The Effect of Risk Sensitivity on Collaborative New Product Development in a Supply Chain

The increasing risks and costs of new product development require firms to collaborate with their supply chain partners in product management. In this paper, a supply chain model is proposed with one risk-neutral supplier and one risk-averse manufacturer. The manufacturer has an opportunity to enhance demand by developing a new product, but both the actual demand for new product and the supplier’s wholesale price are uncertain. The supplier has an incentive to share risks of new product development via an advance commitment to wholesale price for its own profit maximization. The effects of the manufacturer’s risk sensitivity on the players’ optimal strategies are analyzed and the trade-off between innovation incentives and pricing flexibility is investigated from the perspective of the supplier. The results highlight the significant role of risk sensitivity in collaborative new product development, and it is found that the manufacturer’s innovation level and retail price are always decreasing in the risk sensitivity, and the supplier prefers commitment to wholesale price only when the risk sensitivity is below a certain threshold.

The determinants of knowledge transfer within collaborative new product development projects

Purpose – This paper explores the factors which determine the degree of knowledge transfer in inter-firm new product development projects. We test a theoretical model exploring how inter-firm knowledge transfer is enabled or hindered by a buyer’s learning intent, the degree of supplier protectiveness, inter-firm knowledge ambiguity, and absorptive capacity. Design/methodology/approach – A sample of 153 R&D intensive manufacturing firms in the UK automotive, aerospace, pharmaceutical, electrical, chemical, and general manufacturing industries were used to test the framework. Two-step structural equation modeling in AMOS 7.0 was used to analyse the data. Findings – Our results indicate that a buyer’s learning intent increases inter-firm knowledge transfer, but also acts as an incentive for suppliers to protect their knowledge. Such defensive measures increase the degree of inter-firm knowledge ambiguity, encouraging buyer firms to invest in absorptive capacity as a means to interpret supplier knowledge, but also increase the degree of knowledge transfer. Practical implications – Our paper illustrates the effects of focusing on acquisition, rather than accessing, supplier technological knowledge. We show that an overt learning strategy can be detrimental to knowledge transfer between buyer-supplier, as supplier’s react by restricting the flow of information. Organisations are encouraged to consider this dynamic when engaging in multi-organisational new product development projects. Originality/value – This paper examines the dynamics of knowledge transfer within inter-firm NPD projects, showing how transfer is influenced by the buyer firm’s learning intention, supplier’s response, characteristics of the relationship and knowledge to be transferred.

Understanding New Product Project Performance

Purpose – The purpose of this paper is to summarize the accumulated body of knowledge on the performance of new product projects and provide directions for further research. Design/methodology/approach – Using a refined classification of antecedents of new product project performance the research results are meta-analyzed in the literature in order to identify the strength and stability of predictor-performance relationships. Findings – The results reveal that 22 variables have a significant relationship with new product project performance, of which only 12 variables have a sizable relationship. In order of importance these factors are the degree of organizational interaction, R&D and marketing interface, general product development proficiency, product advantage, financial/business analysis, technical proficiency, management skill, marketing proficiency, market orientation, technology synergy, project manager competency and launch activities. Of the 34 variables 16 predictors show potential for moderator effects. Research limitations/implications – The validity of the results is constrained by publication bias and heterogeneity of performance measures, and directions for the presentation of data in future empirical publications are provided. Practical implications – This study helps new product project managers in understanding and managing the performance of new product development projects. Originality/value – This paper provides unique insights into the importance of predictors of new product performance at the project level. Furthermore, it identifies which predictor-performance relations are contingent on other factors.

Ireland's Innovation Performance: 1991-2005

In this paper we use data from the five waves of the Irish Innovation Panel (IIP) to profile the innovation performance of manufacturing plants in Ireland and Northern Ireland over the period 1991 to 2005. Despite considerable public sector investment on both sides of the border levels of innovation activity have remained broadly similar throughout this period although somewhat different trends are evident in Ireland and Northern Ireland. In terms of product innovation for example, the proportion of manufacturing plants making product changes has increased 5 per cent in Ireland and just over 7 per cent in Northern Ireland. In terms of process innovation a decline of almost 7 per cent in Ireland has been accompanied by a 7 per cent increase in Northern Ireland. These trends provide some evidence of convergence in innovation performance over the 1991 to 2005 period. This is evident in the narrowing gap between the proportion of product innovators in Ireland and Northern Ireland, convergence in the proportion of plants undertaking process innovation and in terms of the increasingly similar proportions of sales derived from innovative products. Looking in more detail at the determinants of manufacturing innovation emphasises the importance of R&D and backwards supply chain linkages as sources of new knowledge for innovation. Other external linkages prove less important suggesting the value of policy initiatives designed to promote knowledge sharing. We also find a significant negative innovation effect from legislative restrictions on plants’ product innovation. Public support for both product and process innovation are having positive effects on innovation outputs at the level of the individual plant. Future research interest centres on the contrast between this strong positive result at firm level and the more modest increases in innovation among the population of firms in Ireland and Northern Ireland.

