New Product Development Capability Research Articles

Does Market Orientation Lead to Firm Performance? Exploring the Mechanisms and Boundary Conditions

ABSTRACT This study explores the mechanisms and boundary conditions that will enhance the effective transformation of the firm’s market orientation (MO) into firm market performance (PERF). We examined how MO influences PERF directly and indirectly through the firm’s new product development capability (NPDC). We also examined the indirect conditional effect of social capital (SC) on the MO-PERF relationship through the NPDC of the firm. Data from 313 managers and owners of small and medium enterprises (SMEs) in Ghana was used for the study. Data were analyzed using the conditional process analysis software PROCESS in SPSS 23.0. Findings indicate that MO has a significant influence on PERF. Further, NPDC partially mediates the relationship between MO and PERF. We also found the indirect relationship between MO and PERF to be declining at higher levels of SC. The study clarifies the divergent views of the impact of MO on performance by introducing NPDC and SC in the relationship.

The impact of social media technologies on organization cultural intelligence and new product development in international markets

PurposeThe study examines the role of social media technologies (SMTs) as a driver of organization cultural intelligence (OCI) and new product development (NPD) capabilities, and how the complementary effects of these capabilities contribute to multinational corporations (MNCs)’ performance. Further, the study investigates the capability–performance relationship under conditions of high and low market and technological turbulence.Design/methodology/approachA quantitative survey method was implemented, with the data provided by senior marketing managers employed in MNC regional offices. The proposed model was tested using structural equation modeling and multi-group moderation analysis, and fuzzy-set qualitative comparative analysis (fsQCA).FindingsThe results indicate that SMTs support the development of OCI and NPD capabilities, which in turn contribute to MNC regional performance. A high level of technological turbulence only weakens the relationship between OCI and performance.Research limitations/implicationsThe results suggest that OCI contributes to MNCs’ performance, by deploying social media information and complementing the organization’s NPD capability under a specific environmental context.Practical implicationsThe paper offers practical recommendations to MNCs on social media use when developing and launching new products in different regional markets. MNCs need to recruit culturally intelligent managers, who consider the level of market and technological turbulence when combining several types of capabilities.Originality/valueWithin the dynamic marketing capabilities literature, this is the first study to incorporate and reliably measure cultural intelligence capability. The research offers empirical evidence that OCI and NPD capabilities are necessary to achieve superior MNC performance and depend on the level of market and technological turbulence.

The role of alliance management, big data analytics and information visibility on new-product development capability

Many organizations are increasingly investing in building dynamic capabilities to gain competitive advantage. New products play an important role in gaining competitive advantage and can significantly boost organizational performance. Although new product development (NPD) is widely recognized as a potentially vital source of competitive advantage, organizations face challenges in terms of developing the right antecedents or capabilities to influence NPD performance. Our research suggests that organizations should invest in building alliance management capability (AMC), big data analytics capability (BDAC) and information visibility (IV) to achieve their desired NPD success. Informed by the dynamic capabilities view of the firm (DCV) we have stated seven research hypotheses. We further tested our hypotheses using 219 usable respondents gathered using a pre-tested instrument. The hypotheses were tested using variance based structural equation modelling (PLS-SEM). The results of our study paint an interesting picture. Our study makes some significant contribution to the DCV and offers some useful directions to practitioners engaged in NPD in the big data analytics era. We demonstrate that AMC and BDAC are lower-order dynamic capabilities and that AMC has a positive and significant influence on BDAC. In turn, AMC and BDAC influence NPD under the moderating influence of IV. Ours is one of the first studies to empirically establish an association among three distinct dynamic capabilities which are often considered in isolation: AMC, BDAC and NPD. Our findings support emergent views on dynamic capabilities and their classification into various orders. Lastly, we provide empirical evidence that information visibility acts as a contingent variable to both AMC and BDAC effects on NPD. We end our paper by outlining some limitations of our study and by offering useful future research directions.

