the role of lean launch execution and launch timing on new product

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ORIGINAL EMPIRICAL RESEARCH The role of lean launch execution and launch timing on new product performance Roger J. Calantone & C. Anthony Di Benedetto Received: 16 February 2010 / Accepted: 26 April 2011 # Academy of Marketing Science 2011 Abstract There is a substantial literature on the product development process but comparatively little on the impact of lean launch execution and launch timing on new product performance. Given the costs and risks involved in product commercialization, this research gap is surprising. Delays in product launch can lead to poor channel cooperation and coordination, missed market opportunities, and lost compet- itive opportunities, yet timing of the launch has not been included in many reported studies. In addition, managers at many firms have prioritized supply chain activities such as integration of logistics with other functional areas in order to obtain cost efficiencies and accelerate time to market; the role of lean launch execution in improving new product perfor- mance has also received little research attention. In this study, we build a conceptual model in which lean launch, launch timing, and quality of marketing effort are modeled as precursors to new product performance; we assess the role of market orientation and cross-functional integration in lean launch execution as well as indirect and direct effects of launch timing on performance. We empirically test our model with a sample of 183 U.S.-based corporate managers actively involved in new product launch. We find evidence that execution of a lean launch and effective marketing signifi- cantly improve new product performance, and that correct launch timing positively moderates the effect of lean launch on performance. These variables therefore should be carefully considered by managers of new product processes. Keywords New product development . Lean launch of new products . Launch timing . Logistics-marketing interface Introduction During the past twenty years, a substantial literature has emerged that identifies the relationships between environ- mental factors, proficiencies in carrying out new product development (NPD) activities, and ultimate new product success (Calantone and Di Benedetto 1988; Parry and Song 1994; Song and Parry 1994, 1997a). Until very recently, few of these studies have focused specifically on the impact of launch execution and timing on new product perfor- mance. Montoya-Weiss and Calantone (1994) found very few in their meta-analysis; our subsequent search of the literature finds only 4% of articles focused on launch out of almost 1,200 innovation and NPD articles published since the aforementioned review. Organizational responsibilities during changeover from product development to product marketing are perhaps the most critical part of innovation because it changes a project from a resources consumer to a revenue generator for the firm. Thus, we focus on the juncture of strategic activities Drucker identified as the two most important in a firm, namely innovation and marketing. That such a research gap exists is surprising, for several reasons. First, the costs and risks involved in new product commercialization and launch are substantial (Guiltinan 1999; Hultink et al. 1997; Urban and Hauser 1993), and only recently has launch emerged as a topic of research interest to new product academics (Calantone et al. 2005; DeBruyne et al. 2002; Hultink and Robben 1995; Hultink et al. 1997, 1998, 1999, 2000; Langerak et al. 2004; Lee and OConnor 2003; Thoelke et al. 2001; see also the special issue on new product launch, Journal of Product Innova- R. J. Calantone (*) Michigan State University, East Lansing, MI, USA e-mail: [email protected] C. A. Di Benedetto Temple University and Technische Universiteit Eindhoven, Philadelphia, PA, USA J. of the Acad. Mark. Sci. DOI 10.1007/s11747-011-0258-1

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Page 1: The role of lean launch execution and launch timing on new product

ORIGINAL EMPIRICAL RESEARCH

The role of lean launch execution and launch timingon new product performance

Roger J. Calantone & C. Anthony Di Benedetto

Received: 16 February 2010 /Accepted: 26 April 2011# Academy of Marketing Science 2011

Abstract There is a substantial literature on the productdevelopment process but comparatively little on the impact oflean launch execution and launch timing on new productperformance. Given the costs and risks involved in productcommercialization, this research gap is surprising. Delays inproduct launch can lead to poor channel cooperation andcoordination, missed market opportunities, and lost compet-itive opportunities, yet timing of the launch has not beenincluded in many reported studies. In addition, managers atmany firms have prioritized supply chain activities such asintegration of logistics with other functional areas in order toobtain cost efficiencies and accelerate time to market; the roleof lean launch execution in improving new product perfor-mance has also received little research attention. In this study,we build a conceptual model in which lean launch, launchtiming, and quality of marketing effort are modeled asprecursors to new product performance; we assess the roleof market orientation and cross-functional integration in leanlaunch execution as well as indirect and direct effects oflaunch timing on performance. We empirically test our modelwith a sample of 183 U.S.-based corporate managers activelyinvolved in new product launch. We find evidence thatexecution of a lean launch and effective marketing signifi-cantly improve new product performance, and that correctlaunch timing positively moderates the effect of lean launchon performance. These variables therefore should be carefullyconsidered by managers of new product processes.

Keywords New product development . Lean launch of newproducts . Launch timing . Logistics-marketing interface

Introduction

During the past twenty years, a substantial literature hasemerged that identifies the relationships between environ-mental factors, proficiencies in carrying out new productdevelopment (NPD) activities, and ultimate new productsuccess (Calantone and Di Benedetto 1988; Parry and Song1994; Song and Parry 1994, 1997a). Until very recently,few of these studies have focused specifically on the impactof launch execution and timing on new product perfor-mance. Montoya-Weiss and Calantone (1994) found veryfew in their meta-analysis; our subsequent search of theliterature finds only 4% of articles focused on launch out ofalmost 1,200 innovation and NPD articles published sincethe aforementioned review. Organizational responsibilitiesduring changeover from product development to productmarketing are perhaps the most critical part of innovationbecause it changes a project from a resources consumer to arevenue generator for the firm. Thus, we focus on thejuncture of strategic activities Drucker identified as the twomost important in a firm, namely innovation and marketing.

