final asia 2000 report 1999

8/6/2019 Final Asia 2000 Report 1999

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New Product Development Decision Making

Processes and Dynamics

A Cross Cultural Study between

Singapore and New Zealand

Report to the Asia 2000 Foundation of New Zealand

August 1999

Tony C Garrett

Department of MarketingUniversity of OtagoPO Box 56Dunedin

New Zealand

Professor David H. BuissonDivision of CommerceUniversity of OtagoPO Box 56

DunedinNew Zealand

Dr YAP Chee MengDepartment of Industrial and Systems Engineering

National University of SingaporeKent Ridge TerraceSingapore


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This Research is undertaken with the assistance of the Asia 2000 Foundation of New Zealand, NationalUniversity of Singapore (Grant Number), and the Otago Research Grants Committee of the Universityof Otago.

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Contact Details

Professor David H. BUISSON

Assistant Vice ChancellorDivision of CommerceUniversity of OtagoPO Box 56Dunedin

New Zealand

Ph: +64 (3) 479 8149Fax: +64 (3) 479 8171Email: [email protected]

Tony C. GARRETTLecturerDepartment of MarketingUniversity of OtagoPO Box 56Dunedin

New Zealand

Ph: +64 (3) 479 8195Fax: +64 (3) 479 8172Email: [email protected]

Dr YAP Chee MengSenior LecturerDepartment of Industrial and Systems Engineering

National University of SingaporeKent Ridge TerraceSingapore

Ph: +65 874 3070Fax: +65 777 1434Email: [email protected]

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Table of Contents

1.0 Introduction..........................................................................................................................................11.1 Project Overview..............................................................................................................................11.2 The Research Question....................................................................................................................2

1.2.1 Objectives..................................................................................................................................2Structure of the Report...........................................................................................................................31.4 Economic Context of the Study.......................................................................................................3

1.4.1 New Zealand - The Changing Climate for NPD.......................................................................31.4.2 Singapore - A Changing Nation Encouraging Innovation........................................................41.4.3 Conclusion................................................................................................................................6

2.0 Conceptual Development................................................................................................................... ..72.1 New Product Development..............................................................................................................7

2.1.1 Roles in NPD............................................................................................................................82.1.2 Integration...............................................................................................................................112.1.3 Conclusion..............................................................................................................................14

2.2 National Culture.............................................................................................................................162.2.1 Hofstedes Dimensions of National Culture...........................................................................18

2.3 Link Between National Culture and NPD Decision Processes and Dynamics..............................192.3.1 Individualism..........................................................................................................................192.3.2 Power Distance.......................................................................................................................212.3.3 Masculinity..............................................................................................................................232.3.4 Uncertainty Avoidance ..........................................................................................................252.3.5 Confucian Dynamic (Longterm Orientation)..........................................................................272.3.6 The Link between National Culture and NPD Conclusion.....................................................28

2.4 New Zealand and Singapore According to the Hofstede Dimensions...........................................292.4.1 Implications and Research Propositions.................................................................................30

3.0 Methodology......................................................................................................................................333.1 Research Approach........................................................................................................................333.2 Research Design.............................................................................................................................33Sample..................................................................................................................................................34

3.3.1 Selection of the Cases and Sample.........................................................................................343.4 Case Study Procedure....................................................................................................................343.5 Analysis..........................................................................................................................................353.6 Limitations.....................................................................................................................................363.7 Ethical Considerations...................................................................................................................36

4.0 Results............................................................................................................................................... .374.1 Introduction....................................................................................................................................37

Sample Characteristics.................................................................................................................... .374.2 Context of NPD within the organisation........................................................................................38

4.2.1 Perception of the Importance of NPD.....................................................................................384.2.2 General Organisation of NPD within the firm........................................................................394.2.3 General Perception of the Organisation and Proficiency of their NPD Activities..................41

4.3 NPD Roles.....................................................................................................................................42

4.3.1 Functional Involvement and Number of Roles.......................................................................424.3.2 Role of Senior management....................................................................................................444.3.3 The Project Leader..................................................................................................................474.3.4 Marketing................................................................................................................................494.3.5 Technical Role........................................................................................................................504.3.6 Conclusion of Marketing and Technical Roles.......................................................................50

4.4 Motivation..................................................................................................................................... .514.4.1 Expectations of the NPD task.................................................................................................514.4.2 Positive Motivating Aspects of NPD......................................................................................514.4.3 Negative de-motivating aspects of NPD.................................................................................524.4.4 Helpful Task Dynamics..........................................................................................................534.4.5 Unhelpful Task Dynamics .....................................................................................................544.4.6 Reward System.......................................................................................................................55

4.5 Interaction......................................................................................................................................574.5.1 Communication...................................................................................................................... .57

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4.5.2 Information..............................................................................................................................604.5.3 Conflict....................................................................................................................................63

4.6 Accountability............................................................................................................................... .654.6.1 Charter.....................................................................................................................................654.6.2 Decision Making Parameters..................................................................................................664.6.3 Reporting.................................................................................................................................66

4.6.4 Conclusion..............................................................................................................................674.7 Summary of the Results.................................................................................................................67

5.0 Discussion..........................................................................................................................................705.1 Introduction....................................................................................................................................705.2 Proposition Discussion...................................................................................................................70

5.2.1 Individualism and Collectivism Proposition Discussion........................................................705.2.2 Power Distance and NPD........................................................................................................725.2.3 Uncertainty Avoidance and NPD............................................................................................755.2.4 The Other Dimensions of Hofstede and NPD.........................................................................765.2.5 Conclusion..............................................................................................................................78

6.0 Conclusions....................................................................................................................................... .826.1 Introduction....................................................................................................................................826.2 Discussion of the Objectives .........................................................................................................82

6.2.1 What are the roles of each of the functions within the NPD task?.........................................82What are the key motivations of the NPD workgroup for proficient NPD?....................................836.2.3 What are the expected and actual rewards given for NPD proficiency?................................846.2.4 What are the key components that characterise functional integration in NPD?....................846.2.5 What are the accountability aspects of proficient NPD workgroup decision and processdynamics?.........................................................................................................................................85

6.3 Overall Conclusion........................................................................................................................856.4 Acknowledgements....................................................................................................................... .86

7.0 Bibliography.......................................................................................................................................87Appendix 1: The Recommendations of the 1996 Asia 2000 Research....................................................92Appendix 2: Company Contact Letters and Confidentiality Agreement.................................................96Appendix 3: Interview Protocol...............................................................................................................96

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List of Tables

Table 1: Interfunctional Involvement in the New Product Development Process*..................................9Table 2: NPD Literature Conclusion.......................................................................................................14Table 3: Individualism and Collectivism Characteristics........................................................................20Table 4: Power Distance Characteristics.................................................................................................21Table 5: Femininity and Masculinity Characteristics..............................................................................24Table 6: Uncertainty Avoidance Characteristics.....................................................................................25Table 7: Singapore and New Zealand 1980, 1991 Hofstede Scores........................................................29Table 8: Recalculated Hofstede Dimensions for Singapore and New Zealand.......................................29Table 9: Differences in Hofstede Scores between New Zealand and Singapore.....................................34Table 10: Criticisms of a Case Study Methodology................................................................................36Table 11: Sample Company Characteristics............................................................................................37Table 12: Summary of the Major Results................................................................................................67Table 13: Conclusions of the Proposition Discussion.............................................................................79

List of Figures

Figure 1: Cultural Differences: National occupational and organisational levels ..................................16Figure 2: Manifestations of Culture: From Shallow to Deep (Hofstede et al. 1990)..............................17Figure 3: National Culture and its relationship to NPD...........................................................................18Figure 4: Guiding Model .........................................................................................................................28

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New Product Development Decision Making

Processes and Dynamics

A Cross Cultural Study between

Singapore and New Zealand

Report to the Asia 2000 Foundation of New Zealand

1.0 Introduction

1.1 Project Overview

There is no doubt that new product development (NPD) is an important element in today's businessenvironment (Madique and Zirger, 1985; Cooper and Kleinschmidt, 1987; Gupta and Wilemon, 1990).The importance of NPD is increasing, as the business environment is becoming more complex, withintensive competition (both within an organisation's home markets and international markets). Greatertechnological advancement is resulting in shorter product lifecycles, and NPD cycle times, changes inconsumer expectations and sophistication, and the internationalisation of international business. Anorganisation, therefore, is seeking to find their competitive advantage, through, amongst other things,

NPD.

