Radical Innovation, Technological Orientation, and New Product Development Performance

Abstract

Innovations and new product development are the lifeblood of any firm. For firms active in markets characterized by competition, new product development (NPD) is essential because it contributes to firm survival as well as to competitiveness, and growth. New product development “can influence the competitive success, adaptation, and renewal of organizations” (Brown and Eisenhardt 1995, p. 344). New product development is a critical means by which product managers diversify, adapt, and even reinvent their firms to match evolving market and technical conditions. Also, new developments and changes occurring in the market force firms to develop more effective and competitive cultural orientations. High performance due to the adopted orientation results in sustainable competitive advantage and a powerful organizational culture (Zhou et al. 2005). This research investigates relationships among radical innovation, market turbulence, and technological orientation, and their effects on NPD program performance. Employing a sample of 183 U.S. technology based companies, the study uses partial least square structural equation modeling (PLS-SEM) to test the hypothesized relationships.

In SmartPLS 2.0, standardized path coefficient values are generated by the PLS algorithm. As a follow-up analysis, a bootstrapping method is used to generate the significance of path coefficients. Organizational age and R&D expenditure were the control variables for our study as these might present an alternative explanation for the hypothesized relationships. The cross product of market turbulence and radical NPD had a significant effect on NPD program performance. This significant interaction effect suggests that indeed having a higher proportion of radical NPD projects impacts NPD program performance but this effect is likely to be less at higher levels of market turbulence. The results also indicate that technological orientation has a significant positive effect on NPD program performance. In total, these variables were able to explain about 13.8 % (R² = 0.138) of variation in NPD program performance.

The goal of this research was to identify the effect of radical innovation, market orientation, and technological orientation on NPD program performance. Firms can enhance NPD program performance by fostering technological orientation. It seems that when a firm that harmonizes its structures, systems, and resources with market and technology and shows willingness to use the technology as a competitive element it has higher performance. By focusing on knowing more about their market as well as new and emerging technology, firms can generate better performance by seizing opportunities in emerging new product categories.