That such a research gap exists is surprising, for severalreasons. First, the costs and risks involved in new productcommercialization and launch are substantial (Guiltinan1999; Hultink et al. 1997; Urban and Hauser 1993), andonly recently has launch emerged as a topic of researchinterest to new product academics (Calantone et al. 2005;DeBruyne et al. 2002; Hultink and Robben 1995; Hultink etal. 1997, 1998, 1999, 2000; Langerak et al. 2004; Lee andO’Connor 2003; Thoelke et al. 2001; see also the specialissue on new product launch, Journal of Product Innova-

R. J. Calantone (*)Michigan State University,East Lansing, MI, USAe-mail: [email protected]

C. A. Di BenedettoTemple University and Technische Universiteit Eindhoven,Philadelphia, PA, USA

J. of the Acad. Mark. Sci.DOI 10.1007/s11747-011-0258-1

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tion Management, November 1999). A recent review article(Calantone and Di Benedetto 2007) identified approximatelytwo dozen articles in the marketing or innovation literaturespecifically addressing launch issues, most of these beingpublished within the previous 10 years.

Additionally, few of these studies have specificallyexamined launch execution or timing decisions and theirimpacts on new product performance. For management atmany firms, an important success metric is the length oftime required between initial cash investment and revenuerealization (Bowman 2002; Farris and Hutchinson 2002).These firms, therefore, place high priority on the new productbeing launched successfully and in a timely manner, withoutunnecessary delays in the NPD process. Furthermore, theimportance of executing a “lean” launch, in which the firmmakes small commitments of resources, slow manufacturingramp-up, and limited commitment of inventory during rollout(Calantone et al. 2005), has not been sufficiently examined.The role of supply chain activities, such as integration oflogistics with marketing, manufacturing, and production inorder to pursue a lean launch strategy, has also not receivedmuch research attention, despite the fact that managers canobtain substantial cost efficiencies and significantly acceler-ate time to market with supply chain integration (Bowersoxet al. 1995, 1999; Calantone et al. 2005). Finally, although asubstantial literature exists that relates quality of marketingeffort and cross-functional integration to overall new productsuccess, little work has specifically tied these antecedentvariables to launch strategy effectiveness. Quality of effort inmarketing activities such as market testing, sales forcetraining, and advertising execution, as well as effectivecommunication among functions on the new product team,will directly affect new product launch, revenue realization,and product performance. Since many firms view innovationas a strategic driver of growth, a fuller understanding of the roleof quality of marketing effort, launch execution and timing,and cross-functional integration in supporting a successfullaunch and improving new product performance is critical.

The research objective of this study is to address thefollowing unanswered questions concerning new productlaunch and performance:

& When does adopting a market orientation and/orincreasing cross-functional integration lead to achieve-ment of a leaner launch execution? Is new productperformance in the marketplace ultimately improved?

& How important are lean launch executions to new productperformance? How important is it that the timing of thelaunch provides a competitive advantage, or matches theexpectations of major customers and distribution partners,or the objectives of senior management?

& When does making a good decision on the timing of thelaunch (with respect to customers, distribution partners,

or senior management) moderate the relationshipsbetween quality of marketing effort, lean launch, andnew product performance?

To accomplish these objectives, we develop a theoreticalmodel of new product performance based on the newproduct process literature and the literature on supply chainand lean launch. Our model assesses three antecedents ofperformance: quality of marketing effort, launch timing,and lean launch execution. Proactive and responsive marketorientations, and cross-functional integration, are modeledas antecedents to lean launch. Interaction effects of launchtiming on the other two antecedents of performance (qualityof marketing effort and lean launch) are also modeled. Weempirically test our model with a sample of 183 U.S.-basedcorporate managers involved in new product launch. Wefind that both increased quality of marketing effort and leanlaunch execution have significant positive effects on newproduct performance. We also find that improved launchtiming does not directly affect new product performance,but it does have a significant moderating effect on leanlaunch. That is, lean launch provides a potential forimproved performance, but if the launch timing is off(launched either too late or too early), that potential is notrealized by the firm. In sum, we demonstrate that including leanlaunch and launch timing considerations significantly improvesupon a model of new product performance based solely on thenew product process literature. We conclude with a discussionof managerial implications and directions for future research.

Conceptual model

In our conceptual model, we hypothesize that a firm that ismore market oriented and has greater cross-functionalintegration will be able to deliver better quality marketingeffort, which is related to improved new product performance.These hypotheses are in line with the expectations of theliterature on the new product process, to be elaborated below.However, this literature rarely considers launch timing or leanlaunches, which we believe should also be significantprecursors to improved new product performance. Our fullconceptual model appears in Fig. 1. The following paragraphsexplain and develop each of these relationships more fully.

Market orientation

Market orientation can be defined as the organization-widegeneration and dissemination of market information andintelligence regarding customer needs and wants, andorganizational responsiveness to such information (Jaworskiand Kohli 1993; Kohli and Jaworski 1990; Narver and Slater1990; Narver et al. 2004). In response to critics who note

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that strict adherence to a market orientation might reduceinnovative activity (Berthon et al. 1999; Christensen andBower 1996; Hamel and Prahalad 1994), recent studies havedifferentiated between responsive and proactive marketorientation (Atuahene-Gima et al. 2005; Jaworski et al.2000; Narver et al. 2004). Responsive market orientationrefers to acquisition and use of market information aboutcurrent customers and focuses on meeting current customerneeds (Jaworski et al. 2000), while proactive marketorientation involves exploratory learning on the part of thefirm and is concerned with finding new market opportunitiesand discovering future needs (Atuahene-Gima et al. 2005).Proactive market orientation implies a willingness to observecustomer behavior and to make adjustments based onchanging customer needs (Atuahene-Gima et al. 2005;Jaworski et al. 2000).

