Product Development Strategy

Transcription

1 Product Development Strategy

2

3 Product Development Strategy Innovation Capacity and Entrepreneurial Firm Performance in High-Tech SMEs Mina Tajvidi Bangor Business School, Bangor University, UK and Azhdar Karami University of Tabriz, Iran and Bangor Business School, Bangor University, UK

4 Mina Tajvidi and Azhdar Karami 2015 Softcover reprint of the hardcover 1st edition All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6 10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act First published 2015 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number , of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin s Press LLC, 175 Fifth Avenue, New York, NY Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave and Macmillan are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN ISBN (ebook) DOI / This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress.

5 This book is dedicated to my life s heroes, mum and dad. You are the love of my life Mina Tajvidi I would like to dedicate this book to my family for their unconditional support Azhdar Karami

6

7 Contents List of Figures List of Tables Preface Acknowledgements xi xiii xv xvii 1 Introduction Introduction Research background Product development strategy Innovation capacity Entrepreneurial firm performance Rationale of study Research objective and questions Methodology Summary 9 References 10 2 Literature Review Introduction Strategic management Origin of the term strategy The concept of strategic management Definitions of strategy in management Strategic management process Strategic management in small- and medium-sized enterprises (SMEs) Strategic directions Consolidation strategy Product development strategy Market development strategy Diversification strategy Product development strategy in SMEs Innovation Innovation capacity 29 vii

8 viii Contents 2.5 Entrepreneurship The concept of entrepreneurship Entrepreneurial firm performance Summary 37 References 38 3 Research Strategy Introduction Revisiting the research objectives and questions Research methods and strategy Research philosophy Research approach Qualitative or quantitative research Research design Source of the data Data collection instrument Data collection process Constructing the questionnaire Level of measurement The conceptual framework of the study and research variables Product development strategy variable Innovation capacity variables Entrepreneurial firm performance variable Characteristics of SMEs The proposed model and hypotheses Research choice and data analysis plan Summary 73 References 73 4 Product Development Strategy Introduction Product development and business strategy New product development process and models New product development and success factors Product development and life cycle New product development, knowledge and learning New product development and resource management Organizational knowledge and new product development Descriptive empirical findings Characteristics of the studied firms 103

9 Contents ix Managerial characteristics of the respondents Managerial position of the respondents Research variables Data measurement process Confirmatory factor analysis Product development strategy and innovation capacity Product development strategy and entrepreneurial firm performance Summary 115 References Innovation Capacity Introduction Innovation capacity in SMEs Innovation typology Technological innovation Research and development Innovation capacity and entrepreneurship New product development success factors Innovation capacity, product development strategy and firm performance Product innovation Process innovation Investment in research and development Moderating role of innovation capacity Summary 141 References Entrepreneurial Firm Performance Introduction Entrepreneurship in SMEs Innovation and entrepreneurship Risk taking and entrepreneurship Proactivity and entrepreneurship Financial performance, turnover/net profit Entrepreneurship and product development strategy Entrepreneurial firm performance and innovation capacity Summary 168 References 169

10 x Contents 7 Final Lessons and Conclusion Introduction Revisiting the research questions and objectives of the study Summary of major finding Theoretical contributions Policy implications Managerial implications Limitations of the study and suggestions for future studies 185 References 186 Index of Names 189 Subject Index 196

11 List of Figures 2.1 Ansoff s strategy options Types of product innovation Basic model of product innovation management Structure of new product development Conceptual model of innovation capacity Innovation capability The innovation orientation of national industry clusters Integrated model of innovation management The model of absorptive capacity The influence of internal and external factors on innovation capacity and firm performance Deductive approach versus inductive approach The process of a deductive study Designing a questionnaire or interview schedule Types of questionnaire Flowchart of the data collection process Hypothesized model of the effect of product development strategy on entrepreneurial firm performance with the moderating role of innovation capacity The research choices The hypothetic-deductive research process New product development as a part of business processes Cooper s seven-stage new product development The up-front or predevelopment steps in the NPD The link between product design and value to the customer Three pillars of product life management The product life cycle A resource-based model of product development The location of SMEs according to industry Size of enterprises Location of studied firms Path diagram for causal model of product development strategy and innovation capacity Path diagram for causal model of product development strategy and entrepreneurial firm performance 114 xi