Output Additionality of Public Support for Innovation: Evidence for Irish Manufacturing Plants

Public support for private R&D and innovation is part of most national and regional innovation support regimes. In this article, we estimate the effect of public innovation support on innovation outputs in Ireland and Northern Ireland. Three dimensions of output additionality are considered: extensive additionality, in which public support encourages a larger proportion of the population of firms to innovate; improved product additionality, in which there is an increase in the average importance of incremental innovation; new product additionality, in which there is an increase in the average importance of more radical innovation. Using an instrumental variable approach, our results are generally positive, with public support for innovation having positive, and generally significant, extensive, improved and new product additionality effects. These results hold both for all plants and indigenously owned plants, a specific target of policy in both jurisdictions. The suggestion is that grant aid to firms can be effective in both encouraging firms to initiate new innovation and improve the quality and sophistication of their innovation activity. Our results also emphasize the importance for innovation of in-house R&D, supply-chain linkages, skill levels and capital investment, all of which may be the focus of complementary policy initiatives.

Innovation persistence: Survey and case-study evidence

Evidence on the persistence of innovation sheds light on the nature of the innovation process and can guide appropriate policy development. This paper examines innovation persistence in Ireland and Northern Ireland using complementary quantitative and case-study approaches. Panel data derived from innovation surveys is used, and suggests very different results to previous analyses of innovation persistence primarily based on patents data. Product and process innovation are found to exhibit strong general persistence but we find no evidence that persistence is stronger among highly active innovators. Our quantitative evidence is most strongly consistent with a process of cumulative accumulation at plant level. Our case-studies highlight a number of factors which can either interrupt or stimulate this process including market volatility, plants’ organisational context and regulatory changes. Notably, however, the balance of influences on product and process innovation persistence differs, with product innovation persistence linked more strongly to strategic factors and process changes more often driven by market pressures.
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Help or hindrance? Supplier involvement and causal ambiguity within inter-organisational NPD teams

Suppliers are increasingly involved in buyer firms’ interorganizational new product development (NPD) teams. Yet the transfer of knowledge within this context may be subject to varying degrees of causal ambiguity, potentially limiting the effect of supplier involvement on performance. We develop a theoretical model exploring the effect of supplier involvement practices on the level of causal ambiguity within interorganizational NPD teams, and the subsequent impact on competitor imitation, new product advantage, and project performance. Our model also serves as a test of the paradox that causal ambiguity both inhibits imitation by competitors, but also adversely affects organisational outcomes. Results from an empirical study of 119 R&D intensive manufacturing firms in the United Kingdom largely support these hypotheses. Results from structural equation modeling show that supplier involvement orientation and long-term commitment lower causal ambiguity within interorganizational NPD teams. In turn, this lower causal ambiguity generates a new product advantage and increases project performance for the buyer firm, but has no significant effect on competitor imitation. Instead, competitor imitation is delayed by the extent to which the firm develops a new product advantage within the market. These results shed light on the causal ambiguity paradox showing that lower causal ambiguity during interorganizational new product development increases both product and project performance, but without reducing barriers to imitation. Product development managers are encouraged to utilize supplier involvement practices to minimise ambiguity in the NPD project, and to target their supplier involvement efforts on solving causally ambiguous technological problems to sustain a competitive advantage.

Branding strategies for high technology products: The effects of consumer and product innovativeness

Choice of an appropriate branding strategy is a critical determinant of new product success. Prior work on fast-moving-consumer-goods (FMCG) prescribes that new products carry new (vs. existing) brand names to appeal to earlier adopters - a critical target for new products. However, such a prescription may not be prudent for high-technology (HT) products, as they often involve considerably more consumer perceived risk than FMCG. By drawing on Dowling and Staelin's (1994) framework of perceived-risk handling, we propose that both earlier and later adopters will favor existing brands to cope with the elevated risk associated with an innovative HT product. Two studies - one conducted in an experimental setting and the other in a field setting - support the proposition that both earlier and later adopters respond more favorably to existing (vs. new) brands on innovative HT products.