This research employs organizational information processing theory to propose and examine the antecedents and consequences of new product portfolio management (NPPM) decisions. Understanding NPPM decisions is an important research area because these decisions affect firm profitability but are difficult to make because of limited reliable information. Recent survey results of Product Development and Management Association members and other NPPM professionals suggest nearly half of initial new product ideas are chosen to advance through the new product development (NPD) pipeline via informal processes. Thus, managers wield considerable influence in NPPM. Yet only limited research quantitatively examines how NPPM decisions impact performance and the role of manager dispositions.
Using as the research context a marketing simulation exercise conducted with mid-level managers, this research reveals important insights into the impact of the three NPPM dimensions-value maximization, balance, and strategic fit-on NPD and firm performance. The analysis suggests a critical role for the NPPM dimension of balance as it is the single dimension impacting performance. However, value maximization is relevant as a criterion for competing because, overall, managers see this dimension as important. At the same time, managers are cautioned in their use of strategic fit as it appears this dimension may constrain innovative choices.Furthermore, three manager dispositions proposed from organizational information processing theory-directive leadership style, need for cognition, and risk perceptions-all influence NPPM dimensions. Managers are recommended to consider the personality traits of managers involved in NPPM decisions to ensure thorough consideration of all dimensions.
Given industry competitiveness, how do firms' new product development (NPD) process designs differ when responding to an innovation mandate? How do NPD design elements differ across firms when implementing NPD processes? These design elements are strategic business unit (SBU) senior management involvement, business case content, customer interactions, and cross-functional integration. What are the consequences of different combinations of NPD process design elements for innovation productivity? We explore these questions via a collective case study of newly implemented NPD process designs at three different SBUs of a major US-based international conglomerate, 1 year after receiving the mandate to grow through innovation. Our analysis suggests that industry competitiveness and firm characteristics influence the NPD process design as SBUs employ distinct combinations of NPD design elements. The differential emphasis on design elements leads to variation in process design and divergence in innovation productivity.
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