Empirical Study On New Product Development Practices In Manufacturing Firms Across Countries_NguyenAnhHao_2018_00051000342_TOAN
IN T R O D U C T IO N
Motivation and objectives o f this re s e a rc h
In today's rapidly evolving business landscape, the significance of product development has surged (Smith & Reinertsen, 1998) This process encompasses both the modification of existing products and the creation of new ones, aimed at delivering enhanced value to customers Notably, new product development serves as a key differentiator, providing companies with a competitive edge Consequently, organizations are under constant pressure to improve product development performance in terms of time, cost, and profitability, striving to offer superior value to their customers (Neto, Pereira, & Borchardt).
New product development (NPD) is a crucial activity for firms, and its performance has been extensively studied by researchers Several scholars have confirmed that the success of NPD relies heavily on collaboration among various stakeholders Additionally, NPD is characterized as an interconnected sequence of tasks that involves information sharing and communication to transform customer needs into tangible products.
Collaboration in supply chain management involves knowledge sharing and co-development within a firm or between firms and their partners Integrating various functions, such as marketing with R&D, marketing with manufacturing, and manufacturing with design, enhances new product development (NPD) performance Additionally, collaborating with external partners is crucial for achieving superior NPD outcomes Research indicates that the impact of collaboration practices on NPD performance can vary based on the level of involvement from suppliers and customers.
Over the past two decades, researchers have emphasized the necessity of a formal New Product Development (NPD) process, with a consensus on the importance of identifying key success factors at each stage to ensure a swift and seamless progression (Bhuiyan, 2011) Collaboration among internal and external parties is crucial throughout the NPD process, from idea generation to product manufacturing Additionally, product modularization significantly enhances flexibility and reduces time to market, as it involves breaking down products into smaller, manageable modules that can be designed and tested concurrently (Danese & Filippini, 2010; Sanchez, 1999) This approach not only increases product variety to better meet customer needs but also positively impacts NPD time performance through the standardization of components, facilitating easier product launches However, there remains a gap in research regarding the overall effects of product modularization on NPD performance.
Research on New Product Development (NPD) has been steadily increasing, yet scholars often concentrate on specific determinants of NPD performance, such as internal collaborations between functions like marketing and manufacturing, or external collaborations involving customer and supplier engagement Additionally, prior studies on NPD practices have typically been limited to particular countries and industries, leading to potentially contradictory results due to varying contexts.
Because of globalization, business is becoming more international, understanding NPD process and determinants o f NPD performance across countries is essential
This study explores the impact of various factors on new product development (NPD) performance across different countries, focusing on the collaboration between key parties involved in the NPD process, including manufacturing, design, customers, and suppliers It evaluates whether such collaboration yields benefits for firms during the NPD process Additionally, as customer requirements for new products become increasingly diverse, understanding the factors that help firms meet these varied needs is crucial Therefore, this thesis also investigates the effect of implementing product modularity within firms on NPD performance, addressing two specific research questions.
1 What are the effects o f collaboration practices including manufacturing involvement in design, supplier involvement and customer involvement on NPD performance?
2 What is the impact o f product modularity on NPD performance?
This research aims to enhance product development practices in operations management by examining how internal and external collaboration, along with product modularity, influence New Product Development (NPD) performance The findings will offer valuable empirical insights into NPD Furthermore, by analyzing data from diverse manufacturing companies across various countries, the study seeks to assess the impact of these factors on NPD performance in different national contexts and identify any variations between countries.
Research sc o p e
This research explores the factors influencing the performance of the new product development (NPD) process, focusing on the role of collaboration in supply chain management, both internally and externally Additionally, it examines the impact of product modularity within companies Studies on NPD have been ongoing since the early 1970s, with various terminologies used to describe the process.
