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Past research offers numerous “best practice” studies in New Product Development (NPD). One important characteristic of the earlier “best practice” studies is that they are primarily based on Western samples. Because management practices, cultures, and norms differ around the world it has been argued that the findings of the earlier studies will likely to be less applicable to firms managing NPD outside the West. This study fills this gap by surveying Hong Kong companies and comparing the NPD activities in Hong Kong with those in the US. The results revealed interesting similarities and differences between US and Hong Kong firms with regard to their NPD activities.

Past literature offers numerous “best practice” studies in New Product Development (NPD) (Cooper et al., 2004a, Cooper et al., 2004b, Cooper et al., 2004c, Griffin, 1997 and Page, 1993). One important characteristic of the earlier “best practice” studies is that they are primarily based on Western samples. Indeed, Griffin (1997) has noted that because management practices, cultures, and norms differ around the world the findings of the Western studies will likely to be less applicable to firms managing NPD outside the West. She further argued that studying NPD practices around the world would be a fascinating piece of future research. Earlier studies have also suggested that cultural differences can impact NPD (Nakata and Sivakumar, 1996 and Sivakumar Nakata, 2003). In response to this call for future research, this paper presents a “best practice” study in Hong Kong to understand the NPD activities of Hong Kong firms and to compare them with the benchmarks established in a survey study among the members of the Product Development Management Association (PDMA) in the US (Griffin, 1997) (hereafter, the PDMA study). Hong Kong is an important gateway to Mainland China, which is the world's most populous nation with large market potentials for new products. Furthermore, innovation has been an important part of the economic policies of the Hong Kong Government. As a result, this study, being the first of its kind, offers useful implications not only to local firms but also to global firms that plan to develop new products in this part of the world as well as to the local governmental authorities that want to promote and support product innovation in Hong Kong. The paper is organized as follows: it first outlines the research methodology and the survey instruments. Then, it presents the survey results with regard to the NPD processes, strategies, steps, organizational structures, team leaderships, selection of the team leaders, NPD team reward schemes, the use of multi-functional teams and the NPD outcomes. After that, it highlights key similarities and differences between US and Hong Kong firms with respect to their NPD activities. The paper ends with various managerial and research implications.

This study indicates that there are interesting similarities as well as differences between US and Hong Kong firms regarding their NPD activities. In terms of similarities, it found that both US and Hong Kong firms used a NPD strategy. They also engaged in the “product development” phase of the NPD process the most. In addition, successful firms in both the US and Hong Kong engaged in the NPD activities more often than their unsuccessful counterparts and had more steps in their NPD processes than the unsuccessful firms. Moreover, both US and Hong Kong firms indicated that their NPD activities were usually led by project managers, process owners or project champions. Furthermore, both US and Hong Kong firms reported that their NPD activities usually resided in marketing, R and D or engineering department. Finally, both US and Hong Kong firms used multi-functional teams. Despite the similarities between US and Hong Kong firms, there are also noteworthy differences between them. With regard to the NPD process, while 61.5% of the US firms used a formal NPD process only 51% of the Hong Kong firms used it. In addition, while more than 30% of the US firms have been using a formal NPD process more than 5 years, only 16.7% of the Hong Kong companies have been using it more than 5 years. Moreover, while over 40% of the successful US companies have used a process for more than 5 years only 30% of the successful Hong Kong firms have used a process for more than 5 years. Finally, while 25% of the unsuccessful US firms have used a process for more than 5 years only 12.1% of the unsuccessful Hong Kong firms have used a process for more than 5 years. With respect to organizing for NPD, while 61.9% of the US firms used multiple organizational structures for their NPD activities, with 2 structures per firm, 42.6% of the Hong Kong firms used multiple organizational structures, with 1.65 structures per firm. The findings with regard to the NPD process and organizational structures appear to be consistent with those of the PDMA study. As such, Hong Kong firms are using similar processes and organizational structures that the US firms are, but still to a lesser extent. Given that changes in NPD activities