The main determinants of new product development ability for international markets: An empirical study on brazilian manufacturing export companies

Highlights

• NPDA stands for the ability to systematically develop, launch and introduce new products in the market more skillfully than the competitors.

• What makes medium and large manufacturing export companies achieve higher NPDA performance in international and turbulent environments?

• Five constructs are proposed as main determinants of NPDA and a structural equations model was validated in automotive and metal-mechanic sector.

• New Product Development Ability (NPDA) for international markets is explained by 79,7 % from these main determinants in a chain of relationships.

• An NPDA Framework is presented, contributing for a research agenda and industry best practices in Innovation and Technology Management field.

Abstract

To compete effectively on a global scale, companies must increase capabilities that lead them to greater performance in developing new products. This research validated a model about the influence of the main determinants of the New-Product Development Ability (NPDA) for international and turbulent markets. Involving a cross-sectional survey of 167 manufacturing export companies, the results showed that NPDA is explained by 79 % from these determinants. The model validation provided support to an emerging framework, sustaining on how these five main determinants are key success factors for NPDA. Consequences of these foundations to research agenda and companies’ best practices are discussed.

Introduction

Why are some manufacturing industries more capable of developing, launching and systematically introducing new products into international and turbulent markets more skillfully than their competitors? This study seeks to analyze why some medium and large-size Brazilian manufacturing export companies from the metal-mechanic and automotive sector have a greater New-Product Development Ability level (NPDA) for the international and turbulent market than others, achieving greater NPDA Performance.

Competitiveness must come from innovation and not only from cost reduction. Therefore, the capabilities for new-product development and innovation have become increasingly necessary in the scenario of globalization and turbulence (Slater et al., 2014; Yang, 2012; Kaminski et al., 2008). In order to effectively compete in the global market, companies need to develop capabilities that lead to greater performance in the development and introduction of new products (Holahan et al., 2014; Johnson and Fillipini, 2013; Lee et al., 2011). Thus, the capability to introduce new products generate a source of possible competitive advantage and productivity, as observed by Hana (2013) and Crespi and Zuniga (2012). Moreover, in international markets, competition occurs in environments of higher turbulence and uncertainty, requiring change and adaptation capabilities where knowledge becomes the main factor of production and competitive advantage (Cordes and Hülsmann, 2014; Afgan and Carvalho, 2010).

Knowledge-Based Dynamic Capabilities offers a new understanding of the determinants affecting performance in newproduct development, and it constitutes an object of study and interest both for academia, the government and the business sector (Goedhuys and Veugelers, 2012; Sun and Du, 2010; Wan et al., 2005). Among these determinants, learning capability, organizational creativity, international entrepreneurial orientation, technological capabilities and reconfiguration capabilities are highlighted. These determinants were selected for this study considering four trends that are affecting manufacturing industries. The first one is the evolution of the Knowledge Society, that argues a knowledge economy existence. Companies that have more domain of knowledge as a resource can gain strategic competitiveness, and this paradigm is shaped by uncertainty, requiring constant change and adaptation capability (Kornienko, 2012; Sther and History of Knowledge Society, 2015; Arvanitidis, 2011; Carrilo, 2005). Therefore, learning capabilities, technological capabilities and reconfiguration capabilities become more important in this scenario (Cordes and Hülsmann, 2014; Makkonen et al., 2014; Açikdilli et al., 2013; Ellonen et al., 2011). The other trend is the increasing globalization, which pushes the internationalization level of organizations to compete in international markets, and therefore, require the company’s new behaviors to do so (Dimitratos et al., 2016, 2012; Schweizer et al., 2010; Onetti et al., 2010). In this case, International Entrepreneurial Behavior is considered since the modern's theoretical theories treat internationalization as an entrepreneur process. The third trend is the emergence and evolution of Creative Economy, that implies creativity as a source of aggregated value. That means imagination producing economic value, recognizing knowledge and individual’s and teams creativity (Im et al., 2013; Crespi and Zuniga, 2012; Damanpour and Aravind, 2012; Becky and Okhuysen, 2011; Howkins, 2001). Altough Creative Industries are a sector “per se,” the increasing convergence of Design, IT, Gaming Industries with traditional manufacturing, aggregating value in products, process or services, especially when it comes to start up’s collaboration, is something observed in industry. The fourth trend is innovation as a strategic driver of competitiveness and development, especially in the national-level strategy (Block and Keller, 2011). Once innovation becomes more important to competitive advantage, so does the new product development ability of a company (Huang et al., 2015; Brattström et al., 2012). Therefore, the determinants to achieve innovative performance, which requires higher levels to systematically develop, launch and introduce new products more skillfully than the competitors, are critical to be studied.

However, there remains the question of, in these trends’ context, how these five determinants can be beneficial to NPDA. Thus, the central research question, based on the delimitation of the themes and their respective trend's justification is: What makes manufacturing companies achieve higher NPDA performance? To address this research question, this article establishes at the following section a theoretical background in Learning Capability, Organizational Creativity, International Entrepreneurial Orientation, Technological Capability, Reconfiguration Capability and New-Product Development Ability to positioning the concepts and to develop seven hypotheses for a structural model to be tested, considering five determinants and their validated scales in the literature.

The research environment for this study considers manufacturing exporter companies, in a sample from medium and large-size industries of the metal-mechanic and automotive sector in Brazil. In the third and fourth section the method is described. Structural Equation Modeling is used to test the chain of relationships, in order to assess the determinants validity as constructs and their direct and indirect influence on NPDA.

With these analysis results, this research offers a new view of the determinants of NPD ability via a chain of entrepreneurial abilities, creative innovative abilities and knowledge-based dynamic capabilities. In order to support the foundations of an NPDA Theoretical Framework and Model, that can be applied in the context of higher turbulence, where creativity and adaptation are more required to address uncertainty. Therefore, this study contributes to advancing the comprehension of the New Product Development Ability main determinants for international markets.

In the final section, the explanations of the mechanisms that create the interface between these determinants are addressed. Considering the data and significant statistical results achieved in NPDA Model, as well as the relationship with the theoretical background, an NPDA Framework is discussed. From the role of Organizational Creativity and International Entrepreneurial Behavior for NPD, this study contributes to expanding the cognitive and knowledge aspects of creative entrepreneurship for innovation in this field. In this sense, this paper outlines in its discussions and implications a new research agenda in NPD. The role of learning capability, organizational creativity, international entrepreneurial orientation, technological capability and reconfiguration capability are proposed as critical foundations for the New-Product Development Ability and drivers of best practices in this industry.