Product competence exploitation and exploration strategies: The impact on new product performance through quality and innovativeness

The ability to manage existing assets and capabilities (exploitation) and the development of new capabilities (exploration) are arguably among the most relevant new product success factors. However, while exploitation-related capabilities are based on certainties regarding the efficiency of a company, exploration-related capabilities require the analysis of new technologies and processes. In existing literature, there is a gap concerning the trade-off between the exploitation and exploration of competences. Based on the theoretical background of Resource Based Theory, Dynamic Capabilities Theory and Discovery and Creation Theory, a model is proposed to analyze this gap. In this study, which examines 197 manufacturing organizations, we build on the dualities of the two types of competences and their impact on speed-to-market and market performance. The findings indicate that the choice between exploitation and exploration depends on the goals of new product development. While exploitation increases product objective quality, exploration enhances product innovativeness to the firm. Furthermore, we found that both exploitation and exploration constitute important success factors when it comes to launching new products. Finally, moderate effects of competitive intensity and market turbulence are also examined. High levels of market turbulence improve the results of exploitation, while low levels of competitiveness may encourage exploration.     

Effects of innovation types on firm performance

Innovation is broadly seen as an essential component of competitiveness, embedded in the organizational structures, processes, products and services within a firm. The objective of this paper is to explore the effects of the organizational, process, product and marketing innovations on the different aspects of firm performance, including innovative, production, market and financial performances, based on an empirical study covering 184 manufacturing firms in Turkey. A theoretical framework is empirically tested identifying the relationships amid innovations and firm performance through an integrated innovation-performance analysis. The results reveal the positive effects of innovations on firm performance in manufacturing industries.     

Inbound open innovation for enhanced performance: Enablers and opportunities

Open innovation, defined as a firm's purposive pursuit and integration of external inputs for new product development, offers an alternative perspective on innovation. Drawing on resource-based and capability theories, this study identifies key factors that enable inbound open innovation and increase its efficacy in a business-to-business context. Because open innovation relies on external connections, relational capability—that is, the firm's ability to make and manage relationships with other firms—should enhance the effects of inbound open innovation on firm performance. Two key resources may further enhance the moderating effects of relational capability: network spillovers that indicate knowledge-rich surroundings, and flexibility that allows for responsiveness and adaptability. The authors test these relationships with data from managers in 204 business-to-business high-tech firms, as well as secondary data pertaining to firm performance and flexibility. The results support the expectations that the ability to build interfirm relationships in a knowledge-rich environment increase the efficacy of inbound open innovation for gaining superior financial performance. Interestingly, additional analyses suggest an unexpected nonlinear interaction effect with flexibility. When firms possess strong relational capabilities and adopt an open innovation approach, they achieve higher financial performance if they have a low or a high level of flexibility. The theoretical and managerial implications of these findings are discussed.     

The effect of buyer behaviors on preferred customer status and access to supplier technological innovation: An empirical study of supplier perceptions

Buying firms are increasingly looking to suppliers for technological innovations that enhance the competitive position of their new products. However, extant research provides limited guidance on how buying firms may gain access to suppliers' innovative technologies. To address this gap in the literature, we draw from social exchange theory to posit sequential relationships among buyer behaviors, preferred customer status, and supplier's willingness to share technological innovations. We test our assertions by applying structural equation modeling statistical analyses to survey response data from 233 sales personnel of production good suppliers in the U.S. automotive industry. Whereas our results show that two buyer behaviors – early supplier involvement and relational reliability – positively affect preferred customer status, a third behavior – share of sales – has no effect. In turn, we find that preferred customer status is positively associated with supplier's willingness to share new technology with the buyer. Further, our findings indicate that preferred customer status fully mediates the benefits exchanged within a buyer–supplier relationship. Hence, our study highlights why buyers seeking innovations should take care that their behavior is appropriate for managing suppliers' perceptions. Accordingly, our results provide specific guidance to buyers as to how they may increase their access to suppliers' new technologies.     

