The Fit Between External Involvement and Business Environment

Abstract

Previous studies are inconsistent in their findings about the relationship between external involvement and performance. The authors attribute this inconsistency to the misfit between external involvement and business environment. Drawing the concept of fit between information processing capabilities and needs from information processing theory, they develop the fitting patterns between external involvement and business environment and examine their impacts on performance. Information processing capabilities are measured by the degree of two types of external involvement in the NPD process and information processing needs are assessed based on three dimensions of business environment. Cluster analysis was used to develop the taxonomies of fit between external involvement and business environment. Analysis of variance (ANOVA) was used to examine the impacts of fitting patterns between external involvement and business environment on performance. The results reveal six fitting patterns between external involvement and business environment. ANOVA results show that the fitting patterns between external involvement and business environment are related to both operational performance and business performance, supporting our fit theory.