Many firms rely on external organizations to acquire knowledge that is useful for developing creative new products and reducing the time needed to bring these products to market. Cluster theory suggests that this knowledge is often obtained from organizations located in close geographic proximity. Specifically, proximity is assumed to foster heightened face-to-face communication, strengthened relational ties, increased knowledge acquisition, and enhanced new product outcomes. The authors identify the limitations of these assumptions and offer an enriched model of the influence of geographic proximity on new product development, which they test using both a crosssectional survey of 155 firms in the U.S. optics industry and a longitudinal follow-up survey of 73 of these firms. They find that firms located in close proximity engage in increased face-to-face communication, but this communication has little effect on the acquisition of the types of knowledge that lead to enhanced new product outcomes. In contrast, they find that e-mail communication leads to both enhanced new product creativity and development speed. In addition, they find that relational ties moderate rather than mediate the path connecting geographic proximity and new product outcomes. These findings imply that the new product development outcomes typically ascribed to close geographic proximity may actually be attributed to strong relational ties.
In the continual search for competitive advantage, firms try to develop innovative new products as quickly as possible. The importance of new product development for long-term competitive success is widely recognized by the marketing community (for a review, see Hennart and Szymanski 2001). In general, marketing has viewed the development of new products from the perspective of an isolated firm engaged in solo activity. Thus, the major thrust of extant new product development research has been on internal processes, such as the formation and coordination of new product development teams (e.g., Olson, Walker, and Reukert 1995;Sarin and Mahajan 2001) and the role of organizational culture in new product development success (e.g., Deshpandé, Farley, and Webster 1993;Moorman 1995).Because of the growth of global competition, rapid technological advances, and increasing demands from customers, many firms realize that they need help from external organizations, such as customers, suppliers, and even competitors, to develop innovative and timely new products (Wind and Mahajan 1997). In response, an increasing number of marketing studies have begun to examine new product development alliances (Rindfleisch and Moorman 2001, 2003;Sivadas and Dwyer 2000). However, research suggests that formal alliances represent only a small fraction of interorganizational influence on new product development because much of this influence comes in the form of informal information sharing rather than formal agreements (Allen 1983;Von Hippel 1987). To date, the marketing literature has little to contribute to the nature or the i...