Although there is now a large body of research on key factors to successfully maintain and increase theefficiency of NPD available to the organisation, NPD success rates, internationally, have remainedrelatively static (Stagg et al. 1996, Cooper 1990, Calantone and Cooper 1981, Hopkins 1980).Although there is no conclusive evidence in New Zealand and Singapore to confirm this, it is certainly

a concern of New Zealand and Singapore managers that action should be taken to make their NPDdevelopment more effective and efficient.

Maintaining efficiency and success of NPD is made more difficult when organisations are undertakingNPD for and within a foreign environment. The changing environments in which the organisation iscompeting, are becoming more cross-cultural in nature due to the advent of globalising competition,global products, cross cultural management of NPD, and world product mandates (Angelmar, 1990)have made meeting this challenge of utmost importance. The need to undertake work for specificinternational markets, often in market, has lead to major challenges for marketing, research anddevelopment (R&D) and new product managers. The competency therefore, to develop and managenew products within a single culture is no longer sufficient if a firm is to succeed globally (Comara,1994, Hegarty and Hoffman, 1993, Hofstede, 1991, Kleinschmidt, 1994, and Utterback et al., 1976).Few studies comprehensively explore the link between successful NPD management practice and the

values and cultural norms of NPD project team members, in different national environments. Certainlycross-cultural studies have been undertaken but links to national cultural values have been indirect(Rothwell 1976, Cooper and Kleinschmidt 1987, Hegarty and Hoffman, 1990; Kleinschmidt 1994).The failure of some Japanese management techniques in the United States such as Quality FunctionalDeployment (QFD), for example, have been noted by Griffin (1992) to have failed, possibly due to thelack of fit with the North American culture (Nakata and Sivakumar 1996).

Furthermore there is evidence that major factors explaining success and successful NPD practices can be identified in different national cultural environments (Kleinschmidt, 1994). A vital researchquestion is whether NPD practices are industry bound universal or if there are industry and culturespecific differences in NPD practices and outcomes.

The globalisation trend has important ramifications for New Zealand business with a number of NewZealand organisations now establishing applied NPD centres in important international markets. Theseorganisations now face a situation where they are operating NPD activities in nations that have

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different national cultural values and effective management practices may be quite different. Theunderstanding of the impact of these cultural values have been the subject of both industry and pan-industry bodies (e.g. Asia 2000 and FBEC).

This research has shown the ability to succeed in the increasingly dynamic international environment isimportant. The complexity of NPD is highlighted by its special place within the organisation. The

process is by nature multifunctional, involving organisational members from management, operations,marketing, and R&D. Roberts (1988) reiterates that the management of technological innovation iscomplex, involving the effective integration of people, organisational processes and plans. There aretherefore, often many people involved in the process, each having a different agenda creating anexceedingly complex and difficult process (Crawford 1991). The management of these people,

particularly the reduction of friction in the interaction between the functional units, will have impactson NPD success (Souder, 1987). Therefore it is required that management has understanding, empathyand interaction with people involved in NPD activities, so they understand their requirements. This

becomes very important when NPD activities cross national cultures (Usunier, 1993). The context ofthis report therefore is on understanding the decision processes and dynamics within the NPD contextin Singapore and New Zealand organisations.

This study, an extension of the 1996 study, funded by the Asia 2000 Foundation of New Zealand, and

undertaken by the same research team is based on the research recommendations (see appendix 1) fromthe 1996 study. It focuses on the possible national cultural difference on the dynamics at the NPD

project level and the process dimensions, within a sample of New Zealand and Singapore firms. The1996 research identified a number of national cultural decision and NPD level characteristics of the

NPD project level within New Zealand and Singapore organisations. This study has been developed toexamine these national culture differences in more detail, using a different sample of New Zealand andSingapore organisations.

1.2 The Research Question

This research study will look at and contrast the processes and dynamics of NPD decision making usedby NPD players1involved in NPD projects, in two different national cultural situations, New Zealandand Singapore. The core question being addressed is to determine if there are national culturalvariations in the way that NPD project groups operate and the managerial implications. Theimportance of these issues are being increasingly recognised by business practitioners as theinternationalisation of business means that different tools need to be found that are useful in managingin this new context.

1.2.1 Objectives

The objectives of this study are as follows:

The overall objective of the study is to understand the nature of national culture in Singapore and NewZealand and its impact on NPD group decision and process dynamics. The specific objectives that thisstudy will assess are:

1. What are the roles of each of the functions within the NPD task?i. What is the role of managerial involvement in the NPD workgroup processes?ii. What is the role of marketing involvement in NPD workgroup processes?iii. What is the role of the technical function in NPD workgroup processes?

2. What are the key motivations of the NPD workgroup for proficient NPD?

3. What are the expected and actual rewards given for NPD proficiency?

4. What are key components that characterise functional integration in NPD?i. What are the key mechanisms used to interplay technical and marketing information

within the project?

1 Players in this context refers to those individuals who are intimately involved in a NPD project

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ii. How does the NPD workgroup acquire, share and use technical and marketinginformation?

iii. What are the sources conflict within the NPD workgroup?iv. How is conflict resolved within the NPD workgroup

5. What are the accountability aspects of proficient NPD workgroup decision and process dynamics?

Structure of the Report

This report is structured as follows. The remainder of chapter one will discuss the economic context ofthe study, outlining the innovation context within each of New Zealand and Singapore, and why thesecountries have been selected for study.

Chapter two will outline the theoretical and conceptual underpinnings of the study, specificallyfocusing on the key NPD concepts, national cultural concepts, bringing them together for thedevelopment of the conceptual model and propositions that will be discussed.

Chapter three will outline the methodology of the study, explaining the use of the multiple case study

approach of this research design.

Chapter four will present the results, with Chapter five discussing the results of the study. Chapter sixwill conclude addressing each of the objectives outlined, the overall conclusions, the managerialimplications and finally future research opportunities.

1.4 Economic Context of the Study

1.4.1 New Zealand - The Changing Climate for NPD

The economic reforms over the last decade in New Zealand have resulted in businesses, especially inmanufacturing, improving productivity and profitability. A critical component of this gain has been in

the development of new products and improved processes, with a greater emphasis of the roles oftechnology and marketing in the business as a strategy for development. These changes wereaccelerated in 1988, through the abrupt removal of price supports, import protection, loans to privatesector firms, elimination of subsidies, the sale of Government owned enterprises to the private sectorand major industrial relations reform removing restrictive practices through the Employment ContractsAct. The firms formed after the privatisation decision and change in the economic policy, as they havedeveloped, increasingly exhibit the characteristic Miles and Snow (1978) type of prospector

philosophy. Even in the times of economic recession that impacted New Zealand in 1998, theseprospector organisations have demonstrated their durability through their flexibility and ability to beresponsive leading New Zealand out of the recession. They have achieved this through identifying andtargeting growth markets (e.g. Europe and North America), and making the required changes withintheir organisational structures. The question is what has lead to success in New Zealand and what can

be done to increase this success? Given the continued success of Singapore (the only national

economy that has been truly resilient in the South East Asian economic crisis), New Zealand may havelessons to learn from them to continue New Zealands growth, particularly in NPD in high technology

products.

