The role of the customer in the new product development of radical innovations.

Abstract

This research investigates the conditions under which customer information provided during the new product development (NPD) process improves business performance for radical innovations. I develop a model of the relation between customer inputs and business performance of the radical innovation. The model includes: 1) the technology and market information obtained from the customer, 2) the phase of the NPD process in which the information is obtained, and 3) the firm’s organizational learning (i.e., information acquisition, information utilization, information dissemination, and organizational memory of the firm). The model was estimated with survey data from managers responsible for product development in the medical device market (N=152). The findings suggest there are multiple factors that affect the business performance of a radical new product. First, at the project level, the results show that the type of information obtained from the customer and when it is obtained significantly affect the product’s business performance. Secondly, the firm’s organizational learning capabilities are part of a complex relationship which lead to the success of a new product. Finally, the post-hoc analysis of the interactions of organizational learning with the customer information and product business performance suggests different strategies are appropriate depending upon the state of a firm’s organizational learning capabilities.