Responsive market orientation should result in a goodunderstanding of current customers and their needs, andalso of the marketplace (Baker and Sinkula 1999; Berthonet al. 1999). With a greater understanding of its operationalenvironment, the firm increases absorptive capacity andimproves its competence levels (Atuahene-Gima et al.2005; Cohen and Levinthal 1990), with the result that thefirm can execute higher quality marketing effort and havebetter success at launch (Deshpande et al. 1993; Jaworskiand Kohli 1993; Narver and Slater 1990; Narver et al.2004). Based on this literature, we propose:

H1: Greater responsive marketing orientation is positivelyassociated with higher quality of marketing effort (selling

effort, advertising and promotion, service and technicalsupport, product availability and distribution, pricing andadvertising, and managing channel activities).

Market orientation and lean launch

A “lean” launch refers to a launch strategy in which thefirm makes small commitments of resources, ramps upmanufacturing slowly, and keeps the amount of inventoryduring rollout low (Calantone et al. 2005). Using this policy,the firm remains flexible in terms of its supply chain and isable to respond rapidly to early sales trends. The flexiblesupply chain coordinates sourcing, making, and deliveryoperations such that raw material needs are reduced, and thefirm thereby responds to actual market needs, minimizingdependence on uncertain demand forecasts. A central com-ponent of lean launch is the principle of postponement(Bowersox et al. 1995, 1999). Postponement implies delayingthe finalization of the product form to the last possible pointin time in the product development process, as well as delayingcommitment of inventory to a specific location to the latestpossible point. This policy not only ensures shorter lead timesbut also reduces uncertainty, reduces the need for safety stocks,increases operational flexibility, reduces the risk of error, andlowers total costs faced by the manufacturer (Calantone et al.2005).

A responsive market orientation should help a firm execute alean launch strategy, as its greater understanding of marketplaceneeds allows it to better coordinate market demand with

Quality ofMarketing Effort

Performance

Lean LaunchProactive MarketOrientation

Responsive MarketOrientation

Cross-FunctionalIntegration

Launch Timing

H2

H5

H1

H4

H6

H7

H8

H3

Interactions: H9: Quality of marketin geffort x Launch Timing; H10: Lean Launch x LaunchTiming. The arrows denotesimple path associative relationships as in a multiple equation, non-causal set of regressions. The head of an arrow denotes simple influence from the regressors at the tail of the arrow

Fig. 1 Conceptual Model

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sourcing and delivery operations. Additionally, a firm with aproactive market orientation will have less uncertainty aboutfuture demand and is therefore able to develop more accuratedemand forecasts and continuously adjust future sourcing,manufacturing, and delivery to coordinate more accurately withemerging demand (Deshpande et al. 1993; Jaworski and Kohli1993; Kohli and Jaworski 1990; McKee et al. 1989). Thisincreased ability to forecast accurately will make it easier for ahighly market-oriented firm to efficiently schedule manufac-turing and delivery activities and to postpone product form andproduct inventory commitments as long as possible. Thus itwill be better able to execute a lean launch strategy. Wehypothesize:

H2: Greater responsive marketing orientation is positivelyassociated with a lean launch.

H3: Greater proactive marketing orientation is positivelyassociated with a lean launch.

Cross-functional integration

Cross-functional integration is defined as the level of unityof effort across the functional areas involved in NPD, suchas marketing, R&D, and manufacturing (Song and Parry1997b). Much work over the past fifteen years hasexamined the role of cross-functional integration in NPD(Atuahene-Gima and Evangelista 2000; Dyer 1996; Griffin1992; Gupta et al. 1986; Gupta and Wilemon 1986; Olsonet al. 1995; Sherman et al. 2000; Towner 1994; Troy et al.2008). The use of cross-functional teams in NPD, ingeneral, has a positive impact on the ultimate success ofthe launch (Ayers et al. 1997; Griffin and Hauser 1992,1993; Norton et al. 1994; Ruekert and Walker 1987a,1987b; Song and Parry 1996; Swink 2002). Furthermore,by fully integrating the logistics function into the develop-ment team, the firm can better customize product offerings,reduce the number of material or service suppliers,minimize logistics facilities, or eliminate marginal custom-ers or products, such that the efficiency of marketing effortsis improved (Bowersox et al. 1995). The benefits ofintegration are derived from improved information gather-ing and transmission, more efficient logistics, and ulti-mately higher quality of marketing effort (Ruekert andWalker 1987a, 1987b; Song and Parry 1997a, 1997b). Wehypothesize:

H4: Increased cross-functional integration is positivelyassociated with higher quality of marketing effort(selling effort, advertising and promotion, service andtechnical support, product availability and distribu-tion, pricing and advertising, and managing channelactivities).

Cross-functional integration and lean launch

Lean launch strategy requires certain supply chain com-petences, among which are collaborative relationships withexternal partners, internal operations, and integration ofexternal operations (Bowersox et al. 1999). The firm musthave a framework in place that encourages suppliers,customers, and third-party providers to pursue commonobjectives and align their operations into a single integratedsystem. Greater internal coordination is also required todeliver a lean launch, as synergies across functional areaswithin the firm result in improved ability to meet customerrequirements (Bowersox et al. 1995, 1999). Full integrationof distribution and logistics into new product developmentincreases supply chain flexibility and improves launcheffectiveness and efficiency (Calantone et al. 2005).

