Performance of Global New Product Development Programs: A ...

J PROD INNOV MANAG 2007;24:419–441 r 2007 Product Development & Management Association

Performance of Global New Product Development Programs: A Resource-Based View Elko J. Kleinschmidt, Ulrike de Brentani, and So¨ren Salomo

Gaining a competitive edge in today’s turbulent business environment calls for a commitment by firms to two highly interrelated strategies: globalization and new product development (NPD). Although much research has focused on how companies achieve NPD success, little of this deals with NPD in the global setting. The authors use resource-based theory (RBT)—a model emphasizing the resources and capabilities of the firm as primary determinants of competitive advantage—to explain how companies involved in international NPD realize superior performance. The capabilities RBT model is used to test how firms achieve superior performance by deploying organizational capabilities to take advantage of key organizational resources relevant for developing new products for global markets. Specifically, the study evaluates (1) organizational NPD resources (i.e., the firm’s global innovation culture, attitude to resource commitment, top-management involvement, and NPD process formality); (2) NPD process capabilities or routines for identifying and exploiting new product opportunities (i.e., global knowledge integration, NPD homework activities, and launch preparation); and (3) global NPD program performance. Based on data from 387 global NPD programs (North America and Europe, business-to-business), a structural model testing for the hypothesized mediation effects of NPD process capabilities on organizational NPD resources was largely supported. The findings indicate that all four resources considered relevant for effective deployment of global NPD process capabilities play a significant role. Specifically, a positive attitude toward resource commitment as well as NPD process formality is essential for the effective deployment of the three NPD process routines linked to achieving superior global NPD program performance; a strong global innovation culture is needed for ensuring effective global knowledge integration; and top-management involvement plays a key role in deploying both knowledge integration and launch preparation. Of the three NPD process capabilities, global knowledge integration is the most important, whereas homework and launch preparation also play a significant role in bringing about global NPD program success. Tests for partial mediation suggest that too much process formality may be negative and that top-management involvement requires careful focus.

Introduction

Address correspondence to: Elko J. Kleinschmidt, M.G. DeGroote School of Business, McMaster University, 1280 Main St. West, Hamilton, Ontario, Canada L8S 4M4. E-mail: [email protected]. mcmaster.ca.

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oday, the world is the business arena, and company growth and profitability are largely due to the strategies of globalization and new product development (NPD). Firms must cope with international markets that are turbulent and diverse,

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and in these markets NPD plays a primary role in achieving a sustainable competitive advantage. How firms succeed in NPD has been the focus of much research, but as shown in a meta-analysis by Henard and Szymanski (2001), little of this deals with NPD in the global setting. Globalization makes managing an enterprise more complex, calling for resources and capabilities by which to tackle the challenges and opportunities specifically associated with international NPD. In the present article, resource-based theory (RBT)—a model emphasizing the firm’s resources and capabilities as primary determinants of competitive advantage—is used to explain how companies achieve success in international NPD. According to this theory, companies with a sustainable competitive advantage have capabilities in the form of specialized and practiced routines (Adner and Helfat, 2003; Eisenhardt and Martin, 2000) as well as superior resources (Smith, Vasudevan, and Tanniru, 1996) such that they BIOGRAPHICAL SKETCHES Dr. Elko J. Kleinschmidt is professor of marketing and international business at the Michael G. DeGroote School of Business at McMaster University. He holds a bachelor’s degree in mechanical engineering, an M.B.A., and a Ph.D. in business administration. He is an active researcher and consultant with a particular emphasis on international studies of product innovation practices. He has published extensively on these topics in the Journal of Product Innovation Management as well as in other noted journals and, together with Robert Cooper and Scott Edgett, won the 1999 Thomas D. Hustad Best Paper award. His latest book, coauthored with Cooper and Edgett, is titled Portfolio Management for New Products (2d ed., Perseus Books, 2001). Dr. Ulrike de Brentani is professor of marketing at the John Molson School of Business at Concordia University. She holds an M.B.A. and a Ph.D. in business administration and has research interests in the areas of new product and service development, new product evaluation, and new product and service marketing in the businessto-business sector. She has received several Awards of Excellence for her research, which is published in refereed journals including, among others, Journal of Product Innovation Management, International Journal of Research in Marketing, Journal of the Academy of Marketing Science, Industrial Marketing Management, and European Journal of Marketing. Her current research deals with new product and service development for global markets and market vision for new-to-the-world products. Dr. So¨ren Salomo is professor of technology and innovation management at Karl-Franzens University Graz, Austria. He holds a diploma and doctorate in business administration from Kiel University. He received the Esche-Schu¨mann-Commichau Foundation award for his doctoral thesis. His research interests cover corporate innovation management from a resource-based perspective with a special focus on process and organizational system mechanisms for supporting radical innovation. He also addresses research questions in the field of innovation marketing. His work is published in Scandinavian Journal of Management, Creativity and Innovation Management, and other noted refereed journals.

E.J. KLEINSCHMIDT, U. DE BRENTANI, AND S. SALOMO

‘‘produce more economically and/or better satisfy customer wants by creating greater value or net benefits’’ (Peteraf and Barney, 2003, p. 311). NPD performance has consistently been linked to activities comprising the NPD process (Henard and Szymanski, 2001). Use of an established set of NPD routines ensures that the right tasks are undertaken, that information is accessed in a timely fashion and from the appropriate sources, and that the right people are involved in coordinating and implementing the process (Cooper, 1999; Cooper, Edgett, and Kleinschmidt, 2003). Although most past studies focus on NPD for domestic markets, the small number of recent efforts that take the global setting into account (e.g., Boutellier et al., 1998; Chryssochoidis and Wong, 1998; Roberts, 2001) also provide clues that success in developing products that compete worldwide is linked to having routines in place that help firms to leverage and coordinate their creative, but often internationally diffused, NPD resources. Besides the notion that process capabilities impact global NPD performance, specific firm-related resources have also been noted to play a significant role (Henard and Szymanski, 2001). Organizational factors such as firm culture, past experiences, tacit knowledge, traditional practices and approaches, and commitment by senior management have been shown to affect NPD outcomes (de Brentani and Kleinschmidt, 2004; Zou and Cavusgil, 2002). In the present article, it is proposed that NPD process capabilities are essential for achieving superior outcomes if these are guided and enhanced through the more effective deployment of key organizational resources. Although NPD has become largely global in scope, the two literatures—NPD and globalization—flow in relatively separate streams. A key objective and contribution of the research presented in this article, therefore, is the integration of knowledge from the two literature streams and the expansion and adaptation of the parameters proposed to impact NPD in terms of factors relevant for globalization. Second, the research focuses on the performance effect of key factors relevant for carrying out global NPD programs. By viewing new product development through the globalization lens, this study offers the potential to contribute to a better understanding of what makes for success in global NPD. A third contribution relates to the underlying RBT-based model. Few studies in NPD incorporate the two groups of factors— organizational resources and NPD process capabilities—in a complex, interdependent model to explain

PERFORMANCE OF GLOBAL NEW PRODUCT DEVELOPMENT PROGRAMS

NPD program performance. By analyzing the impact of organizational resources on outcome, as mediated by the firm’s NPD process capabilities, this study contributes to the collective knowledge on RBT and also provides a more explicit, potentially more realistic, model of the factors that drive global NPD performance. Fourth, the study entails a large cross-industry sample of internationally active firms—a database that allows for generalization about what is relevant for achieving NPD success in global markets. Finally, the results of this study provide conclusions and calls for further research, as well as managerial implications.

