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Planning and uncertainty in new product development

Christoph Stockstrom and Cornelius Herstatt


Institute for Technology and Innovation Management, Hamburg University of Technology, Schwarzenbergstrae 95, 21073 Hamburg, Germany. stockstrom@tu-harburg.de; c.herstatt@ tu-harburg.de

The domain of New Product Development (NPD) is subject to considerable uncertainties. Aside from market-related sources of uncertainty, the degree of innovativeness of the underlying product concept is a signicant source of uncertainty, as unclear goals and specications like, e.g. product specications may lead to substantial delays in the project. However, companies are required to manage the innovation process as efciently as possible. The resulting conicting demands often leave companies struggling to achieve both efciency as well as exibility due to their often opposing implications for organizing and managing NPD projects. In this context, planning plays a central role; however, its usefulness for NPD project success is perceived quite differently. While there are reports about a positive inuence of initial planning on various success measures, others have questioned the effectiveness of elaborated initial planning and contend that the ability to rapidly react to changes later in the process and to improvise may lead to success in NPD. This study aims at achieving a better understanding of planning in NPD by investigating a sample of 475 Research & Development projects in Japanese electrical and mechanical engineering companies. Regression analysis is used to shed more light on the interplay of planning intensity, changes, and the degree of technological newness of the NPD project and their inuence on project success. Our results indicate planning to be of value for different types of innovation projects. Furthermore, the inuences of the variables in question vary with the success measures that are taken into account, indicating that a more detailed and contingent understanding of planning in NPD needs to be developed.

1. Introduction

roducts are the primary means by which companies achieve their objectives (Inwood and Hammond, 1993). As a result, New Product Development (NPD) is understood as one of the most important tasks in business. Research by Cooper shows that companies in many different industries draw almost one-third of their revenues from new products, which have been introduced in the market during the last 5 years. In especially dynamic industries, even 100% of revenues may stem from new products (Cooper, 2001).

Despite the importance ofNPD, failure rates remain high (see, e.g. Robertson, 1971; Booz et al., 1982; Grifn, 1997). For example, the study by Booz-Allen and Hamilton showed that only one of four projects that enter the development state becomes a commercial success (Booz et al., 1982). Therefore, researchers as well as practitioners are still trying to nd ways to enhance the success of NPD. The fuzzy front end or pre-development phase is indicated as being one of the greatest opportunities to do so. Why should that be? Firstly, several large-scale studies highlight the importance of the fuzzy front end (e.g. Booz et al.,