New Zealand has a very small base of business with the critical mass to undertake formal R&D. TheGovernment, as the major investor in R&D through the Public Good Science Fund, has taken astrategic approach to R&D through a range of programmes which ensure that science and technologycontribute to New Zealands welfare and prosperity and represent value for money for the taxpayer(MORST, 1994). The Governments strategy recognises that small and medium size manufacturingenterprises (SMEs) have special technology needs to enable business to tackle NPD and processimprovements. The goal is to increase public investment in R&D, from a current level of 0.6% of GDPto 0.8% of GDP by the year 2010. It has recently been suggested (New Zealand Trade DevelopmentBoard, 1995) that a new paradigm of thinking is required to get leverage from the investment in science

and technology, by applying investment in areas appropriate to the manufacturing and science sectors.

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The private sectors contribution to the R&D overall spend needs to increase for greater measurablebenefit also. This report may assist in identifying these areas.

Tradenz, the NZ Trade Development Board, has influenced development (New Zealand TradeDevelopment Board, 1995) in particular through identifying the lack of professional assistance on howto maximise the contribution technology can make to business. Considerable work in identifying

appropriate technologies for particular business sectors has been undertaken in Joint Action Groups(JAGs) of businesses in related areas, for example the Telecommunication Industry JAG. To furtheraddress this issue, Tradenz developed the Business Technology Link programme. This programmeidentifies and provides training to business technology consultants to work with SMEs to assess thecontribution of technology in the context of the total business, develop systems to improve NPD, assistwith developing a technology strategy, and manage specific technology related projects. This reportwill assist in identifying other areas for development based on the Singapore development experience.

A report (Frateret al., 1995) has stated that New Zealand finds itself in an exciting position. A spirit ofentrepreneurship has been quickly established outside of the traditional farming and processing areas.There is a sharp acceleration in the export growth rate of elaborately transformed manufacturers (in1994 growth rate exceeded 20%), and that 80% firms in New Zealand are in a can do or proactivemode. Manufacturers are setting their own goals and objectives and are well advanced in undertaking

the necessary reorganisation, internal development and expansion of capacity to realise growthpotential that they, as a collective body, have identified, focusing on building international business.

Since the 1995 Frater report there have been some massive changes in the economic environmentwithin which the New Zealand organisation operates. In 1997 the Asian Economic Crisis impacted anumber of New Zealands major export markets, with a subsequent flow on effect upon the domesticmarket. Within this operating environment the observation made by Frater et al. (1995) cameincreasingly into effect. Organisations are again no longer in an environment in that there wasguaranteed success, rather a careful consideration of all aspects of their business is required to succeed.

All these changes have important implications for the operating philosophies of firms, theirmanagement and how NPD and innovation is undertaken in New Zealand. Are there cultural elementsfrom NPD practices in Singapore that can be encouraged to be developed in New Zealand?

1.4.2 Singapore - A Changing Nation Encouraging Innovation

1.4.2.1Introduction

Singapore is a nation with a population of 3 million in an area of about 620 square kilometres. It hasundergone five phases of economic development spanning the period from 1959 (self-government)until now.2 Policies implemented in the first two phases in the earlier years were geared toward the

provision of jobs for the unemployed masses while the latter phases emphasise upgrading of theeconomy. The second phase of development, lasting from 1966 to 1973, was put into effect and alabour-intensive export-oriented manufacturing strategy was implemented. Attractive incentives thatincluded tax relief, stable labour situation, and availability of skilled workers prompted a surge ininvestments by foreign multinationals.

By 1973, the level of foreign investments had grown to such a level that a labour surplus situation wasreplaced by a labour shortage situation. Workers had to be imported from neighbouring countries.This brought about the third phase of development (1973-78) that shifted the economic strategy fromone of attracting labour intensive industry to one that sought high technology industries. A portfolio ofincentives covering wage rates, manpower development, tax regimes, and ease of entry of qualifiedforeign professionals succeeded in attracting further investments. By 1979, foreign firms were playinga major role in the economy of Singapore. The slowdown in industrialised economies around this timealerted the government to the need to diversify the economy.

2

The discussion on the five phases of economic development is drawn from Teck-Wong Soon and C.Suan Tan, The Lessons of East Asia: Singapore - Public Policy and Economic Development, TheWorld Bank, Washington D.C., 1993

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The fourth phase of development (1979-84) was an economic restructuring, whereby both theeconomic activities and markets were diversified and expanded. Wages were also adjusted upwards todiscourage the inflow of labour-intensive, low technology investments that posed obstacles toupgrading and restructuring. Promotions to attract firms in eleven selected industries with hightechnology components were undertaken. These included: automotive components, machine tools andmachinery, medical and surgical apparatus and instruments, speciality chemicals and pharmaceuticals,

computer, computer peripherals equipment and software development, electronic instrumentation,optical instruments and equipment, advanced electronic components, precision engineering products,and hydraulic and pneumatic control systems. Large inflow of foreign direct investments into thedesired industries resulted.

Phase 5 of development started with the countrys first severe recession in 1985. Wage rates and othercosts of doing business were reduced and the country recovered from the recession the next year. Atthe same time, the government continued its unrelenting efforts to promote high value-addedtechnology-based manufacturing industries. Incentives are given to firms to conduct their research anddevelopment (R&D) activities in Singapore.

1.4.2.2Innovation in Singapore

The most visible support for innovation comes from the government commitment to allocate asubstantial budget for engaging in the development of science and technology. The amount committedwas S$2 billion for the 1991-95 period and S$4 billion for the 1996-2000 period.3 From experience,the government knows that it can parlay this S$4 billion into a cumulative expenditure of S$12 billion

by the year 2000 when private sector R&D commitments are taken into accounted. The public fundsearmarked for R&D-related activities are administered by the National Science and Technology Board(NSTB), a statutory body tasked to stimulate R&D and build up capabilities in certain fields of scienceand technology. The nine technology fields targeted are: Information Technology; Microelectronics;Electronic Systems; Manufacturing Technology; Materials Technology; Energy, Water, Environmentand Resources; Food and Agrotechnology; Biotechnology; Medical Sciences.

It is envisaged that public spending in R&D will be employed to meet the four main challenges thatmust be overcome in order to spur the undertaking of economically relevant R&D in Singapore. These

challenges are: meeting the demand for manpower; making it conducive for industry to undertakeR&D; strengthening the countrys technological capability; and fostering technological innovation andcommercialisation.

A number of schemes are currently in place to deal with the above challenges. In the area of meetingmanpower needs, NSTB offers scholarships for bright undergraduates to pursue postgraduate researchstudy. Furthermore, the government has maintained an open door policy of admitting foreign technical

professionals with the relevant expertise to boost the manpower base.

A series of support activities and incentives are in place to create a conducive environment for industryto undertake R&D. Financial support in the form of grants are available for co-funding R&D activities.Physical infrastructure include the development of a Technology Corridor, which is a fifteen kilometreregion containing a synergistic mix of higher education establishments, research institutes and private

sector laboratories. The proximity of these institutions, especially the Science Park, provides avibrant environment for researchers who can interact on a frequent basis.

The task of strengthening the technological capability of the country falls on the research institutes anduniversities. Research institutes are set up to develop generic technologies for strategic industryclusters. These institutes will collaborate with industry partners to develop pre-competitivetechnologies. In the process, manpower training and technology transfer are effected. The universitiesare not only expected to fulfil their role in training researchers but are also expected to provideleadership in research on areas of strategic importance.