Model Development The underlying model for this research is RBT as developed in the strategic management field (Pringle and Kroll, 1997; Wernerfelt, 1984). RBT postulates that a firm’s performance is largely based on its resources. Competitive advantage—measured by rents or, more broadly, profit-earning ability (Grant, 1991)—derives in particular from resources that are valuable, rare, inimitable, and nonsubstitutable (Barney, 1991; Smith et al., 1996). Resources are assets or inputs to production that an organization owns, controls, or has access to (Helfat and Peteraf, 2003) and that give it an enabling capacity to enhance its efficiency or effectiveness (Hunt, 1997) and, thereby, its ability to ‘‘exploit opportunities or neutralize threats’’ (Barney, 1991, p. 106). Key resources typically are intangible and developed over time (e.g., culture, experience, reputation, working relationships, and established practices), making them heterogeneous, relatively immobile, and not readily bought and sold (Teece, Pisano, and Shuen, 1997). Traditional RBT, however, does not explain how and why some firms achieve competitive advantage in situations of rapid and unpredictable change. According to Eisenhardt and Martin (2000), it is the capabilities by which managers integrate, build, and reconfigure the firm’s internal and external competencies and resources to address changing environments that are the real source of competitive advantage. In this broader capabilities view of RBT (CRBT), firms gain a competitive edge not only by deploying key assets and through multiple resource interaction (Smith et al., 1996) but also by developing new capabilities through skill acquisition, learning, and accumulation of organizational and intangible assets over time (Teece, Pisano, and Shuen, 1997). Because


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managerial decisions operate on the resource and capability base of an organization, which has been developed based on lessons from prior experience and over time (ibid.), differences between firms in this regard may lead to differences in managerial decisions and thus to different competitive outcomes (Adner and Helfat, 2003). Firms can achieve an advantage, which can become longer term, through the constant reconfiguration or recombination of different types of resources to generate new applications (Eisenhardt and Martin, 2000) and to meet changing market demands (O’Regan and Ghobadian, 2004). Thus, organizational capabilities are processes that are embedded in firms; they are ways of organizing and getting things done. They are identifiable, specific activities (Eisenhardt and Martin, 2000) as well as patterns of current practices and learning, including routines for planning, controlling, coordinating, task completion, and information gathering and processing, which are viable across multiple products or markets (Pringle and Kroll, 1997; Teece, Pisano, and Shuen, 1997). For the performance of an activity to constitute a capability, it must have reached some threshold level of practiced or routine activity and at a minimum must work in a reliable manner (Helfat and Peteraf, 2003). Organizational resources, on the other hand, are seen less as being productive in themselves and more as working through a firm’s ability to assemble, integrate, and manage them via organizational capabilities (Eisenhardt and Martin, 2000). Several recent studies use RBT to investigate the role of resources in creating competitive advantage through innovation (e.g., Ahuja and Katila, 2004). For example, an important question for which this model might provide answers is why some firms are more effective than others at NPD. As noted already, with the emergence of the global economy and the accelerating dynamics of technology, sustaining a position of superiority is closely linked to a successful international NPD program. Cast in RBT, the firm’s ability to enhance its offerings so as to create and sustain an advantage in this highly competitive market arena is the key to success and this, in turn, is principally a function of its resources and NPD capabilities (Autio, Sapienza, and Almeida, 2000). Winners in global markets are typically firms that demonstrate timely responses and flexible product innovation, coupled with effective management of internal and external competences (Teece, Pisano, and Shuen, 1997; Zou and Cavusgil, 2002). In line with CRBT, this study assesses global NPD programs

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in terms of three broad elements: (1) organizational resources relevant for international NPD; (2) global NPD process capabilities, or NPD process activities or capabilities required for developing successful products for global markets; and (3) global NPD program performance. These are modeled in antecedent terms, where the impact of resources on performance is mediated by the NPD process capabilities (Figure 1). The first part of the model depicts the global NPD organizational resources of the firm. These describe the longer-term setting, experiences, and established approaches underlying international NPD (Hunt, 1997; Smith et al., 1996). In the context of this study, key organizational factors are stipulated to include (1) the innovation (Capon et al., 1992; Helfat and Peteraf, 2003) and globalization culture (Ogbuehi and Bellas, 1992; Roberts, 2001) surrounding the NPD program; (2) the attitude of management regarding involvement in (Bonner, Ruekert, and Walker, 2002) and resource commitment to (Grant, 1991) the international NPD effort; and (3) the formal process for NPD that has been developed and practiced over time and that determines the NPD routines used for developing new products for international markets (Cooper, Edgett, and Kleinschmidt, 2003; Menon, Chowdhury, and Lukas, 2002). Part two of the model focuses on organizational capabilities, which in this study are characterized by key global NPD process capabilities relevant for identifying and exploiting new product opportunities for international markets. Based on NPD and globalization literatures, three key process activities are considered relevant for effective Organizational Resources

international NPD: (1) activities to access, coordinate, and integrate information and resources pertaining to international market opportunities (i.e., global knowledge integration) (Graber, 1996; Ogbuehi and Bellas, 1992); (2) carrying out NPD homework tasks (Henard and Szymanski, 2001); and (3) preparing for international new product launch (Chryssochoidis and Wong, 1998; Hultink et al., 1997). The final set of constructs defines global NPD program performance. Performance in RBT is competitive advantage, which is seen as a firm’s potential to best its rivals in rents, profitability, market shares, and other outcomes of interest (Smith et al., 1996). This is measured ultimately in terms of superior financial performance (Hunt, 1997) but typically also involves shorter-term measures such as establishing an advanced strategic position (e.g., market or technological leadership) (Grant, 1991; Hunt, 1997).

Hypotheses For the purpose of theoretical development, a mediated model is assumed because this permits a more parsimonious approach to hypothesis development for this relatively complex model. The present study recognizes that NPD program performance may also be impacted directly by organizational factors, calling for partial mediation. This could be due to a direct effect or to other-than-NPD-process routines (e.g., NPD team approach) that might also mediate the resource–performance relationship. The sections in this article on research and analysis and results deal with

Global NPD Process Capabilities / Routines

Global NPD Program Performance

Global Innovation Culture Global Knowledge Integration Financial Performance

Top Management Involvement H 1a – H 4c

Homework Activities

Resource Commitment Launch Preparation

H 5a – H 7b

H8 Windows of Opportunity

NPD Process Formality

Figure 1. Impact of Organizational Resources and Global NPD Process Capabilities on Global NPD Program Performance


this in more detail. According to the model, a firm’s organizational resources influence the performance of its global NPD program indirectly through key NPD process capabilities and routines.

Global NPD-Related Organizational Resources Global innovation culture. Corporate culture entails the norms, attitudes, values, and behavior patterns that permeate the organization and form its core identity (Denison, 1984). In RBT, culture is a valuable organizational resource because it is created over time, is intangible, is difficult to imitate, and has the potential for moving the firm to a position of competitive advantage (Helfat and Peteraf, 2003). Studies show that a strong corporate culture contributes to improved performance, directly in terms of specific achievements (Deshpande´, Farley, and Webster, 1993) or indirectly by enhancing commitment and motivation associated with challenges linked to success (Lim, 1995). An important subculture is the firm’s innovation culture. This is a ‘‘style of corporate behavior that is comfortable with, even aggressive about, new ideas, change, risk and failure’’ (O’Reilly, 1997, p. 60). A strong innovation culture fosters an environment where company personnel emphasize the importance of new products for company success where the firm is receptive to new ideas and innovations (Deshpande´, Farley, and Webster, 1993; Schein, 1990), and where involvement in NPD, entrepreneurship, and risk taking are encouraged and rewarded (Andriopoulos, 2001; Salomo, Kleinschmidt, and de Brentani, 2005). According to CRBT, it is in the context of an innovative culture that a firm’s knowledge can be effectively leveraged through capabilities by developing innovative products and opening new markets (Grant, 1996; Hunt and Morgan, 1995). When companies internationalize, their culture must incorporate globalization. This means being open to world markets, diverse customer needs and preferences, and different national cultures and competitive scenarios (Ogbuehi and Bellas, 1992; Roberts, 2001). Also, it calls for the ability to recognize and leverage specialized skills, resources, and ideas within the firm but that often are geographically dispersed (Boutellier et al., 1998; Chiesa, 1996). Thus, global orientation in many respects is synonymous with innovation (Lu and Beamish, 2001), requiring firms to redefine and adapt strategic elements of their operations, including their NPD effort, in line with the realities of the


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international market arena. For the purpose of this research, therefore, the concepts of innovation culture and globalization culture are integrated as one concept labeled global innovation culture. A strong global innovation culture has been linked to superior performance in NPD. Chryssochoidis and Wong (1998) and Calantone et al. (2004) show a positive relationship between global orientation and the nature of the firm’s NPD process and the ability to manage knowledge throughout the development effort. Cast in CRBT, through key capabilities a firm can leverage its global innovation culture for efficient and effective NPD for international markets. Specifically, a global innovation culture can be seen as an important, intangible resource affecting the firm’s emphasis on gathering, coordinating, and integrating internal and external, globally dispersed, and culturally diverse information across different products and markets (Grant, 1996; Helfat and Raubaitschek, 2000). Also, a global innovation culture can positively influence the management of key tasks related to the research and development of new product concepts (e.g., homework activities) as well as the implementation of global new product launch routines (Calantone et al., 2004; Ogbuehi and Bellas, 1992). Thus, the following hypotheses are offered: H1a: Capabilities of global knowledge integration are more effective the stronger the global innovation culture. H1b: Capabilities of homework activities are more effective the stronger the global innovation culture. H1c: Capabilities of launch preparation are more effective the stronger the global innovation culture.