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Planning and uncertainty in NPD 1982; Dwyer and Mellor, 1991; Cooper and Kleinschmidt, 1994). Cooper and Kleinschmidt (1994) found that the greatest differences between winners and losers were found in the quality of pre-development activities. Secondly, the fuzzy front end strongly determines which products will be developed in a rm (Zhang and Doll, 2001; Kim and Wilemon, 2002). Thirdly, quality, costs, and time scales are dened to a large extent here (Burgel and Zeller, 1997). The front end has the greatest potential for improvement with the least possible effort (Souder and Moenaert, 1992; Moore and Pessemier, 1993; Cleland, 1999). In addition, unclear goals and specications like product specications may lead to substantial delays (Verganti, 1997; Khurana and Rosenthal, 1998; Kim and Wilemon, 2002). A large-scale German study (Bullinger, 1990) reports that one-third of the total development effort is caused by unnecessary changes. And last but not least, the fuzzy front end is one of the least well-known areas in innovation management (Nobelius and Trygg, 2002). Front-end activities include idea generation, idea assessment, the reduction of market and technological uncertainty, and project planning. Cooper, too, divides the fuzzy front end into four phases from idea generation, initial screening, and preliminary evaluation to concept evaluation and stresses the importance of both market-related and technical activities (Cooper, 1988). Khurana and Rosenthal (1998) dene the front end to include product strategy formulation and communication, opportunity identication and assessment, idea generation, product denition, project planning, and executive reviews. In contrast to them, we focus on project-related activities and exclude strategic aspects from our study. From our point of view, during the product development process information is gathered to reduce uncertainty, whereby uncertainty is dened as the difference between the amount of information required to perform a particular task and the amount of information already possessed by the organization (Galbraith, 1973). We assume that the more the uncertainty about the market and technology is reduced during the front end, the lower the deviations from front-end specications during the following project execution phase and the higher the product development success. This uncertainty reduction point of view is shared by several authors (e.g. Moriaty and Kosnik, 1989; Moenaert et al., 1995; Mullins and Sutherland, 1998).
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Although there are organizations that succeed in balancing efciency and innovation in this environment of uncertainty, by their very nature, tension exists between these processes and emphasis on one may mean harming the other as they often carry opposing implications for organizing and managing NPD projects (Naveh, 2005). This is supported by Brown and Eisenhardt (1997), who argue that the management practices and paradigms that lead to innovation and efciency are different and generally contradictory (Brown and Eisenhardt, 1997). As Naveh (2005) puts it: Efciency demands standardization, control, and conformity to rules and procedures; innovation requires exibility, breaking from existing paradigms, autonomy, risk taking, and tolerance for mistakes in the pursuit of new and prospective knowledge. In this context, planning plays a central role (Verganti, 1999). In line with the above discussion, the benet of extensive initial planning is perceived quite differently: while Moorman and Miner (1998) for example report a positive inuence of initial planning on various success measures, others have questioned the effectiveness of elaborated initial planning and contend that the ability to rapidly react to changes later in the process and to improvise may lead to success in NPD (see e.g. Eisenhardt and Tabrizi, 1995; Moorman and Miner, 1998; Miner et al., 2001). Aside from the aforementioned dispute regarding planning in NPD, most existing studies do not look in any greater detail into the various aspects related to planning and present them collectively under one heading. In addition, while there is extensive literature on innovation and efciency as individual constructs, the literature does not offer a solid theory on the relationship between the two, particularly in the context of NPD (Naveh, 2005). Consequently, there is a call for research into what exactly constitutes good planning (Thieme et al., 2003). This study aims at achieving a better understanding of planning in NPD by investigating a sample of some 497 Research & Development (R&D) projects in Japanese electrical and mechanical engineering companies.

2. Project planning and its impact on project success 2.1. Measuring project success
Success in NPD is a complex construct as it is a composite of various subjective and objective
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Christoph Stockstrom and Cornelius Herstatt measures (Balachandra and Friar, 1997). The difculties of measuring success have driven project managers to use simple criteria such as achieving target budget, scheduled, goal and acceptable performance, even though these measures are partial and often misleading of the real project success (Dvir and Lechler, 2004). However, success criteria should be comprehensive enough to reect various interests and views, which make a multi-dimensional and a multi-criteria approach (Dvir et al., 2003b). Pinto and Prescott (1990) even suggest that researchers in project management need to rst and most importantly give a comprehensive and clear denition of project success before starting to undertake studies of the project implementation process. It is common to distinguish between internal measures of success, such as meeting budget, schedule, and performance goals, and external measures of success such as the value of the project and client satisfaction (Dvir and Lechler, 2004). Aside from such process-oriented and nancially oriented measures of success, knowledge acquired through the project is another and relatively frequently cited measure of success (Moorman and Miner, 1998; Herstatt et al., 2004). Auditing failed and difcult projects is especially instructive and provides the involved personnel with experience, that may be used in later projects (Verganti, 1999). This dimension is especially relevant for Japanese companies, as knowledge creation is a key to why they have become so successful and can stimulate continuous innovation within companies to achieve competitive advantage (Nonaka and Takeuchi, 1995). However, despite the importance of inter-project learning, many companies do not audit or review their projects. One reason for this is that auditing projects is regarded as extra time and efforts, causing (opportunity) costs. Oftentimes, narrow nancial perspectives held by senior managers prohibit using projects to develop new capabilities (Bowen et al., 1994). One stream of research strongly emphasizes the importance of the early phases of an NPD project as decisions taken at this stage are unlikely to be changed later on and if they are, then often only at considerable cost (Verganti, 1999). The importance of these initial planning activities is documented in a number of studies (Cooper and Kleinschmidt, 1986, 1987a, 1987b; Gupta and Wilemon, 1990; Khurana and Rosenthal, 1998) and it has been shown that advanced planning in NPD projects positively contributes to a number of success factors, such as time, reduction of failure rates, nancial returns, and innovation levels (Moorman and Miner, 1998). However, this orthodox thinking (Dvir and Lechler, 2004) about the benets of project planning has been called into question by several researchers. Bart reports of managers claims that new product R&D projects seldom turn out the way that they were planned originally. He argues that the traditional approach of planning and controlling R&D projects tends to fail mainly because creativitywhich plays an important role in NPDis hampered by too much of formal control. Therefore, trade-offs are necessary and control should be reduced to a minimum necessary level (Bart, 1993). McGinnis and Ackelsberg (1983) follow a similar train of thought by arguing that ambiguity in goals and processes is necessary to foster search and experimentation in order to arrive at better solutions. According to them, too much control will limit the number of options that are considered especially in innovation projects and there is a danger that planning becomes an end in itself, rather than a means of establishing and attaining goals. In addition, Song and Montoya-Weiss (1998) point out the need to better align planning activities to the degree of newness of the innovation. Therefore, a second stream of research more recently questions the effectiveness of elaborated initial planning and contends that the ability to rapidly react to changes later in the process and to improvise may lead to success in NPD (Eisenhardt and Tabrizi, 1995; Ward et al., 1995; Brown and Eisenhardt, 1997; Moorman and Miner, 1998; Miner et al., 2001). Taking this discussion into account, we hypothesize that: Hypothesis 1a: Planning positively contributes to external project success. Hypothesis 1b: Planning positively contributes to internal success.
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2.2. Planning and project success


