ between the new product and the firm's existing products have repeatedly failed to gain empirical support. We resolve ambiguity in prior work by developing dynamic measures of relatedness, and by making a distinction between entries inside vs. outside a firm's primary business domain. Using a fine‐grained dataset on the telecommunications sector, we find that inside a firm's primary business domain, acquisitions are used to fill persistent gaps near the firm's existing products, whereas outside that domain, acquisitions are used to extend the enterprise in new directions. Copyright © 2009 John Wiley & Sons, Ltd.     

Managerial ties and firm performance in an emerging economy: Tests of the mediating and moderating effects

Although the literature documents the direct effects of managerial ties on firm performance, the empirical results are divergent and inconclusive. To explain these disparities, this study (1) develops and tests a model that establishes the role of external resource acquisition as a salient mediating mechanism through which managers’ business and political ties influence firm performance; and (2) examines the moderating role of environmental turbulence that further explains the impact of managerial ties on resource acquisition (the mediator). Results from a survey of 253 firms in China indicate that resource acquisition plays a partial mediating role in the relationships between the two sub-dimensions of managerial ties and firm performance. Environmental turbulence shows a curvilinear (i.e., inverted U-shaped) moderating effect on the business ties–resource acquisition relationship, whereas it dampens the positive effect of political ties on resource acquisition. Theoretical and managerial implications are discussed.     

Cooperation and the Ability to Minimize the Time and Cost of New Product Development within the Spanish Automotive Supplier Industry

New product development (NPD) cycle time has become a strategic competitive weapon for corporations and a focus for research on product development management. Reducing NPD cycle time may create relative advantages in market share, profit, and long‐term competitiveness. This article follows recent research that already has moved beyond anecdotes and case studies to test factors empirically and variables that are associated with the company's NPD time and cost minimization abilities. One emerging research area is the impact of comprehensive lists or sets of firm variables (not project variables) on the ability to speed up NPD. At the same time, several authors' findings suggest a contingency approach to speeding up innovation. Contingency theory argues that there is not one “best answer” to a particular problem: Instead, the appropriateness of managerial interventions is dependent on the prevailing conditions that surround that problem. On the issue of NPD, several scholars point out that cooperation accelerates learning and product development: Firms that combine resources can gain a competitive advantage over firms that are unable to do so, and this is viewed as one of the key benefits of interfirm cooperation. A firm's network of cooperations represent a valuable resource that can yield differential returns in the same way as other tangible and intangible assets such as product brands or R&D capabilities. Combining both lines of research, this study seeks to add to the growing literature and further to inform practicing managers in speeding up NPD by analyzing the relationship between cooperation and the use of some NPD firm practices. This article shows the results of a survey of 63 Spanish automotive suppliers to test the moderation effect of cooperation in the relationship between the use of NPD firm practices and the company's NPD time and cost minimization abilities. Factor and regression analyses were used to test the article's hypotheses. It was found that high‐cooperation companies used more intensively sets of firm practices than low‐cooperation companies. It also was found that two out of four identified factors of NPD firm practices—Design‐Manufacturing Interface and Cross‐Functional Design—were related positively to the company's NPD time and cost minimization abilities in the subsample of high‐cooperation companies but not in the low‐cooperation companies. These results support late research in the area of speeding up NPD. The article discusses some implications for managers.     

Making the most of what you have: managerial ability as a source of resource value creation

The current study investigates a central premise of the resource‐based view of the firm—that managers are a potential source of value creation for the firm. Using data from professional sports teams, we test theory regarding the effects of managerial ability, human resource stocks, and managers' actions on resource value creation. While results indicate managerial ability affects resource productivity, this effect is less pronounced with increases in the quality of firm resources. Further, we investigate the extent to which managerial actions that synchronize resource bundles account for the influence of managerial ability and resource context on a firm's performance advantage. These results contribute to our understanding of resource management and provide empirical evidence for the importance of managerial ability in the resource‐based view. Copyright © 2008 John Wiley & Sons, Ltd.     

The Impact of a Creativity‐supporting Work Environment on a Firm's Product Innovation Performance

