The Role of Globalization in New Product Development

Abstract

Research has long emphasized the importance of the development of new products for global markets. However, despite the increasing interest of firms in developing such products, we do not know empirically how such development impacts the performance of new product development (NPD) programs. Addressing this research gap in the literature, this study proposes and tests a series of hypotheses about the relationship between the development of new products with a global market focus and the performance of NPD programs, and investigates various organizational, procedural, and operational conditions that may moderate this relationship. The results of an empirical study indicate that the development of new products with a global market focus was positively related to the financial performance of NPD programs, and this relationship was stronger when firms used a cross-functional organizational structure in NPD and an NPD process. In addition, these results suggest that such development was positively related to the rate of new product introduction, and this relationship was stronger when firms used an NPD process. Finally, contrary to our theoretical expectations, these relationships were not moderated by firms' engagement in the fuzzy front-end NPD activities.