Help or Hindrance? The Role of Familiarity in Collaborative Product Development

Abstract

For products developed through a collaboration of specialized groups, success requires craft and engineering ingenuity from designers who focus on specific attributes, coupled with synchronized coordination between various design groups. We study the relationship between a development team's composition and the performance of the new product. While shared work experience in the team -- or familiarity -- can improve coordination, it can deter creativity. We provide empirical evidence regarding the effects of overall team familiarity, familiarity within and across roles, and the formative experiences of teams on the performance of innovative products. We offer actionable insights for improving the formation of new product development teams. We empirically study product development in the video game industry by coupling a granular database of development credits with sales data for video games. Our novel dataset includes the performance of 752 games, supplemented with the work histories of 13,230 contributors recorded over 100,000 prior games. Overall, team familiarity is associated with a decrease in the product's market performance. This is driven by the negative effect of familiarity among designers, and the negative effect of familiarity between designers and coordinators. While familiarity among coordinators has a positive effect on performance, it is insufficient to overcome the negative effect seen in creative roles. Further, the positive effect of familiarity among coordinators is stronger when the familiarity is built through coordination roles (rather than design roles). Firms can improve the performance of new product development teams by actively considering familiarity among team members. Specifically, our results suggest that infusing fluidity in creative roles and maintaining stability in coordination roles could improve the performance of new products.