Development and return on execution of product innovation capabilities: The role of organizational structure

This paper conceptualizes and tests an integrated model that combines the dual-core and ambidextrous models of product innovation. The integrated model distinguishes the development and return on execution of radical and incremental product innovation capabilities. The authors argue that organizational structure plays an important dual role as an (a) antecedent to the development of radical and incremental product innovation capabilities and (b) as a moderator in determining the new product performance returns from executing such capabilities. Using a sample of high-tech firms, the study finds that organizational structure is more consistent in predicting the execution of product innovation capabilities into new product performance than in predicting the development of such capabilities. For example, the effect of radical product innovation capability on new product performance is negative but nonsignificant under a formal structure, while the same effect is positive under an informal structure. Conversely, the effect of incremental product innovation capability on new product performance is positive under a formal structure, while the same effect is negative under an informal structure. The implications for managing different types of product innovation capabilities under formal versus informal structures and their effects on new product performance are discussed.     

The influence of formal controls on customer interactivity in new product development

This study examines how formal control mechanisms, specifically output, process, and team reward controls used in new product development (NPD) projects, influence the degree of customer interaction during the project. It is argued that controls can differentially focus the efforts of the project team either internally on the organization's process or externally on the market and its customers. Data from 95 projects across several industries suggest that the use of output control and team rewards leads to higher customer interactivity. However, heavy reliance on process control can lead to reduced customer interactivity if not also accompanied with output controls. This study extends our understanding of using management controls to integrate the voice of the customer into new product development.     

Firm orientations, innovativeness, and business performance: Advancing a system dynamics view following a comment on Hult, Hurley, and Knight's 2004 study

Hult, Hurley, and Knight's [Ind. Mark. Manage. 33 (2004) 429.] study reports correlations for each of the three subfactors of market orientation (competitor orientation, customer orientation, and interfunctional coordination) and innovativenss. However, their report fails to discuss the nature of these relationships. Such findings are worthy of discussion because they support prior evidence demonstrating the centrality of customer orientation in linking competitor orientation and interfunctional coordination with both innovativeness and business performance. Also, the finding that interfunctional coordination relates strongly with innovativeness supports the paradigm shift toward relationship marketing. The point needs mentioning that several different (more than one) standardized effects, structural equation models explain similar amounts of variance of business performance besides the models that Hult et al. examine. Thus, the implication by Hult et al. (p. 436) that “…learning orientation has no significant direct effect on performance” is accurate only for the model tested (shown in their Fig. 2). Applying the “quick clustering” method helps to inform interpretation when nearly all relationships among variables are statistically significant. The present article includes a proposal for advancing from one-directional structural equation modeling of innovativeness and business performance to system dynamics modeling that includes real-world feedback loops.     

Compressing new product success-to-success cycle time: Deep customer value understanding and idea generation

Despite nearly 30 years of research focused on improving new product development (NPD) processes, recent research reveals that these improvements have failed to materialize as expected. Additionally, in today's continuous-change business environment, managers are focused on reducing cycle time in nearly all operations, including NPD, in order to realize acceptable returns on investments more quickly. Thus, we must not only be better but also faster at NPD, specifically at compressing the cycle time between new product successes, i.e., accelerating success-to-success velocity and not just accelerating each NPD project. But, how can businesses both improve the probability of new product successes and also speed up the process of doing so? This paper proposes that formalizing front-end processes will certainly help. Specifically, a process is presented which draws on customer value research that ought to help clarify the traditional “fuzzy front end” of NPD processes, resulting in consistently more successful new products.     

The use of information technology tools in new product development phases: Analysis of effects on new product innovativeness, quality, and market performance

Extant research has largely ignored empirically examining how information technology (IT) affects new product effectiveness. Using the knowledge-based theory as a foundation, this study examines if, and how, particular IT tools used in the discovery, development, and commercialization phases of the new product development (NPD) process influence NPD effectiveness dimensions, namely, market performance, innovativeness, and quality of a new product. Based on data collected from NPD managers in the US and Canada, the findings indicate that specific IT tools contribute to various measures of new product effectiveness differently. Moreover, the results show the positive effect of these IT tools in different phases of the NPD process. This suggests that with regard to NPD, a decompositional approach that examines the role of IT within each phase of the NPD process is best. Based on these findings, the authors discuss theoretical and managerial implications of the study and suggest paths for future research. Managerially, some interesting results of our study are that decision support systems, file transfer protocols, and concept testing tools would significantly improve NPD effectiveness regardless of the phase they are used.     