Research on New Product Development (NPD) encompasses various themes, including the formalization of NPD processes, specific activities within these processes, the roles of individuals involved, and the coordination between functions for successful product launches Over the years, the focus has shifted from understanding NPD processes and activities in the 1970s to identifying factors influencing these processes in the 1990s Recent studies emphasize the importance of collaboration, communication, and information sharing among stakeholders This research continues to explore NPD within supply chains, the measurement of NPD performance, and the relationship between collaboration practices and performance outcomes Additionally, as technology advances, the study investigates how product modularity affects NPD performance, highlighting its potential to enhance manufacturing efficiency.
This study uses data collected from 10 countries including Brazil, German, Spain, Israel, Italy, Japan, China, Korea, Taiwan and Vietnam with the sample consists of
265 manufacturing companies The data were collected from Round 4 survey of High-Performance Manufacturing (HPM) Project initiated in 1980s The details of this project will be explained later in this work.
This research leverages data collected from the HPM project between 2013 and 2015 (Round 4), representing the most recent database from this ongoing international initiative aimed at identifying best practices for achieving high performance in manufacturing companies.
Structure o f the stu d y
The structure o f this study is as follow:
• Literature review: provides information related to concepts, practical insight as well as review previous studies in the same research field.
• Research design: Analytical framework is showed with hypotheses building and scales or constructs explanation.
• Data collection and analysis: This part shows research methodology, how data are collected and analyzed Subsequently, analysis results are provided.
• Findings, discussion and implications: Main findings are indicated, discussion o f the results as well as providing some managerial implications.
• Conclusion: Main contribution o f the thesis is illustrated, also pointing out limitations and suggesting some direction for future researches.
LITERATURE R E V IE W
New product developm ent
2.1.1 Overview o f new product development process
New Product Development (NPD) is the process of transforming market opportunities into sellable products through a logical sequence of activities (Krishnan & Ulrich, 2001) This process typically involves four key phases: fuzzy front-end, product design, product implementation, and fuzzy back-end The fuzzy front-end is the initial stage where ideas are generated, and their potential success or failure informs further investment decisions (Moenart et al., 1995) During this phase, opportunities are identified and assessed, requiring collaboration between R&D and marketing to understand customer demands and develop innovative solutions The second phase, product design, involves translating these ideas into detailed designs, which includes initial design, assessment preparation, prototype construction, and testing (Veryzer).
The design stage in the New Product Development (NPD) process is critical, as it influences 70-80% of the final product quality and 70% of the total life-cycle cost (Zhou, 2009) According to Ulrich & Eppinger (1995), this stage encompasses system design, detailed design, prototype testing, and refinement Once design specifications are completed, they are forwarded to the manufacturing function for product implementation or production ramp-up, where initial products may be tested with key customers to identify any issues The final phase, commercialization, shifts the focus to customer benefit orientation, as feedback from customers is essential for refining the product before mass production (Veryzer, 1998) The marketing function plays a pivotal role during this stage, ensuring that the product meets customer expectations and addressing any limitations based on their insights.
P rod u ct im p lem en tation
- Place early production to key customers
- Marketing activities (PR, customers’ trial, survey, etc.)
Figure 2.1 New Product Development’s 4 main phases.
(Sources: Kim & Wilemon, 2002; Ulrich & Eppinger, 1995; Veryzer, 1998)
2.2.2 Importance o f new produ ct developm ent
In today's rapidly evolving marketplace, the significance of new product development (NPD) for companies is crucial To improve operational performance, businesses are increasingly prioritizing innovation (Liu & Tsai, 2009) Being a first mover in launching new products allows firms to gain a competitive edge, setting them apart from rivals (Thomas, 1995) Additionally, as customer needs and technologies continually shift, investing in NPD becomes essential for sustained success.
NPD is crucial for manufacturing firms of all sizes and sectors to maintain a competitive edge (Matsui et al., 2007) To achieve first mover advantage, companies focus on reducing time to market and leveraging process and product technologies to enhance performance, lower costs, and foster customer loyalty Despite the significant role of NPD in driving future business growth, many firms struggle with low success rates due to numerous failed projects (Barczak et al., 2009) The failure of new ideas in the market often stems from a lack of structured processes (Twigg, 1998) High rates of failure are attributed to substantial uncertainty and risk, the extensive information required across various functions (Almeida & Miguel, 2007), and elevated costs Consequently, recent decades have seen increased research into NPD practices, focusing on identifying optimal processes and factors influencing both NPD success and failure, all aimed at enhancing NPD performance.