12 xii List of Figures 4.13 T-value for path diagram for causal model The path diagram of the research conceptual model Coefficient path of product development strategy and entrepreneurial performance T-value of product development strategy and entrepreneurial performance Coefficient path of innovation capacity and entrepreneurial performance T-value of innovation capacity and entrepreneurial performance 168

13 List of Tables 2.1 Comparison of SMEs and large organizations The two main research philosophies Features of the two main paradigms Fundamental differences between quantitative and qualitative methods Comparison of questionnaires Main attributes of self-administered questionnaires Common advantages and disadvantage of web-based surveys Advantages and disadvantages of postal questionnaires Types of data applied in this study Measurement of product development strategy Measurement of innovation capacity Measurement of entrepreneurial firm performance Definitions of SMEs Research background methodology Data analysis plan The different models and phases of new product development New product development success factors Life cycle: four basic stages Previous empirical studies of individual learning in NPD Previous empirical studies of project team learning in NPD Age of SMEs The demographic profile of the respondents in studied SMEs Cross tabulation of age and work experience of respondents Construct correlation matrix Measurement model Confirmatory factor analysis Construct structural model PDS and innovation capacity Construct structural model PDS and entrepreneurial performance Descriptive statistics of the innovation capacity variables One-sample test on innovation capacity variables 137 xiii

14 xiv List of Tables 5.3 Construct structural model Recent studies regarding strategic directions and entrepreneurial firm performance Entrepreneurial firm performance, result of t-test Construct structural model of product development strategy and entrepreneurial firm performance Studies regarding innovation capacity, strategic directions and entrepreneurial firm performance Construct structural model of innovation capacity and entrepreneurial firm performance 167

15 Preface With increased technological change, global competition and a changing business environment, innovation and entrepreneurship are becoming a vital issue in managing small businesses effectively. Small and medium-sized enterprises (SMEs) also play a key role in the business environments in all economies. However, the failure rate of small business in almost all economies is very high. The question is, why do many SMEs fail within the startup and early years of their operation? How can the performance of SMEs be increased and what are the factors associated with successful strategy development and implementation in SMEs? Analysis of the role of innovation capacity in developing new products and services for SMEs operating in the high-tech sector has become attractive to academics and practitioners. The development of new products and services is one of the critical success factors for SMEs, and increases entrepreneurial firm performance. This book is an attempt to shed light on the critical issue of the role of related and unrelated product development and diversification in small and medium enterprises operating in the high-tech sector. The main conceptual framework developed and tested empirically in this research proposes that small and medium enterprises could improve and enhance their entrepreneurial performance if they pursue product development rather than market development strategy. This major theoretical contribution to research in this area is supported theoretically by the resource-based view (RBV) in the strategic management context. The changing nature of the high-tech industry requires an innovative and strategic thinking approach for the firms when it comes to making strategic decisions. Innovation is a core element in the success of SMEs. SMEs potentially have an advantage in the innovation and development of new products. This is due to several characteristics of SMEs, including their flat organizational structure, flexibility and adaptability to rapid changes in the business environment. This book answers some essential questions and makes theoretical and empirical contributions to strategic management in small and medium enterprises. For instance, why should SMEs pursue a product development strategy? How can innovation capacity enhance and facilitate the relationship between the product development strategy and xv

16 xvi Preface entrepreneurial firm performance? And also, how can entrepreneurial firm performance be increased? One of the major contributions of this book is to test empirically the role of innovation on making strategic decisions in SMEs. The other major contribution of this volume is its use of sophisticated methodology for developing and testing the hypotheses. This research benefits from a quantitative approach and uses structural equations modelling (SEM) methodology for data analysis. We hope that this work adds values to the existing literature and opens and develops new avenues for future research into strategic management in small businesses. Mina Tajvidi Azhdar Karami

17 Acknowledgements In the pursuit and completion of this book, special thanks and acknowledgement are due to Bangor Business School, Bangor University, UK. We also wish to thank Dr Siwan Mitchelmore, Bangor Business School, Dr Rosalind Jones, Department of Marketing, Birmingham University, and Professor Kostas Nikolopoulos, Bangor Business School, Bangor University for their significant contributions to this work. The authors wish to acknowledge the following for permission to reproduce copyright material: Elsevier, Emerald Group Publishing Limited, and John Wiley and Sons. xvii