New product development capabilities and new product performances: moderating role of organizational climate

Abstract

Corporate culture plays a key role in determining the working climate, leadership style, strategy formulation, organization behavior, and processes of the firm (Saffold, 1988). Culture must permeate an organization to make a difference (O'Reilly, 1997). In the RBV, culture is a valuable organizational resource because it is created over time, is intangible, is difficult to imitate, and has the potential for moving the firm to a position of competitive advantage (Helfat & Peteraf, 2003). Studies show that a strong corporate culture contributes to improved performance, directly in terms of specific achievements (Deshpandé, Farley, & Webster, 1993), or indirectly by enhancing the commitment and motivation associated with those challenges linked to success (Lim, 1995). The goal of this research is to investigate organizational climate factors' (innovativeness and open-mindness) moderating role in the various relationships between NPD capabilities and NPD performance. To understand the specific role of organizational climate factors in the various NPD processes, we suggest viewing NPD capabilities as a composition of various steps (idea generation, idea screening, technical development, market test, and commercialization), and adopted diverse NPD performance metrics (sales change, sales growth, profit performance, market share performance, ROI, ROA, and cash flow). We surveyed 84 US firms (originally from the list of the High-Technology Marketplace Directory) that participated in our research. All companies met the required criteria of developing and commercializing new products. The key informant was the project manager of a recently-developed product. The results of the main effects between new product development capabilities and NPD performance show that most of new product capabilities, except technical development, are positively associated with various NPD performance metrics. For example, idea generation is positively associated with sales growth, market share, operation profit, ROI and ROA. Idea screening is significantly associated with sales growth, market share, operation profit, ROI and ROA. Commercialization also showed positive relationships with sales growth, market share, operation profit, ROI and ROA. However, all of the relationships between technical development and new product performance are not significant. Market test also has no significant relationship with operation profit or ROA. Based on the moderated regression analysis results, we found a significant moderating role of open-mindness culture in the link between NPD capabilities and NPD performance. For instance, open-mindness moderates the effects of idea generation on sales growth, market share, operation profit, ROI, and ROA. Open-mindness also moderates the effects of idea screening on sales growth, market share, operation profit, ROI, and ROA. However, for technical development only the effect on the market share is moderated by open-mindness. For market test and commercialization, open-mindness only has significant moderating effect on sales growth and market share. For innovativeness culture, the findings indicate that innovativeness influences the relationship between idea generation and sales growth, market share, operation profit, ROI, and ROA. Innovativeness also moderates the effects of idea screening on sales growth, market share, operation profit, ROI, and ROA. When we examined commercialization, we found significant interaction effects with sales growth, market share, operation profit, ROI and ROA performance. Although not all performance dimensions are supported in our hypotheses, the results suggest that researchers must understand the research context and choose meaningful variables of NPD performance dimensions for suggesting appropriate explanations. Additional research is needed to test other types of organizational cultures. Organizational culture is a complex construct that encompasses many dimensions. Future research could be directed toward the inclusion of other important dimensions.