In NPD, companies often struggle to achieve both efciency as well as exibility due to their often opposing implications for organizing and managing NPD projects. In this context, planning plays a central role. In NPD, one can distinguish between two different perspectives on planning (Verganti, 1999). 482
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2.3. Degree of newness and project success


The NPD process is a process of uncertainty reduction. A common line of argument is that the more market and technological uncertainty are reduced during the fuzzy front end, the less deviations occur during project execution and the higher the probability of success (Moenaert et al., 1995; Mishra et al., 1996; Song and Parry, 1996). According to this rationale, the degree of newness should negatively inuence project success, as radical innovations are associated with higher degrees of uncertainty than incremental innovations. In fact, research into this issue shows mixed results. Even though more innovative product can create more opportunities for the product success by competitive advantage, they mostly come with higher uncertainty and risk (Song and MontoyaWeiss, 1998). Balachandra and Friar (1997) showed that an innovative product has a bigger chance of success in the market. However, at the same time, innovative products fail more easily. Bonner also found that product innovativeness does not have a signicant inuence on the project performance measured by the degree to which the project met its schedule, budget, product performance objective, and the overall level of satisfaction with the teams performance (Bonner et al., 2002). Verworn et al. (2006) show that especially the reduction of technological uncertainty contributes to the efciency and effectiveness of NPD projects. Therefore, a conclusive relationship between innovativeness and commercial success is still not established (Balachandra and Friar, 1997). These observations lead us to hypothesize that: Hypothesis 2a: The degree of technological newness positively inuences external project success. Hypothesis 2b: The degree of technological newness negatively inuences internal success. Hypothesis 2c: The degree of technological newness positively contributes to learning.

fore, an initial plan is very likely to be adapted to the current situation as new information becomes available during the project execution. Dvir and Lechler (2004) show that these changes to the original plan have negative effects, that can more than offset the positive effect that results from high-quality planning. The occurrence of many changes during the project design and implementation stages hinders meeting the project schedule and budget goals. (Dvir et al., 2003a). Learning, on the other hand, seems to result primarily from problematic and failed projects (Verganti, 1999). These often provide the involved personnel with experience, that may be used in later projects (Verganti, 1999). We therefore hypothesize that: Hypothesis 3a: Changes negatively inuence internal project success. Hypothesis 3b: Changes positively contribute to project learning.

2.5. Interaction effects


Of course, the question arises as to whether planning is benecial under all circumstances or whether contingencies exist. Song and Montoya-Weiss (1998) show that it is necessary to better align planning activities and styles with the degree of newness of the underlying product concept. In contrast to incremental innovations, radical ones exhibit a greater need of exibility rather than efciency, as the latter are not only subject to higher uncertainty and risk but are also more expensive and more difcult to plan in detail (Ettlie and Subramaniam, 2004). Hence, management practices that are deemed suitable for incremental innovations may hamper the progress of radical innovations projects considerably (Rice et al., 1998) and it seems questionable whether one best way of managing R&D projects exists. NPD projects do not resemble a series of predictable steps that can be identied and planned from the outset (Bailetti et al., 1994; Shilling and Hill, 1998) as there often is a lack of true understanding about the project-specic tasks, their order, the potential interdependencies among them, and a time frame when beginning an NPD project (Tatikonda and Rosenthal, 2000). In light of the above discussion, we question the benet of extensive planning for radical innovation and suggest that:
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2.4. The effect of changes on project success