NPD performance reflects a firm's operational effectiveness in its new product development (NPD) process, encompassing factors such as product quality, timeliness, and customer responsiveness (Acur, Kandemir, & Boer, 2012) It can be classified into various performance types, including financial and time performance (Langerak & Hultink, 2005) Financial performance relates to the profitability and cost efficiency of new products, measurable through quantitative metrics like return on equity (ROE), sales growth, and productivity (Awwad & Akroush, 2016) Time performance assesses the punctuality of product launches and the reduction of time-to-market for new introductions (Matsui et al., 2007) Additionally, NPD performance is influenced by product quality, which reflects a product's ability to meet customer needs and its innovativeness compared to competitors Factors affecting NPD performance include the NPD process, program organization, strategy, innovation culture, and senior management commitment (Anderson, 2008) Moreover, NPD performance can be evaluated through internal learning and improvements in NPD capabilities, which are indirect benefits of successful product launches (Awwad & Akroush, 2016).
2016) Several researches about NPD performance and its measures are showed in the table 2.1.
Table 2.1 Studies about NPD performance and NPD performance measures
M easures D ata C ollection M ethod M ain findings
Product prototype & product launch proficiency, development time, changes in design, market forecast, technological core competency fit
Integration between R&D and marketing, and knowledge management have significant effect on several NPD performance measures.
Financial performance: revenue and profit
85 manufacturers from Italy and 87 from Japan, which produce industrial goods
No difference in determinants of NPD financial performance among Japan and Italy
390 high-tech companies in Taiwan
Product design and NPD process as well as their integration have positive impact on NPD performance
Modularity has positive impact on
(HPM) data set (Round 3) analysis NPD time performance.
Process features meet customer demand, technology features, innovative process, new product introduction time and flexibility
191 Malaysian and Iranian manufacturing firms
20 NPD factors were grouped into five higher level constructs
NPD revenue, profitability, NPD success rate relative to competitors
217 companies in China’s electronics industry
EFA, CFA and regression analysis
Positive effect of R&D-marketing integration, customer and competitor orientation are confirmed Customer and competitor orientation have moderating effect on the impact of R&D- marketing cooperation on NPD success.
Financial performance, Internal learning during NPD, NPD capabilities improvement, NPD knowledge sharing, and NPD marketing performance
558 manufacturers in Jordan Industrial Estates Corporation (JIEC)
Qualitative Analysis (three-step content) and Quantitative Analysis (EFA&CFA)
Identify and build a model of NPD performance success measures
NPD lead time, New product introduction timeliness, product innovation
112 companies that manufacture technically simple and complex products.
There is positively significant effect of product modularity on new product introduction performance
Collaboration practices in supply chain management
2.2.1 Overview supply chain collaboration practices a Definition
Collaboration is the exchange of information and resources to achieve mutual benefits and common goals (Himmelman, 1996) It requires a commitment to shared responsibilities among participating parties In operations management, fostering stakeholder involvement is crucial for enhancing efficiency Specifically, supply chain collaboration refers to the cooperative efforts of multiple firms to plan and execute supply chain operations (Simatupang & Sridharan, 2002) While supply chain integration and collaboration are often used interchangeably, the latter better emphasizes the relational governance between companies, focusing on partnerships rather than contracts (Nyaga, Whipple, & Lynch, 2010).
Supply chain collaboration encompasses both internal and external cooperation, broadening its scope Additionally, collaboration can be classified into vertical and horizontal methods, further enhancing the understanding of supply chain dynamics.