The contingent value of exploratory and exploitative learning for new product development performance

This study endeavors to extend research on organizational learning by investigating the complicated effects between exploratory — exploitative learning and new product performance in a single new product project. Specifically, premised on contingency theory the authors investigate the negative nonlinear and interaction effects of project-level exploratory and exploitative learning behaviors on product development performance, and examine internal organizational and external environmental factors to recognize their differential moderating effects between the two learning behaviors and new product performance. Most of the hypotheses are supported based on questionnaire survey results of 253 new product projects. The results indicate that the two type of learning have curvilinear (inverted U-shaped) effects on new product performance, and suggest that product development performance will be enhanced when one learning is at higher level and the other is at lower level. Furthermore, the authors discover that process-based reward, encouragement to take risk, and environment dynamics strengthened the benefits of exploratory on new product performance. On the other hand, the advantages of exploitative learning on new product performance is further enhanced when output-based reward, project development formalization, and environment competitiveness is high. Finally, this study suggests that project managers should pay careful attention to employ the two learning behaviors during new product development.     

Cross-Functional collaboration,competitive intensity,knowledge integration mechanisms,and new product performance: A mediated moderation model

This study draws upon the structural contingency theory to develop a mediated moderation model in order to examine how knowledge integration mechanisms mediate the impact of competitive intensity on the cross-functional collaboration–new product performance relationship. A final sample of 182 Taiwanese manufacturing firms provides the data for the analyses. The results show that (1) competitive intensity weakens the effect of cross-functional collaboration on new product performance and (2) knowledge integration mechanisms mediate the negative effect of competitive intensity on the cross-functional collaboration–new product performance relationship. These results not only provide an explanation for the inconsistent findings documented in the marketing literature but also call on managers to take relevant actions to alleviate the negative influence of competitive intensity on the performance effects of cross-functional collaboration and knowledge integration mechanisms.     

Firm performance: the interactions of corporate social performance with innovation and industry differentiation

The impact of corporate social performance on firm financial performance has been examined previously with mixed results. This study examines the possibility that corporate social performance enhances financial performance by allowing the firm to differentiate, and that this effect may be moderated both by innovation, which also drives firm differentiation, and the level of differentiation in the industry. Hypotheses concerning both direct and moderating effects are developed and tested using secondary data. Our results support both innovation and the level of differentiation in the industry as moderators for a positive relationship between corporate social performance and financial performance: corporate social performance most strongly affects performance in low‐innovation firms and in industries with little differentiation. Copyright © 2008 John Wiley & Sons, Ltd.     

Balancing exploration and exploitation capabilities in high technology firms: A multi-source multi-context examination

Based on the dynamic capability view, this study examined the balance between exploration and exploitation capability. With this, we proposed a framework that synthesizes the impact of new product creativity and marketing program creativity on new product quality (internal product quality and external product quality), and further understanding the path to performance of new products in a select number of industrial and consumer products. The main findings revealed that the effect of new product creativity in consumer product firms through internal and external product quality was less dominant than those in industrial product firms. In contrast, the effect of marketing program creativity in industrial product firms through only external product quality was less dominant than those in consumer product firms. Additionally, this paper also discusses the research limitations, future research directions, and theoretical and practical implications.     

Product and environmental social performance: Varying effect on firm performance

Corporate social performance (CSP) consists of actions in different domains that vary in the information they provide stakeholders, and hence, in their effect on firm performance. To demonstrate this, the authors examine the impact of CSP on firm performance in two areas—the product and the environment, referred to as product social performance (PSP) and environmental social performance (ESP), respectively. PSP has a stronger positive impact on firm performance compared to ESP. The findings using disaggregated measures of PSP and ESP indicate negativity bias in that PSP weakness has a stronger negative impact on firm performance compared to PSP strength. Copyright © 2013 John Wiley & Sons, Ltd.     