Management involvement in global NPD. Topmanagement involvement represents an important form of corporate commitment to the firm’s strategic effort and has been positively linked to performance in both the NPD (Cooper and Kleinschmidt, 1995; Hauschildt and Gemu¨nden, 1999) and the globalization (Calantone et al., 2004; Roberts and Senturia, 1996) literature. In the context of CRBT, this factor is a key organizational resource because it incorporates essential knowledge and permits capabilities based on lessons from prior experience. Such know-how, familiarity, and understanding are usually of a tacit nature and result from past involvement in firm-specific projects, team interactions, and leadership experiences. Pringle and Kroll (1997) elaborate that a sustainable

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competitive advantage results from effective teamwork induced by senior managers and also, at times, from their reputation or relationship with customers (Grant, 1991). The NPD literature also refers to the value of senior managers playing a visible role, particularly in ventures where uncertainty and risk are high. Roles include (1) visioning to guide the NPD program (Reid and de Brentani, 2004; Swink, 2000); (2) sponsoring high-risk ventures (Kuczmarski, 1998); (3) championing NPD efforts during critical phases (Takeuchi and Nonaka, 1986); (4) participating directly in day-to-day NPD activities or indirectly as project reviewers (Cooper, Edgett, and Kleinschmidt, 2003); and (5) interacting with strategic customers as representatives of the firm’s reputation and capabilities (de Brentani and Ragot, 1996). The idea that senior managers play a role in NPD is well accepted. How active this involvement should be, however, has been questioned conceptually (Gupta and Wilemon, 1990) and empirically (Ayers, Dahlstrom, and Skinner, 1997). Bonner, Ruekert, and Walker (2002) found that too much intervention in team activities has a negative performance effect. Thus, in a partially mediated model, the relationship between management involvement and performance may have an inverted u-shape. When concerned with global NPD, the experience embodied in senior management and their involvement as leaders and facilitators increases in importance (Douglas and Craig, 1989). This is because managers play a critical role in reducing cultural distance among geographically and culturally dispersed facilities and team members (McDonough, Kahn, and Barczak, 2001), in translating company objectives and values to NPD participants worldwide (Graber, 1996; Starr, 1992), and in pulling together the elements of an internationally dispersed NPD program and team (Knight and Cavusgil, 2004; Ogbuehi and Bellas, 1992). Accordingly, the following hypotheses are proposed: H2a: Capabilities of global knowledge integration are more effective the higher the level of top-management involvement.


Resource commitment. According to Henard and Szymanski (2001), a dominant factor linked to NPD performance is the commitment of sufficient resources. This could be seen as a hard resource that is of value but imitable but can also be conceptualized as an intangible organizational resource that is developed over time and based on a firm’s experiences and emphasis on international markets (Roberts and Senturia, 1996). Viewed in CRBT, commitment of sufficient resources is an essential attitude by senior management—in its role as champion of the global NPD effort—to find, dedicate,or redeploy scarce resources to handling critical problems and tasks (Graber, 1996; Swink, 2000). However, alone the ability to commit resources is not what leads to success; instead, it is resource dedication to organizational routines, which impacts outcome. In other words, the effect on performance of resource sufficiency is mediated by the enhanced capabilities resulting from the effective operation of key NPD process activities. For this study, performance is linked to a prevailing attitude in the firm to provide sufficient resources for knowledge creation—including research and development (R&D) and technology development—knowledge sharing, and transfer, as well as to allocate the right, often the best, people to the global NPD effort. It means supporting the NPD process from early idea to launch to ensure that activities embedded in these routines can be effectively and efficiently accomplished (Daellenbach, McCarthy, and Schoenecker, 1999). Given the added complexities and dynamics of a NPD program of international scope (e.g., coping with geographic and cultural distances among markets, team members, and affiliates; coordinating and integrating diverse information and competencies, worldwide) an attitude that ensures resource sufficiency for the NPD effort is even more important (Bohgani et al., 1999; Ogbuehi and Bellas, 1992). Therefore, H3a: Capabilities of global knowledge integration are more effective the higher the level of resource commitment. H3b: Capabilities of homework activities are more effective the higher the level of resource commitment.

H2b: Capabilities of homework activities are more effective the higher the level of top-management involvement.

H3c: Capabilities of launch preparation are more effective the higher the level of resource commitment.

H2c: Capabilities of launch preparation are more effective the higher the level of top-management involvement.

NPD process formality. Using a formal, StageGates -like system that provides a template for


activities, routines, and reviews to be implemented throughout the stages of the NPD process has been linked to NPD success (Cooper, 1999; Griffin, 1997). But the mere existence of such a process does not make it a resource by which firms sustain a competitive advantage, as required by RBT. A formal NPD process becomes valuable and rare only once it undergoes company-specific tuning (e.g., adjustment for industry, firm size, NPD experience, domestic versus global). In practical terms, this means that the process needs full buy-in from NPD personnel, team leaders, and senior managers and is implemented for most of the firm’s NPD ventures. Added requirements are (1) explicit and tacit knowledge of applying the process to different product and market scenarios; (2) understanding by different functions in the firm; (3) knowledge of its limitations; and (4) steady adjustment to help speed up the development cycle, to increase flexibility, and to ensure its relevance to changing technological and market conditions (Cooper, 2001). NPD process formality is viewed as an organizational resource that helps firms to achieve superior performance. This, by ensuring that project teams understand the required tasks and that key routines such as getting customer input and integrating knowledge from different locations and functional sources are effectively carried out (Bonner, Ruekert, and Walker, 2002; Schmidt and Calantone, 2002). It should be noted that some evidence suggests that too high a level of process formality can have a negative performance effect. Some studies show NPD process formality to be positively and directly related to NPD outcome (Bonner, Ruekert, and Walker, 2002; Schmidt and Calantone, 2002) and that saving costs by skipping stages ultimately leads to reduced financial performance because a greater likelihood of failure results from this. Recent studies challenge this view, suggesting that (1) there is no—or at most a marginal— direct link to NPD performance (Cooper, Edgett, and Kleinschmidt, 2003; Henard and Szymanski, 2001); or (2) the relationship is direct, but negative (Bonner, Ruekert, and Walker, 2002). The thinking is that too inflexible a process results in the exclusion or mishandling of more innovative, high-risk projects (ibid.) and in unnecessary bureaucracy and inefficiency for less innovative ones (Capon et al., 1992; de Brentani, 2001). Predetermined routines such as fixed process stages and precise sets of evaluation criteria at the gates cannot cope with the multitude of uncertainties inherent in highly innovative ventures (Garcia, Calantone, and Levine, 2003). The latter results


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indicate that process formality may have an inverse u-form impact (quadratic term). This possibility is reviewed in the sections on analysis and results and discussion. This notwithstanding, a formalized process is viewed as an important resource because it defines the scope and extent of activities for each stage and specifies the required people and functional involvement as well as expected results. In the global NPD context, one can expect the level of complexity and uncertainty surrounding the process to increase substantially. Thus, for global NPD, due to the scope of information required and the greater number, diversity, and dispersion of markets and players, process formality is key to ensuring that all the elements are identified and accounted for when undertaking NPD process routines. This supports the contention that NPD process formality is an important resource to be deployed by the NPD process capabilities of the firm, thus impacting global NPD outcome. H4a: Capabilities of global knowledge integration are more effective the higher the level of NPD process formality. H4b: Capabilities of homework activities are more effective the higher the level of NPD process formality. H4c: Capabilities of launch preparation are more effective the higher the level of NPD process formality.