Integration of external operations can be defined as thesynchronization of core competencies of supply chainmembers with those of the firm (Calantone et al. 2005).This requires the firm to outsource specialized activitiespreviously conducted internally, develop operational inter-faces between firms to minimize redundancies and dupli-cation, and share information such that processes andprocedures among firms are standardized. All of theseefforts are conducted in such a way as to best meetcustomer requirements (Bowersox et al. 1999; Calantone etal. 2005). We hypothesize:

H5: Increased cross-functional integration is positivelyassociated with correct execution of a lean launchstrategy.

Antecedents to performance

There exists a well-established literature on the importanceof properly carrying out the various marketing effortsrelated to NPD (Calantone and Di Benedetto 1988; Cooper1983; Cooper and Kleinschmidt 1987; Maidique and Zirger1984; Song and Parry 1997a; Szymanski et al. 2007; Troyet al. 2008). High quality marketing effort (such asselecting customers for product use testing, conductingtest marketing, training the sales force, and developingand testing the advertising) increases a product’s com-petitive advantage as viewed by the customer, ultimatelyincreasing the level of success attained by the product(Calantone and Di Benedetto 1988; Cooper 1979, 1983;Cooper and Kleinschmidt 1987, 1990; Maidique and Zirger1984; Song and Parry 1994, 1996, 1997a; Szymanski et al.2007). We hypothesize:

H6: Increased quality of marketing effort is positivelyassociated with increased performance.

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The launch stage is often the most expensive stage inproduct development by far (Langerak et al. 2004; Urban andHauser 1993). High quality marketing effort provides the firmwith a better understanding of the marketing efforts requiredat the time of launch as well as target customers’ responses toprice levels, resulting in better tactical launch decisions suchas improved timing (Calantone and Di Benedetto 1988, 2007;Hultink and Robben 1999; Langerak et al. 2004). Theproduct development literature shows that effective executionof launch activities is related to superior market performance(Calantone and Di Benedetto 2007; Cooper 1979; Cooperand Kleinschmidt 1990; Guiltinan 1999; Parry and Song1994). While few studies have focused specifically on launchtiming, the literature on product pioneering suggests thatdelaying the launch results in lower market shares in the longterm (Karakaya and Stahl 1989; Kerin et al. 1992; Lambkin1988; Robinson 1988; Robinson and Chiang 2002; Robinsonand Fornell 1985; Song et al. 1999; Tellis and Golder 1996).There is also anecdotal evidence that firms that a delayedlaunch can cause a firm to be beaten to market by competitors(Crawford and Di Benedetto 2008). The idea that an“optimal” time to launch exists, and that there are risks inlaunching either too early or too late, is related to the strategicmanagement notion of the strategic window, or the optimalpoint at which to capitalize on a market opportunity (Abell1978). In sum, we hypothesize:

H7: If the launch timing is selected with regard to theobjectives of customers, distribution partners, and topmanagement, and provides a competitive advantage,it will be positively associated with performance.

Additionally, the supply chain literature suggests thatadopting a lean launch strategy increases new productperformance. Lean launch strategies are related to acceleratedtime to market, reduced lead times, and better adaptation ofcustomer needs. Product features and benefits can be muchmore easily and efficiently matched to customer requirements,the number of manufacturing change orders is minimized,distribution costs are reduced, and total costs faced by themanufacturer are ultimately lowered (Calantone et al. 2005).We hypothesize:

H8: Better execution of a lean launch strategy (low inventorylaunch, use of work-in-process inventories, minimizingchannel inventories, using flexible manufacturing tech-niques, etc.) is positively associated with performance.

Moderating effects of launch timing

The first eight hypotheses test the main effects of theconceptual model. The last two hypotheses test the

moderating effect of launch timing on marketing and leanlaunch activities, as we expect that getting the timing rightshould improve the effectiveness of these activities, otherthings equal.

In addition to the direct effect of launch timing onperformance discussed earlier, we hypothesize that launchtiming will moderate the effectiveness of quality of marketingeffort on performance. Although the literature has notspecifically addressed launch timing, poor execution ofproduct launch activities has been related to marketplacefailure, even in cases where other stages in the productdevelopment process are carried out well (Montoya-Weissand Calantone 1994). Launch timing is, in fact, increasinglyimportant as rapid changes in technology, as well as growingglobal competition, have caused the windows of opportunityto narrow in many industries (Ofek and Sarvary 2003). Theliterature suggests that marketing programs such as advertis-ing, distribution, or pricing can be well planned and executed,but if the launch is delayed, a marketplace opportunity maybe missed altogether, or the launch would be too late for theproduct to meet its performance potential. Conversely, if theproduct is launched too early, key information may belacking; for example, the firm may be entering the marketwith an inappropriate technology. Such information may onlybecome available if the firm delays the launch and takesadvantage of the opportunity to learn about the market as itevolves. Thus, while there is a tradeoff in delaying thelaunch, the firm may be in a better position to plan marketingprograms that are appropriately designed and sufficientlyfunded. Thus we expect that the positive effect of a highquality marketing effort on performance is increased if thefirm times the market launch correctly, and is compromised ifthe timing is faulty. We hypothesize:

H9: Correct launch timing positively moderates the positiveeffect of quality of marketing effort on productperformance.