As Andersen (1996) points out, a project is a unique endeavor and he argues that initial planning consequently is not feasible as uniqueness implies that it is impossible to know all the necessary activities at such an early stage. Therer 2008 The Authors Journal compilation r 2008 Blackwell Publishing Ltd

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Christoph Stockstrom and Cornelius Herstatt Hypothesis 4a: Extensive planning of radical innovations negatively inuences external project success. Hypothesis 4b: Extensive planning of radical innovations negatively inuences internal project success. As exibility is a prime requirement of radical innovation projects, frequent assessments of the current project status and the plan are necessary to detect deviations and act upon them. This frequent reviewing and questioning of plans has been termed reexivity (Hoegl and Parboteeah, 2006) or consistency (Segars, 1994). Considering the effect of the degree of newness on the benet of planning activities, high degrees of reexivity/ consistency are likely to be associated with an increasing number of changes in the course of the project as new information becomes available. If this is the case, the project team will adapt the product concept to changing or clearer market requirements, that should ceteris paribus (all other things being equal) result in higher sales once the product is in the market. In addition, frequent revisions of the plan are likely to mitigate escalating commitment (Brockner, 1992), i.e. the allocation of resources to and the pursuit of plans that are already outdated. These often arise from taking sunk cost into account when making decisions about the future project course or when people stick to a course of action because they have been following it throughout the project and want to see it through (completion effect) (Keil et al., 1995). This behavior often results in further allocation of resources to the intended course of action, making it difcult to stay on budget and, due to further pursuit of the plan, also on time (Keil et al., 1995). In sum, we therefore hypothesize that: Hypothesis 5a: Changes in radical innovation projects will positively contribute to external success. Hypothesis 5b: Changes in radical innovation projects will positively contribute to internal success. be translated into Japanese, in particular, the interpretation of the questions had to be veried. The purpose of the pilot study and the pre-test was (a) to assess construct validity and further purify the scales whenever necessary and (b) to evaluate and improve the quality of the questionnaire before full implementation of the survey. The results suggested that several scales reported in former studies could be used with minor modications. A few additional items resulting from the interviews were added to the constructs. This study is based on the revised standardized questionnaire, that was sent to 2000 research and development directors of mechanical and electrical engineering companies identied in Japan in 2004/2005. The database from a Japanese industry association was used to identify companies and R&D directors and covers the majority of Japanese companies in both industries (census assumed). Out of the total of 2000 questionnaires, we achieved a response rate of 28%. Of these 555 questionnaires, 475 data sets could be used for analysis. Comparisons of average values did not identify signicant differences between those questionnaires that were returned early and those that were returned later, and so in accordance with Armstrong and Overton (1977), we did not assume a signicant non-response bias. We used seven-point Likerttype scales ranging from 1 strongly disagree to 7 strongly agree and 1 objectives not achieved to 7 objectives exceeded.

3.2. Company and project characteristics


The size of the rms participating in our study ranged from having 570,000 employees and annual sales ranging from 5 billion Yen to 30,000,000 billion Yen. The majority of the sample consists of medium to large companies employing 10010,000 employees and annual sales between 1 billion and 1 trillion Yen for the purpose of this study, interviewees were asked to describe the development of the last product introduced to the market. This denition includes the modication of existing products. However, most of the new products studied here were medium or highly innovative. According to the scheme of Booz et al. (1982), 28% of the products were new to the world, 36% new product lines, and 14% product modications. Only 22% of the products had a rather low degree of newness (either repositioning in the market or cost reduction products). Thus, the NPD projects were
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3. Methods 3.1. Data collection


