Structural ambidexterity in NPD processes: A firm-level assessment of the impact of differentiated structures on innovation performance

Abstract

Based on a survey study of 155 U.S. firms, we conducted a firm-level assessment of the impact of different kinds of structures (i.e., functional versus cross-functional) in different kinds of new product development (NPD) processes (i.e., incremental versus radical) on different kinds of firm innovation performance (i.e., derivative versus breakthrough). We observe that most firms opt for similar structures for their incremental and radical NPD processes. At the same time, though, we find strong evidence that (1) firms that apply a cross-functional structure for the radical NPD process perform significantly better in terms of breakthrough innovation performance than firms that apply a functional structure for the radical NPD process and (2) firms that apply a functional structure for the incremental NPD process perform significantly better in terms of derivative innovation performance than firms that apply a cross-functional structure for the incremental NPD process. These latter findings point to the relevance of adopting structural ambidexterity, where firms make an explicit distinction between incremental and radical NPD processes and organize them in a different way.