Management of new product development in smallelectronics firms
A. Ledwith The Department of Management & Marketing and Small Firms Research Unit,University of Limerick, Ireland
New product development,Small firms, Electronics industry,Ireland
The management of new productdevelopment in large firms has been studiedin great depth. Much has been publishedrelating to how new product development ismanaged, and in particular to managementpractices that have been found to bedeterminants of new product success.Montoya-Weiss and Calantone (1994) providea very comprehensive review of the researchinto NPD to date and conclude that it lackedfocus and direction. A wide variety of methodologies and study types have beenused. This makes it difficult to directlycompare the results of different studies.However, in their meta-analysis they definevariables in four categories that have beenidentified as determinants of new productperformance. These have been slightlymodified for the purpose of this study and aresummarised in Table I. A discussion of eachcategory of factors follows.
This paper reports on the findingsof a study of the development of 63 new products in 36 electronicsfirms in Ireland. The firms range insize from fewer than ten to over1,000 employees. They all operatein the electronics sector, develop-ing and manufacturing a variety of products from completely inte-grated systems to discrete com-ponents. A series of questionnaires and interviews wasused to collect historical life cycledata of new products. The resultspresented in this paper focus onthe management of the productdevelopment process. The rela-tionship between the developmentprocess and new product successor failure is examined. The differ-ences between the managementof product development in smalland large firms are also explored.Small firms report a new productsuccess rate comparable to thatof larger firms, suggesting that thefactors that are linked to thesuccess of new products may berelated to firm size.
Received August 1999Revised January 2000
Journal of European Industrial Training24/2/3/4 [
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The management of internal and externalrelations in new product development is onearea where there is a marked differencebetween the existing literature on small andlarge firms. Most of what is published aboutlarge firms deals with internal relations. It isargued that integration between differentfunctional departments will achieve betterresults both in the characteristics of theproducts developed and the time taken todevelop them (Shrivastava and Souder, 1987;Wheelwright and Clark, 1992; Towner, 1994).In contrast, literature dealing with smallfirms focuses on external relations,addressing issues such as industrial services,subcontracting relationships, licensing,networking, collaborative R&D (Rothwelland Dodgson, 1991; Hoffman et al., 1998;
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MacPherson, 1997). This difference inemphasis makes some sense ± large firmstend to be able to resource all their technicalrequirements internally and thus therelationships that must be managed areinternal. Small firms, however, often need tolook outside their organisational boundariesfor services and, therefore, must developskills in managing external relationships.Organisational factors, including theexistence and characteristics of projectteams, the level of top managementinvolvement, the nature of leadership of NPDprojects, have been examined extensively inlarge firms. Cross-functional ormultidisciplinary teams with strongleadership and a high level of ownership andaccountability are generally recommendedas good organisational design for newproduct development projects (Cooper, 1999;Page, 1993; Wheelwright and Clark, 1992). Butmany of the above factors are not relevantwhen examining determinants of success insmall firms, simply because they existinherently in almost all small firms andusually to a much greater degree than inlarge firms.
Development process factors
The new product development process hasbeen studied in great detail and manyprocess related factors are identified in theliterature as determinants of NPD success. Technical and marketing proficiency are keyfactors in product success (Cooper andKleinschmidt, 1987). Controllable variables,rather than environmental variables, havebeen found to determine the outcome of product development projects (Cooper, 1990). The most important technical and marketingactivities include prototype testing withcustomers, test marketing, market launch,product development and production start-up. In general, most of the literature that
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