NEW PRODUCT ACTIVITIES AND PERFORMANCE - THE MODERATING ROLE OF ENVIRONMENTAL HOSTILITY

In the race to bring new products to market, a company may be tempted to cut corners in the new product development (NPD) process. And a hos tile environment-that is, one marked by intense competition and rapid technological change-only heightens the pressure to reduce NPD cycle t ime. However, hasty completion of the NPD process may actually jeopard ize a product's chances for success. In a study of Fortune 500 manufac turers of industrial products, Roger, J. Calantone, Jeffrey B. Schmidt , and C. Anthony Di Benedetto explore the relationships among new prod uct success rates, proficiency in the execution of NPD activities, and the perceived level of hostility in the competitive environment. Thei r study examines how proficiency in NPD activities affects the odds of success for industrial new products. Adding environmental hostility t o the mix, they also investigate whether the perceived level of hostil ity in the competitive environment affects the relationship between NP D proficiency and success. In this way, they provide insight into the factors managers must consider when attempting to accelerate cycle tim e in a hostile competitive environment. The respondents to their surve y-142 senior managers involved in NPD or product innovation rated envi ronmental hostility in terms of the extent to which the firm perceives its industry as safe, rich in investment opportunity, and controllabl e. To assess NPD proficiency, respondents were asked about their firms ' performance in predevelopment marketing and technical activities, de velopment marketing and technical activities, and financial analysis. Respondents assessed new product performance in terms of product profi tability. As expected, the responses indicate that proficiency in the performance of NPD activities increases the likelihood of new product success. Proficiency in development marketing activities produced the largest increase in likelihood of success-nearly 25 percent over that of projects in which respondents rated performance of these activities at any level below ''most proficient.'' More importantly, the respons es indicate that a hostile competitive environment increases the impac t of NPD proficiency. In other words, by improving performance of key NPD activities under hostile environmental conditions, a firm can grea tly increase the likelihood of success for a new industrial product. R ather than simply cut corners in the NPD process, a firm face with a h ostile environment must strike a balance between speed and quality of execution.