Furthermore, the benefits of lean launch may be mostevident if coupled with appropriate launch timing. In orderto improve the chances of marketplace success, manage-ment must assess the likely value of the new product tocustomers and make efforts to work closely with customerssuch that the product will be launched at the mostappropriate time (Lynn and Reilly 2002; O’Connor andVeryzer 2001; O’Connor et al. 2004). Lean launchstrategies are related to accelerated time to market andreduced lead times (Calantone et al. 2005). Therefore, if thelaunch is delayed, the potential benefits of speeding up theNPD process are not realized; furthermore, unwanted levelsof excessive inventory may accumulate. If the launch isexecuted without sufficient time to coordinate the variousmembers of the distribution channel, there will be shortfalls

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in supply or distribution, leading to frustration in thechannel and among customers. To fully benefit from thelean launch, the timing must meet market requirements, andnot be either too late or too early. We hypothesize:

H10: Correct launch timing positively moderates thepositive effect of a lean launch strategy on productperformance.

Methodology and data collection

A retrospective methodology was employed in this study,as has been successfully done in several previous studies ofNPD and product launch (Calantone and Di Benedetto1988; Calantone et al. 1996; Cooper 1979, 1983; Cooperand Kleinschmidt 1987). A mail survey instrument wasdeveloped for data collection, based on the NPD literature.Respondents were requested to select one of their com-pany’s most recent new product launches (i.e., launched nomore than five years ago) that was “characteristic” of theirfirm at the time of launch and for which they would be ableto provide detailed information. Each of these wasmeasured on 0 to 10 Likert-type scales. The samplingframe used was U.S.-based product managers derived fromthe Product Development & Management Associationmember database.

The following sections detail the instrument develop-ment process and data collection.

Instrument development and validation process

To ensure that we had a survey instrument that providedvalid, reliable measures of the constructs under study(Churchill 1979), we used a two-step process to developthe instrument. This was particularly important since scalespreviously validated in other studies were not available forsome of the constructs (for example, timing of launch).

In the first step, we identified relevant scales from themarketing and related literature wherever possible to buildan initial pool of scale items. We grouped scale itemsderived in this way into constructs. To the initial pool, weadded new items wherever it was felt that the domain of theconstruct had not been sufficiently covered by the identifieditems (Mintu et al. 1994). For example, few itemspertaining to launch timing were available, so new itemswere added.

In the second step, we assessed the construct validity ofthe scales being developed and corrected ambiguous orconfusing scale items by pretesting the questionnaire. Thepretest sample included 50 individuals, who were allpracticing managers participating either in a universityexecutive training program or in an evening MBA program.

Participants were asked to fill out the questionnaire, andthen in the debriefing they were asked if they felt all thequestions were clear and the scale items represented thedesired constructs adequately and captured the appropriate“shades of meaning.” Only minor corrections and adjust-ments needed to be made to the questionnaire based on thefeedback from the pretest. The Appendix provides a list ofthe final measurement items and the response formatemployed in the questionnaire, and also indicates whichscales were developed for the purposes of this study.

Construct measures

Reactive market orientation was measured using a multi-item scale developed by Narver and Slater (1990) and alsoused by Song and Parry (1997a). This scale includes a setof questions about the extent of meetings (within thedepartment and with other departments) regarding customerneeds, the number of customer meetings, and the dissem-ination of customer satisfaction information.

Proactive market orientation was also measured using amulti-item scale adapted from Narver and Slater (1990).This scale measures the extent to which the firm reviewsproduct development effort to make sure they are in linewith customer needs, takes immediate corrective action toimprove product quality or to modify according to changesin customer need, and periodically reviews its NPD effortsto ensure they are in line with customer wants.

Cross-functional integration A scale to assess cross-functional integration originally developed by Bowersoxet al. (1995) was used. This scale assessed the involvementof cross-functional teams in strategic decisions concerningmanufacturing, distribution, or logistics, and the presenceof liaison personnel and/or task forces to facilitate interde-partmental collaboration and coordinate the efforts ofdifferent departments.

Quality of marketing effort A multi-item scale drawn fromCooper (1979) and Cooper and Kleinschmidt (1987)measured the quality of various marketing efforts, such assales force hiring and training, advertising development andexecution, promotional activities such as discounts andtrade shows, price setting, distribution effectiveness anddistribution channel activities, as well as product availabil-ity and service and technical support.

Lean launch A new lean launch scale drawn from therelevant literature (Bowersox et al. 1995, 1999) wasdeveloped and pretested in this study. The scale waspretested on a sample of about two dozen students inexecutive MBA programs for clarity. This new scaleincluded seven scale items, which assessed whether

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logistics operations were well integrated with marketingand manufacturing, and whether costs and inventories werekept low as a result, whether the firm used quick responseor efficient customer response (QR or ECR) programs orflexible manufacturing techniques, and whether theseefforts resulted in fewer required design revisions.

Launch timing A new launch timing scale was also newlydeveloped in this study and based in the relevant literature.The appropriateness of the timing decision was measuredwith respect to the competition, major customers, topmanagement, and the distribution channel. The scale alsoassessed whether the timing of the launch helped the firmachieve a competitive advantage and whether rapid deploy-ment into the distribution channel was reached.

Performance Recent literature has suggested that a unidi-mensional performance scale is an oversimplification(Griffin and Page 1993; Hultink and Robben 1995). Threescale items were borrowed from the work of Cooper andKleinschmidt (1987). Each of these was measured on aLikert-type scale of −5 to + 5 (scale items appear inAppendix). On these scales, performance was assessed asthe level of sales success achieved by the new product withrespect to other new product launches, competing productlaunches, and business unit objectives for this launch. Twoobjective measures of performance were also obtained fromexternal sources: return on assets and return on investment(ROA and ROI).

