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Operation and Service Management

Complementary Drivers of New Product Development Performance:

Cross-Functional Coordination, Information System Capability, and
Intelligence Quality
Case Study

Submitted By
Ajay pokhrel
Trim: v
Sec: A

New product introduction and development is a hard task to most of the companies,
especially in the heterogeneous market and costumers where there is rapidly
changing technologies. New product development requires great effort and proper
coordination among firms marketing and manufacturing functions. External supply
chain partners and their coordination with the company are most important now
days. Supply-chain relationships are being restructured in order to peruse higher
goals like discover new product opportunities and to understand new market
dynamics. And second major development to radically alter new product
development process is increasing importance of the firms information system.
Therefore development of new product is dependent on the effective transformation
of information received via the coordination process into forms of organizational
intelligence that can be easily shared. Also importance of cross-functional
coordination is discovered for the success of new product development. The factors
that help in success of new product development must be synergistically integrated
instead of that performed in isolation. Empirically specific forms of organizational
intelligence are crucial mediating construction in the causal chain from coordination
processes to NPD performance. But all firms may not be successful in generating
both forms of organizational intelligence. The study is performed to examine how
the forces of market dynamism impact the separate effects of market and supply
chain intelligence on new product development performance.
The theoretical model presented in the study presents data collected from 169
manufacturing firms. The result supports the hypothesis about the importance of
both moderating (market dynamism and information system) and market mediating
(market intelligence and supply chain intelligence) in introduction of new products
on market.
Research model and hypothesis:
The goal of the study is to develop a model of NDP performance defined as the
revenues that accrue to a firm through the introduction of new product to the
market. These market intelligence and supply chain intelligence serve as critical
mediating constructions in the path to NPD performance.
The capability of an organization to process, interpret, manipulate and access in a
purposeful, goal directed mannerism called intelligence quality of a firm. It is
reflected in accuracy, validity, relevance's and timeliness of information that it
obtains about activities that are critical to its performance.
Market intelligence quality: it is the quality of an organization that reflects the
extent to which the information obtained is accurate, valid, relevant, timely and

Supply chain intelligence: supply chain intelligence is information related to the

supply of product and demand of the product, which is gained through effective
coordination with the firms supply chain partners. Therefore, it is crucial in new
product development performance. The quality of such intelligence reflects the
accuracy, relevance, timelineness and novelty of the information gained by a firm
through its network of supply chain partners.
Supply chain intelligence helps to reduce uncertainties about markets and
technological changes, thereby raising creative potential relationship and
contributing to the innovation of the products and services.
External and internal coordination processes: successful NDP involves a wide range
of coordinated activities involving various groups both within the firm and
increasingly outside the firm. It is said that inter-functional coordination helps
ensure a clear and unified vision, by aligning different technical competencies to
ensure compliance to the goals.
Manufacturing market coordination: the extent to which the manufacturing and
marketing functions within a firm develop a mutual understanding of each others
capabilities and align their respective goals and activities based on continued
maintenance of such understanding. Coordination functions between manufacturing
and marketing functions enable the transfer of complex and often tacit costumer
preferences into concrete costumer solutions. It also identify possible downstream
problem due to poor alignment with the firms manufacturing capabilities.
Manufacturing supply chain coordination: it is defined as the extent to which a
firms manufacturing unit and its external supply chain partners develop a mutual
understanding of each others capabilities and align their respective goals activities.
Early and extensive supplier involvement results in valuable design insights as well
as accelerates the pace of product development because the internal coordination
alone may be inadequate to generate the types of organizational coordination.
Capability: complementary combinations of technology resources egg. Hardware,
software, and network platform, IT human sources egg. Technical and managerial IT
skills, and IT business resources egg, business application and partnering
relationships combine to form a complex firm level capability which is generally
rare, valuable and intermittent and non-subistutable are calles Is capability.
Therefore IS capability is considered as multi-dimensional and rooted in a firms
ability to effectively acqire deeply and leverage its IT sources to shape and support
its business strategies and value chain strategies.
The moderating role if Is capabilities: It is studied that why companys IS is very
important in both manufacturing-marketing and manufacturing supply as well.
Because in the case of manufacturing-market coordination, interactions among the
members of both functional areas are critical across dofferent stages of the
innovation process, manufacturing expertiseis critical in the later stage of growth.

