CONTROLLABLE FACTORS OF NEW PRODUCT SUCCESS - A CROSS-NATIONAL COMPARISON

While the new product literature suggests that managerially controllab le factors most strongly affect new product success, few studies have examined how these factors differ across countries. The objectives of this article are: (1) to develop a model of managerially controllable factors associated with new product success, (2) to directly compare t he factors that managers perceive to be associated with new product su ccess in the United States and China, and (3) to demonstrate the appli cation of various statistical analyses for increasing the confidence t hat may be placed in empirical findings and outline methods for assess ing whether significant estimation biases exist in cross-sectional dat a. Our paper should be of interest to new product researchers and inte rnational comparative marketing researchers. The implications of our r esults should also be of considerable value and interest to executives faced with the complex task of selecting and managing new product dev elopment projects as well as to those firms experiencing international competition. To accomplish our objectives, we develop a model of mana gerially controllable factors related to new product success, which in cludes variables related to the organization, the new product developm ent process, and the product itself. The model is tested using data co llected on 142 new products launched in the United States and 470 new products launched in China. We conduct case studies to examine the app ropriateness of the data collection methods, to establish the content validity of the concepts, and to assess the usefulness of the measures and constructs in a Chinese context. The model was tested using EQS w ith covariance matrices as input. We tested the measurement model befo re assessing the structural relationships. Once the measurement issues were satisfactorily resolved, the structural model was tested for eac h country individually. Since the results of the individual models for the United States and China were satisfactory, we performed a two-gro up simultaneous path analysis in order to test for similarities and di fferences in the factors of new product success between the United Sta tes and China. We tested whether or not the path coefficients were inv ariant across the two countries using a Lagrangian Multiplier test. Th e challenge for all cross-sectional studies is to reject the hypothesi s that many of the parameters associated with the dependent variable a re biased by ''omitted'' firm level effects and other specification er rors. We examine these possible biases within the structural equations framework by examining the robustness of the parameters with and with out the measurement error interactions fixed and an examination of nom inological validity for each country. In addition, since we collected two observations per firm in our Chinese sample, we also examine wheth er bias exists due to omitted firm effects by comparing within and bet ween estimates. The stability of the within and between estimates also suggests that our findings are robust to omitted firm effects. Our fi ndings provide important managerial guidelines concerning appropriate managerial actions to take in the new product development process for new product managers. First, firms are advised to build appropriate ne w product development resources and expertise. In both countries, our findings suggest that adequate marketing research, sales force, distri bution, advertising, and promotional resources and skills are required for proficiently conducting market assessment studies, testing produc ts, and introducing products. Furthermore, technical resources and ski lls are positively linked with proficiency in conducting technical act ivities. Sufficient R&D and engineering resources and skills are relat ed to proficiency in performing technical assessments, designing produ cts, and manufacturing products. Second, our results reveal that a hig her proficiency in marketing and technical activities leads to a highe r level of new product success in both countries. The level of profici ency of technical activities appears to relate more to the level of ne w product success than do marketing activities. Third, it is important to collect and assess market and competitive information in order to understand customers' needs, wants, and specifications for the product ; to know customers' price sensitivity; to understand customers' purch ase decisions; and to learn about competitors' strategies, strengths, and weaknesses. In China, product quality is the second most highly co rrelated factor of new product success. Therefore, firms competing in China should direct their marketing and technical efforts toward devel oping quality products.