Collaboration between manufacturing and design departments is crucial for reducing product time-to-market and enhancing productivity When these teams operate separately, constraints arise due to differing knowledge areas, leading to increased costs To mitigate this, companies have formed cross-functional teams that facilitate effective communication among design developers, manufacturing engineers, and marketing executives This interactive approach allows manufacturing processes to commence before design completion, streamlining steps, saving time, and optimizing product quality While many companies strive for internal collaboration to reduce functional myopia and eliminate waste, it is equally important to engage in external collaboration with customers and suppliers For example, Dell's strong relationships with suppliers have resulted in significantly lower transaction costs As the business landscape evolves towards greater cooperation, maintaining open lines of communication is essential for fostering relationships and ensuring mutual benefits for all stakeholders involved.
Collaboration practices are essential for companies to leverage each other's experiences and resources, enhancing brand awareness and identity For example, the partnership between BMW and Louis Vuitton resulted in the creation of luxury products like the BMW i8 and matching suitcases, showcasing their shared commitment to quality and prestige Similarly, the collaboration between Uber and Spotify in 2014 allowed riders to enjoy personalized music experiences, benefiting both platforms by increasing user engagement While some may view collaboration among competitors as a threat, it can actually enhance brand reputation when targeting different market segments, as seen in the partnership between H&M and Alexander Wang Additionally, manufacturing companies like Apple rely on collaborative practices with global partners to produce their products efficiently, while LEGO has successfully engaged customers by allowing them to design their own creations, reducing design costs and boosting satisfaction.
Numerous studies have explored the significance of supply chain collaboration and integration, particularly its impact on new product development Research indicates that both internal and external collaboration practices significantly influence business performance (Kong, Li, Feng, & Sun, 2015; Carr & Pearson, 2002) Additionally, investigations have identified essential activities for successful supply chain collaboration, emphasizing that effective collaboration goes beyond mere transactional cooperation It necessitates frequent communication to foster knowledge sharing and creation, ultimately enabling firms to achieve a collaborative advantage (Cao & ).
Research indicates that while supply collaboration offers significant advantages over isolated operations, companies face numerous challenges in achieving effective collaboration Key factors include the reliance on technology for fostering long-term relationships with customers and suppliers Additionally, trust issues can act as barriers, hindering collaborative efforts Recent studies on supply chain collaboration are summarized in Table 2.2.
Table 2.2 Collaboration practices in recent studies
Study R esearch them e C ollaboration practices M ain findings
Relationship between internal collaboration and success
Cross functional integration has a positive impact on companies’ success
Higher level of marketing- manufacturing integration brings greater performance of
Effect of customer involvement on service firm performance
The involvement of customer can bring negative or positive impact on firm performance, depending contexts.
Effect of internal coordination on external coordination (supplier & customer), and how external collaboration affect new product performance
Internal collaboration, supplier and customer involvement
New product performance is affected positively by supplier and customer involvement. Internal and external collaboration has positive correlation.
How supply chain collaboration affects collaborative advantage and firm performance
Collaborative advantage acts as intermediate factor between the significant effect of supply chain collaboration and firm performance
Technology can drive higher extent of collaboration with supplier in retail companies.
Why companies resist to collaborate
Vulnerability feeling reduce the desire for collaboration as well as discourage the development of essential skills.
2.2.2 Manufacturing involvem ent in design process
Involving manufacturing in the design process fosters internal collaboration within a firm, allowing for early engagement of manufacturing functions in product design This integration promotes effective communication between manufacturing and design teams, leading to reduced timeframes and minimized defect costs By understanding manufacturing capabilities, design teams can align product characteristics with existing processes, resulting in fewer mismatches (Langowitz, 1988) Furthermore, manufacturing can provide insights to optimize product designs for cost-effective manufacturing, such as reducing component count and enhancing testability (Boothroyd, 1994) Engaging manufacturing early in the design phase facilitates concurrent product development, enabling production to commence while design is still evolving, a strategy known as product development cycle overlap, which necessitates manufacturing's acquisition of product design knowledge (Schonsleben, 2003).
