II. THE ROLE OF THE CUSTOMER IN THE DEVELOPMENT OF RADICAL
2.4 Study Context, Measurement, Design and Sampling Method
2.4.2 Measurement
Measures of all constructs, except for the customer information levels and NPD stages, were drawn from prior research. (See Table 2-5.) While the majority of the measures relate to the innovation level unit of analysis, certain measures relate to the level of the organization developing the radical innovation. These include organizational
learning and the business unit sales, number of employees, and other firm characteristics.
The measures provide illumination of the NPD process from both a tactical (information levels) and a strategic (organizational learning) perspective. Thus, the research
investigates what happens within a specific NPD project, as well as how the firm’s characteristics influence the process.
2.4.2.1 Customer Input
Building upon the information types identified by Zahay et al. (2004)3, the nature and amount of market and technical information obtained from the customer was
assessed for each stage of the NDP process and for the total process. To insure clarity of the measurement, market information is defined as information related to market size, market growth, competitor information, and the environment, while Technical
Information is defined as information on technology content, technical needs, technology uniqueness, and technical trends. Using a 7-point Likert scale (see Appendix 1),
respondents were asked how much market and technology information the firm obtained from the customer during each phase of the NPD process.
2.4.2.2 Customer Characteristics
The characteristics of the customer are that of a customer or user at the front of the technology adoption curve. They may be able to provide both market and technology information to a firm developing a radical innovation. Consequently, the identity of the customer may be captured based upon their technology and market contribution, as well
3 Information types : strategic, financial, project management, customer, needs, technical, competitor,
as their propensity to adopt new technologies or seek out solutions to their technology problems.
The key difference between these customers and lead users (von Hippel 1986) is in the timing of the acquisition of information from the customer. This distinction allows the utilization of a “lead user” scale implemented in Morrison et al. (2000) and Franke and Shah (2003) that provides a measure of how innovative the customer informant may be.
2.4.2.3 Product Business Performance
For the purposes of this research, the outcome measure of interest is the level of business performance of the radical innovation developed by the firm. The business performance of the innovation is measured through the use of two scales utilized by Song and Parry (1997a; 1997b): (1) the market share performance to capture the market
acceptance of the developed innovation and (2) the new product performance relative to the firm’s expectations to capture the product’s business performance from the firm’s perspective. Two measures are used to accommodate different respondent interpretations of success; market share represents an external perspective on performance and new product performance represents an internal perspective relative to firm expectations.
(Hereafter, this construct is called “internal performance.”) Market share is measured by a three item scale which assessed the market share of the radical innovation relative to competitor’s products and the firms own products (Song and Parry 1997a). Internal performance was measured with a three-item scale that included profitability and sales volume assessments (Song and Parry 1997b).
2.4.2.4 Organizational Learning
Organizational learning is measured following the conceptualization proposed by Huber (1991). The information acquisition processes of the firm was assessed using a five item scale developed in Moorman (1995). This scale assessed the firm’s collection of information on customers, competitors, and experts in their market. The information dissemination scale, developed by Sinkula et al. (1997), consists of three items that measure the dissemination of information within the firm. The information utilization scale was developed by Maltz and Kohli (1996), utilizing seven items. The scale captures the firm’s implementation of the information it acquires. The organizational memory scale was developed by Moorman and Miner (1997). This four item scale measures the amount of information that a firm possessed about their market and technology.
2.4.2.5 Radical innovation
The level of the radical innovation is determined through the level of market and technology newness. Because some innovations may be more radical than others, technology newness was measured using a six item scale employed by Gatignon and Xuereb (1997) which assessed the newness of the technology to the market and competitive environment. Market newness was measured with a five item scale developed by Danneels and Kleinschmidt (2001) that assessed the creation of a new market as well as whether the firm entered a new market.
2.4.2.6 Firm Characteristics
The characteristics of the firm may influence many factors of this study. For instance, the revenue size, number of employees, and age of the firm may be reflected in the organizational learning of the firm, with small, young firms being closely tied to the market and innovative behaviors. Just as a firm’s level of organizational learning will provide insight into the culture of a firm, the firm’s demographic characteristics must be considered in an analysis of the firm’s success or failure in new product development.
Control variables utilized by Atuahene-Gima (1995) and Baker and Sinkula (1999) that are consistent with the literature are implemented in the conceptual model
2.4.2.7 Medical Device Control Variables
In addition to the general control variables, the medical device domain requires additional control variables. For instance, medical device development projects may utilize a trained medical professional or an end-use consumer as the information source.
This may potentially play a role in either the propensity to seek information or the likelihood of the use of that information (Jacobson 2004). This “source credibility” may significantly impact the process.
Also, because there are, as defined by the FDA, different “types” of medical device products (FDA 1998) with each “type” facing different regulations (AdvaMed 2004), that information must be captured to insure that the results may be interpreted in a meaningful and valid manner.
2.4.2.8 Covariates
Guided by the literature, control variables were collected from each respondent (Atuahene-Gima 1995; Atuahene-Gima 2005; Baker and Sinkula 1999). These
covariates included the functional area and tenure of the respondent, the revenue
generated by the product, total revenue of the developing firm or business unit, number of employees, number of years the firm was in the market, and the list price of the product.