Academic journal article Academy of Strategic Management Journal

Entrepreneurial Orientation, Communication Strategies, and New Product Success: A Theoretic Model

Academic journal article Academy of Strategic Management Journal

Entrepreneurial Orientation, Communication Strategies, and New Product Success: A Theoretic Model

Article excerpt

New product success determines organizational performance such as sales and profits. It is reported that new products account for about 50% of sales and 40% of profits in companies (Cooper, 2000). Likewise, most firms rely on new products to increase sales and profits. The obsolete products cannot satisfy the needs of target customers. To develop new products is crucial to the firms' success. As a result, the firms compete to develop new products in order to achieve organizational performance. Meanwhile, new product development shapes short product life cycles, and the firms cannot but fast develop new products (Rink and Swan, 1979). As we see the rapid development of IT products like iPhones and iPads the firms endeavor to develop new products for financial returns.

With respect to new product success, the literature has already shown that the rewards of new products appear more spectacular in the hi-tech sector (Song & Parry, 1997). Hi-tech firms need to develop new products for profits under short product life cycles. The fast new product development is the firm's lifeblood. For example, Hewlett-Packard and Northern Telecom adopt quick new product development to attain better performance (Oakley, 1996). In Taiwan, the Hsinchu Science Park accommodates the manufacturers of information technology hardware products in semiconductors, computers and peripherals, telecommunications, and optoelectronics (Hu & Li, 2006; Hsinchu Science Park, 2013; Lee & Yang, 2000). They develop high-value products to succeed in the marketplace (Song, Montoya-Weiss, & Schmidt, 1997; Tanzer, 2001).

On the basis of new product success, Wernerfelt (1984) suggests that resources and products may be the two sides of the same coin to convey the association between resources and products given the resource-based view. The resource leads to profitable new products because the resource is valuable, rare, inimitable, and non-substitutable (Barney, 1991). In entrepreneurship and new product development, entrepreneurial orientation is the intangible resource as organizational culture to develop new products (Atuahene-Gima & Ko, 2001; Ireland, Hitt, & Sirmon, 2003). Entrepreneurial orientation comprises the organizational values of innovation, manageable risk-taking, and proactiveness to reflect entrepreneurship culture (Davis, Morris, & Allen, 1991). As the resource, entrepreneurial orientation is engaged in new product development to earn profits. With the antecedent of entrepreneurial orientation, communication is the route to arrive at new product success (Allen, 2007).

Although entrepreneurial orientation and communication both contribute to new product success (Atuahene-Gima & Ko, 2001; Brown & Eisenhardt, 1995; Ireland, Hitt, & Sirmon, 2003), little attention understands their relationship. In entrepreneurship, the research stream hasn't yet focused on how entrepreneurial orientation accomplishes new product success. Following the resource-based view, the present study considers communication strategies to link entrepreneurial orientation and new product success (Barney, 1991; Brown & Eisenhardt, 1995). In a consonant sense, it attributes to the literature gap. First, the literature in the resource-based view mainly focuses on the resource-performance relationship (e.g., Helfat & Peteraf, 2003; Lambe, Spekman, & Hunt, 2002; Masakure, Henson, & Cranfield, 2009; Miller & Shamsie, 1996; Newbert, 2007; Wade & Hulland, 2004; Wu, Yenlyurt, Kim, & Cavusgil, 2006). There are few efforts to center on the resource-strategy-performance relationship. Given this gap, the present study intends to adopt communication strategies to bridge the resource-performance relationship in new product development. Communication strategies focus on information activities (Park & Kim, 2008). Second, entrepreneurial orientation is the firm's resource to achieve new product success (Atuahene-Gima & Ko, 2001). …

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