The production process encompasses several key functions, including product planning, concept design, design specifications, and revisions, with manufacturing serving as a secondary function that executes the design team's blueprints Manufacturing involves prototyping, testing, production planning, and full-scale production In today's competitive market, companies are pressured to accelerate new product development while improving quality and reducing costs This is achievable through concurrent engineering, a method that integrates manufacturing functions into the design team to enhance product design and processes Since the 1980s, this approach has been adopted by numerous companies in the U.S and Japan, demonstrating a significant positive impact on product development performance Furthermore, the involvement of manufacturing is facilitated by cross-functional teams that include design members, manufacturing engineers, marketing staff, and other functions, promoting direct communication within the company.
Manufacturing involvement significantly enhances a company's operations by fostering cross-functional development teams, which lead to lower production costs, improved quality, and reduced time-to-market (Nafisi, Wiktorsson, & Rosio, 2016) Each department's unique expertise contributes to this synergy, resulting in decreased maintenance costs and fewer product recalls (Zhu et al., 2011) Ultimately, greater manufacturing involvement boosts overall productivity and performance within the firm.
Supplier involvement is the integration of suppliers into a firm's supply chain to leverage their expertise for improved operations This collaboration allows suppliers to contribute resources such as capabilities, investments, information, and ideas, enhancing the buyer's product development both now and in the future In supply chain management, supplier collaboration is crucial for practitioners, particularly in manufacturing, where it enables the utilization of suppliers' technological capabilities in design and manufacturing processes Suppliers participate in various activities, including just-in-time delivery, quality improvement, new product design, and green purchasing For example, during the early stages of new product development, supplier representatives can offer valuable insights on product design based on their understanding of the company's manufacturing capabilities.
Research indicates that supplier involvement significantly enhances a company's productivity and performance Collaboration with suppliers leads to improved material quality, facilitating the achievement of manufacturing goals (Narasimhan & Jayaram, 1998) Effective supplier collaboration also optimizes inventory management by ensuring optimal inventory levels and timely material delivery When companies and suppliers share information and objectives, they can more easily address quality and delivery issues (Kannan & Tan, 2005) Furthermore, involving suppliers in the design process enhances decision-making and fosters continuous improvement, allowing companies to better understand customer requirements and accelerate decision-making, ultimately boosting manufacturing performance (Omar, Zailani, & Sulaiman, 2006) Supplier collaboration in product design is a crucial driver of product innovation through interfirm cooperation, as evidenced by research in the automotive industry (Takeishi, 2001) Additionally, strong partnerships with suppliers enhance flexibility and product quality, while suppliers benefit from improved innovation, product quality, and financial performance Overall, supplier collaboration is essential for enhancing supply chain effectiveness and a firm's competitiveness (Chang et al., 2006).
While supplier involvement is often seen as beneficial, numerous studies indicate it can actually hinder a company's productivity and performance Conflicts arising from differing ideas between suppliers and companies during product development can lead to delays and extended time-to-market Furthermore, as the number of suppliers increases, the complexity of communication and technology requirements also grows, suggesting that supplier participation does not always contribute positively to the success of product development (McGinnis & Vallopra, 1999).
Effective customer relationship management is crucial for a firm's success in the market, as customers play a significant role in the supply chain Many companies are now focusing on customer involvement management, which integrates customers into the value creation and product delivery processes (Iruka & Ateke, 2014) This collaboration encourages interaction between company members and customers across various activities, including design, marketing, sales, and customer service, allowing customers to actively participate in business and product development Customer involvement can take multiple forms, offering organizations valuable benefits Customers provide essential feedback and suggestions regarding products, and in more advanced scenarios, they contribute ideas and support for technology development In the context of new product development (NPD), key customers work alongside organizational members to solve problems and finalize product designs (Feng, Sun, & Zhang, 2010).