Mechanisms to help foster technological innovation and commercialisation are manifold. Informationon technologies are made available through the National Technology Databank and National Patent

3 National Science and Technology Plan...towards 2000 and beyond, National Science andTechnology Board, 1996.

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Information Centre. Innovators wishing to protect their invention can apply for financial assistancethrough the Patent Application Fund. Financial assistance for technical entrepreneurs are available inthe form of the Technology Development Fund, a fund that helps a start-up through its initial yearswhen it is difficult to secure funding from the traditional sources. Finally, incubators help ease smallcompanies into their new business.

The above discussion indicates that there is no lack of funding or initiative on the part of thegovernment to upgrade the technical skills and competencies of the country. The bulk of the proposed

budget will be allocated to manpower training and development. This is identified as one factor thatwill attract foreign multinationals to base part of their research operations in Singapore. These foreignmultinationals play an important role in the economy and are expected to be the primary drivers ofR&D activities in Singapore.

Despite the major impetus and large funding given to R&D by the government, the private sectorspending in R&D outstrips the government spending. The private sector accounted for 63% of thecountrys Gross Expenditure on R&D (GERD) during 1994. The manufacturing sector and the servicesector account for 99.7% of the private sector spending on R&D. Foreign MNCs account for 71% and81% of the R&D spending in the manufacturing and services sector respectively. The electronicindustry is the most important industry within the manufacturing sector, accounting for 49% of the

private sector investments in R&D. Out of this amount, foreign MNCs accounted for 77% of thecommitments in the electronic industry.4

The private sector funds most of their R&D activities internally. Only 2.3% of the funds used comefrom the Government. This figure is consistent with the government policy of allocating their R&D

budget to ensuring the availability of trained manpower that the private sector, and especially foreignmultinationals, require for their R&D activities. Thus, the government may perceive its role as that of

providing the environment and opportunities for R&D rather than that of funding the incremental costsof specific R&D activities. This strategy seems to be working when evaluated in light of thecommitments and R&D activities taking place in the private sector.

It is noted from the discussion above that substantial amount of R&D work will be carried out in across-cultural setting where the innovating firms are non-Singaporean (and even non-Asian) while the

researchers will be predominantly Asian. This sets up a situation where an understanding of the valuesand culture of the local staff becomes essential for a firm to maximise the research productivity of suchworkers. This current study will provide initial insights into the salient issues that must be dealt with

before a beneficial cross-cultural working relationship can be developed.

1.4.3 Conclusion

Each country has undergone significant change over the last fifteen years with both countries beingincreasingly reliant on innovation and NPD in niche/high value segments for economic growth in anincreasingly worldwide global economy.

4 All figures are computed from the statistics found in National Survey of R&D in Singapore 1994,National Science and Technology Board.

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2.0 Conceptual Development

2.1 New Product Development

The setting for this study is NPD, defined as a series of managed activities taking new product ideasfrom generation to commercialisation. NPD has been well established as an important means forfinancial growth of organisations. (Booz Allen and Hamilton 1982; Wind, Mahajan, and Bayless, 1990)Also NPD is a critical function in the modern organisation to maintain its competitive advantage in thisera of dynamic environmental and economic change (Nayak et al., 1993). Although there have beennumerous studies exploring the determinants of NPD success and failure and of optimising the processcost and time, NPD remains an expensive and risky task with failure being all too common, resulting inenormous resource expense and marketplace disadvantage (Stagg et al. 1996, Cooper 1990, Calantoneand Cooper 1981, Hopkins 1980). Organisations and academics alike are therefore, constantly lookingfor methods and environments to enhance and optimise the management of the NPD process tominimise the risks of failure

Successful NPD and marketing activities are essential to meet an organisations internal and external

strategic objectives. Trends, such as accelerating technological development, intensified internationaland domestic competition, shorter product lifecycles and variable economic growth, highlight the needfor organisations to develop better new products, to do it faster, be more flexible (Takeuchi and

Nonaka 1986, Gupta and Wilemon, 1990), have market and international orientations (Cooper 1993,Atuahene-Gima 1995) and to learn from the best cultural practices identified from different nationalapproaches to innovation by successful Singapore and New Zealand firms.

The right organisational structure is identified as being critical for the future success of theorganisations NPD activities (Cooper 1993). The structure of the NPD process will depend on the

people involved in the process, and more importantly, the form the process takes. The roles that uppermanagement and teams play in the NPD process and the ability of the organisation to foster flexibilityinto the process, are all critical components (Souder 1987, Montoya-Weiss and Calantone 1994).

The right organisational structure is essential to ensure that decision and process dynamics of anorganisation are optimised and Kleinschmidt (1994) and Cooper and Kleinschmidt (1995) summarisethe success and failure determinants into six blocks of variables affecting the success and failure of

NPD activities. These, based on previous empirical research, are as follows:

1. the NPD process and activities within this process.2. the organisation of the NPD programme3. the firms culture and climate4. senior management involvement and commitment5. relationship of the NPD strategy to the overall strategy of the firm6. national/cultural environment.

As the process and activities within the process will differ between industry sectors and firms, the main

emphasis of this study outlined in this report are on points 2-6. There are other NPD success factors,such as the quality and cost advantages of the new product, but these are beyond the scope of thisreport (see Montoya-Weiss and Calantone 1994, for a summary).

Keys to effective NPD decision making processes and dynamics have further been summarised as(Calantone et al. 1995):

1. Innovative ideas have a greater chance of NPD success when there are few participantsinvolved in the process

2. Innovative ideas have a greater chance of NPD success when there are few opposing factionswithin the organisation.

3. Innovative ideas have a greater chance of NPD success when the key decisions are centralised.4. A key facilitating factor in NPD is the ability to monitor the environment (internal and

external).5. A key factor that facilitates NPD is the flexibility of the organisation.

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6. A factor that facilitates NPD is the centralisation of power within the organisation7. Once a strategic choice has been made, it should not be altered and made to work.8. A product champion has been found to facilitate NPD, if they are able to offer protection from

the financial and managerial restraints that exist within the firm.9. The success of NPD will be facilitated if there is support from the key power holders within

the organisation.

2.1.1 Roles in NPD.

2.1.1.1Senior Management

Upper management plays a critical role in the facilitation and effective completion of NPD projects.Upper management needs to play two major roles for effective NPD: their involvement and todemonstrate their corporate commitment. Upper management therefore needs to send clear messagesto the entire organisation about the role and importance of NPD in the form of broad parameters andstrategic mission for NPD (Kleinschmidt 1994). Further not only are they required to send cleardirections, they should also have commitment to the risk taking that is inherently involved in all aspectsof NPD and innovation activities. It is found also that NPD success is enhanced if there is access toupper management in times of difficulties, or there are major decisions to be made. Some form of

technical literacy amongst the upper management therefore will enable this interaction and empathy tosucceed. Importantly also as a critical success factor, upper management should make sufficientresources and funds available for effective completion of a NPD project.

As part of the corporate commitment to NPD activities upper management involvement is vital to aidthe overall corporate culture that NPD needs to succeed. This culture should allow an environment thatsupports teamwork, aids the emergence of intrapreneurs, of product champions, is supportive inrewards, risk, autonomy and treatment of failure, and provides the resources and time for NPDactivities. All of these approaches have been found to be positive organisational culture influences on

NPD.

2.1.1.2Functional Involvement

There is no question that the two functions of R&D and marketing play important roles in themanagement of a NPD project. The only other function of equal importance is the role of operations,and overriding all the others the role of senior management, as mentioned earlier, as facilitators. Whenfirms were less complex and or if the firm had only one or two products developed by a strongentrepreneur, all the functional roles of the organisation resided within the guiding manager of theoperation a baker for example could develop his/her product and had all the skills to assess thetechnical and customer/consumer demands for their product, thus could develop the bundle of benefitsfor both the seller and buyer and facilitate a successful exchange, the basis of the marketing concept(Griffin and Hauser, 1996).

