Measuring market-sensing capabilities for new product development success

Abstract

PurposeThe purpose of this paper is to conceptualize and operationalize the concept of market-sensing capabilities and analyze its relationship with new product development (NPD) success and organic organizational structures. To the authors' knowledge, past measures of market-sensing capabilities have never included opportunity interpretation, through business experience and organizational articulation, as part of the concept.Design/methodology/approachBased on a sample of over 180 small and medium-sized enterprises (SMEs), market-sensing capabilities constructs and their relationships were tested through academics' and managers' perceptions. The measure was tested using confirmatory factor analysis (CFA).FindingsFindings reveal theoretically sound constructs based on four underlying market-sensing capabilities components: analytical processes, customer relationship, business experience and organizational articulation. Results demonstrate reliability, convergent, discriminant and nomological validity. All four dimensions are positively associated with NPD success and are more likely to appear in organic organizational structures.Practical implicationsThe resulting instrument provides managers with a valuable tool to measure firms' abilities to address environmental uncertainty. By using this instrument, managers can assess internal organizational structures and resources allocated to sensing capabilities. By developing sensing capabilities, managers might ultimately influence their NPD strategy. Findings also reveal that sensing capabilities are positively and significantly associated with organic organizational structures.Originality/valueExisting sensing capabilities measures are focused on environmental scanning, and the essence of the concept is not fully expressed by the traditional measures of analytical processes and customer relationship. The authors' new measure includes opportunity interpretation through business experience and organizational articulation.