Customer involvement is crucial for maintaining a sustainable supply chain, as evidenced by existing literature The nature of this involvement varies between service and manufacturing firms For service providers, customer involvement aims to deliver customized services (Salter & Tether, 2006), while in manufacturing, it primarily focuses on new product development, including product design and production operations (Ariffin, Lamsali, & Mohtar, 2012) Research indicates that customer involvement is a key factor in enhancing service performance (Dorson, 2017) and helps reduce delays and mismatches between product ideas and customer needs during the development process.
Customer involvement plays a crucial role in the innovation process by reducing uncertainty and failure rates, ultimately boosting revenue from new products (Rohrbeck, Steinhoff, & Perder, 2010) Additionally, when products are tailored to better meet customer needs, it enhances customer satisfaction, leading to improved marketing effectiveness and overall business performance.
Product modularity
Product modularity refers to the practice of dividing a product into independent parts known as modules, which can be recombined into integrated products (Ulrich K., 1994) This concept is rooted in the idea that complex systems can be broken down into loosely standardized subsystems (Simon, 1962) By standardizing product components, companies can rapidly launch new products based on existing designs The degree of modularization can be evaluated using three key criteria: functional binding, where some components share the same useful functions; interface standardization, which ensures that interfaces among components are consistent across multiple products; and decomposition, which allows components to be broken down and reused (Vickery, Bolumole, Castel, & Calantone, 2015).
Modularity offers significant advantages, as highlighted in existing literature It enhances product functionality by allowing easy reconfiguration through the addition or alteration of modules Consequently, this approach increases product variety, enabling companies to better meet diverse customer needs.
Modularity enhances design team flexibility during changes in the product manufacturing process, allowing for concurrent design and testing of modules, which accelerates product development Additionally, if a specific module's design is delayed, other modules can still be developed and produced without impacting the overall timeline.
Product modularity offers significant cost-saving advantages for firms By producing modular products or product families that utilize common components, companies can achieve economies of scale in their manufacturing processes.
Implementing functional modules allows firms to easily update their products and simplifies the ordering of components, ultimately reducing lead times and inventory levels Additionally, leveraging commonalities in manufacturing shortens the assembly process and enhances cost efficiency For instance, Volkswagen, a leading German car manufacturer, saved $1.7 billion by utilizing shared platforms for various components such as axles and exhaust systems, while still maintaining distinctiveness in their vehicle designs.
Recent literature reveals that numerous scholars have focused on New Product Development (NPD) research over the past decade High NPD performance necessitates attention to internal integration factors, including cross-functional integration (Sherman, Berkowitz, & Souder, 2005), the voice of the customer (Saeed et al., 2013), supplier involvement in the development process (Johnsen, 2009), support from top management (Felekoglu & Moultrie, 2013), and the application of technology, particularly information technology Nonetheless, the existing literature identifies two significant gaps in this area.
• There are limited number of works combine various factors to analyze effects on specific types of NPD performance, even in manufacturing industry.
• Limited number of studies concentrate on NPD across countries in diverse industries.
Studying the impact of various variables on different types of New Product Development (NPD) performance, such as financial and time performance, is essential Additionally, conducting international comparisons of NPD practices across multiple countries can help generalize the effects of these practices on NPD performance while highlighting similarities and differences among nations.
This study aims to address existing gaps by examining the impact of four key New Product Development (NPD) practices: manufacturing involvement, supplier involvement, customer involvement, and product modularization It will assess their effects on various categories of NPD performance, including financial outcomes (profit and cost), time metrics (development time and time to market), quality measures (new product quality), and customization capabilities.
RESEARCH DESIG N
High Performance Manufacturing (HPM) Project Introduction
In today's highly competitive global market, companies are actively seeking ways to enhance their business performance Access to valuable knowledge and theories for improving operations is readily available; however, the practical application of this knowledge varies across different contexts While some firms leverage modern technology for competitive advantage, others struggle to implement it effectively Many organizations improve their operations by learning from the experiences of others rather than relying solely on their own initiatives In the manufacturing sector, companies aspire to become World-Class Manufacturers (WCM), characterized by superior performance compared to their industry peers The distinction between high-performance and average manufacturing lies in the adoption of best practices Without the implementation of these practices, even well-formulated strategies and strong commitments may fail to achieve optimal operational performance Therefore, there is a pressing need to gather data from various industries across different countries to research and identify best practices for attaining high-performance manufacturing.