Supplier integration in new product development: Computer mediated communication,knowledge exchange and buyer performance

In new product development (NPD), the buyer–supplier relationship is changing. Suppliers are becoming an integral part of the design team. This study investigates the effectiveness of computer-mediated and face-to-face communication channels on knowledge exchange between buyer and supplier firms, and ultimately buyer NPD and market performance. Open innovation literature and media richness theory are used to develop hypotheses which are then empirically tested using data collected from 157 R&D project managers from U.S. manufacturing firms. To date, empirical studies on the link between supplier integration and buyer performance show conflicting results. Structural equation modeling found a significant positive link between knowledge exchange and NPD performance, measured both in terms of effectiveness and efficiency, and a significant positive link between effective and efficient NPD and market performance. A surprising finding is that contrary to media richness theory, email can perform like face-to-face communication transmitting rich information and having a positive relationship to knowledge exchange between buyer and supplier. It was also found that with face-to-face communication, knowledge exchange fully mediates the relationship with effective NPD while with email communication knowledge exchange fully mediates the relationship with efficient NPD. Video conferencing was found to have no significant effect on knowledge exchange and the effect of web-based tools was significant and negative. The implications of these findings in theory and practice are discussed.     

The curvilinear relationships between responsive and proactive market orientations and new product performance: A contingent link

Recent research has defined market orientation as two dimensions, responsive and proactive market orientations, and further argued that an inverted U-shaped relationship exists between each of these two market orientation dimensions and new product performance. However, empirical evidence has not confirmed such a nonlinear relationship. This study argues that the curvilinear relationship between the two dimensions of market orientation and new product performance may depend on external environmental characteristics. A total of 107 new product development programs in five high tech industries constitute the analytical sample. Hierarchical regression analysis reveals that under a high level of technological turbulence, responsive market orientation becomes detrimental to new product performance beyond a certain level; the relationship between proactive market orientation and new product performance is an inverted U-shaped under a low level of technological turbulence or competitive intensity. Results also indicate that responsive and proactive market orientations are important determinants of new product performance. These findings sharpen the understanding of the relationship between market orientation and new product performance.     

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.     

New product development in Asia: An introduction to the special issue

Given the increasing importance of Asia, the purpose of this special issue is to broaden the scope of our understanding of New Product Development (NPD) by going beyond the traditional Western research settings and looking at how new products are developed in Asia. This paper introduces the special issue on NPD in Asia and identifies key patterns of similarities and differences between Asian and Western NPD practices. The paper highlights key similarities and differences in the areas of organizational/top management support; technological proficiency; customer/market orientation; information sharing; cross-functional interface; entrepreneurship orientation; NPD strategies; innovation orientation; contingencies of innovation orientation; innovative marketing strategies; NPD process; appointment of project managers; rewarding team members; success rate; and cycle time.     

Vertical integration,innovation, and alliance portfolio size: Implications for firm performance

We examine the consequences of alliance portfolio configuration by focusing on contingencies that affect the impact of alliance portfolio size on innovation and financial performance. While increasing alliance portfolio size is expected to positively impact innovation and financial performance, we propose that, at high levels of innovation of the focal firm, increasing alliance portfolio size dampens financial performance. We also propose that firm boundaries moderate the impact of alliance portfolio size on innovation and financial performance differently. Specifically, vertically integrated firms benefit less (more) than their vertically specialized counterparts in leveraging higher innovation (financial) performance with increasing alliance portfolio size. Our analysis suggests that both vertical scope and innovation levels of the firm play an important role in understanding how alliance portfolios impact performance. Copyright © 2013 John Wiley & Sons, Ltd.     

Product proliferation strategies and firm performance: The moderating role of product space complexity

In the Spanish automobile market between 1990 and 2000, significant reductions in tariff and nontariff protections increased the complexity of the product space, through the penetration of new car brands and models. Acknowledging these environmental dynamics, this study details conditions in which across‐niche (product breadth or intraindustry diversification) and within‐niche (product depth or versioning) product proliferation exerts a positive relationship on firm performance, as well as how key relationships change according to the complexity of the product space in the industry. Copyright © 2013 John Wiley & Sons, Ltd.