Market Information Processing in New Product Development: The Importance of Process Interdependency and Data Quality

Abstract

While there is a growing interest in the role of market information processing activities (i.e., the acquisition, dissemination, and use of market information) in new product development (NPD), a number of gaps remain in our knowledge on this topic. When investigating the performance impact of market information processing, most studies have treated the three activities as independent. Our research adds to the extant knowledge by exploring not only both direct relationships between each of the market information processing activities and new product performance, but also interaction effects. We, thus, ask the question of whether there may be synergies in obtaining performance increases by jointly improving two processing activities, rather than just considering each activity independently. In addition, we investigate these effects for different levels of information quality; a topic largely neglected in the market information processing literature. Our analysis is based on empirical data from 152 Dutch NPD projects. The results indicate that market information acquisition and use are both directly associated with increased performance. We also find significant interaction effects for information acquisition and dissemination, and for information dissemination and use. Finally, the importance of information quality is emphasized, with lower quality information producing lower performance and wiping out the effects between various aspects of market information processing and new product performance. We provide several implications of our findings for managers and academics.