Firms have evolved since this time and there is added complexity to the roles of marketing and R&Dwithin the firm. Literature suggests that only the most unique of individuals could have the requisiteknowledge of both the functions and to a degree that all technical and marketing considerations aretaken into account to successfully develop and market the product. The consequence is that the skillshave functionalised, grown apart, and are increasingly becoming their own empires, with the dangerthat the gap will become too great and therefore insurmountable (Griffin and Hauser, 1996).

To understand why this has happened the role of each of the functions needs to be assessed, andoverlaid on the product development process.

Numerous studies have identified the roles of upper management, marketing and R&D and theirrelationship to the success of a NPD project. For approximately 30 years there have also beennumerous studies that have set out to and have established, with the contingency of the type of projector organisation, that projects generally have to establish integration (namely communication and co-operation) between the functional areas, particularly marketing and R&D to succeed. However, assome authors have concluded, there is still a gap, particularly in western cultures, between the optimallevel of interaction and the actual level of interaction observed between the functions (see Griffin andHauser, 1996).

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The types and levels of functional involvement and integration are highlighted in table 1 (adapted fromWind, 1981). It is clear in this table that each of the functions play important roles at different stages,with each function having primary responsibility, with some required to have mutual jointresponsibility, highlighting the importance of functional integration.

Table 1: Interfunctional Involvement in the New Product Development Process*

Stages inNPD Prices

Organisational Function

TopManagemen

tMarketing Finance R&D Operations

Other (legal,procurement, personnel

etc)

Setting ofobjectivesor selectionof internalvs externaldevelopment

Primaryresponsibilit

yInputs Inputs Inputs

Idea

generation


yInputs


yInputs Inputs

Idea/concept screening

ApprovalPrimary

responsibility


y


yInputs Inputs

Concept/productdevelopment


yInputs Inputs

Concept/productevaluation

ApprovalPrimary

responsibility


y


y


yInputs

FinalProductevaluation&

development ofmarketingstrategy

ApprovalPrimary

responsibilit

y


y

Inputs Inputs Inputs

Continuousevaluationof productperformance

ApprovalPrimary

responsiblyInputs Inputs Inputs Inputs

Productintroduction


y


y

*Adapted from: Wind (1981) p. 231

The roles of team members within an NPD team are largely determined by the functions to which they

belong. The roles played by the different functions and those of senior management and project leaderswill be examined in the following sections.

Marketing

Should the firm have adopted the marketing concept then the marketing function should be one of thepivotal areas of the organisation, communicating information from the customer to the required parts ofthe organisation. In this role, marketing should be facilitating the identification of productopportunities, defining the market segments, and identification of consumer wants, needs and desires.

Not only is the marketing function involved in the communication from the customer to the requiredparts of the organisation, they are also involved in the communication of the company products andconcepts to the customer. The marketing function therefore should be intimately involved in the designof the marketing mix programme (communication, pricing and distribution strategies) for the product

development as well as overseeing the launch process and strategy. As can be seen in Table 1marketing also has a responsibility in the continuous monitoring, screening and evaluation of the NPD.

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The role of marketing is, therefore, especially important in acting as an interface between customersand the NPD team. Primary marketing tasks are to obtain customer requirements from the market tothe development team, providing regular feedback from customers regarding product performance,gathering information on competitors moves and strategies and also setting new product goals and

priorities (Gupta et al., 1985). Their market understanding also brings them critically involved in

generating new product ideas and idea screening at the front end of NPD. Subsequently, marketingplays an important role in market testing the new product and the product launch. In fact, marketingshould play a leadership role in NPD according to studies by Cooper (1984a, 1984b), whose researchshowed that for NPD performance, a balanced strategy combining technological prowess and marketorientation is needed, with the group dominated by marketing.

R&D

The R&D function leads to the definition of the basic form of the product. This is in translation of thecustomer needs into the technical considerations of the NPD. The role of R&D is important throughoutall aspects of the development of the product, not only in terms of the physical development, but in allother evaluation, screening and control of the product's life. R&D may have dominant responsibilityfor establishing long-term research directions, keeping abreast of competitive technology, and

identifying and fixing design flaws for future product releases.

R&D plays an indispensable role in the actual development of a new product. R&D is responsible fortranslating customer requirements into technical product specifications, applying suitable technologiesfor satisfying those customer requirements. Their technical expertise is required in evaluating andscreening for technically viable new ideas. They carry out the physical testing of a new product. Also,the long time-horizon of R&D makes them useful for setting long-term research directions (Griffin andHauser, 1996).

R&D involvement in NPD by providing technological sophistication, innovativeness andaggressiveness coupled with heavy R&D spending is found to be essential in a balanced strategyemployed by top NPD performers (Cooper, 1984a; 1984b).

2.1.1.3Cross-Functional Teams

In an overwhelming majority of modern firms, the structure adopted is one that is defined alongfunctions. This is possibly attributable to the complexity of the environment that businesses todayoperate in, and the specialisation required to handle it. In NPD, however, throughout a projects lifecycle, a combination of skills, knowledge and expertise from different functions is needed. It therefore

became apparent that a cross-functional team is the most effective organisational structure to approachthe multi-disciplinary demands of developing new products.

Cross-functional teams contribute to improved NPD performance in terms of success in the market, profitability and development speed (Rusinko, 1997; Griffin and Hauser, 1996; McDonough andBarczak, 1992; Swink et al., 1996). Cross-functional project teams encourage communication andcooperation, provide some extent of formalisation and help resolve conflicts. However, team membersrisk losing their functional specialisation in the long run by interacting less with specialists of the samefield.

The integration of the different functions in a cross-functional NPD team is the subject of muchresearch. Extensive amount of research has been dedicated especially to the integration of two veryimportant functions involved in NPD, namely, R&D and marketing (Song and Dyer, 1995; Griffin andHauser, 1996; Gupta et al., 1984; Sounder, 1988). The early inclusion of manufacturing into NPD byfirms implementing concurrent engineering has also received substantial amount of attention (Rusinko,1997; Griffin and Hauser, 1992; Mabert et al., 1992; Swink, et al., 1996).

2.1.1.4Conclusion

Dependent on the size of the organisation, each of these functional areas will have individuals withdifferent skills. Rarely is a NPD undertaken and completed by one individual, or one functional area

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within the organisation. Marketing and R&D responsibilities are neither independent nor static of eachother. The roles that each of them play will evolve over time as new technological and marketopportunities arise, the competitive and regulatory environments change. Whatever the case, the long-term competitiveness and profitability requires the organisation to have a large investment in NPD inorder to have constant product or service offering renewal. There is, therefore, a constant flow ofinformation, technical expertise, money and materials that are transferred across the functional areas.

2.1.2 Integration

2.1.2.1Integration of R&D and Marketing

A major theme in the literature in recent years has been in the recognition that the NPD process can notexist without more than one functions involvement.

R&D and marketing integration, although an important dimension has three major defining basiswithin the literature (Kahn and McDonough III 1997). The first is the association between integrationand interaction, where communication and regular meetings between the two functions are emphasised(Carlsson 1991; Griffin and Hauser 1992; Moenaert et al.1994; Urban and Hauser 1993). The secondis integration associated with collective goals, mutual respect and teamwork (Griffin and Hauser, 1996;Kahn and McDonough III, 1997). Finally integration is associated with components of the two abovedefinitions, where involvement and information exchange and sharing have equal roles (Gupta et al.1985; Lorsch 1965; Song and Parry 1992; 1993). For the purposes of this study the third aspect of theliterature pertaining to R&D and market integration will be used, where effective integration isachieved when there is sufficient communication and co-operation between the marketing and R&Dfunctions (Griffin and Hauser 1996; Kahn and McDonough III 1997). This definition considersintegration as a multidimensional construct. Integration will be used instead of communication andco-operation for the remainder of this paper.