Data collection

The survey was mailed to a list of corporate managerswhose principal responsibility was new product commer-cialization. This sampling frame was chosen because theseindividuals were felt to be representative of the mostknowledgeable managers active in new product manage-ment and launch. A follow-up call and second mailing wereused to boost response rates. A key informant method,commonly used in NPD research, was used for datacollection (Calantone et al. 1996; Cooper and Kleinschmidt1987; Song and Parry 1997a, 1997b). All respondents wereexperienced practicing managers in new product manage-ment and were the most knowledgeable source of informa-tion on the product’s launch and commercialization(Phillips 1981). The sample included practitioners fromfirms producing consumer goods as well as business-to-business goods and services. A total of 1005 questionnaireswere sent, of which 183 usable questionnaires werereturned; this represents a response rate of 18.2%.

Most respondents held manager, assistant manager, ordirector positions. About 6% of the respondents held

planning, corporate planning, or strategic planning posi-tions within their firms; the remainder of the sample wasroughly evenly split across technology, marketing, newproduct development, and other management. These demo-graphics (by functional area and job title/level) are veryrepresentative of the overall sampling frame characteristics.Additionally, for evidence of reliability, the sample wassplit into halves (early and late respondents), and, with onlyone exception, no significant differences were foundbetween halves of the sample obtained on any of the scaleitems. The two halves were not different in terms of any ofthe performance measures used. We therefore concluded thatthe earlier and later respondents are not significantly differentfrom each other in any way that would bias our results. Thisfinding can also be used to infer a non-threatening level ofnon-response.

The sample included 82 business-to-business manufac-turers, 42 business-to-consumer manufacturers, 45 serviceproviders, and 7 materials producers, for a total of 183respondents. The firms ranged in size from 11 to 30,000employees, with an average of about 1,317 employees. Ofthe 183 products reported on by the respondents, only 3were classified as “totally new to the world.” Twenty-eightwere classified as new to the world but sold to existingmarkets; 52 were new to the firm but sold to existingmarkets; 38 were new product lines to the firm but sold toexisting markets; 23 were new items added to an existingline; 3 were significant modifications to an existingproduct; and 8 were minor modifications.

Results

We first carried out a confirmatory factor analysis (CFA)using EQS 6.1B to test for convergent and discriminantvalidity, resulting in a CFI = 0.931; Bollen’s Fit Index =0.932; SRMR = 0.058; RMSEA = 0.068 and 90%confidence interval of RMSEA = (0.060, 0.076). This wasjudged to be a satisfactory nomological net to proceed and afull model was fit with PLS using the SmartPLS2 code(Ringle et al. 2005).

In studies using informants who know the value of theoutcome and also inform the researchers about theantecedent variables, one must check that biases in thedataset do not arise from the single informant, the use of asingle instrument, or some other combination of internaland external threats to measurement and subsequentinference. In studies of this type, the greatest practicaldanger is the common method bias, where the measurementerrors of the independent manifest variables (exogenouslatent constructs) are correlated significantly with those ofthe dependent variables (the endogenous latent constructs).We performed several tests for such bias and in every case

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no significant bias was found. First we did a CFA-basedversion of the so-called Harmon’s single factor test, whichis actually an observation rather than a test when done withan EFA; we used our CFA to show that the difference chi-squared measure was very significant when the ordinaryhypothesized value was compared to the single factorvalue.1 Next we checked for significant correlations in off-diagonal elements of the theta-delta matrix within the XYpartition, to determine if there were significant correlationsbetween measurement errors of exogenous manifest varia-bles and endogenous manifest variables.2 None obtainedsignificance; thus we proceeded with the analysis of the fullmodel.

The full path model, showing all manifest variables andlatent constructs, is shown in Fig. 2. Our analytical resultsfrom the path model are summarized in Table 1.

As indicated in Table 1, most of the hypothesized maineffects were found to be significant at the 0.05 level, aswell as one of the two hypothesized interaction effects.First, strong support was found for the hypotheses relatedto market orientation (H1-H3) and cross-functional inte-gration (H4-H5). As expected, responsive market orienta-tion was significantly correlated with improved quality ofmarketing effort (H1 supported, standardized coefficient =0.417; all reported significances at 0.05), and bothresponsive and proactive orientation were significantlycorrelated with leaner launch execution (H2 and H3supported; std. coeff. = 0.200 and 0.141 respectively).We also found that cross-functional integration wassignificantly correlated with improved quality of market-ing effort and with leaner launch execution (H4 and H5supported; std. coeff. = 0.330 and 0.176).

The last five hypotheses test the significance ofprecursors to performance. Quality of marketing effortwas related to improved performance (H6 supported; std.coeff. = 0.352). Launch timing was not found to have asignificant main effect on performance (H7 not sup-ported; std. coeff. = −0.075, not significant), but leanerlaunch did have a significant effect on performance (H8supported; std. coeff. = 0.328). Finally, we tested for twomoderating effects of launch timing. We found thatlaunch timing did not significantly moderate the qualityof marketing effort-performance relationship, but it didsignificantly moderate the relationship between leanlaunch and performance (H9 not supported; std.

coeff.=.069, n.s.; and H10 supported; std. coeff. =0.317, significant).

Discussion

In this manuscript, we have sought to assess the impact oflean launch execution and launch timing on new productperformance. In sum, though some of our hypothesesconcerning the importance of launch timing were notsupported, we found support for most of the hypothesizedrelationships in the model and also found evidence of asignificant moderating effect of launch timing on leanlaunch. We believe our findings suggest the importance ofgood launch timing and should encourage more research onthis topic.