In the large firms the manufacturing and marketing functional groups are ikely to
be dispersed globally creating cultural, geographical, and time zone boundaries.
With respect to manufacturing supply chain it has been shown that firms with
widest area are of integration that firm integrates both suppliers and customers into
the activities of the firm, and receive large benefits. it is suggested that effects of
manufacturing and marketing interaction as well as boundary spanning
collaborations with supply chain partners are sufficiently amplified through the
effective use of IS, leading to improves market as well as supply chain intelligence.
Hence the effect of marketing-manufacturing coordination on the market
intelligence quality is moderated by IS capability such that firms are more
pronounced for firms with higher capabilities.
The effect of manufacturing supply chain intelligence quality is moderated by IS
capability such that effects are more pronounced for firms with more pronounced
for firms with higher IS capability.

The mediating role of Intelligence quality on NDP performance:

It is justified that impact of high quality intelligence emerging from interactions with
marketing and supply chain partners like on NDP performance. High quality
intelligence represents the availability of, timely, and accurate insights into the
market, both in terms of trends in customer demand as well as emerging supply
chain capabilities. The further ability of high quality intelligence is that it ensures
greater matches between design features and new market demands and also
reduces the risk of downstream adjustments. the mediating role of market and
supply chain intelligence also occurs because coordination process especially those
amplified by superior IS, can easily be overdone and lead to wasted interactions and
meetings where nothing of substance is accomplished.
Therefore, market intelligence quality mediates the association between
manufacturing-marketing coordination and NDP performance. And supply chain
intelligence quality mediates the association between manufacturing-supply chain
coordination and NDP performance.

The moderating effect of market dynamism:

Market dynamism refers to the rate of change in costumer preference, competitor
actions and technologies. These changes posses a number of challenges and
opportunities for firms with regards to NDP. These also involves the potential
changes that occur technically suitable and tactically available supply lines
downstream partnerships. Lacking real time intelligence the firms may fail to update
their plans thereby creating offerings that have limited relevance to the market. The

influence of market dynamism on the preference contribution of high-quality SC

intelligence is no less critical. It provides an understanding of upstream and
downstream options available to firms.
The positive effect of market intelligence quality on NDP performance increases as
market dynamism increases. And the positive effect of supply chain intelligence
quality on NDP performance increases as market dynamism increases.
Manufacturing managers from publicly traded single business manufacturing firms
served as key informants. 1023 mangers were involved and among them 386
uniquely represented manufacturing firms. Complete response were given from 169
unique publicly traded firms and response rate was 43.8% of all firms contacted.
Conformity factor analysis(CFA) was used to estimate the measurement models.
Overall 6 multi-item constructs showed acceptable fit levels as judged by goodness
fit indicators. Scale evaluation yielded positive results with composite reliability
estimates for all constructs being >0.70 and averaging address potential
concerns stemming from use of survey data several of the procedural remedies
identified were followed. to minimize common method variance, the NDP
performance measure used a scale format ( a numeric format) different from the
criterion variables that were measured using Likert scale.
Primary hypothesis testing:
Discussion: the study draws on the theoretical framework of organizational
complementarities emphasizing in synergistic benefits of point capabilities wherein
the marginal benefit of one capability is enhanced in the presence of other
capabilities. These capabilities can assist with information sharing, joint sense
making and knowledge integration, and hence paramount in the development of
actionable intelligence and in turn NDP performance. Both internal and external
coordination activities are valuable in NDP. While organizational knowledge may
mold the nature of coordination routines such established routines enable the
continuous updating of cross-functional intelligence that are critical to NDP
Mediating role of intelligence quality: this study also provides a more understanding
to the mediation role of intelligence quality in the homological path to NDP
performance. Another finding is the key role played by market dynamics.
Intelligence qualities effects on NDP performances are found to be stronger in
dynamic markets putting a premium on them in such conditions.
Managerial implications:

Growth is major challenge for firms. Managers need to maintain open mind
regarding the knowledge generating potential of routine cross-functional
coordination activities. Managers also should take care to appreciate the knowledge
generate potential of all operational activities, not just those of R and D
departments, and hoe such potential can be supported and encouraged via IS
There are such limitations which are to be noted. First is , despite strong theoretical
arguments utilized in forming the model, the non significant results for the direct
mediating role supply chain intelligence quality require further explanation. Second
this study is confronted with some more commons and generalized data issues.
Since independent and dependent variables were collected from the same source
and use a similar method, the results of the present study could be affected by
common method bias.
And finally much of the primary data were collected using self reported scales.
While several researchers attest that the use of such scales do not necessarily
compromise the validity and may in fact be necessary to ensure interpretability of
accounts and response rates that lend to statistical power in analysis-secondary
data measures from alternate source could have enhanced the robustness of the
This study finds that the internal and external coordination of both synergistically
complemented by IS capabilities in their impact on the creation of high quality
actionable intelligence a crucial mediating factor for the enhancement of NDP
performance. Market dynamics appear to be more relevant as far as the
applicability of this intelligence toward NDP performances is concerned, with many
of their effects accentuate in more dynamic market environments.