Global NPD Process Capabilities Global knowledge integration. Information about markets and the ability to respond to opportunities and threats underlie all NPD activities. In the context of CRBT, gaining a competitive advantage demands the integration of external activities and technologies with internal capabilities (Grant, 1996). This requires special routines, including those for gathering and processing information. When applied to global NPD, success calls for an information integration capability that fully leverages existing resources to ensure that products are conceived in the form of global entities but at the same time are adapted to respond to stimuli from different country markets and sources of expertise (Moenaert et al., 2000; Roberts and Senturia, 1996). This requires knowledge input from a variety of internal and external sources to determine how much commonality, versus local content, should be designed into the product (Calantone et al., 2004; Chiesa, 1996). Global knowledge integration is

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identified as a capability by which firms access and integrate globally and functionally dispersed information throughout the NPD process for the purpose of developing offerings that respond to customers worldwide (Roberts, 2001). Further, it is expected that well-integrated information about the external environment, combined with knowledge of internal competencies, provide important clues about pioneering new product and market opportunities that permit firms to leap forward and to achieve a competitive edge (Knight and Cavusgil, 2004). H5a: The more effective global knowledge integration, the higher the global NPD program performance in terms of windows of opportunity. H5b: The more effective global knowledge integration, the higher the global NPD program performance in terms of financial performance.

Homework activities. These include early evaluation of new product ideas, creating project definitions, and studies assessing product potential in markets worldwide. These help to understand customers and to determine the extent and specific types of local tailoring required (Graber, 1996; Ogbuehi and Bellas, 1992). Cast in CRBT, this capability links the firm’s core competencies to the dynamics of the external environment (Teece, Pisano, and Shuen, 1997). Thus, global NPD projects, in which companies input the right type and level of homework, should result in reduced rework, should speed up the NPD cycle, and should make the process more efficient. Also, because up-front homework typically results in new products that are more clearly defined and responsive to markets, companies are more likely to take advantage of valuable pioneering opportunities (Zou and Cavusgil, 2002). H6a: The more effective the homework activities, the higher the global NPD program performance in terms of windows of opportunity. H6b: The more effective the homework activities, the higher the global NPD program performance in terms of financial performance.

Launch preparation. Launch preparation for global NPD is a capability that involves detailed planning for the commercialization of new products on a global scale. Although the overall launch plan entails strategic elements such as market entry (e.g., first to


market) (Hultink et al., 1997; Riek, 2001), the launch preparation capability is more tactical and typically entails training and empowering the front line (Chryssochoidis and Wong, 1998; de Brentani, 2001), internal marketing (Hultink and Atuahene-Gima, 2000) and ensuring that commercialization is based on solid market information about differences in buyer readiness and behavior worldwide (Graber, 1996). A wellconceived, implemented, and resourced new product launch is identified by Cooper (1999) and others, domestic and global (Hultink et al., 1997; Riek, 2001), as a key NPD success factor. Because excellent launch preparation improves the ability to meet time-based schedules, including more complex international roll-outs, this factor is expected to impact NPD performance. H7a: The more effective the launch preparation, the higher the global NPD program performance in terms of windows of opportunity. H7b: The more effective the launch preparation, the higher the global NPD program performance in terms of financial performance.

Performance in Global New Product Development In CRBT, performance entails a firm’s ability to achieve a competitive advantage that ultimately is measured by superior financial returns but that in the shorter run is gauged in terms of improved efficiency, market share or position, or breaking into new arenas (Hunt, 1997; Smith, Vasudevan, and Tanniru, 1996). This is similar to NPD, where performance has both a strategic and a financial dimension (Samiee and Roth, 1992) and where firms assess financial returns using subjective outcome perceptions (Griffin and Page, 1996) or proxies (Crawford and Di Benedetto, 2003)—that is, more easily determined measures that represent longer-term financial results. For studies involving international and global performance in general, commonly used measures include financial performance (e.g., exports, market share) and overall firm impact. Studies of international NPD or R&D often employ measures similar to those used for NPD program performance (i.e., financial, nonfinancial, firm/program impact) without international adaptation (Katsikeas, Leonidou, and Morgan, 2000; Zou and O¨zsomer, 1999). The model of global NPD program performance depicts an antecedent relationship between a


key nonfinancial NPD outcome (Hunt, 1997 [superior market position]; Mills, Platts, and Bourne, 2003 [entering new markets]; Smith, Vasudevan, and Tanniru, 1996) and overall NPD financial performance. Specifically, two outcome measures are used: (1) windows of opportunity, which is the extent to which global NPD programs open new market, product, and technological arenas (Cooper and Kleinschmidt, 2000; Knight and Cavusgil, 2004); and (2) financial performance, which encompasses global NPD program sales, profitability, and cost performance (Griffin and Page, 1996). The measure of windows of opportunity is seen as antecedent to financial NPD program performance (Hauschildt and Salomo, 2005). Firms that can open new global market or technological arenas create opportunities for generating returns from NPD and are better able to meet the demands of a diversified global market. In line with RBT and with empirical results in NPD research, the following hypothesis is proposed: H8: The higher the level of performance in opening windows of opportunity, the higher the level of financial performance in the global NPD program.

The Research Questionnaire Design and Data Collection A structured questionnaire was self-administered by managers in a large sample of business-to-business (B2B) firms active in international markets. The questionnaire was developed over several stages. An extensive literature review helped to identify relevant concepts and previously operationalized scale items. Based on this, items were adapted to the international context, and new items were developed when measures were unavailable. The resulting questionnaire, which was pretested in two pilot studies of 12 and 22 firms, respectively, covered a broad range of international NPD issues, including the organizational resources and NPD process routines of interest in this article. Several listings were used to identify internationally active respondents including lists of alumni of graduate business programs, a Dun & Bradstreet list for North America, and industry lists for European firms (ZVEI Elektro þ Elektronik Einkaufsfu¨hrer 2000, Die Deutsche Industrie 2000, Hoppenstedt Firmendatenbank, Deutschland, Competence-Site and Dienstleisterdatenbank Absatzwirtschaft). Respondents were contacted by phone and asked to participate.


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To ensure that only knowledgeable key informants took part, several criteria (e.g., management position, involvement in international NPD) were used to identify respondents who had responsibility for their firm or small business unit’s (SBU’s) international NPD program. Bias was minimized for retrospective data by surveying managers who were participating in the NPD program, by limiting the recall time frame to a three-year period, and by ensuring confidentiality to all respondents. A total of 1,187 managers was identified and offered a report of the results to encourage participation. Data collection took place over 18 months, with a total of 469 firms taking part (39.5% response rate). A nonresponse bias test (Armstrong and Overton, 1977) via firm-size comparison (i.e., sales, number of employees) between nonrespondents and respondents, and a time-trend bias test (Langeral et al., 1999) comparing results from early with late respondents showed no significant differences. As per Kumar, Stern, and Anderson (1993), 82 cases were eliminated due to missing or doubtful data, leaving 387 international NPD programs for analysis. When compared to the retained sample, the eliminated cases exhibited no differences in variable values. Respondents were from North America (262, or 68%) and Europe (125, or 32%), comprising firms from a broad range of industries (196 manufacturing, 191 services). The firms were combined into one data set as analysis comparing these groups indicated no significant difference on all three sets of variables— organizational resources, organizational capabilities, and performance—and on sample characteristics. The following section discusses a test for measurement equivalence.

Measures Respondents provided data on a broad range of issues related to international NPD, including 21 organizational resource and 12 NPD process capability items, as well as seven performance variables derived from the theoretical framework. All questions used sevenpoint Likert-type scales with anchor phrases, and data on certain company identifiers (e.g., firm size) were also obtained. The measures in this research were similar to previously used scales (see the Appendix), although adjustments were made to respond to its international scope. To test for the problem of common method variance (dependent and independent

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variables were collected from the same respondent), the Harman one-factor test (Podsakoff and Organ, 1986) was used. Factor analysis of dependent and independent variables yielded nine factors explaining 73.4% of the variance, with the first factor accounting for 31.5%. Given that several factors emerged from this analysis and the first did not account for most of the variance, common method variance appeared not to be a serious problem. As per Figure 1, three construct subgroups were identified: (1) organizational resources; (2) global NPD process capabilities; and (3) global NPD program performance.