We began with an exploratory model that is developedfrom current NPD literature and expanded it to includeadditional constructs related to launch timing and leanlaunch policy. Consistent with the NPD literature, we findthat the firm must be market oriented in order to carry outthe marketing efforts at the required level of quality.

Most of the hypotheses related to lean launch or launchtiming were supported, suggesting that new productsprocess models typically seen in the literature, which de-emphasize these strategic components, can be improved bytheir inclusion. First, we note that quality of marketingeffort and lean launch both have significant, positive effectson new product performance. A surprising finding was thatlean launch was not related directly to improved newproduct performance, though an interaction effect wasfound (these findings will be discussed below).

We also found that cross-functional integration hadsignificant effects in this model. Both cross-functionalintegration and responsive market orientation were posi-tively correlated with better quality of marketing effort andalso with leaner launch execution. Therefore, both marketorientation and cross-functional integration are relatedindirectly to improved product performance through twodistinct paths. All of these relationships are consistent withhypotheses of our model.

The most surprising results concerned the effects oflaunch timing. Launch timing was not directly related toimproved new product performance. This is contrary toexpectations from the innovation literature, which suggeststhat launch delays weaken a firm’s competitive position andmarket share (Kerin et al. 1992; Song et al. 1999).Nevertheless, launch timing did have a significant, positiveinteraction effect with lean launch; other things equal, afirm executing a lean launch will improve its performanceif it can get the launch timing right. Surprisingly, a similarinteraction between launch timing and quality of marketingeffort was not significant. That is, if launch timing is faulty,

1 This evidence, while correct, is trivial since the original nomologicalnet would never obtain if the alternate condition existed.2 The presence of a significant mediation effect would excludecommon method bias on logical grounds, and the presence of severalin our model provides that evidence. The usual requirement thatcontingency effects be due to exogenous causes is mildly supported bythe use of product innovativeness type; this also provides some logicalexclusion of common method bias.

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the benefits obtained from lean launch execution (e.g.,reduced costs and time of production) are compromisedmore than the benefits obtained from the marketing efforts(e.g., better promotion, distribution, and pricing decisions).

One possible explanation of the significant interactionbetween lean launch and launch timing is that leanlaunch allows the firm to speed up the developmentprocess, giving it the potential to launch more quickly if itchooses to do so. The firm may decide not to exploit thisoption. A well-timed launch means that consideration is

given to many parties (timing should be appropriate withrespect to competition, customers, distribution channel,and business unit goals) and that many components of thelaunch are coordinated (service policies and training, tradepromotions, readiness of the channel). Therefore, theoptimum launch time, given all of these considerations,may not be the earliest possible time. Lean launch,however, would allow the firm to launch sooner ifcircumstances required it. One could also questionwhether respondents could accurately answer questions

Scale item numbering corresponds to the scale items in Appendix (e.g., XFUNC1 = first scale item in Cross-Functional scale, etc.)

Fig. 2 Full Model Results (Coefficients shown, significance levels reported in Table 1)

HYPOTHESIS STD. COEFF. (SIG.)

H1: Responsive Market Orientation → Quality of Marketing Effort 0.417 (6.549) a

H2: Responsive Market Orientation → Lean Launch 0.200 (3.015) a

H3: Proactive Market Orientation → Lean Launch 0.141 (2.249) a

H4: Cross-Functional Integration → Quality of Marketing Effort 0.330 (5.388) a

H5: Cross-Functional Integration → Lean Launch 0.176 (2.176) a

H6: Quality of Marketing Effort → Performance 0.352 (3.305) a

H7: Launch Timing → Performance -0.075 (0.903) n.s.

H8: Lean Launch → Performance 0.328 (1.674) a

H9: Launch Timing x Quality of Marketing Effort → Performance 0.069 (0.522) n.s.

H10: Launch Timing x Lean Launch → Performance 0.317 (1.693) a

Table 1 Hypothesis testingresults from full modelanalysis

a = significant at 0.05 level, n.s.not significant.

Adjusted R squared scored forthe three dependent variables inthe PLS model: Lean LaunchR2 =.173; Quality of MarketingEffort R2 =.393; PerformanceR2 =.742.

(Also see Fig. 2 for the full pathmodel.)

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regarding the appropriateness of their timing decision,given the many factors that need to be considered whenassessing the “goodness” of a timing decision. That is,some items such as “quality of marketing effort” might bemore easily answered by the respondents. This is apossible limitation that suggests additional research intolaunch timing. While more research is clearly requiredhere, our results suggest the importance of more fullyconsidering the timing issue and its effect on performance.

A limitation of this research is our inability to rule outsome possible spurious results. We have not attempted tobuild a model incorporating all possible explanatoryvariables; rather, we focused on marketing effectivenessand launch-related variables such as lean launch and launchtiming and on their impacts on new product performance. Itwas encouraging to find that quality of marketing effort, cross-functional integration, and market orientation all positivelyaffected the new product’s performance, either directly orindirectly. While we did take care to validate all of thesescales, and we believe we used the most appropriate and well-accepted scales for all of these constructs, there is still thepossibility that an underlying construct (such as superiormarketing skills) might affect each of these. That is, it isimpossible for us to rule out the possibility of an underlyingconstruct accounting for variation in product performance.Wesuggest that further research into launch effectiveness couldattempt to disentangle the effects of these or other possibleexplanatory variables. An additional further extension couldinvestigate the performance consequences of launching tooearly versus too fast. Our measure of correctness of launch didnot distinguish between these two extremes (i.e., we measuredonly whether the launch was correctly timed or not). Futureresearch can determine if the risk of launching too early isgreater than the risk of launching too late, as a risk-averse firmwould choose to err on the side that poses the lesser amount ofperceived risk

A useful direction for future studies would be togather data in other business environments. It would beinteresting to determine the generalizability of this modelin a market like China, marked by centralized planning, agrowing base of entrepreneurial small- to medium-sizedenterprises, and less traditional media advertising. Wemight hypothesize that, in this environment, lean launchand launch timing effects are more significant thanquality of marketing effort.