The factors obtained from the literature and exploratory interviews were veried during a pilot study and a pre-test in Japan. As items had to 484
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Planning and uncertainty in NPD relatively balanced concerning the degree of newness of new product concepts. variables are highly signicant. R2 varies between 0.087 and 0.176, the latter being quite satisfactory considering the narrow focus of factors investigated. VIF ranges from 1.005 to 1.150 indicating that collinearity is not a problem (Kleinbaum et al., 1998). Model 1, the analysis pertaining to external success, supports H1a; however, we do not nd support for H2a, as the coefcient is negative and signicant at the 0.05 level. While not all interaction terms are signicant in our models, it is not a requirement for their interpretation in the context of multiple moderated regression (Bedeian and Mossholder, 1994). We nd support for H4a as the regression coefcient is negative. We also nd support for H5a with a positive and signicant coefcient. Model 2 lends support to our hypothesis H1b as the coefcient is both positive and highly signicant. The model further lends support to H2b (and H3a : both coefcients are negative and signicant at the 0.01 level. In both models, the intensity of planning is the most inuential factor. However, we do not nd support for our hypothesis H4b as the regression coefcient for the product term is positive. In contrast to this, we nd support for H5b with a positive coefcient. The evaluation of the factors inuencing learning, our third model, lends support to our hypotheses H2c and H3b. While the intensity of planning also positively inuences project learning, the changes that occur throughout the course of a project are the most inuential factor in this model.

4. Analysis and results


All constructs with the exception of learning were measured via multiple items (see Table A1). In validating the instrument, we followed the recommendations by Ahire and Devaraj (2001). To assess unidimensionality, Conrmatory Factor Analysis (CFA) was carried out. This led to the elimination of two items for the internal success construct. Cronbachs a was computed to check reliability (see Table 1). The values range from 0.725 to 0.870, a range considered to be highly satisfying, given the fact that two of the constructs comprise only three items (Hair et al., 2006). Convergent validity was assessed using the BentlerBonett coefcient (cf. Bentler and Bonett, 1980). Values range from 0.892 to 1.000, indicating good convergent validity (Ahire and Devaraj, 2001). Discriminant validity was demonstrated by a series of CFAs using AMOS following the approach as outlined by Venkatraman (1989). The respective items were averaged to provide scores for the individual constructs (cf. Klink and Athaide, 2006). The resulting factors were used to calculate three multiple regression models to test our hypotheses. Following the recommendations given by Aiken and West (1991), the predictor variables were standardized before the analysis to avoid multi-collinearity between the predictors and the product term. In addition, the number of employees was considered to control for company size, which has been shown to inuence corporate planning activities (cf. e.g. Grinyer et al., 1986; Yasai-Ardekani and Haug, 1997). As can be seen from Tables 24, all main effects regressions show signicant F-values and, consequently, allow for interpretation. With the exception of changes in Models 1a and 1b, all regression coefcients for the three initial

5. Discussion
Our analyses lend support to nine of the hypotheses described above. In both Models 1 and 2, the intensity of planningan actionable variableis the most inuential factor. The value of intensive project planning is hardly affected by technological newness, as both interaction effects are very small and not signicant. We therefore fail to nd

Table 1. Sample descriptive statistics and correlations (before centering)1 Variable 1. 2. 3. 4. 5.


1

Mean 4.70 3.81 4.62 5.01 4.22

S.D. 1.10 1.48 1.20 1.09 1.13

1 (0.79) 0.33 0.07 0.26*** 0.35***

2 (0.80) 0.32*** 0.78 0.18***

Intensity of Planning Technological Newness Changes External Success Internal Success

(0.76) 0.02 0.19***

(0.87) 0.45***

(0.73)

Cronbachs alpha reported along the diagonal. ***Po0.01; n 475.

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Table 2. Results of the regression analysis External Success Model 1a Main Effects Planning Newness Changes Company Size Interaction Terms Planning Newness Changes Newness R2 Adjusted R2 F 0.248*** 0.082* 0.041 0.110** Model 1b 0.250*** 0.099** 0.059 0.110** 0.006 0.110** 0.098 0.087 8.505***

0.087 0.079 11.139***

***Po0.01; **Po0.05; *Po0.1; n 475; Standardized beta values are reported.

Table 3. Results of the regression analysis Internal Success Model 2a Main Effects Planning Newness Changes Company Size Interaction Terms Planning Newness Changes Newness R2 Adjusted R2 F 0.348*** 0.120*** 0.150*** 0.016 Model 2b 0.348*** 0.128*** 0.140*** 0.017 0.021 0.059 0.176 0.166 16.704***