occur in an evolutionary fashion (Griffin, 1997), perhaps Hong Kong firms are just starting to utilize these NPD practices and will catch up with their US counterparts in the future. In the area of team leadership, 70% of the US and 90% of the Hong Kong firms reported that the NPD team leaders were appointed by management. This difference is not very surprising given the “top-down” business style and the unique national culture (e.g., low on individualism and high on power distance) in Hong Kong. With respect to rewarding the NPD team members, the US firms usually offered non-financial rewards in rewarding their NPD personnel. They rarely used project-based-financial rewards. The Hong Kong firms, however, used both financial and non-financial rewards in rewarding NPD personnel. Project-based financial rewards such as profits and stocks were also popular in Hong Kong. With regard to the use of multi-functional teams, both the US and Hong Kong firms used them. However, while the US firms used them more for innovative products than for less innovative products Hong Kong firms used them equally for both innovative and less innovative products. This suggests that Hong Kong companies need to be more flexible with regard to the use of multi-functional teams as opposed to using them indiscriminately across all product types. Finally, the US and Hong Kong firms differ with regard to the NPD outcomes. Most notably, the average success rates were 59% and 44.91% in the US and Hong Kong, respectively. In addition, while 100 initial ideas led to 15.2 successful new products in the US, 100 initial ideas led to 2.15 successful new products in Hong Kong. Moreover, 2 out of every 3 products that entered the development phase in the successful firms in the US succeeded subsequently whereas 1 out of every 5.34 products that entered the development phase in the successful firms in Hong Kong succeeded subsequently. Finally, while manufactured goods and service firms were equally successful in the US, service firms were more successful in Hong Kong. 3.1. Managerial implications Although product innovation has been an important business activity of Hong Kong companies, there are no established local benchmarks with which these companies can compare their NPD activities. As Griffin (1997) argues, earlier “best practice” studies may not be helpful for Hong Kong companies to guide their NPD activities, as the US and Hong Kong management practices may differ. This study fills this gap by surveying Hong Kong companies and comparing the NPD activities in Hong Kong with those in the US. In addition, the new products of Hong Kong firms do not perform as well as those of US firms. Although market conditions might affect the success of new products, Hong Kong firms can at least adopt more formal NPD processes and complete the stages of the NPD process more carefully. They can also utilize alternative organizational structures for NPD. They can explore different ways of appointing NPD team leaders rather than expecting top management to appoint a leader. Finally, although they use multi-functional teams they use them indiscriminately across innovative and less innovative products. They can reduce the organizational conflicts that are associated with multi-functional teams by not using them for less innovative products, as the PDMA study found that such teams may not be necessary for less innovative products. For the US firms that are interested in developing new products in this part of the world, this study suggests that they can certainly utilize many of the NPD activities that they have been using in the US in Hong Kong, as Hong Kong firms also engage in similar activities to a certain extent. Their primary challenge will be to reduce the mortality rate of new product ideas initiated in Hong Kong. They can either train new product managers in Hong Kong as how to generate and select potentially successful new product ideas and as how to turn those ideas into more successful new products or generate new product ideas in the US and get new product managers in Hong Kong involved in the NPD process in its later stages. For the governmental agencies in Hong Kong, this study suggests that they can develop policies that help local firms become more aware of the best NPD practices. They can furthermore offer training workshops for these firms about the importance of such NPD activities as testing and commercialization, as these important activities were conducted relatively less in Hong Kong than in the US. Finally, they can establish industry rewards for those firms that are successful in their NPD activities so as to encourage the adoption of the best NPD practices in Hong Kong. 3.2. Research implications This study will also lead to other future studies for further investigation. For example, future studies can look at the NPD activities of Chinese and other Asian companies. The results of all these companies can be compared against each other and against their market performance so that meaningful lessons can be drawn. Researchers can also repeat this survey in future to see whether NPD activities in Hong Kong change overtime.