Company Competencies as a Network: The Role of Product Development

Abstract

Product development managers and academics like to assure themselves and each other that new product development is one of the most critical areas of company competence and contributes positively to company success. But does top management agree? Because if they do not, the consequences will heavily influence the resource allocation to product development and career possibilities of new product developments manager. This study examines how top managers view the importance of product development relative to other central competence areas. Although asking managers about their perception is one way of evaluating the importance, its contribution to company success is another important measure. In this study, the impact of product development, relative to other important competence areas, is measured to assess further how critical product development is for overall company success. The authors investigate these matters in a survey of top managers in 513 Danish production companies. Ten areas important for achieving company objectives are identified. These are product development, market intelligence, production management, strategy and vision, sales, market responsiveness, promotion, internal co‐operation, image, and supply management. Product development is rated a fairly important competence as it ranks number four, with sales, market responsiveness, and production management ranking numbers one to three. Yet a distressing negative impact on overall company success is found for product development proficiency, whereas success is positively related to production management, image, and differentiation of products. Further analysis reveals that product development contributes positively to success by enabling product differentiation and enhancing promotion proficiency. Influenced by and influencing many other competencies, product development is found to be a central competence. Results support a nonfunctional and broad perspective of how bundles of competences interact and impact on success and establish a positive overall contribution to product development.

A Holistic Approach to New Product Development: New Insights

“…Suppliers can also be an important source of market intelligence. In other words, suppliers often have the capacity to contribute both product ideas and the means to realize them (Harmsen, Grunert and Bove 2000). This in turn can simultaneously bring about a reduction in production costs (manufacturing efficiency), provide the ultimate customers with a wider variety of desired products (manufacturing agility) and facilitate excellent delivery service (Dowlatshahi 1998;Vallopra 1999a, 1999b;Narasimhan and Das 1999;Tracey and Vonderembse 2000).…”

Tacit Knowledge, Lessons Learnt, and New Product Development

“…M anaging new product development (NPD) is a challenging, complex process. In order to maintain a competitive edge, companies need to launch new products faster than their competitors and this is why senior managers perceive NPD as a key competence (Harmsen, Gruner, and Bove, 2000). To develop this competence, it is crucial to learn from each and every NPD project and to ap-ply this learning to subsequent projects.…”

Performance-enhancing internal strategic factors and competencies: Impacts on financial success

“…Most of the time, companies have little or no control over these factors and they often fail to scan and respond to their external environment properly (Okumus, 2004). Internal resources and capabilities include know-how and various kinds of knowledge, personnel, capital, production equipment, buildings, operational, marketing capabilities, and other company resources (Harmsen et al, 2000). Even though the external environment influences company success, sustained competitive advantage is derived from the internal resources and capabilities a company controls that are valuable, rare, imperfectly imitable, and not substitutable (Barney et al, 2001).…”