New product advantage infused by modularity: Do resources make a difference?

AbstractGiven the plethora of new product introductions, managers often embrace modularity (i.e., decompose product or process design into components or sub‐tasks, respectively) as part of new product development (NPD). Although modularity increases overall firm performance, a holistic view is missing for the relationship between modularity and new product advantage (i.e., a new product's superiority relative to competing products). In addition, extant research has not examined modularity in juxtaposition with allocated resources, so it is unclear how their interplay will unfold as means to foster new product advantage. Accordingly, by building on resource theories (resource‐based view and resource orchestration theory) and extant research on NPD, we bridge the modularity‐new product advantage gap in a survey study of managers involved in NPD projects. Overall, we view product modularity and process modularity as NPD capabilities and contrast their roles in NPD. Our findings show that product modularity, rather than process modularity, directly fosters new product advantage. More interestingly, resources form different contingency factors for the two types of modularity to influence new product advantage. Resources allocated to marketing stages constrain product modularity's positive impact, but they create a synergy with process modularity to increase new product advantage. On the contrary, the synergy between resources allocated to technical stages and product modularity generates more benefit for new product advantage, but resources allocated to marketing stages do not have a contingency effect on process modularity. These findings help firms understand how to leverage modularity to develop superior new products. At the same time, they offer insights into allocating and bundling different resources across NPD stages as the range of product modularity and process modularity vary in NPD.

Innovation Management to Sustain Competitive Advantage: A Qualitative Multi-Case Study

The importance of new product development (NPD) and innovative capabilities in marketing, innovation, and business strategy has been recognized by management and researchers. Knowledge management and organizational capabilities have also been explored and evaluated by researchers and practitioners. However, the current literature shows a lack of connection between NPD, innovative capabilities, integrated shared knowledge, and organizational capabilities. Also, there is limited knowledge on the impact and the contribution of the integrated shared knowledge and the organizational capabilities to the firm's success, performance, and sustainability. This study aimed to determine if there is a link between NPD and innovative capabilities, integrated shared knowledge, and the organization's capability. The purpose of the research is to explore how shared knowledge and the organization's capabilities influence and contribute to NPD, innovative capabilities, and innovative management. A qualitative, multi-site case study through one-on-one, in-depth interviews with primary decision-makers from technology and innovative companies located in Texas State in the USA is employed. The primary research question that guided the project is: How do shared knowledge and the organizational capabilities that influence NPD and innovative capability contribute to the firm's success, performance, and sustainability? Respondent interviews have been imported and analyzed through NVivo qualitative data analytics software. Findings have been determined using NVivo 11 through theme analysis. A key finding is that shared knowledge and the organization's capabilities are linked and critical for NPD's success and innovative capabilities. A set of recommendations for future researchers is proposed.

Does Market Orientation Lead to Firm Performance? Exploring the Mechanisms and Boundary Conditions

The purpose of this study is to explore the mechanisms and boundary conditions that will enhance the effective transformation of the market orientation (MO) of the firm into firm market performance (PERF). We examined how MO influences PERF directly and indirectly through the new product development capability (NPDC) of the firm. We also examined the indirect conditional effect of social capital (SC) on the MO-PERF relationship through NPDC of the firm. Data from 313 managers and owners of small and medium enterprises (SMEs) in Ghana was used for the study. Data was analyzed using the conditional process analysis software, PROCESS in SPSS 23.0. Findings indicate that MO has a significant influence on PERF. Further, NPDC partially mediates the relationship between MO and PERF. We also found the indirect relationship between MO and PERF to be declining at higher levels of SC. We discussed the implication of the study’s findings for theory and practice.