0.173 0.166 24.522***

***Po0.01; n 475; Standardized beta values are reported.

Table 4. Results of the regression analysis Learning Model 3 Main Effects Planning Newness Changes Company Size R2 Adjusted R2 F 0.113*** 0.143*** 0.284*** 0.108** 0.156 0.149 21.766***

tion for the lack of support for our hypothesis that the degree of technological newness positively inuences external project success (H2a) is that the negative inuence of technological newness on internal successi.e. on reaching milestones, being on budget and within personnel requirementsmay result in a higher cost, thereby reducing potential prots. Budget constraints and running out of resources may also force a company to consider simpler designs than originally intended, with possible negative consequences for competitive advantage, customer satisfaction, and sales. With regard to changes, our ndings are inconsistent. In line with Dvir and Lechler (2004), we nd that they negatively inuence project goals such as staying on time and within budget. However, contrary to them, our research shows a positive effect of changes on market-oriented success measures. While these differences may also stem from measurement and methodological differences, another possible explanation is the nature of the projects investigated. While Dvir and Lechler analyze a broad variety of projects ranging aside from product developmentfrom construction to software and reorganization projects, our sample exclusively consists of NPD projects that may be less prone to negative inuences by changes due to the highly dynamic and uncertain environment they are carried out in. The positive and signicant regression coefcients for the interaction between changes and the degree of newness support our argument in favor of reexivity and the resulting opportunity for timely adaptation of plans. The magnitude of the coefcients highlights the importance of these practices in NPD. Model 3 supports the notion of learning by doing or learning from experience. While both the intensity of planning as well as the degree of technological newness contribute to project learning, changes and unforeseen events are by far the most important driver of project learning.

5.1. Practical implications


For corporate R&D, the results underscore the importance of thorough initial project planning. In dening work packages, assigning budgets and responsibilities, a common understanding of the project structure is created, facilitating intra-team communication and adherence to project plans and budgets. Our results suggest that these benets can be enjoyed relatively independent of
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***Po0.01; **Po0.05; n 475; Standardized beta values are reported

support for our Hypothesis H4b. This is in line with the results obtained by Naveh (2007), who nds that formality in R&D projects is benecial regardless of the project-inherent uncertainty. Comparing Models 1 and 2, a possible explana486
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Planning and uncertainty in NPD the degree of technological newness of the project. In addition, the analysis underlines the importance of post-project evaluation as an important source of learning (cf. Koners and Gofn, 2007): the results indicate that the changes and problems that occurred during the execution of the project contribute much more to learning than meticulous planning, which is based on past knowledge and proven solution[s] that .. [have] been devised to meet previously dened needs (Naveh, 2007, p. 111). Finally, the analyses show the importance of constant monitoring of project progress and the development of contingency plans to recognize changes as soon as possible and act upon changing conditions.
Aiken, L.S. and West, S.G. (1991) Multiple Regression: Testing and Interpreting Interactions. Newbury Park, CA: Sage. Andersen, E.S. (1996) Warning: activity planning is hazardous to your projects health. International Journal of Project Management, 14, 2, 8994. Armstrong, J.S. and Overton, T.S. (1977) Estimating non-response bias in mail surveys. Journal of Marketing Research, 14, 396402. Bailetti, A.J., Callahan, R. and DiPietro, P. (1994) A coordination structure approach to the management of projects. IEEE Transaction on Engineering Management, 41, 4, 394403. Balachandra, R. and Friar, J.H. (1997) Factors for success in R&D projects and new product innovation: a contextual framework. IEEE Transactions on Engineering Management, 44, 3, 276287. Bart, C.K. (1993) Controlling new product R&D projects. R&D Management, 23, 3, 187197. Bedeian, A.G. and Mossholder, K.W. (1994) Simple question, not so simple answer: interpreting interaction terms in moderated multiple regression. Journal of Management, 20, 1, 159165. Bentler, P.M. and Bonett, D.G. (1980) Signicance tests and goodness of t in the analysis of covariance structures. Psychological Bulletin, 88, 3, 588606. Bonner, J.M., Ruekert, R.W. and Walker Jr, O.C. (2002) Upper management control of new product development projects and project performance. Journal of Product Innovation Management, 19, 3, 233 245. Booz, Allen and Hamilton (1982) New Product Management for the 1980s. New York: Booz, Allen and Hamilton Inc. Bowen, H.K., Clark, K.B., Holloway, C.A. and Wheelwright, S.C. (1994) Development projects: the engine of renewal. Harvard Business Review, 72, 110119. Brockner, J. (1992) The escalation of commitment to a failing course of action: toward theoretical progress. Academy of Management Review, 17, 1, 3961. Brown, S.L. and Eisenhardt, K.M. (1997) The art of continuous change: linking complexity theory and time-paced evolution in relentlessly shifting organizations. Administrative Science Quarterly, 42, 1, 134. Bullinger, H-J. (1990) IAO-Studie: F&E heute. Munchen: Gesellschaft fur Management und Tech nologie Verlag. Burgel, H.D. and Zeller, A. (1997) Controlling kri tischer Erfolgsfaktoren in Forschung und Entwicklung. Controlling, 9, 4, 218225. Cleland, D.I. (1999) Project Management: Strategic Design and Implementation. New York: McGraw-Hill. Cooper, R.G. (1988) Predevelopment activities determine new product success. Industrial Marketing Management, 17, 2, 237248. Cooper, R.G. (2001) Winning at New Products: Accelerating the Process from Idea to Launch. New York: Basic books.
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5.2. Limitations and future research