Analysis and Research Results Structural equation modeling (SEM) using LISREL v.8.54 was applied to simultaneously perform confirmatory factor analysis (CFA) for the latent constructs of the model and to test the substantive hypotheses. Goodness-of-fit of the models was assessed with the comparative fit index (CFI) and the standardized root mean square residual (SRMR), following recommendations by Hu and Bentler (1998). Additionally, the chi-square/df ratio, root mean square error of approximation (RMSEA), and non-normed fit index (NNFI) are reported. Satisfactory model fits are indicated by SRMR and RMSEA 0.08 and NNFI and CFI above 0.90 and a chi-square/df ratio below 2.5. As a preliminary analysis, reliability of the measures was evaluated using Cronbach’s alpha (range: 0.78 to 0.92) and item-to-total correlations (Churchill, 1979). Construct items were subjected to principal component analysis with results providing support for the unidimensionality of constructs (Ahire and Devaraj, 2001). Convergent validity of the factors was assessed through average variance extracted (AVE) (Fornell and Larcker, 1981). Seven of nine constructs exhibited AVE above 0.50, considered indicative for convergent validity. The constructs global innovation culture and top-management involvement show AVE just below 0.50. Despite this slightly lower AVE, the decision not to purify the measures further was taken to maintain the richness of the constructs and because all other measures indicate sufficient construct validity. Discriminant validity of the model constructs was assessed by comparing AVE of the constructs to the shared variance with all other latent constructs (Fornell and Larcker, 1981). This condition is satisfied for all constructs. The Appendix provides a detailed


description of the constructs and items used, together with their sources, factor loadings, Cronbach’s alphas, and AVE. Structural models were used to assess the hypothesized main effects among the organizational resources, NPD process capabilities, and global NPD program outcome. Before testing the hypotheses, multigroup SEM was applied to determine if the North-American and European samples were equivalent and could be combined. As the sample consists of respondents from firms with headquarters in different countries, scores may differ across cultures because of variance in social desirability or understanding of specific firm aspects (Vijier and Poortinga, 1982). Empirical research has built a case for assessing measurement equivalence in international research, specifically in consumer behavior research (Myers et al., 2000). Given the B2B setting of thus study, cultural, demographic, or ethnic heterogeneity can generally be expected to be of lesser importance. Nevertheless, systematic differences may occur in assessing key organizational resources—that is, the firm’s global innovation culture, attitude to resource commitment, top-management involvement, and NPD process formality. To test for measurement equivalence, a structural model was specified in which all of the relationships—factor loadings, error variances, and factor covariances—among the four resource constructs were constrained to be equal in both samples (Mullen, 1995; Myers et al., 2000; Steenkamp and Baumgartner, 1998). The fit of this constrained model was then compared to the fit of a model in which all of these relationships were free to vary. The w2 difference value of 19.13 (df 5 28) is not significant at the p .05 level. Hence, the two samples can be combined. Similar tests for measurement equivalence were conducted for all other constructs used in this research. Given the assumption that managers from European and North American firms, which are all active on an international scale, would share a very similar understanding of NPD programrelated process capabilities and NPD program success measures, the tests did show full measurement invariance, allowing for combination of the two samples of firms. Two-step SEM was applied to test for the hypothesized mediation effects (Baron and Kenny, 1986; Holmbeck, 1997). Fit statistics for both models (mediated: CFI 5 .97, SRMR 5 .068, w2 /df ratio 5 2.45, RMSEA 5 .061, NNFI 5 .96; partially mediated (full): CFI 5 .97, SRMR 5 .062, w2 /df ratio 5 –2.44,


RMSEA 5 .061, NNFI 5 .96) are well within the acceptable range, indicating satisfactory fit to the data. The mediated (partially mediated) model explains 25% of the variance in windows of opportunity and 28% of the variance in financial outcome of global NPD programs; the partially mediated model explains 30% of the variance in windows of opportunity and 32% in financial outcome of global programs. Thus, the constructs identifying organizational resources do affect NPD process capabilities to a large extent. Table 1 reports the results from the path model estimating the direct and mediated effects of the independent variables on NPD program performance. To formally test the mediation model, the mediated model is compared to the partially mediated (full) model, the latter including direct paths from all latent constructs to the two outcome constructs, windows of opportunity and financial performance. The chisquare difference test (Dw2 (df) 5 33.02(8), p .001) indicates that the full model is an improvement over the mediation model. Hence, the data suggest only a partial mediation effect of NPD process routines between organizational resources and outcome. On closer inspection, the hypothesized mediation effect is particularly true for windows of opportunity, whereas most organizational resource constructs show significant direct relationships with the financial


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performance measure in addition to the indirect hypothesized relationship via NPD process capabilities (Table 2). The results of the parameter estimates are to a large extent as hypothesized. Of the 12 hypothesized relationships between organizational resources and NPD process capabilities, 9 are confirmed by the data. Resource commitment and NPD process formality impact all three NPD process routines positively, confirming H3a, H3b, H3c, and H4a, H4b, and H4c. Top-management involvement as an organizational resource affects global knowledge integration (H2a) and launch preparation (H2c) positively and significantly. Only homework activities are not related to top-management involvement; hence, H2b is not supported by the data. Contrary to expectations, global innovation culture has a positive impact only on global knowledge integration and not on the two other NPD process routines (H1b, H1c), lending support only for H1a. The first part of H5, H6, and H7 posited that NPD process routines positively affect windows of opportunity as a global NPD program outcome. The data lend support to H5a and H6a, confirming the positive impact of global knowledge integration and homework activities on windows of opportunity. As launch preparation is not significantly related to this outcome

Table 1. SEM Results for Organizational Resources, NPD Process Routines and Global NPD Program Performancea Mediated Model NPD Routines Global Innovation Culture Resource Commitment Top-Management Involvement NPD Process Formality R2

Knowledge

Homework

Launch

Knowledge

Homework

Launch

.31 .26 .09 .35 .61

.07 .39 .05 .32 .38

.10 .42 .13 .32 .56

.30 .25 .09 .37 .60

.07 .39 .05 .32 .38

.09 .42 .13 .33 .56

NPD Outcome Global Knowledge Integration (Knowledge) Homework Activities (Homework) Launch Preparation (Launch) Global Innovation Culture Resource Commitment Top-Management Involvement NPD Process Formality Windows of Opportunity a

Standardized path coefficients and R2 from SEM.

p 0.05. p 0.01. p 0.001.

Partially Mediated (Full) Model

Financial Performance

Windows of Opportunity


Windows of Opportunity

.16 .05 .19

.38 .14 .06

.09 .09 .14 .13 .20 .14 .05 .32

.30 .17 .01 .15 .08 .11 .15

.34

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Table 2. Results for Hypotheses Testing Independent Variable H1a H1b H1c H2a H2b H2c H3a H3b H3c H4a H4b H4c H5a H6a H7a H5b H6b H7b H8 a

Global Innovation Culture

Top-Management Involvement

Resource Commitment

NPD Process Formality

Global Knowledge Integration Homework Activities Launch Preparation Global Knowledge Integration Homework Activities Launch Preparation Windows of Opportunity

Dependent Variable

Resulta

Significance

Global Knowledge Integration Homework Activities Launch Preparation Global Knowledge Integration Homework Activities Launch Preparation Global Knowledge Integration Homework Activities Launch Preparation Global Knowledge Integration Homework Activities Launch Preparation Windows of Opportunity

Confirmed ./. ./. Confirmed ./. Confirmed Confirmed Confirmed Confirmed Confirmed Confirmed Confirmed Confirmed Confirmed ./. ./. ./. Confirmed Confirmed


– –

–

– – –

./. 5 not confirmed.

p 0.05. p 0.01. p 0.001.

measure, H7a is not confirmed. With respect to financial performance, the data indicate that launch preparation (H7b) is an antecedent with a positive effect. The two other NPD process routines, global knowledge integration and homework activities, are not directly related to financial outcome (H5b, H6b). The data do suggest, however, a strong and positive effect of windows of opportunity on financial performance, supporting H8. Given this between-performance effect, the total impact of NPD process capabilities on financial performance (for global knowledge integration: direct 5 .09 þ indirect via windows of opportunity [.30 .34] 5 0.19; for homework activities: not significant) is positive and relatively strong. To formally test the underlying mediation model, direct paths were introduced from organizational resources to the two outcome measures in the partially mediated (full) model. With respect to windows of opportunity, of the four organizational resources, only global innovation culture and NPD process formality show a direct and significant impact on outcome. Thus, apart from the mediated effect via global knowledge integration, global innovation culture enhances windows of opportunity directly. NPD process formality, though showing a positive mediated effect via the routines of global knowledge integration and

homework activities, exhibits a negative direct effect on windows of opportunity. The other two organizational resource constructs have no direct effect. When considering financial performance all organizational resources, except for NPD process formality, show significant direct impacts. Global innovation culture enhances financial performance directly. As global innovation culture has no effect on launch preparation (H1c), the underlying model of mediation via NPD process capabilities does not hold true for this specific organizational resource. Resource commitment also shows a direct and positive impact on financial performance. Hence, the data suggest only a partial mediation effect of resource commitment via the NPD process routine of launch preparation. Top-management involvement also exhibits a mediated and positive effect on financial outcome via launch preparation. However, the direct link between top-management involvement and outcome is negative, suggesting that more involvement decreases financial performance. NPD process formality shows no direct effect on financial performance, indicating that the underlying model of mediation via NPD process routines is valid for this organizational resource. These final two points are further elaborated with additional test results in the discussion section.