Knowledge Sharing, Organizational Capabilities, and Innovation Management to Sustain Competitive Advantage: A Qualitative Multi-Case Study

The importance of new product development (NPD) and innovative capabilities in marketing, innovation, and business strategy has been recognized by management and researchers. Knowledge management and organizational capabilities are also explored and evaluated by researchers and practitioners. However, the current literature shows a lack of connection between NPD, innovative capabilities, integrated shared knowledge, and organizational capabilities. Also, there is limited knowledge on the impact and the contribution of the integrated shared knowledge and the organizational capabilities to the firm's success, performance, and sustainability. This study aims to determine if there is a link between NPD and innovative capabilities and the integrated shared knowledge and the organization's capability and explore how shared knowledge and the organization's capabilities influence and contribute to NPD, innovative capabilities, and innovative management. A qualitative, multi-site case study through one-on-one, in-depth interviews with primary decision-makers from technology and innovative companies in Jordan is employed. The primary research question is, how do shared knowledge and the organizational capabilities that influence NPD and innovative capability contribute to the firm's success, performance, and sustainability? Respondent interviews are imported and analyzed through NVivo qualitative data analytics software. Findings are also determined using NVivo 11 through theme analysis. A key finding is that shared knowledge and the organization's capabilities are linked and critical for NPD's success and innovative capabilities.

Organizational capabilities and SME exports: the moderating role of external funding intentions and managerial capacity

Entry to export markets can stimulate business growth, yet remarkably few small- and medium-sized enterprises (SMEs) pursue export strategies. Using data gathered from the UK Small Business Surveys and a theoretical framework that combines principles from the resource-based view of the firm with notions of “investment readiness” and “managerial capacity,” we examine the empirical relationships between new product development (NPD) and new market entry (NME) capabilities on UK SMEs export decisions. Among other things, we find that there are contexts in which SMEs should develop these capabilities concurrently and others in which they should develop them independently to minimize added managerial complexity. Our results also indicate that in the absence of strong managerial capacity, SMEs should prioritize NME over NPD capabilities. Our findings produce several interesting theoretical and practical implications for SME exports.

More (new) products, more problems? A systems perspective on increased capability deployment and organizational errors

The capabilities-based view postulates that organizational capabilities are a key driver of competitive advantage. However, while increasing the pace of deploying organizational capabilities, such as new product development (NPD), may enable alignment with changing environments, it may also have unintended consequences. In this study, we advance theory on these unintended consequences by investigating how the increased deployment of NPD capability leads to organizational errors. Borrowing from organizational research employing systems theory, we argue that an increase in NPD deployment may increase the likelihood of routine discoordination and, thus, the incidence of intra-firm and interfirm errors. However, we also proffer that firms can mitigate errors from increases in NPD capability deployment by engaging in distinct internal and external activities that enable the accumulation of knowledge on how to coordinate systemic change. We distinguish between internal and external errors, demonstrating that in the context of increased NPD deployments, internal voluntary investigations ameliorate internal manufacturing errors, while supplier alliances mitigate outsourced component errors. We find support for our predictions using data from new product introductions and recalls in the U.S. automotive industry. This study sheds light on the tension inherent to accelerating the deployment of patterned organizational activities and suggests that the outcomes of deploying an organizational capability are best viewed holistically within the milieu of organizational systems the capability spans.

New product development capabilities in China: the moderating role of TMT cooperative behavior

While China is experiencing economic transformation, Chinese firms still lack sufficient new product development (NPD) capability. Such capability is crucial for business innovation. This study examines the impact of operational capabilities on NPD capability of Chinese firms. Acknowledging the importance of top management team (TMT) social interactions in capability development, this study also examines the moderating effect of TMT cooperative behavior (i.e., collaborative and communicative behaviors). Based on a sample of 213 firms from China, we find substantial support for our hypotheses, thus contributing to the capabilities-based view of the firm and providing managerial implications for firms in emerging economies.

