Platform-based product design and environmental turbulence

Abstract

Purpose – When competing in a turbulent environment, strategic flexibility can be a competitive advantage. One source of flexibility is the new product development (NPD) process, or more specifically product design. The purpose of this paper is to investigate platform-based product design and its relationship to environmental turbulence, strategic flexibility, and market performance. Design/methodology/approach – A theoretical model is developed and relationships are empirically tested using structural equation modeling. Data were collected from engineering design managers in the US manufacturing industry. Findings – The paper found that the higher the level of environmental turbulence the more firms turned to platform product design. Also, the higher the level of platform design the higher the level of market performance, both in the short term and the long term. Finally, the paper showed that strategic flexibility positively and partially mediates the positive relationship between platform design and performance. Originality/value – Platform-based product design is a research area noticeably devoid of empirical work. Furthermore, research has called for a better understanding of the different contexts in which platforms are applied stating that platform planning is too often decoupled from NDP strategy resulting in unsatisfactory results.

Strategic Flexibility: A Review of the Literature

“…Although most authors mentioned changes in the business environment in relatively broad and general terms, some specifically mentioned uncertainties (Fredericks 2005;Ouakouak and Ammar 2015) and competitive forces Hitt et al 1998;; however, more recently, the combined influence of various factors arising from the complexity of modern markets has been observed (e.g. see Thomas 2014).…”

“…In other words, firms that want to maintain a competitive advantage must continuously be one step ahead of their competitors . Furthermore, the levels of competition have only been increasing (Thomas 2014) hand in hand with the rising complexity of the conditions in modern markets .…”

“…According to the literature, these complex conditions have been characterized by globalization, current management practices in the market, the recent economic crisis, changes in consumer preferences, strong and unpredictable fluctuations in demand and supply, more frequent changes in internal and external environments, the complexity of the value network, emerging technological solutions, changes in government regulations and the power shift towards customer interaction and partner networks Dreyer and Grønhaug 2012;Hitt et al 1998;Schön 2012;Thomas 2014). In the words of Herrmann (2010, p. 1050), 'With increasingly intense competition, shrinking product cycles, accelerated technological breakthroughs, and progressively greater globalization, the business arena may best be described as being in a chronic state of flux, with continual variation in its external environment'.…”

“…In summary, in quantitative studies, strategic flexibility has most frequently been measured according to the variables related to the firm acting on opportunities in the business environment (Grewal and Tansuhaj 2001;Kapasuwan et al 2007;Zahra et al 2008), a firm's actions regarding macroenvironmental changes (Barrales-Molina et al 2013;Grewal and Tansuhaj 2001), a firm's actions towards competitors Nadkarni and Narayanan 2007;Verdú-Jover et al 2004;Volberda 1996), new technology (Thomas 2014;Zahra et al 2008), slack resources and their coordination (Grewal and Tansuhaj 2001;Nadkarni and Narayanan 2007;, finances and financial flexibility (Aaker and Mascarenhas 1984;Kurt and Hulland 2013), manufacturing or operations Worren et al 2002), its product base Kortmann et al 2014), marketing (Harrigan 1985;) and knowledge and learning (Harrigan 1985;Lin and Wu 2014).…”

“…Predictable and unpredictable changes Eppink (1978); Young-Ybarra and Wiersema (1999); de Haan et al (2011); Férnandez-Pérez and Gutiérrez (2013) Continuous changes and disturbances de Haan et al (2011) Opportunities and threats Matusik and Hill (1998) (2012) Types of triggers Articles Uncertainties ; Hitt et al (2003); Fredericks (2005) (2012); Dreyer and Grønhaug (2012); Maitland and Samartino (2012); Schön (2012); Thomas (2014); Perez-Valls et al (2015) 20…”