Discussion of Results The mediated model was tested against the partially mediated model. The results show that the impact of the resources in question is not fully mediated by the selected routines. This notwithstanding, the results do show that the effect of organizational resources on global NPD program performance is to an important extent mediated by the NPD process capabilities, as hypothesized. In particular, gaining a competitive advantage by opening windows of opportunity in global markets, according to the findings, calls for NPD process capabilities that can effectively leverage the organizational resources under study. For financial performance, however, the impact of organizational resources is primarily direct. This can be explained by the likelihood that the relationship between the organizational resources under study and the financial outcome of a company’s global NPD program is also influenced by other potential mediators. For example, innovation culture has been shown to affect the approach companies use to organize and implement the functioning of its NPD teams, which is linked to NPD outcome (Gupta and Wilemon, 1990; Takeuchi and Nonaka, 1986). At the same time, it is important to note that windows of opportunity is shown to be a highly significant driver of financial performance, lending further support to the validity of the mediated model, as detailed here. In sum, except for one of the hypothesized links (i.e., between global innovation culture and financial performance), all of the relationships between organizational resources and outcome measures were found to be either mediated or partially mediated by the NPD process capabilities selected for this study. This suggests that, on the overall, the underlying model connecting performance of global NPD programs to organizational resources via key NPD process capabilities holds true.

Organizational Resources The findings in this study highlight the importance of the firm’s internal resources as determinants of its ability to achieve superior NPD program performance, partially directly in terms of specific outcomes, but also largely indirectly (i.e., mediated) by being effectively deployed via the NPD process capabilities or routines relevant for developing products for international markets. NPD process formality. NPD process formality as incorporated in the operational routines by which new


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products are conceptualized, developed, and launched is of particular importance. All relationships are positive and highly significant ( p .001), indicating that a more formal process—that is, clearly defined phases and decision points, a high degree of buy-in by senior managers, and system implementation for NPD throughout the organization—permits the effective deployment of NPD process capabilities that significantly impact global NPD program outcome. This supports the notion that a higher degree of NPD process formality provides the base needed for NPD process capabilities to cope with the increased complexity and diversity of NPD efforts that are of a globalized scope (Graber, 1996; Teece, Pisano, and Shuen, 1997). The finding indicated by the partially mediated model of an additional direct and negative relationship with windows of opportunity is also relevant because it provides insight to the question of how much process formality should be deployed (Bonner, Ruekert, and Walker, 2002; Cooper, Edgett, and Kleinschmidt, 2003). This is discussed following. Resource commitment. A strong attitude by senior managers to resource commitment aimed at supporting the global NPD effort was found to play an essential role. All three relationships with NPD process capabilities are positive and significant ( p .01). As hypothesized, resource sufficiency—that is, people, systems, and funding—is critical if NPD programs are to meet the challenges and opportunities in the international market arena. Adequate resources help to ensure that NPD routines are understood, coordinated, and deployed at the appropriate level. Especially important, according to this study, is resource commitment for creating and coordinating multinational databases by which to ensure that new products meet market needs and are competitively superior in the complex global setting. Similarly, carrying out homework activities and planning the international launch needs the right level of support to be effective. Resource commitment also has a positive, but somewhat weaker ( p .05), direct effect on financial outcome. This is not surprising, given that the impact on performance of other routines not included in the model are also likely to be enhanced through an attitude of sufficient resource support. Global innovation culture. The findings highlight the value of a strong global innovation culture when developing new products for international markets. Its positive and highly significant impact on global

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knowledge integration (p .001) suggests that resource commitment alone is not enough. Even more important to the successful functioning of this capability is company support in the form of a globalization-plus-innovation perspective. As such, this finding supports calls in the literature (Chiesa, 1996; Moenaert et al., 2000) for openness to differences in culture-, market- and skill-based scenarios, where contributions from members in different countries are valued and where knowledge is shared across geographic units. In addition, the results emphasize the importance of embedding in the corporate culture an entrepreneurial and risk-taking mindset, pointing to the acceptance of unfamiliar types and sources of information—that is, thinking outside of the box—as a way of achieving a competitive advantage. Contrary to expectation, homework activities and launch preparation for global NDP did not rely on global innovation culture. What might explain this nonsignificant result is that the items used to measure these two capabilities describe the specific tasks of planning and implementing the research, development, testing, and launch of new product concepts. These capabilities are likely to depend less on culture as an influencing organizational resource and more on NPD process formality and resource commitment to ensure their effective deployment. Top-management involvement. Top-management involvement, according to this study, has a primary effect on facilitating launch preparation (p .01) and also on supporting global knowledge integration (p .05). This suggests that senior managers have at least two key roles in global NPD: (1) the role of innovation representative, enhancing the reputation of the firm and its new products by interacting with strategic and lead-user customers (de Brentani, 2001; von Hippel, 1986); and (2) the role as linked to the global scope of NPD programs and the overview that often only senior managers have of the firm’s worldwide endeavors (Graber, 1996; Roberts and Senturia, 1996). This overview facilitates pulling together the diverse knowledge and resources of the firm, as well as translating company objectives and values to dispersed and culturally different elements of the international organization. The anticipated positive connection of top-management involvement with homework activities, however, did not materialize. The finding of a nonsignificant (negative) relationship may suggest that use of senior managers should not be too active in day-to-day NPD operations.


Direct effects. There were also a number of direct effects of organizational resources on global NPD program outcome. Global innovation culture had a positive impact on both measures of NPD program outcome (p .05). This supports past findings that a strong corporate culture has a positive company performance impact (Deshpande´, Farley, and Webster, 1993; Schein, 1990). Furthermore, because this is an intangible organizational resource that permeates the firm—thus impacting a broad variety of corporate activities beyond the NPD process capabilities included in the model—its positive performance effect, which is likely to be mediated by other corporate capabilities relevant for achieving a competitive advantage (Lim, 1995), is not surprising. Two negative direct effects were also identified— one from top-management involvement and one from NPD process formality—which seem to contradict the underlying positive mediation model. For top-management involvement, the idea that senior managers play a role in NPD is well accepted, and this is supported by the model. Thus, the negative direct impact on financial performance could indicate support for previous findings that too intensive an involvement can be detrimental (Bonner, Ruekert, and Walker, 2002), suggesting an inverse u-form relationship. Similarly, the negative relationship between NPD process formality and performance (windows of opportunity) may have curvilinear roots (see previous discussion). Keeping in mind the aforementioned positive relationship of NPD process formality with operational routines and thus indirectly with performance, there is reason to believe that a formal process may indeed mean too much process when projects are highly innovative or entrepreneurial in scope as is typical when companies compete for windows of opportunity (de Brentani, 2001). This argument is supported in RBT by Grant (1991), who states that routines or processes that are too well established and methodical may be inadequate when less frequent contingencies arise. To account for possible curvilinear relationships, a second SEM was performed in which both the organizational resource and its square are entered along with the other constructs of the model (Kline, 1998). To reduce complexity of the model, this SEM was performed for the complete model including all of the constructs and the quadratic terms for top-management involvement/NPD process formality with summated scales. Additionally, partial models, including measurement models but excluding different sets of organizational resources except for top-management


involvement/NPD process formality, were performed. All showed similar results. According to the results, the quadratic effect of top-management involvement in the partially mediated model is not significant— that is, the inverse u-form relationship does not hold. Instead, given the positive and significant relationship of top-management involvement with two of the NPD process routines, it is speculated here (see also Swink, 2000) that it may be a question of focus rather than intensity. In other words, when NPD capabilities such as global knowledge integration and launch preparation deploy management attention, where their input enhances the effectiveness of these activities, increased involvement improves financial outcome. However, indiscriminate highly active involvement on the part of senior managers, meddling in all areas of global NPD, may have a deteriorating effect. In the case of NPD process formality, introducing the quadratic term leads to a direct linear effect that is positive but a quadratic term that is significant and negative. This lends support to the proposition of a curvilinear performance effect of NPD process formality, which enhances windows of opportunity only up to a point. Too much formality in the NPD process creates increased rigidities, causing firms to impose and enact strict procedures that ultimately reduce the positive impact on performance. Hence, although NPD process formality enhances windows of opportunity by enabling better international knowledge integration and homework activities, too strict adherence to a predefined process allows no further improvement.