The role of marketing capabilities, absorptive capacity, and innovation performance

PurposeThe purpose of this paper is to analyze effects of absorptive capacity (ACAP) on organizational performance. The model looks at the mediating influence of marketing capabilities (innovative capability and new product development capability (NPDC)) and innovation performance (IP).Design/methodology/approachThis study takes a quantitative approach by using survey data from 333 Brazilian manufacturer managers involved with strategic marketing processes. Structural equation modeling was used to test the theoretical hypotheses.FindingsResults indicate that ACAP does not have a direct impact on organizational performance. The relation is fully mediated by marketing capabilities (innovative capability and NPDC) and IP.Research limitations/implicationsAccording to the research findings, managers should put efforts in the ACAP as well as marketing capabilities that will result in better organizational performance. This research is limited to the context of manufacturer firms in Brazil. However, it is suggested that an application of this research can be conducted in different industries and different countries.Originality/valueThis study contributes to theory and management practice. First, no study has explored all these constructs together. Through the relationship between ACAP and performance, the authors found that marketing capabilities and IP can fully mediate the former proposed relation. The authors’ contribution is the understanding of the role of ACAP influence on performance. Managers should be encouraged to invest in companies’ ACAP as well as marketing capabilities to differentiate themselves from competitors and improve performance.

A design-thinking perspective on capability development

PurposeThe purpose of this paper is to examine the interaction between new product development (NPD) capabilities and business model innovation (BMI) by studying the adaptation of capabilities in a manufacturing firm as it adopts a service business model.Design/methodology/approachAn in-depth case study is used to identify design capabilities and document how these have been developed as the firm has adapted its NPD processes to the needs of its service business model.FindingsDesign capabilities are proposed as a facilitator of servitization, allowing a manufacturing firm to develop service offerings that build on resources such as knowledge and experience. Conversely, the scope of servitization is restricted by the extent to which these design capabilities can be updated to suit the demands of a new business model.Practical implicationsServitization is presented as an imperative for manufacturing firms, yet research has not addressed the implications for NPD nor investigated how BMI affects NPD capabilities. This study shows the need to identify whether current NPD processes help or hinder BMI and proposes how managers can adapt NPD processes to a new business model.Originality/valueA three-stage process is identified for adapting NPD processes – as BMI changes the nature of products and services required, existing processes are supplemented by design activities requiring expert knowledge, these are subsequently refined into design methods that can be incorporated into the NPD process, and eventually design tools allow automation and efficiency.

Enablers of NPD financial performance

PurposeThe purpose of this paper is to examine new product development (NPD) financial performance enablers through examining the roles of NPD capabilities improvement, NPD knowledge sharing and NPD internal learning in manufacturing organisations in Jordan.Design/methodology/approachBased on relevant literature review on NPD performance, a structured questionnaire was developed to collect data related to NPD performance measures. Questionnaires were distributed to a sample of 558 manufacturing organisations in Jordan, out of which 355 were returned and valid for the analysis. Exploratory and confirmatory factor analyses were applied to reveal NPD performance success dimensions that manufacturing organisations use to assess NPD performance success. Then, path analysis was employed to examine the research model and test its hypotheses.FindingsThe study’s findings reveal that manufacturing organisations use a multidimensional construct for assessing NPD performance success, which consists of NPD financial performance, NPD internal learning, NPD capabilities improvement, NPD knowledge sharing, and NPD marketing performance. NPD capabilities improvement exerted a positive and significant effect on each of NPD internal learning, NPD knowledge sharing, and NPD marketing performance, respectively. NPD knowledge sharing exerted a positive and significant effect on each of NPD internal learning NPD marketing performance. Each of NPD internal learning and NPD marketing performance exerted a positive and significant effect on NPD financial performance. The structural findings also indicate that 38.1 per cent (R2 is 0.381) of NPD financial performance is explained by the path of NPD capabilities improvement, NPD knowledge sharing and NPD marketing performance, which is the strongest path in the empirical model.Research limitations/implicationsThe paper’s focus on manufacturing organisations limits its contribution to the manufacturing sector only. The services sector is a rich field for understanding NPD financial performance enablers in various service industries. Further, the paper focusses on only five dimensions of NPD performance success, other dimensions of NPD performance success might add more insights to their effect on NPD performance success measures especially their effect on organisational performance.Practical implicationsThe findings of this study provide managers of manufacturing organisations with empirical insights related to the multidimensionality of NPD and their complex relationships to enhance NPD financial performance. The empirical findings assist managers to assess their NPD strategies, processes and implementation based on a results-oriented approach. The major contribution of the study is identifying the strongest paths of NPD financial performance enablers which reveals the complexity and criticality of NPD capabilities improvement, NPD knowledge sharing and NPD marketing performance on NPD financial performance. The rationale is NPD financial performance is still the most important NPD performance success dimension amongst manufacturing organisations.Originality/valueThe originality of this paper stems from developing and testing a multidimensional model of NPD financial performance enablers for the first time in emerging markets, Jordan. NPD financial performance is a function of other areas of NPD performance dimensions, namely; NPD capabilities improvement, NPD knowledge sharing and NPD marketing performance. This empirical evidence is provided to managers for the first time by this study.