Many scholars and practitioners have suggested that a creativity‐supporting work environment contributes to a firm's product innovation performance. Although there is evidence that such an environment enhances innovative behavior at individual level, very few studies address the effect of a creativity‐supporting work environment on product innovation performance at firm level, and the results are inconsistent. This paper examines the relationship between a firm's creativity‐supporting work environment and a firm's product innovation performance in a sample of 103 firms. For measuring a firm's creativity‐supporting work environment, a comprehensive and creativity‐focused framework is used. The framework consists of 9 social‐organizational and 12 physical work environment characteristics that are likely to enhance employee creativity. These characteristics contribute to the firm's overall work environment that supports creativity. The firm's product innovation performance is defined by two distinct concepts: new product productivity (NP productivity), which is the extent to which the firm introduces new products to the market, and new product success (NP success), which is the percentage of the firm's sales from new products. In most firms, different knowledgeable informants provided the data for the variables. The results show that firms with creativity‐supporting work environments introduce more new products to the market (NP productivity), and have more NP success in terms of new product sales (NP success). NP productivity partly mediates the relationship between creativity‐supporting work environment and NP success. The mediation model shows that the two paths from a creativity‐supporting work environment to NP success are about equally important: the direct path between creativity‐supporting work environment and NP success has a coefficient of .22, and the coefficient of the indirect path via NP productivity is .23. The creativity‐supporting work environment framework can be used in managerial practice to enhance employee creativity for product innovation. It allows applying a flexible and broad approach by influencing both social‐organizational and physical characteristics of the work environment.     

Strategic Suppliers' Technical Contributions to New Product Advantage: Substitution and Configuration Options

Current theory lacks clarity on how different kinds of resources contribute to new product advantage, or how firms can combine different resources to achieve a new product advantage. While several studies have identified different firm‐specific resources that influence new product advantage, comparatively little research has explored the contribution of strategic supplier resources. Combining resource‐based and relational perspectives, this study develops a theoretical model investigating how a strategic supplier's technical capabilities impact focal firm new product advantage and how firms combine different resources to gain this advantage. The model is tested using detailed survey data collected from 153 interorganizational new product development projects in the United Kingdom within which a strategic supplier had been extensively involved. Empirical results support our research hypotheses. First, supplier technical performance is shown to have a significant positive impact on new product advantage. Next, we show that while supplier technical capabilities have a positive influence on supplier technical performance, the a priori nature of the supplier's task moderates the relationship. Finally, our data support our hypotheses related to the positive relationship between relationship‐specific absorptive capacity and new product advantage, and the proposed negative moderation of supplier technical capabilities on this relationship. Based upon these findings, we encourage managers to recognize that strategic suppliers' with greater technical capabilities perform better regardless of the degree of creativity required by their task; but that strategic suppliers with lower technical capabilities may partially compensate (substitute) for their lack of technical capabilities, if they are able to respond to high problem‐solving task requirements. Furthermore, we suggest that the firm's development of relationship‐specific absorptive capacity is much more important when a strategic supplier is less technically capable. A buying firm's relationship‐specific absorptive capacity can, according to our data, substitute for low supplier technical capabilities. On the other hand, where the supplier has strong technical capabilities, investments in relationship‐specific absorptive capacity have no effect on new product advantage. Our findings reinforce recent calls for research on how firms can combine different resources and capabilities to achieve superior performance.     

Legitimizing actions in dependence-asymmetry relationships: A comparison between Chinese and Western firms

To overcome the negative outcomes of dependence, disadvantaged parties in exchange relationships characterized by dependence asymmetry seek effective strategies to rebalance their dependence. Obtaining legitimacy in the eyes of the advantaged party through legitimizing actions is a novel way to influence the advantaged party's exchange and conflict management approaches toward the disadvantaged party. However, a disadvantaged party's preference between external and internal legitimizing actions varies across cultures because culture influence the character if the relationship management preference. Drawing on the individualism–collectivism framework, we argue that facing dependence asymmetry, a Chinese firm is more likely to seek legitimacy through external legitimizing actions than a Western firm. In contrast, a Western firm is more likely to seek legitimacy through internal legitimizing actions than a Chinese firm when facing dependence asymmetry. We also predict a positive relationship between legitimizing actions, both external and internal, and the disadvantaged party's performance. We test these hypotheses by collecting dyadic survey data of exchange partners in Chinese-owned and Western-owned firms. The results support most of our predictions. Theoretical and managerial implications for partners in dependence-asymmetric relationships are discussed based on these findings.     

Customer and Supplier Involvement in Design: The Moderating Role of Incremental and Radical Innovation Capability

More and more firms are leveraging design as a resource to gain the upper hand in today's competitive business market. To this end, this study draws on the resource‐based view (RBV) of the firm to examine the relationship between customer and supplier involvement in the design process and new product performance. The research also extends the RBV to a contingency lens by introducing product innovation capability (incremental and radical) as a moderator to draw the boundary conditions of the impact of customer/supplier involvement in design on new product performance. Using data collected from Canadian high‐tech companies, the findings provide strong support for the hypotheses in that customer involvement in design helps new product performance under high incremental innovation capability but harms new product performance under high radical innovation capability. In contrast, supplier involvement in design was beneficial to new product performance under both high incremental and radical innovation capability. The managerial implications for the role of design under different innovation capabilities are discussed.