This paper is a part of an ongoing research project and as such is subject to certain limitations. Data for both the dependent as well as the independent variable were collected from the same informant. In addition, we only obtained information from one respondent per company. The operationalization of the learning construct needs further renement, as it is currently measured with one item only. The analysis could further be extended to include other relevant factors of inuence as explained below. Finally, to shed more light on the potential interdependencies and interactions of the phenomena investigated here, more sophisticated statistical analyses are required. Future research could further rene the concept of planning in NPD to consider other factors aside from its intensity. In addition the inclusion of market newness similar investigations appears to be worthwhile to better understand how both of the related uncertainties inuence success. Finally, further detailing the contribution of planning to project success with respect to varying degrees of newness or within different environments will additionally contribute to a better understanding of effective planning in NPD.

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Christoph Stockstrom is a PhD student at the Institute for Technology and Innovation Management at the Hamburg University of Technology (TUHH), Germany. He studied business administration at the University of Hamburg, focusing on marketing, strategic management, and industrial organization. His current research focuses on the front end of innovation and the planning of new product development projects. Cornelius Herstatt is full professor and director of the Institute for Technology and Innovation Management at the Hamburg University of Technology (TUHH), Germany. His research interests encompass the management of the innovation process, the front end of innovation, ways of generating concepts for breakthrough innovations, and user-related innovation activities. Before his position, he worked for various industrial companies and a major US-based consulting rm.

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Appendix A
Table A1. Measurement items and construct characteristics Constructs and items Intensity of Planning (CFI 0.907, SRMR 0.0531) The project was broken into work packages. (P1) Timings were assigned to the work packages. (P2) Resources (personnel, nancial) were assigned to the work packages. (P3) There was a detailed cost plan for the project. (P4) Responsibilities of team members were assigned at the beginning of the project. (P5) Degree of Technological Newness (CFI 0.896, SRMR 0.0859) Our company did not have much experience with the technical components of the new product. (N1) The required production lines were not yet existent in our company. (N2) Our company did not have much experience with the required production processes. (N3) The required competencies and skills to realize the product concept differed strongly from available competencies/skills for most of the employees. (N4) Changes (CFI 1.000, SRMR 0.000) During project execution, a lot of new elements emerged that had not been foreseen during the pre-development stage. (C1) The project team was confronted with surprises and unforeseen ndings during project execution. (C2) During project execution we diverged from planned procedures. (C3) External Success (CFI 0.895, SRMR 0.0527) To what degree did the new product fulll your companys objectives with regard to the following aspects?  prot? (E1)  sales? (E2)  market share? (E3)  competitive advantage? (E4)  customer satisfaction with the new product? (E5) Internal Success (CFI 1.000, SRMR 0.000) Planned milestones were reached. (I1) Planned nancial resources were sufcient. (I2) Planned personnel resources were sufcient. (I3) Learning I learned a lot during the project. Standardized factor loadings 0.624 0.677 0.793 0.553 0.637 0.57 0.80 0.93 0.50

0.78 0.88 0.53

0.76 0.86 0.84 0.72 0.61 0.44 0.82 0.82

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