Two paths to organizational effectiveness – Product advantage and life-cycle flexibility

Successful organizations develop marketplace advantages over rivals. To do so, many companies strive to develop processes and routines that allow them to regularly develop innovative offerings. However, due to marketplace dynamics, product advantage is often fleeting. To cope, some organizations concentrate on developing an ability to quickly modify existing products in response to marketplace changes (i.e., life-cycle flexibility). Both new product development (NPD) and product adaptation provide ways in which organizations can deliver value to consumers. However, research suggests that they may require different sets of resources. As a result, managers are faced with a formidable task—how to use their limited resources to develop new market offerings and to adapt existing ones to changing environments. We propose that an organization's NPD capability provides a mechanism by which firms can improve both product advantage and life-cycle flexibility. To examine this thesis, we develop and test a model, using data from over 180 hotels, that hypothesizes two routes by which an organization's NPD capability enables it to improve organizational effectiveness, i.e., by improving its product advantage and its life-cycle flexibility. The findings provide support for the hypothesized role of NPD capability.

The Differential Impact of New Product Development “Make/Buy” Choices on Immediate and Future Product Quality: Insights from the Automobile Industry

This article examines the impact of new product development (NPD) “make/buy” choices on product quality using data from the automobile industry. Although the business press has lamented that NPD outsourcing compromises product quality, there is no systematic evidence to support or refute this assertion. Against this backdrop, this study tests a contingency model of the impact of NPD make/buy decisions on immediate and future product quality. The hypotheses are tested using data on NPD make/buy choices of 173 models of 12 automobile firms in the United States between 2007 and 2014. The authors find that whereas NPD buy has a more positive impact on immediate product quality, NPD make has a more positive impact on future product quality. Furthermore, the immediate product quality impact of NPD buy is stronger when (1) technologies are more complex and (2) firm NPD capability is higher. In contrast, the future product quality impact of NPD make is stronger when (1) there is postlaunch adverse feedback and (2) firm NPD capability is higher. The study highlights the complex trade-offs associated with NPD make/buy decisions and offers valuable insights on how firms could manage these decisions.

Does organizational creativity always drive market performance?

AbstractThis study develops and tests arguments that the relationship between organizational creativity and market performance is channeled through new product development (NPD) capability, and that the indirect effect of creativity on performance, via NPD capability, is conditional upon levels of environment dynamism and market responsiveness. The proposed relationships are tested on a sample of 221 small‐ and medium‐sized enterprises (SMEs) in a major sub‐Saharan African market. Findings from the study indicate that process and product NPD capabilities partially mediate the effect of novelty and usefulness elements of organizational creativity on market performance. The study further finds that while environment dynamism weakens the indirect effects of novelty and usefulness of organizational creativity, via process and product NPD capabilities, on market performance, the effects are strengthened under conditions of greater responsiveness to target market needs. A theoretical contribution from this study is the finding that how organizational creativity dimensions drive market performance is more complex than previously thought: it depends on whether or not organizational creativity components are first used to develop an organization's process and product innovation capabilities, and whether target market environment conditions are dynamic and an organization has ability to respond to target market demands.

