This study examines the influence of the organizational climate in the marketing–R&D relationship during the new product development (NPD) process on new product performance. Two key variables—trust and interfunctional integration—serve to measure this interfunctional climate. This article distinguishes between internal and external success, such that three dimensions—“met cost goals,” “met time goals,” and “product advantage”—represent dimensions of internal success, whereas a market dimension represents external success. Furthermore, this research determines whether the type of innovation, in terms of newness, moderates relationships among these variables. According to surveys of R&D directors from 178 innovative Spanish firms that introduced 345 products, (1) trust is positively associated with interfunctional integration; (2) firms in which interfunctional integration exists obtain better cost, time, and product performance; (3) each dimension of internal success is positively associated with greater market success; and (4) newness moderates the intensity of the positive association between the met time goals and market success variables.
Innovation represents one of the most important sources of competitive advantage for organizations. Aware of the relevance of new product development (NPD), various researchers analyze the factors that contribute to the success of such a process and thus identify a wealth of determinants, including process, strategic, environmental, and organizational (Henard and Szymanski, 2001; Montoya-Weiss and Calantone, 1994; Pattikawa et al., 2006). Because developing new products requires a multidisciplinary process, most recent works study “interfunctional integration” as one of the determinants of new product performance, understood as the cooperation and communication among different areas involved in the innovation process, especially marketing and R&D.
However, these two dimensions likely are not the only variables that constitute the interfunctional climate that affects innovation performance; for example, the relationship between marketing and R&D may be characterized by the presence of other, more affective factors. According to relationship marketing theory, trust represents one of the most relevant relational variables, so an analysis of the interfunctional climate and its effects on performance might be stronger if it considers trust as a determinant of cross-functional integration. Therefore, the first objective of this research is to analyze the influence of the organizational climate that exists between marketing and R&D during the NPD process on the successful operational execution of the project (internal performance in terms of cost, time, and product advantage), as well as how this internal performance affects the results achieved by the new product in the market (external performance). We measure organizational climate using two basic constructs: interfunctional integration and trust.
Furthermore, some of the relationships among these variables probably are moderated by the type of innovation, because the uncertainty and task complexity related to the development process varies depending on the nature of the innovation (i.e., radical or incremental). Previous evidence shows that more complex tasks call for more cooperation and coordination among the team members (Akgun et al., 2005), so the role of interpersonal trust should be more relevant in fostering interfunctional integration. Moreover, the type of innovation likely moderates the relationship between internal and external new product success, because firms face different degrees of internal and environmental uncertainty, depending on a product's newness. External success probably depends more on the successful internal operational execution of those new products that are new to the firm but not to the market. With such products, the lower market uncertainty means success depends less on environmental factors. In contrast, because internal uncertainty is high, the degree to which the firm achieves cost, time, and product performance will affect its final market success. Thus, the second objective of the study involves determining whether the type of innovation influences the intensity of the relationships of (1) trust and interfunctional integration and (2) internal new product performance and external new product performance.
The study is structured as follows: first, we provide an overview of new product performance and interfunctional integration literature, in combination with relationship marketing literature, to conceptualize the basic constructs of our research. Second, we describe the possible moderating effect of type of innovation. Third, we explain the methodology we used to conduct the analysis and discuss the empirical results. Fourth, we comment on some conclusions from this study, as well as the main limitations and possible lines of further research.
This research makes three main contributions to the innovation literature. First, we consider interfunctional trust as a determining factor of cross-functional integration in an initial attempt to analyze this topic in-depth, as several authors have requested. Some recent works, such as that by Bstieler (2006), examine trust formation in vertical NPD partnerships, but no structured academic research previously has analyzed the effects of internal trust between departments on interfunctional integration (communication and cooperation). We attempt to overcome this gap.
In doing so, we reveal the importance of developing a working environment based on trust to enhance cooperation and the frequent and open exchange of information among employees. This positive effect does not depend on the type of innovation. In addition, firms that enjoy interfunctional integration between marketing and R&D obtain better cost, time, and product performance for their projects. Such internal successes then are positively associated with greater market success.
Second, we provide an effective measure of new product performance, in which we not only take into account the different key dimensions of performance derived from previous literature but also consider them separately instead of grouping them into a second-order factor. Furthermore, we distinguish between internal and market success. This approach to measuring performance enables a more powerful analysis, because we can investigate in-depth the differential effects of interfunctional integration on each of the three internal success dimensions (i.e., cost, time, and product advantage), as well as the effect of each of these intermediate measures of performance on the final objective of a NPD process: market success.
Third, we highlight the relationships among these variables (trust, interfunctional integration, the three internal success dimensions, and market success) for different types of innovations. The classical typology of Booz et al. (1982) serves as a moderator, and the results show that the intensity of the positive association between met time goals and market success depends on product newness. Specifically, it is stronger when a new product line is involved in the NPD process than it is for the remaining types of innovations.