In summary, our model provides insights into the rolesof lean launch execution and launch timing on new productsuccess. Many managers are integrating logistics withmarketing, manufacturing, and production in order to gainmanufacturing flexibility and improve efficiency. They alsoare increasingly using the time to revenue realization (cash-to-cash) as an important success metric. Our study suggeststhat proper attention to marketing effort and cross-

functional integration are important precursors to newproduct performance, yet execution of a lean launch andmaking excellent launch timing decisions cannot beneglected.

Appendix

Scale items used in this study

Note: The scale used was 0 = strongly disagree; 10 =strongly agree.

Coefficients and lambdas appear in Fig. 2.

Responsive Market Orientation (Source: Narver and Slater1990)Please indicate your degree of agreement or disagreementwith each statement.

When developing this new product,…our marketing people met with customers frequently tofind out what products or services they needed.

…we had frequent interdepartmental meetings to discussmarket trends and developments.

…marketing personnel in our business unit spent timediscussing customers’ future needs with other functionaldepartments.

…data on customer satisfaction were disseminated at alllevels in this business unit frequently.

Proactive Market Orientation (Source: Narver and Slater1990)

Please indicate your degree of agreement or disagreementwith each statement.

When developing this new product,…we periodically reviewed our product developmentefforts to ensure that they were in line with whatcustomers want.

…if a major competitor had launched an intensivecampaign targeted at our customers, we would haveimplemented a response immediately.

…if we found that customers were unhappy with thequality of our service, we would have taken correctiveaction immediately.

…if we found that customers would like us to modify aproduct or service, the departments involved would havemade concerted efforts to do so.

…several of our departments generated competitive intel-ligence independently.

…we periodically reviewed the likely effect of changes inour business environment (e.g., regulation) on customers.

Cross Functional Integration (Source: Bowersox et al.1995)

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In assuring the compatibility among decisions made in onearea (e.g., logistics) with those in other areas (e.g.,marketing/sales), certain integrative mechanisms may ormay not be used. Please indicate the extent to which thefollowing are used in your selected product launch.

For the selected product launch,…interdepartmental committees were set up to allowdepartments to engage in joint decision-making.

…task forces or temporary groups were set up to facilitateinterdepartmental collaboration.

…liaison personnel existed whose specific job it was tocoordinate the efforts of several departments.

…cross-functional teams made decisions concerningmanufacturing strategy.

…cross-functional teams made decisions concerning distri-bution or logistics strategy.

…cross-functional teams made decisions concerning mar-keting or sales strategy.

Quality of Marketing Effort (Source: Cooper 1979; Cooperand Kleinschmidt 1987)

Please indicate how well your business undertook each ofthese activities, relative to how well you think it shouldhave been done. (0 = very poor; 10 = excellent)

Selling effort (e.g., the right people, properly trained,etc.).Advertising.Promotion (e.g., discounts, trade shows, events).Service and technical support for the customer (e.g., rightpeople, qualified, responsive).

Product availability: sufficient inventory available.Product distribution: on-time delivery, quick response.Pricing: appropriateness of pricing level(s).Executing the advertising strategy for this product (e.g.,good copy placement, adequate number of insertions).

Managing distribution channel activities for this product.

Lean LaunchPlease indicate your degree of agreement or disagreementwith each statement below.

The product launch is considered a “lean” or “lowinventory” launch. (A “lean launch” is one wherecontinuous, real-time market feedback and/or quick-response stock replenishment is used to keep resellerinventories and costs very low.)

Our sales forecasts were really helpful in calibrating plantsize.

Our sales forecasts helped keep manpower and trainingcosts reasonable.

Work-in-process inventories were well-controlled.QR (Quick Response) or ECR (Efficient Customer Response)programs were in force.

Channel inventories were kept to a minimum.

Flexible manufacturing techniques were used on this project.

Launch TimingPlease comment on the relative timing of the product’slaunch.

We achieved rapid deployment of our product into thedistribution channel.

Relative to our direct competition, the timing of our launchwas perfect.

From the point of view of our major customers, the timingof our launch was excellent.

The timing of our launch helped us achieve a competitiveadvantage.

The product was launched at the appropriate time.Top management believed the timing of our market entrywas excellent.

From the distribution channel’s point of view, the productwas launched at the right time.

New Product Performance (Source: Cooper andKleinschmidt 1987; plus two externally-obtained itemsadded)

New product performance can be measured in a number ofways. Please indicate, from what you know today, howsuccessful this market entry was or has been, using thefollowing scale: --5 = far less; +5 = far exceeded.

Relative to your business unit’s other new product launches,how successful was this market entry in terms of sales?

Relative to competing product launches, how successfulwas this market entry in terms of sales?

Relative to your business unit's objectives for this productlaunch, how successful was this market entry in terms ofsales?

Plus:ROA (obtained from external sources)ROI (obtained from external sources)

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