REFINING THE NPD/INNOVATION PATH TO PRODUCT MARKET SUCCESS WITH PARTIAL LEAST SQUARES PATH ANALYSIS

Abstract

In this paper, a refinement of the NPD/innovation process and its relationship with new product success is explored. Through a review of the literature, a rationale for a research model and the associations among its constructs were developed. In this study, a factor analysis was performed on data describing the proficiency by which major, traditional NPD/innovation process activities were performed. This analysis led to the development of seven parsimonious NPD/innovation process activities. This research evaluated new product success by employing four measures: profit, sales, successfully opening new markets, and successfully entering existing markets with new products. Respondents to a mail survey process directed to NPD managers in the medical instruments, heavy construction equipment, and electrical products industries provided the study's empirical data. The research model was examined by performing a Partial Least Squares (PLS) path analysis on the study data. PLS path analysis was employed to provide an answer to the research question: How does the proficiency with which new product development activities are performed relate to the market success of newly developed products? The factor analysis and subsequent PLS path analysis suggest that (1) there are seven important NPD/innovation activities that form the basis for a prudent view of new product development/innovation, (2) there is a parallel path to new product success much of which occurs after new product commercialization, and (3) NPD proficiency continues to significantly influence the market success of new products. Implications from this research are provided.