Enhancing new product development capabilities of small- and medium-sized enterprises through managerial innovations

This essay aims at finding empirical evidence on which types of managerial innovations actually promote new product development (NPD) capabilities of small- and medium-sized enterprises (SMEs). We built this study upon empirical data derived from 650 German SMEs that took part in the Community Innovation Survey (CIS) 2011. We applied principal component analysis (PCA) to detect three different NPD capability factors. Our findings indicate positive effects of the following two types of managerial innovations: innovations in organisational procedures and in organisational forms. The results imply that the best bet for SMEs aiming at improving capabilities that are important for the first phases of NPD are changes in their organisational procedures. On the other hand, firms gearing toward advances in the final phases of NPD should concentrate internal changes on their general work organisation. Our paper demonstrates that SMEs can actively reinforce their NPD capabilities by implementing the right changes in their organisations.

SMEs Internationalization and New Product Development: Evidence from U.S. and South Korea Data

We draw on the organizational learning, innovation and international entrepreneurship literatures to develop hypotheses that link two types of international activities - foreign sales and offshoring of knowledge-intensive value chain activities - to new product development capability (NPDC) of SMEs. Furthermore, we also examine the impact of CEOs foreign experience on the NPDC of SMEs. Using a sample of small and medium-size enterprises from three industry sectors in the U.S. and South Korea, we test our hypotheses and find support. Implications of our findings for international entrepreneurship theory and practice are discussed.

Viable strategy configurations and new product development capability and performance

Purpose – The purpose of this paper is to identify firm groups pursuing different configurations of customer-, entrepreneurial-, and information technology (IT) orientation and to compare their new product development (NPD) capability and NPD performance. Design/methodology/approach – Hierarchical cluster analysis was used on the sample of 156 firms on the basis of their mix of customer-, entrepreneurial-, and IT- orientation. Then, analysis of variance was used to compare the groups’ NPD capability (NPDCAP), NPD process efficiency (NPDPROC), new product effectiveness (NPEFF), and new product financial performance (NPPERF). Findings – Of the seven strategy configurations posited, four emerge and two unexpected configurations are revealed. Overall, firms simultaneously pursuing multiple strategic orientations have higher NPDCAP, NPEFF, and NPPERF. Interestingly, all six strategy groups have equally low levels of NPDPROC. Practical implications – To enhance NPDCAP and NPD performance, managers should consider more complex strategy configurations that act in complementary ways, in particular, customer-orientation complemented by either entrepreneurial- and/or IT-orientation. Moreover, more attention is needed to improving NPDPROC, as achieving gains in this area would contribute positively to firm performance. Originality/value – This study presents initial evidence that, at least for firms in Thailand, resources must be configured by pursuing several strategic orientations simultaneously to enhance their dynamic capabilities in NPD, a strategic issue that has not been given much attention in previous literature.

The relationship between quality management and new product development: evidence from China

Research suggests that organizations involved in new product development (NPD) can adopt quality management (QM) systems to optimize their NPD processes and thereby build their NPD competence. This paper contributes to a further understanding of the link between QM and NPD by investigating why and how more effective QM can promote and assist NPD. Based on taxonomy of QM practices, we examine the differences between the effects of infrastructure quality management practices (IQMP) and core quality management practices (CQMP) on a firm’s NPD capability and NPD performance. We also incorporate NPD practices in a conceptual model, to examine the integration effects of QM practices and NPD practices. The results show that IQMP significantly promotes NPD capability, while the influence of CQMP on NPD capability is relatively insignificant. Furthermore, our results indicate that the integration of design and manufacturing has a significant negative influence on NPD capability. Our findings highlight the significant role NPD capability plays in explaining the link between QM practices and NPD performance. Our findings also suggest to practitioners that they should integrate QM with other technology management practices in order to optimize their NPD processes.