The High Performance Manufacturing (HPM) Project, initiated in the 1980s through a collaboration between professors from the University of Minnesota and Iowa State University, aims to enhance operational performance in manufacturing companies amid global competition This project focuses on both theoretical and empirical contributions by reviewing literature across various fields, including operations management and international business, to support high performance manufacturing concepts It collects data from the United States, Europe, and Asia to identify key factors influencing manufacturing performance, utilizing questionnaires that assess practices across diverse industries and countries The project also incorporates qualitative data through interviews and factory visits, ultimately benefiting academics and practitioners with comprehensive research insights To date, the HPM project has completed four rounds with participants from 18 countries worldwide.
Analytical framework
Based on existing literature, an analytical framework is presented in the figure 2:
In which, each variable in the framework is illustrated as follow:
• Manufacturing involvement: The extent that manufacturing department is involved in designing process This includes early involvement to before new product concepts, also the involvement in making product design.
Supplier involvement refers to the degree of collaboration between a company and its suppliers in the design of new products This concept evaluates how actively suppliers participate in the company's new product development (NPD) initiatives.
• Customer involvement: The extent that company partner with customer in product design This may include customer’s feedbacks, opinions about product design, or customer is an integral part o f designing process.
• Product modularity: The extent that company separates product into several common parts called modules Besides, the construct evaluate whether new products are designed to use modularity in manufacturing.
New Product Development (NPD) performance is measured by various factors, including product quality, cost efficiency, profitability, development time, and the punctuality of product launches Additionally, a firm's capability to customize products significantly contributes to its overall success in NPD.
Hypotheses development
3.3.1 Relationship between m anufacturing involvem ent in design and NPD perform ance
The impact of cross-functional teams on new product development (NPD) success has been extensively researched by scholars like Olson et al (2001) and Gerwin & Barrowman (2002) Inter-functional collaboration in NPD involves integrating various functions such as manufacturing, marketing, and design, which enhances product concept assessment and clarifies module functions and interfaces Additionally, manufacturing involvement in design significantly improves NPD time performance by reducing development time and time to market Danese & Filippini (2010) highlighted that inter-functional integration mediates NPD time performance, while Turkulainen & Ketokivi (2012) found that early manufacturing involvement eliminates redundant steps, accelerates ramp-up, and minimizes duplicated efforts in product testing and commercialization Furthermore, Fleischer & Liker (1992) demonstrated that effective communication between designers and downstream processes enhances product manufacturability and helps meet customer requirements.
H I : Manufacturing involvement has positive linkage with NPD performance.
3.3.2 Relationship between supplier involvem ent and NPD perform ance
Research has extensively explored the relationship between supplier involvement in new product development (NPD) projects, highlighting that early supplier involvement significantly enhances outcomes (Takeishi, 2001) Studies dating back to the early 1980s, particularly in Japanese companies (Imai, Nonaka, & Takeuchi, 1985), laid the groundwork for understanding this impact Scholars such as Clark and Fujimoto (1991) have further examined how supplier involvement affects the quality and productivity of NPD projects Since the 1990s, comparative studies between Japanese, US, and European firms have strongly confirmed the positive influence of supplier involvement on NPD performance (Nishiguchi, 1994) Recent research has focused on the timing of supplier involvement, emphasizing the concept of early supplier involvement, which provides robust evidence of suppliers' critical role in ensuring product designs are manufacturable Additionally, studies have expanded to include various industries, such as automotive and food, across multiple countries worldwide.
