An Empirical Investigation of the Antecedents and Outcomes of NPD Portfolio Success

Abstract

Managing new product development (NPD) portfolios is difficult and little is known about how successful NPD portfolio management can improve overall firm performance. Despite regular calls in the literature for more research on NPD portfolio management, what successful NPD portfolio management means and how firms can achieve it remains unclear. For this reason, this paper combines theory and previous empirical findings to build a model of the antecedents and outcomes of NPD portfolio success. We generate and test 12 hypotheses with empirical data from 189 paired dyads in Dutch firms.Our results show that all three dimensions of NPD portfolio decision‐making effectiveness (i.e., portfolio mindset, focus, and agility) are associated with achieving the three dimensions of NPD portfolio success (i.e., strategic alignment, maximal NPD portfolio value, and portfolio balance), which in turn influences market performance. While a portfolio mindset and agility are related to all three dimensions of NPD portfolio success, focus is related only to strategic alignment and maximal value. No one dimension of NPD portfolio decision‐making effectiveness or portfolio success is sufficient to achieve overall market performance. We also found several unexpected findings with important implications. For example, portfolio balance, one recommended measure of portfolio success, has no direct link to market performance, but operates through the other two dimensions of NPD portfolio success, i.e., strategic alignment and maximal portfolio value. We conclude our paper with implications for further theory development and testing on successful NPD portfolio decision‐making, and with implications for managerial practice.