II. THE ROLE OF THE CUSTOMER IN THE DEVELOPMENT OF RADICAL
2.3 Hypothesis Development
2.3.1 Information obtained from the customer and the level of business performance of a radical innovation
This research is interested in a specific aspect of the NPD process, the acquisition
of customer information. Models of the NPD process (cf., Booz, Allen, and Hamilton 1982; Cooper and Kleinshmidt 1986; Song and Montoya-Weiss1998) may be distilled down into three key sets of activities: 1) Idea Generation, 2) Development, and 3) Product Launch. The idea generation stage requires the evaluation of a firm’s marketplace or potential marketplace to determine a possible unmet need. The
development stage represents the transition from ideas into designs. During the launch stage, products are taken from the design drawings and are molded into physical products that can be manufactured and sold. It is predicted that, because the information needs of the firm vary across the stages of NPD, the extent of information obtained from the customer is likely to vary across the stages of the NPD process, with the importance and relevance of the customer’s information changing with each stage.
H1a: The level of technology information obtained from the customer in the development of a radical innovation will vary according to the stage of the NPD process (idea
generation, development, and product launch) in which such information is obtained.
H1b: The level of market information obtained from the customer in the development of a radical innovation will vary according to the stage of the NPD process (idea generation, development, and product launch) in which such information is obtained.
2.3.2 The stages of the new product development process, information obtained from the customer, and the level of business performance of the radical innovation.
Technology and market information are likely to be utilized during the different stages of NPD, where high levels of technology and market information should relieve the uncertainty associated with managerial decision-making within each stage. Hence, the business performance of a radical innovation may be influenced by how much information is obtained at each stage of the NPD process.
H2a: Higher levels of technology information obtained from the customer in the
development of a radical innovation will result in higher levels of business performance of the radical innovation contingent upon the stage of the NPD process (idea generation, development, and product launch) in which such information is obtained.
H2a: Higher levels of market information obtained from the customer in the development of a radical innovation will result in higher levels of business performance of the radical innovation contingent upon the stage of the NPD process (idea generation, development, and product launch) in which such information is obtained.
2.3.3 The organizational learning of the firm, information obtained from the customer, and the level of business performance of a radical innovation
It is the use, not just the collection, of information that is critical to the
development of a radical innovation. Beyond the direct effect of customer information on the new product outcome, firms that are better able to learn should derive greater benefit from customer information than firms that are less able to learn. It has been linked to the concept of organizational innovativeness (Calantone et al. 2002), which has been associated to business performance (Hult et al. 2004).
Ultimately, organizational learning is a measure of the firm’s ability to acquire information, distribute it, interpret it, and store it in a manner that allows for the conversion of information into useful knowledge. Such learning will influence the information firms seek, as well as what the firm will do with the information once it has been obtained. A firm that does not have the capability to convert information into knowledge will be less likely to generate a successful product than a firm that can convert information into knowledge. Thus, while organizational learning occurs at the firm level, it will directly affect performance of a radical innovation as well as potentially moderate the amount of information sought from the customer.
H3: Higher levels of business performance of the radical innovation are positively associated with:
(a) higher levels of information acquisition (b) higher levels of information dissemination (c) higher levels of information utilization (d) higher levels of organizational memory
2.3.4 Interaction of Organizational Learning and Information Levels
Organizational learning is critical to the success of new product development. Of the four components comprising organizational learning, information acquisition is likely to be the foundation of the success of the organization. As Di Benedetto (1999) states,
“activities that generate information on customer, competitive, or economic changes are critical for controlling and fine tuning the product, process, and/or marketing strategy.”
Reinforcing the argument for collecting information, Calantone et al. (2002) suggest that
“learning occurs largely through organizational interaction with and observation of the environment.” A link between organizational learning and information processing (Sinkula 1994) relates the active versus passive acquisition of information without addressing the source of the information. From another perspective, the Customer Knowledge Process of organizational learning theory which addresses the acquisition of information related to the customer and the integration of that information into the NPD process was supported by Li and Calantone (1998). Consequently, in a post hoc analysis the possible interaction of the firm’s organizational learning and the information obtained from the customer and the effect of the learning-information relation on a radical
innovation’s business performance is explored.