Coping with a volatile environment is a job requirement for all modern-day new product development managers as change and uncertainty characterize today's unpredictable business world (Calatone, Garcia, & Droge 2003; Lynn & Akgun 1998). A useful taxonomy of new product development classifies approaches according to the degree to which they emphasize control (e.g. Bower & Hout 1988; Cooper 1994b, 1998; Eisenhardt & Tabrizi 1995) and the degree to which they emphasize adaptability (e.g. Iansiti 1995b; Kamoche & Cunha 2001; Miner, Bassoff, & Moorman 2001). Such a classification is useful as it highlights the tension in the literature between the amount of structure necessary to control development, versus the need to adapt to changes (e.g. Deuten & Rip 2000; Gwynne 1997; Kamoche & Cunha 2001).
However, the problem for business is that NPD approaches that emphasize control may be too rigid for today's highly dynamic markets (Chakravarthy 1997; Cooper 1994b; Deuten & Rip 2000; Hoopes & Postrel 1999; Iansiti 1995a; Imai, Ikujiro, & Takeuchi 1985; MacCormack & Verganti 2003; Moorman & Miner 1998b; Rosenthal 1992), while approaches that emphasize adaptability are inefficient (Aram & Walochik 1996; Miner, et al. 2001; Sharkansky & Zalmanovitch 2000). Therefore, in this study, we test an integrated approach to new product development that combines control with adaptability (Nunez & Lynn 2007). We theorize that coupling these two seemingly divergent approaches offers a way to reinforce the strengths of each approach, while overcoming their respective shortcomings.
While examining an integrated approach to new product development is constructive, this usefulness is diminished if the environment is not considered as well. New product development is the principal means by which firms adapt to changing market and technical conditions (Schoonhoven, Eisenhardt & Lyman 1990), and innovative approaches have emerged as an effective means by which to manage in unstable environments (e.g. MacCormack, Verganti & Iansiti 2001). Scholars have given the environmental context of a project insufficient consideration in the literature (MacCormack & Verganti 2003). This research attempts to remedy this deficiency by examining the impact of novel NPD approaches on a critical development outcome in a turbulent environment. The following research question drives this study:
How can we best maintain cost effectiveness of a new product
development project under various levels of environmental
To answer this question, we develop and test two hypotheses. We begin by providing a brief overview of various product development approaches, describing where each may be lacking under conditions of rapid change. To address issues with existing NPD approaches, we propose an integrated approach that builds on the existing literature, and develop a theoretical framework focusing on a significant aspect of NPD processes: cost reduction. We then provide our research methodology which includes our questionnaire design, sampling procedure, process to ensure measure reliability and validity, and the analytical techniques performed. Next, we move into an analysis of our results and discuss the implications of our research to academics and practitioners. Finally, we discuss the limitations of our research and provide the broad conclusions we have drawn from our study.
Sequential NPD Helps to Control Costs with Structure
The highly-structured, sequential NPD framework, characterized by consecutive product development phases, with each separated by a decision point (Cooper 1998), is the most pervasive model in the literature (e.g. Cooper & Kleinschmidt 1991; Millson & Wilemon 2002; and Shepard & Pervaiz 2000). As such, scholars have been enthusiastic in studying this model, including its impact on controlling costs. …