Integration of R&D and marketing has been identified as a significant factor to success in many of themajor NPD success and failure studies over the past three decades (e.g. Cooper and Kleinschmidt 1987;Hise et al. 1990; Rothwell 1976; Souder 1988). The importance of the integration between the twofunctions has increased as the business environment becomes more dynamic with firms facingintensifying pressure to find competitive edge through faster development cycles, lead times, NPDefficiency and effectiveness (Griffin and Hauser 1996; Kahn and McDonough III 1997; Song et al.1997; Montoya-Weiss and Calantone 1994). Integration importance for effective NPD across allenvironments, both organisational and country, has been established by many empirical studies(Dougherty 1990; Moenaert et al. 1994b; Song and Parry 1992, 1993; Souder 1988; Souder andChakrabarti 1978; Takeuchi and Nonaka 1986). Mechanisms fostering integration in these differentenvironmental settings need to be addressed somewhat more however (Griffin and Hauser 1996).

There is a propensity for disharmony between the R&D and marketing functions (Souder 1977, 1981)with some researchers going as far as saying that it is the norm rather than the exception (Moenaert andSouder 1990). The Griffin and Hauser (1996) review summarised the barriers to integration as theR&D and marketing differences in R&D and marketing: personalities; cultural thought worlds;language; organisational responsibilities (including reward systems); and environmental factors such as

physical barriers. When these barriers exist in NPD they are significantly linked to limiting NPDperformance (see Griffin and Hauser 1996).

Calantone et al. (1995) summarises the major principles from the literature in relation to R&D andmarketing integration as:

1. Marketing and technical personnel do not communicate effectively with one another2. Marketing and technical personnel generally do not trust each other.3. Harmonious interaction between marketing and R&D departments is associated with

improved NPD success rates.

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4. Early involvement of both the marketing and R&D departments in the NPD process fostersbetween the departments.

5. Support of top management fosters better interaction between the marketing and R&Ddepartments.

6. A protocol or formal agreement between marketing and R&D on product performancespecifications minimises conflicts and misunderstandings between marketing and technical

personnel.

It is noted that Calantone et al (1995) mentions the integration predominately between the marketingand R&D function, with the upper management function playing a moderating effect. There arehowever several other functions that are important to the stakeholders in the NPD process and thereon

NPD success. Notably the financial and operation functions. Not only are these functions necessaryfor the effective and efficient completion of the NPD activity, but the inter-functional relationships herecan also be prone to conflict and problems (references).

A myriad of different integration mechanisms has been proposed by the literature (Griffin and Hauser1996; Gupta and Wilemon 1988; Moenaert and Souder 1990; Moenaert et al. 1994b). Griffin andHauser (1996, p. 202) listed six general approaches, collated from the extant literature, thatorganisations use to integrate functional activities. These include the co-location (Kahn and

McDonough III 1997) or physical design of R&D and marketing, the movement of personnel acrossfunctions (or role flexibility (Moenaert and Souder 1990; Moenaert et al. 1994b)), informal socialsystems, organisational structures, incentive and reward systems and formal integrative mechanisms.These are component titles for many specific tools, which have all been positively linked to NPD

performance and enhancing NPD integration (Griffin and Hauser 1996). Apart from physical locationand design of the facilities, the mechanisms identified in Griffin and Hauser's (1996) can be linked tofour general types of organisational mechanisms that breakdown barriers to integration. These areformalisation, centralisation, role flexibility, and inter-functional climate (Moenaert and Souder 1990;Moenaert et al. 1994b).

Formalisation: Project formalisation relies on a set of rules and procedures for performing theNPD function. Formal Integrative mechanisms include phase review, stage-gate process, PACE, andQFD (see Griffin and Hauser 1996). Whatever system is used to formalise the project, the objective isto improve the quality of the functional integration. They could also be an important mechanism for

fostering informal communication between the functions.Centralisation: The amount of communication, decision making and power held within a

project by a few people (normally at management level), will have a significantly negative impact onthe integration of the functions. Issues will not be able to be resolved quickly at the project level,rather will need to go through a hierarchical process (Gupta and Wilemon 1988). This is indicative ofthe traditional functionally type organisation (Griffin and Hauser 1996).

Interfunctional Climate: This relates to the subjective aspects of the functional relationship. Itrelates to the degrees of trust, awareness, support and interest between the functions. (Moenaert et al.1994b). Upper management has to provide a climate for this type of culture, through their proactivesupport (Souder 1987). This climate will provide for the organisational value of the task (Gupta andWilemon 1988).

Role Flexibility: This relates to the movement of personnel beyond their assigned functionaltasks throughout the project. This has been noted in a number of organisational settings, where R&D

staff take an active interest and involvement in marketing functions, or vice versa which aids theintegration process. (see Griffin and Hauser 1996; Souder 1994).

Management has a responsibility in the development of an organisational climate that is conducive tointegration and overall NPD. They should provide the corporate commitment, in terms of sending clearmessages to the organisation about the role and importance of NPD and thereon the importance offunctional integration. (Gupta et al. 1990; Hegarty and Hoffman 1990; Johne and Snelson 1988;Kleinschmidt 1994; Song and Parry 1992, 1993).

2.1.2.3Role of Project Leader

As the leader of the cross-functional team that develops a new product, the responsibilities of the

project leader is extremely crucial and their implementation is directly related to the success or failureof the project. A project leader is responsible for defining team member roles, establishingcommunication channels and cross-functional integration, projecting and obtaining resource

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requirements, coordinating technical and design issues, scheduling project stages and setting project priorities (Khurana, and Rosenthal, 1997). To carry out these tasks, a project leader needs to beknowledgeable and experienced (Mabert et al., 1992; Swink et al., 1996).

However, the effectiveness of a project leader is moderated by many other factors. In generating newideas and producing solutions, project leaders should not dominate discussions but instead, should play

the integrative role of facilitating thinking among group members, providing critical evaluation,channelling original ideas from outside the group and consolidating ideas into a final solution (Farris,1972). Communication patterns of project leaders studied, indicate that successful project leadersdealing with familiar technology discussed technical issues and scheduling more with engineering,vendors, management and purchasing than less successful project leaders. Successful project leaders ofhighly innovative teams discussed customer needs with team members and customers more (Barczakand Wilemon, 1991). On the other hand, faster development is associated with younger project leaders(McDonough III, 1993).

2.1.2.4Communication

Communication is the theme that runs through every aspect in every stage of NPD. It is almostimpossible to speak of communication independent of the environment in which it takes place. There

is strong evidence that in order for an NPD project to succeed, a high level of information flow isrequired among the team members, team leaders and parties outside the group (Griffin and Hauser,1996). As discussed under the difficulties to integrate R&D and marketing, smooth and effectivecommunication risks are being restricted by a number of barriers (Griffin and Hauser, 1996).

However, merely having large amount of information flow does not in itself guarantee NPD success.Communication between whom, what was communicated, contingent upon the strategy of the firm andthe orientation of the team leader and members differentiate the top performers from the failures(Murphy and Kumar, 1997; Song and Dyer, 1995; Griffin and Hauser, 1992; Farris, 1972; Swink et al.1996). Communication is also the key to cross-functional integration (Song and Dyer, 1995; Griffinand Hauser, 1992; 1996) and conflict resolution (Griffin and Hauser, 1996; Gupta et al., 1984; Souder,1988).