Global NPD Process Capabilities The findings show that NPD process capabilities play a significant role for ensuring successful global new product development programs. Of the three process routines analyzed, of particular importance is global knowledge integration. As suggested in the literature, and supported here, achieving internal and external coordination and integration of information about customers, markets, and dispersed company resources results in new product offerings by which firms can gain a pioneering edge (i.e., windows of opportunity) in the international marketplace (p .001) (Knight and Cavusgil, 2004; Teece, Pisano, and Shuen, 1997). In addition, global knowledge integration has a positive overall impact on financial performance via windows of opportunity (i.e., total effect). This shows that establishing a capability that ensures the accessing and integration of globally and functionally


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dispersed information throughout the stages of the NPD process leads to new products that respond more effectively to diverse market characteristics and needs worldwide. Homework activities is also significantly linked to windows of opportunity (p .05), but at a lower level than global knowledge integration. One explanation is that although global knowledge integration is paramount for creating core elements of global new products (e.g., key benefits, platform requirements), homework activities—as measured here—are concerned with detailed market-based tasks. Given that the phases of the NPD process in this model are largely sequential, it is the result of the knowledge creation capability that sets the stage for the ensuing homework and launch preparation tasks. Therefore, the impact of homework on creating windows of opportunity is less relevant. This is further supported by the result that there is no significant direct or indirect (i.e., total) effect of homework activities on financial performance. Launch preparation was found to have a positive and moderately significant (p .05) link to financial performance. This finding is supported in the literature where a better launch plan is seen as improving coordination of commercialization activities, ensuring frontline preparation, meeting schedules, and coping with international roll-out complexities (Hultink and Atuahene-Gima, 2000). That this connection is of only moderate significance can be explained by the fact that financial performance is an outcome measure that is influenced also by other factors and because launch preparation typically has a relatively shortterm effect (Langerak, Hultink, and Robben, 2004). The hypothesized impact of launch preparation on windows of opportunity did not materialize. Though there is literature suggesting that an effective launch helps to achieve a competitive advantage (e.g., being first to market; O¨zsomer, Calantone, and Di Benedetto, 1997), this routine per se is not sufficient to create and exploit new market and technological opportunities. The findings indicate that the strength of knowledge integration and the resulting homework are what play the primary role in identifying and developing windows of opportunity in the global market arena.

Performance The research results emphasize that when operating in global markets, achieving superior financial

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performance is linked to opening new windows of opportunity (p .001). This supports the premise in RBT (Hunt, 1997; Peteraf and Barney, 2003) that establishing market and technological leadership positions is antecedent to achieving a competitive advantage and ultimately superior financial performance. Of importance in opening opportunity windows in international markets, according to the model (mediated), is the effective integration of information and knowledge about markets and company NPD activities worldwide. A strong and established global knowledge integration capability is the primary mediator that allows firms to benefit from the three organizational resources considered relevant for global NPD program success: NPD process formality, global innovation culture, and resource commitment. The other two NPD process capabilities and the top-management involvement resource also have a positive effect on outcome, but on a secondary level. Further, the partially mediated model indicates that there are direct effects, but these too are on a secondary level with respect to windows of opportunity.

Conclusions and Implications Globalization of markets and NPD are two realities impacting the ability of firms to achieve success in today’s turbulent business environment. These two drivers of business performance, which are incorporated in the model of global NPD program performance, are highly interrelated as succeeding in international markets requires commitment by firms to a program of new product development. Further, success in NPD has been linked to the effective implementation of NPD process capabilities as well as to corporate resources. Using CRBT as a theoretical framework permits viewing these two sets of determinants of NPD performance in antecedent terms. This combination of views, incorporating both globalization of NPD and the RBT perspective, leads to several contributions and managerial implications. One objective of this study was to integrate knowledge from different literature streams—NPD and globalization—to expand and adapt constructs shown to impact NPD performance to the global program setting. Two relatively less defined constructs were developed. One is global innovation culture, which combines (1) concepts of entrepreneurship and risk taking (NPD) with (2) the idea of openness to world markets and readiness to respond to diverse customer


needs and characteristics (globalization). The research results support the notion that operating in global markets calls for an organization culture that incorporates at once a proactive NPD approach and a readiness to adapt to multifaceted global opportunities and requirements. A second construct adapted to global NPD is global knowledge integration. Past studies (Gupta and Wilemon, 1990; Moenaert et al., 2000) focus on information coordination across functions for a given NPD project. To augment this concept for global NPD programs, this study incorporates the idea of capturing and integrating knowledge across different projects and especially from dispersed sources of information and ideas in the international setting. The importance of this construct in a model dealing with factors that lead to global NPD success is clearly supported. A second contribution of the research is that, to the best of our knowledge, it is the first major empirical study using the globalization lens to identify key factors that influence outcome when a company’s NPD program is aimed at achieving success in international markets. Given the importance of globalization to the continued survival of firms, this research adds to a better understanding of what makes for success in global NPD and contributes to future research on this topic by providing a more relevant and better specified set of constructs. Application of CRBT helps in identifying and reclassifying key NPD success factors in terms of organizational resources and capabilities, which according to CRBT are primary determinants of sustained competitive advantage and superior performance. Though past NPD research notes the importance of the constructs in the present study’s model, their reclassification in CRBT terms allows one to distinguish between factors that are less tangible and to describe the longer-term setting, experiences, and established approaches of the firm (resources) from those entailing explicit procedures for planning, controlling, information processing, and task completion (capabilities). This is important from a managerial perspective because capabilities or routines are more easily adapted or changed to incorporate new learning (Eisenhardt and Martin, 2000; Smith, Vasudevan, and Tanniru, 1996), whereas resources are more or less fixed in the short-term (Teece, Pisano, and Shuen, 1997). This suggests that to improve global NPD program performance, companies must plan for change in both the long and short run. Bringing about transformations in intangible firm resources calls for a long-term


approach with identified interim objectives and strategies. For example, creating a global innovation culture can only be achieved over time, but moving the firm toward this end might entail shorter-term tactics such as rewarding entrepreneurship and prioritizing truly global projects. NPD process capabilities, on the other hand, are more explicit and more amenable to immediate modification. For example, the global knowledge integration capability can be enhanced through direct investments in interactive IT systems, regular face-to-face global NPD team meetings, and conference-call facilities. In addition, through the NPD process capabilities firms are able to deploy or reconfigure a given mix of resources in a new way to achieve possible corporate advantages (Eisenhardt and Martin, 2000; O’Regan and Ghobadian, 2004). To the best of our knowledge, the mediated approach to modeling the relationship between performance and organizational resources and routines specific to global NPD has not been previously used. As such, this study contributes by providing a more explicit, potentially more realistic view of how specific factors are interrelated and influence NPD success. For example, although past studies refer to management involvement and knowledge coordination as success factors (Henard and Szymanski, 2001), the model presented here shows that the positive impact of top-management involvement on performance is not direct, but indirect, through an enhanced global knowledge integration capability, which potentially reduces cultural distance and provides the needed overview for pulling together the elements of a globally dispersed NPD effort. The present study also provides insight to the question of how much top-management involvement and NPD process formality may be excessive—by introducing a quadratic term to test for an inverted u-form relationship. For top-management involvement— where the quadratic term is not significant—it may be a question of focus rather than intensity. In other words, for a positive performance effect, senior management attention should be deployed through such NPD process capabilities as global knowledge integration and launch preparation, while minimizing involvement that is indiscriminate (i.e., direct negative effect on financial performance) and that may indicate meddling and a lack of delegation of responsibility. For NPD process formality, where the quadratic term was significant and negative, this may support the contention that a certain level of formality is essential, but, at one point, continued focus on formality leads


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to inflexibility and bureaucracy that precludes effective coping with and responding to the many uncertainties and variations inherent in global NPD. A final contribution relates to the extensive empirical sample used for this study. Findings based on large, cross-industry and -country samples of internationally active firms, allow for generalization and greater insight about what is relevant for achieving success when developing new products for international markets (Drazin and Schoonhoven, 1996; Verona, 1999).