To enhance communication, it is possible to eliminate any physical barriers or move personnel acrossdepartments, encourage informal interaction and implement teams to carry out tasks (Griffin andHauser, 1996). From a managerial perspective, a greater degree of formalisation, for example usingQFD, enhances communication significantly (Griffin and Hauser, 1996; Mabert et al., 1992).

2.1.2.5Information

Part of creating an effective dialogue between the functional units is the sharing of informationbetween the functional units. Supported by previous research many of the critical issues that arise atdifferent stages of the NPD process requires good information exchange (e.g. Gupta et al. 1985).However, ineffective communication of information between the marketing and R&D functionsdevelops because R&D personnel would like to have clear, unambiguous and precise answers to whatcharacteristics that customers desire in the NPD and the price that they are willing to pay for thesecharacteristics. Marketing, however, often would like R&D to stall the NPD, at the earliest possible

juncture, whilst market research, and testing is initiated so that effective business planning can beundertaken (Burgelman and Sayles 1986). In essence, both the marketing and R&D functions wouldlike to have certainty in the information that they receive, whilst maintaining the right to be uncertainthemselves.

2.1.2.6Conflict

In a NPD team with members from different functions engaging in activities, the result of and theapproach to, which are inherently uncertain, conflicts are almost inevitable.

The level of disharmony within the NPD team influences success of an NPD project. Most projectswith severe disharmony between R&D and marketing failed (Souder, 1988). It is therefore importantthat attention is paid to the management of conflict within NPD teams.

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Souder (1988) in a ten-year study of 289 NPD innovation projects identified 5 states of disharmony.Lack of appreciation and distrust were classified as severe disharmony while lack of communication,lack of interaction and even being too-good friends were grouped as mild disharmony.

Conflicts arise for a number of reasons. Personality differences even when it is a perceptual stereotype

hinders cooperation and communication. Different functions have different thought worlds. Forexample, marketing has a short time horizon with focus on the market, and they are able to tolerate ahigh degree of ambiguity and bureaucracy and feel loyal to the firm while R&D is loyal to theirscientific profession, focusing on scientific development, have a long time horizon in technologicallycomplex projects, and do not accept ambiguity and bureaucracy. Different organisationalresponsibilities, performance measures and task priorities for each different function can also be thecauses that lead to conflicts. A top management that does not reward integration is potentially harmfulto inter-functional cooperation (Griffin and Hauser, 1996). Uneven praise to different parties maycause rivalries to develop, as one party may perceive that their due credit has been stolen (Souder,1988).

Conflicts risk being institutionalised in firms and may become so deeply entrenched that they aredifficult to eventually be removed.

2.1.2.7Accountability (Group Autonomy)

Those involved in highly innovative research work have always been stereotypically associated withthe image of the idiosyncratic mad scientist unbounded by mundane rules and procedures. In addition,

because of the uncertainties involved in the creative process, intuition suggests that innovators be leftunhindered in their work. Formalisation is the emphasis placed within an organisation on followingspecific rules and procedures in performing ones job and centralisation refers to the organisationallevel at which decision making occurs and to the extent that employees participate in decision making.Therefore, it appears that innovative processes should use a low level of formalisation andcentralisation.

In a survey of 274 R&D managers and 264 marketing managers in 315 Japanese high technology firms,it was found that more innovative firms that react fast by using new products, new technologies to takeadvantage of opportunities in marketplace (Prospector firms) employ higher level of formalisation andcentralisation than less innovative firms that find and defend an established market in a proven product(defender firms) (Song and Dyer, 1995). This indicates that complexity of entering many new markets,the need to resolve conflicts and increase communication as well as to complete non-routine tasksfaced by prospector firms may outweigh the need the need for autonomy in innovative NPD.

However, in a team hierarchy, managers do not necessarily completely predetermine a teams level ofautonomy. A teams extent of autonomy is dynamic, evolving along the project lifecycle. Within the

NPD team itself, Gerwin and Moffat (1997) proposed that a team seeks to expand its authority whenthe task problems faced by the team are serious, combined with the teams strong ability to exertinfluence and when the team leader has a counterdependent internal model of authority.

2.1.3 Conclusion

Table 2 brings together the important points of the above discussion together, highlighting the roles,processes and environment that exists for effective NPD in the extant literature. These will be thefocus of this research

Table 2: NPD Literature Conclusion

Roles in NPD Processes Environment

Senior Management Integration ConflictFunctional Communication Autonomy

(Marketing) Project Leader Role(R&D) Information

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No one role is more important than another in NPD, with each having an important contribution atdifferent stages of the NPD project. If there is not involvement of each of the functions, then it has

been found that NPD is somewhat more prone to failure. Integration, communication and informationflow and the role of the Project Leader are significant process determinants that brings about effective

NPD activities. However mitigating NPD activities are internal environmental factors such as the levelof conflict that exists between the different functions and the level of autonomy granted to the NPD

group.

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2.2 National Culture

NPD is not undertaken in a vacuum. It has been determined that country differences do exist in NPDbehaviour. Country level contextual differences that effect NPD activities have been classified intotwo sets of variables, socio-economic and cultural (Moenaert et al., 1994).

Socio-economic based variables have bearings on technological progress and development within acountry. While these can be somewhat ambiguous in orientation, they have been narrowed to thecountrys technological heritage, the structure of the market, the administrative heritage, andentrepreneurial environment (Moenaert et al. 1994). The socio-economic context the firm operateswithin, influences the types of activities displayed by the firm and the processes followed. They

provide the historical context and macro environment of the firm. However, socio-economicdifferences do not explain innovation behaviour fully. This cultural analysis lead the belief that ethnicculture dimensions such as individualism, determinism, distance perception and complexity provide anexplanation of why NPD projects are managed differently in Europe than the US. This Moenaert studyis seen as a non-exhaustive discussion on potential relations between the socio-economic and culturalcontexts and the management of outcome of innovation projects. It suggests that innovation

performance does not solely depend on finding a fit between ethnic culture and organisational culture,

but some national cultures are inherently better suited to deal with the challenging task of NPD. Thisreport addresses elements of the national and organisational cultural elements that foster anenvironment, not only for innovation, but commercialisation of the innovation.

Culture is defined largely on its intended use as a determining criterion. From a functionalist perspective, culture is something that the organisation has whereas from an anthropological perspective culture is something that the organisation is. Functionalists tend to measure thecorporate culture whereas anthropologists measure the national or ethnic culture.

The distinction between organisational and national culture is important. Hofstede et al. (1990)determined that national and organisational cultures are composed of different elements.Organisational culture is the shared perceptions of daily practices, therefore is mostly measured on theshared practices amongst the members of the organisation. National culture is the shared values of

people within a certain national environment. This is mostly measured on the work values and less onpractices of the individual. The link showing where cultural levels are acquired is shown in Figure 1.The individuals acquisition of these elements of culture come from different sources. Values comefrom the socialisation of the individual in society, family and school, whilst organisational culturecomes from socialisation in the workplace. An occupational culture level has been placed halfway

between national and organisation suggesting both values and practices impact on the performance ofthe individual at the project level. It is therefore, valid to assume that some elements of organisationalculture will transcend national boundaries, hence the need to consider the national impacts onorganisational culture as a subcomponent within this study.

Values

Practices

Place of

Socialisation

Family

School

Workplace

Level

Nation

Occupation

Organisation

Figure 1: Cultural Differences: National occupational and organisational levels

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Manifestations of culture have been classified into four categories: symbols, heroes, rituals and valuesas shown in Figure 2.

Practices

Heroes

Rituals

S mbols

Values

Figure 2: Manifestations of Culture: From Shallow to Deep (Hofstede et al. 1990).

The cultural core values, which are defined as broad tendencies to prefer a certain state of affairs overothers, endure over time. These are the fundamental feelings of the individual, which will determine

the alternative forms of behaviour the individual shows. These are not so observable and ascertain thelong-term ambitions of the respondent and the feelings they have to NPD practices, and gauge thefundamental feelings the respondent has to their environment. The practices, defined as the state ofhow something is undertaken by an individual, consist of symbols, heroes and rituals, and are directlyobservable. Symbols, which are gestures, words, pictures or objects that carry a particular meaningwithin the culture, are measured by variables such as words, language, and jargon as used andunderstood by people within the organisation, along with dress, hairstyles, status symbols etc. and areindicative of the dynamics of people within a NPD team. Heroes, are people (real or imaginary) that

persons look to as their ideal, and are measured by questions such as what characteristics would theideal NPD team member possess? Rituals, are collective activities that are socially imperative for theculture and are measured by questions such as how often do R&D and Marketing personnel meetoutside of the NPD function?, identified as an important component for NPD success (Dwyer 1990,Gupta and Wilemon 1990, Walsh, 1990), and past experience and innate knowledge of NPD

developers within the organisation.

Whilst this study is principally concerned with the national culture impacts, it is important tounderstand where other determinants are placed. The link of national culture with organisationalculture is demonstrated in the following model Figure 3 (Garrett et al. 1995) which identifies groups ofcultural factors from the literature and the preliminary study showing the relationship between the setsof variables.

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Figure 3: National Culture and its relationship to NPD

National culture for the purposes of this study will use Hofstedes (1980) definition of culture definedas the collective programming of mind which distinguishes one national group orcategory of people from another.(thus)..the interactive aggregate of commoncharacteristics that influence a human groups response to its environment.Culture is not directly observable, but is inferable from observed behaviours,demeanours and statements. National culture implies that shared values impactthe behavioural patterns of one group from another. National culture thereforewill impact organisational culture but organisational culture practices will not

impact national culture.

The use of Hofstede as a basis for measuring national culture has been thesubject of much debate since his original publication in 1980. The use ofalternative paradigms, from Kluckholn and Strodtbeck (1961), Hall and Hall(review - 1990) to many others attempting to measure national culture. TheHofstede dimensions have been validated by many different studies (seeSondergaard 1994). Whilst remaining controversial the Hofstede approachprovides a good point for commencement in understanding cultural differences(Gannon, 1994).

2.2.1 Hofstedes Dimensions of National Culture

According to Hofstede, cultural differences between nations can be described using bipolardimensions. The position of a country on these dimensions allows predictions about how each societyand its management processes operate. The dimensions are (Hofstede 1980, 1991; Hofstede and Bond,1988; Nakata and Sivakumar, 1996):

1. Power Distance is the degree of inequality amongst people running from relatively equal toextremely unequal. The degree ofPower Distance within the society will impact the structurethat is in place for the organisation. For example in more Power Distance societies a veryhierarchical system would be more acceptable than in lowPower Distance societies while itsinverse is the expectation of relative equality in organisations and institutions.

2. Individualism - Collectivism is the degree to which people act as individuals or as group

members. Individualism is the condition in which personal interests (and their immediatefamily) are accorded greater importance than are the needs of groups (Wagner and Moch1986). Rewards for achievement of goals differ in accordance to the degree ofIndividualism

New ProductStrategy

New ProductStrategy

NPD ProjectOutcome

NPD ProjectOutcome

Senior Management

Involvement and commitment

National/Cultural Environment

Organisational

Setting for NPD

NPD Process

NPD Project Level

Climate and culture

Organisational

Climate and culture

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and Collectivism of the nation. Individualistic societies for example would reward more theindividual rather than the group (Bond, Leung and Wan 1982). A collectivist unit integrates

people into cohesive groups.

3. Masculinity - Femininity, is the degree to which Masculine values like assertiveness,performance, success and competition prevail overFeminine values like the quality of life,

service, modesty and solidarity.

4. Uncertainty Avoidance, is the degree to which people in a country prefer structured overunstructured situations and taps the feeling of discomfort in unstructured or unusualcircumstances while the inverse shows tolerance of new or ambiguous circumstances. Itrelates to risk taking and entrepreneurship. Should the individual be more adverse toambiguous situations rather than structured and known the nature of the people to acceptingnew ideas will be impacted. Societies that are found to have high Uncertainty Avoidance willrequire greater degrees of forward planning and control in order to gain greater degree ofcertainty.

5. Longterm - Short Term Orientation (The Confucian Dynamic) (Hofstede and Bond 1988)considers Longterm values orientated toward the future, like thrift, savings and persistence

while Short Term values are oriented toward the past and present like respect for tradition andfulfilling social obligations. A longer term perspective will orient members to fulfilling longerterm goals. NPD team members who take this view will more likely seek longterm innovationsuccess thus identify a projects contribution to the core competence of the firm (Prahalad andHamel, 1990) therefore the longer term sustainable competitive advantage of the firm.

2.3 Link Between National Culture and NPD Decision Processes and Dynamics

The focus of this research is the examination of the link between national culture and NPD decisionprocesses and dynamics in a sample of Singapore and New Zealand organisations. Culture can be usedas an aid to the definition and exploration of ways for organising processes such as NPD. Althoughorganisational culture is composed of different elements to national culture, it is fair to assume that

organisational conduct will be impacted by the common values displayed by the individuals in thatnational environment, particularly in terms of individual behaviour, the tenor of interpersonalrelationships, expectations about the legitimate use and manifestation of authority, and in general therelationship of the individual, his rights and obligations to the collectivity (Child 1981).

Each of the Hofstede dimensions influence on NPD will be discussed based on previous literature asfollows:

2.3.1 Individualism

Individualism refers to the relationship between the individual and the collectivity which prevails in agiven society (Hofstede 1980, p. 213).

Research on product champions suggests that high degrees ofIndividualism may be associated withsuccessful NPD. Product champions are people who champion products, nurturing them beyond therequirements of their jobs (Schon 1963). Research shows that product champions are often associatedwith successful new products (Chakrabarti, 1974, Chakrabarti and Rubenstein 1976, Rubenstein et al.1976; Tornatzky et al. 1980). Perhaps their non-conformity, self confidence, and perseverance fuelsthe innovation process by generating possibilities and overcoming obstacles.

Similarly, current understanding about technical and business innovators raises the possibility of higherlevels ofIndividualism being tied to successful NPD. Technical innovators rely on their scientificingenuity and personal vision to originate and execute new concepts (Johne and Snelson 1988). Theytypically operate with autonomy, yet exert considerable influence on others in organisationalinnovation endeavours. Their presence is understood as a key discriminator between successful andfailed innovations. Business innovators are similar to their technical counterparts in zeal and

Individualistic vision but they do not necessarily generate the idea or apply knowledge needed to makethe new product, instead their influences stems from senior management positions that enable them to

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identify opportunities and direct resources toward exploiting them (Johne and Snelson 1988). It isargued that more successful NPD may also occur in tandem with higher degrees ofIndividualism.Thus it appears that the higher the cultures Individualism, the better the new products outcomes;however the antipode ofIndividualism, orCollectivism, seems to be a positive force as well. Japanese

NPD approaches serve to illustrate this point. Collectivism characterises many of the approaches toNPD (e.g. QFD and Quality Circle programmes). A common element in many of these approaches are

teams - a manifestation of Collectivism. Empirical research has shown that Japanese managers aregenerally collectivist in their methods and perspectives, whereas their North American counterparts areIndividualistic (Howard, Shudo, and Umeshima 1983).

More broadly supporting the notion of group orientation facilitating NPD are findings on team andmatrix structures and the interface between the Marketing and R&D functions. Supporting the notionof group orientation, facilitating NPD are that matrices and project team structures performsignificantly better than functional organisations (Larson and Gobeli 1988). When communications,co-operation and harmony between Marketi

final asia 2000 report 1999

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