Limitations and future research. One limitation may be the cross-sectional sample, consisting of many industries and two broad geographic locations. Although this enhances generalizability—that is, sole reliance on North American and industry-centric data is overcome (Drazin and Schoonhoven, 1996; Verona, 1999), nevertheless, future testing of the model with different data to confirm general applicability is called for. A second limitation concerns the constructs used in this study. Given the significance of the partially mediated model, other routines might be considered as mediators of the impact of firm resources on global NPD program performance—for example, other NPD process phases and other global NPD-related concerns such as the working of teams or cross-functional operational capabilities. A third limitation is that the model excludes contingencies where, for example, environmental turbulence might be used to assess the stability of the results. Furthermore, the model considers only two global NPD program outcomes—windows of opportunity and financial performance—where one is viewed as antecedent to the other. This requires further research. Using other NPD program outcome measures (e.g., efficiency or speed of the NPD cycle) might provide new insights about the antecedent relationships and the impact of company resources and capabilities. A final factor that might be a limitation is the finding, contrary to this study’s hypotheses, of a negative (direct) link between two of the organizational resources and outcome. Though this result is not dissimilar to those of other researchers (Bonner, Ruekert, and Walker, 2002; Roberts and Senturia, 1996), it does call for further study to identify the specific relationships. With regard to NPD process formality, future research questions might include what degree of formality is positive; when does it begin to have a negative effect on outcome; and what is the link between

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process formality and degree of globalization of the NPD program? Similarly, the role of top-management involvement needs more study along these lines. Despite these limitations and further research questions, we believe that the work presented makes a worthwhile contribution in that it sheds new light on issues important for firms involved in new product development for international markets.


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Top-Management Involvement (5 items, alpha 5 0.78; AVE 5 0.48) Top management is personally involved in international/global NPD program (1) by playing a central role in project review (i.e., make key go/no-go, spending decisions) (2) as visionaries or champions of international and global new product ventures (3) to enhance reputation of our organization and new products (4) by encouraging strategic customers to adopt our new products Top managers do not play an active role in the day-to-day activities of international new product ventures—that is, they usually leave things up to project leader and team (reversed scale).

Global Innovation Culture (8 items, alpha 5 0.87; AVE 5 0.46) Management has created an open and innovative corporate culture for our international NPD program by (1) recognizing and strongly rewarding entrepreneurship (2) actively encouraging employees, worldwide, to submit new product ideas (3) ensuring that project leaders are not punished if new product projects fail or are canceled (i.e., no harm in terms of, e.g., promotion, salary, merit, evaluation) To create a truly global innovation culture, our firm or small business unit (1) strongly encourages contributions from team members located in different countries or cultures (2) strongly emphasizes knowledge sharing across different geographical subunits (3) emphasizes responsiveness to differences in local markets (4) achieves a high degree of NPD interdependence among our affiliates worldwide (5) strongly endorses informal communication and coordination of NDP activities across country units

Questionnaire Items for Organization Resources (Scale: 1–7; strongly disagree/agree)

.84 .81 .73 .53

.67

.59

.70 .54

.85

.84

.64 .67 .52

Loading

Cooper, Edgett, and Kleinschmidt (2003), de Brentani (2001), Grant (1996), Gupta and Wilemon (1990), Kuczmarski (1998)

(For general theme, see references in text)

Andriopoulos (2001), Boutellier et al. (1998), Capon et al. (1992), Grant (1996), Gupta and Wilemon (1990), Kuczmarski (1998), Ogbuehi and Bellas (1992)


Items as Identified or Applied by:

Appendix. Organization Resources, NPD Process Routines, and Performance Constructs—Items, Factor Loadings, Cronbach’s Alpha, AVE, and References

PERFORMANCE OF GLOBAL NEW PRODUCT DEVELOPMENT PROGRAMS J PROD INNOV MANAG 2007;24:419–441 439

.82

.84 .94

.84

.79

.75

.77 .87

.75

.87

.77

.66 .68

.88 .86

Cooper (1999), Cooper, Edgett, and Kleinschmidt (2003)

(For the general theme see references in text)

Cooper, Edgett, and Kleinschmidt (2003), Cooper and Kleinschmidt (1995), Henard and Szymanski (2001), Kuczmarski (1998)



Cooper (1999), Cooper, Edgett, and Kleinschmidt (2003), Cooper and Kleinschmidt (1995), de Brentani (2001), Griffin (1997)


Cooper, Edgett, and Kleinschmidt (2003), Daellenbach, McCarthy, and Schoenecker (1999), Grant (1996), O’Reilly (1997)



Homework Activities (3 items, alpha 5 0.87; AVE 5 0.64) NPD activities before actual development starts entail (1) early project assessment and analysis (e.g., market and project appraisals, financial analysis) (2) complete project definitions (e.g., we identify target markets, project concepts, project benefits, features and requirements) (3) thorough studies of markets, wherever globally located, to determine, for example, product advantages, positioning, features, and requirements

Global Knowledge Integration (4 items, alpha 5 0.86; AVE 0.60) Our NPD process is effective in (1) facilitating the incorporation of internationally dispersed information (2) facilitating the coordination for internationally dispersed NPD activities Gathering input from worldwide locations is highly coordinated (1) during early stages of the NPD process (e.g., concept development, idea screening) (2) during later stages (e.g., development, testing and launch)

Questionnaire Items for NPD Process Routines (Scale: 1–7; strongly disagree/agree) Loading

NPD Process Formality (4 items, alpha 5 0.92; AVE 5 0.74) Our firm uses a formal NPD process— that is, standardized set of stages and go/no-go decisions guides all new product activities from idea to launch. Our international NPD process (1) lists and defines specific activities for each stage of the process (2) has clearly defined GO/NO GO decisions points (or gates) for each stage in the process (3) has defined gatekeepers—that is, review projects at each gate; make go/no-go decisions

Resource Commitment (4 items, alpha 5 0.88; AVE 5 0.68) On average, sufficient resources—people, time, money—are committed so that (1) international NPD research activities can be undertaken effectively and on time (2) international NPD-related marketing activities can be undertaken effectively and on time (3) international operational or process activities can be undertaken effectively and on time (4) new product steering and coordination committees can operate effectively at the international level

440 E.J. KLEINSCHMIDT, U. DE BRENTANI, AND S. SALOMO

Windows of Opportunity (3 items, alpha 5 0.78; AVE 5 0.56) On average, how successful was your international new NPD program in (1) opening new markets to your firm (division/SBU) (2) leading your firm into new product arenas (i.e., products you did not have three years ago) (3) opening new technologies for your firm(1 5 not at all; 7 5 great success, many new opportunities)

.72

.85

.83

.68 .70

.71

.72 .81

.90

.86

.65

.74

Factor Loading

Financial Performance (4 items, alpha 5 0.87; AVE 5 0.68) In terms of sales (revenue) performance, over the last three years, how successful was your international NPD program in meeting its objectives? 1 5 far below objectives; 7 5 far above objectives) In terms of spending, over the last three years, from a technical standpoint, how successful was the global NPD program in meeting its objectives? (1 5 very poor, technical failure; 7 5 very good, technical success) In terms of profitability, over the last three years (1) how profitable was your international NPD program, relative to your spending (1 5 very poor, negative returns; 7 5 excellent returns) (2) how successful was your international NPD program in meeting its profit objectives (1 5 far below objectives; 7 5 far above objectives)

Questionnaire Items for Global NPD Program Performance (All scales are 1 to 7)

Launch Preparation (5 items, alpha 5 0.87; AVE 5 0.58) When launching new projects to global markets we usually (1) develop a highly detailed formal launch plan (2) base the plan on solid market information and studies of international customer behavior (3) actively promote the new product to our frontline in all locations (internal marketing) (4) train our front-line personnel regarding project- and customer-related knowledge and skills (5) train and empower our front-line personnel to recover potential project failures (e.g., make customer specific adjustments and resolve unforeseen problems)

Cooper and Kleinschmidt (2000), Griffin and Page (1996)


Chryssochoidis and Wong (1998), Cooper and Kleinschmidt (1995, 2000), Griffin (1997), Griffin and Page (1996), Roberts (2001)



Cooper (1999), Cooper, Edgett, and Kleinschmidt (2003), Chryssochoidis and Wong (1998), de Brentani (2001), de Brentani and Ragot (1996), Hultink and Atuahene-Gima (2000), Riek (2001)


PERFORMANCE OF GLOBAL NEW PRODUCT DEVELOPMENT PROGRAMS J PROD INNOV MANAG 2007;24:419–441 441

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