Involving suppliers in the new product development process is time-consuming but essential for success Initially, firms must select the right suppliers, followed by relationship development to build trust and commitment A strong partnership allows for effective supplier integration, which enhances new product development performance Research by Hartley et al (1997) highlights that supplier capabilities can mitigate design-related delays, while Ragatz et al (2002) demonstrate that supplier integration improves cost, quality, and cycle time Enhanced manufacturability reduces production costs and increases product quality, leading to greater success Additionally, supplier representation in development teams fosters knowledge sharing, particularly in the face of technological uncertainty Collaborative co-design processes can significantly boost innovation performance through this exchange of knowledge, as noted by Jean, Sinkovics, and Hiebaum (2014) Furthermore, Song and Benedetto (2008) reveal that supplier involvement has a substantial impact on new product performance, emphasizing the importance of integrating suppliers into the development process.
Second hypothesis is proposed as follow:
H2: Supplier involvement has a positive linkage with NPD performance.
3.3.3 Relationship between custom er involvement and NPD perform ance
During the New Product Development (NPD) process, companies gather insights into customer needs and preferences through market research and interviews This information is utilized to align NPD efforts with customer expectations In many organizations, customers actively participate as co-developers, collaborating with internal teams in problem-solving and product design (Cui & Wu, 2016) This collaboration reduces the risk of poor design, ultimately enhancing the quality and reliability of new products.
Customer involvement significantly impacts product innovativeness and enhances new product performance, particularly in terms of financial outcomes (Cui & Wu, 2016) Research by Rauniar et al (2008) in the U.S automotive industry and Bonaccorsi & Lipparini (1994) in Italian food processing and packaging machinery confirms that customer participation improves both the time and quality of new product development (NPD) Firms that recognize the importance of customer roles in NPD are more likely to achieve higher customer satisfaction and outperform competitors in terms of time to market, acceptance, and success rates Gruner & Homburg (2000) demonstrated in the German machinery industry that involving customers in the NPD process, excluding the engineering stage, enhances success Additionally, Chien & Chen (2010) found that customer involvement significantly affects NPD success in Taiwan's financial services sector, highlighting that customers' contributions help firms mitigate uncertainty.
Based on those arguments above, third hypothesis is stated as:
H3: Customer involvement has positive linkage with NPD performance.
3.2.4 Relationship between produ ct modularity and NPD perform ance
It was confirmed by many authors that product modularity can decrease the amount o f time for NPD introduction (Vickery et al., 2016; Danese & Filippini, 2010; Lau
Modularization in product design enables firms to easily adapt specific components to meet customer requirements, facilitating targeted changes and improvements in product functionality This approach simplifies the design and testing processes, allowing different design teams to focus on individual modules, ultimately reducing the overall time required for new product development (NPD) Additionally, product modularity enhances the range of offerings available to customers and boosts the combinative capabilities of NPD within the firm Collaborating with various suppliers is essential for accessing new technologies and streamlining design complexity through external coordination As a result, this leads to the creation of more innovative products, increasing customer acceptance and satisfaction.
H4: Product modularity has positive linkage with NPD performance.
Survey instruments
HPM project framework is adopted and HPM questionnaire items are used to test the established hypotheses To be more specific:
3.4.1 M anufacturing involvem ent in design
The questionnaire assessed the frequency of interaction between manufacturing and design, as well as the significance of manufacturing in the development of new product concepts It included six items to evaluate the level of manufacturing involvement.
• Direct labor employees are involved to a great extent before introducing new products or making product changes.
• Manufacturing engineers are involved to a great extent before the introduction of new products.
• New product design teams have frequent interaction with the manufacturing function.
• Manufacturing is involved at the early stages o f new product development.
• The manufacturing function is key in improving new product concepts.
• Manufacturing is given challenging tasks in the development o f new product concepts.
Measurement o f customer involvement consists o f four items (Source: H PM project,
• We consult customers early in the design o f new products.
• We partner with customers for new product design.
• Customers are frequently consulted about the design o f new products.
• Customers are an integral part of new product design efforts.
Measurement o f supplier involvement consists o f four items (Source: H PM project,
• Suppliers are involved early in product design efforts.
• We partner with suppliers for the design o f new products.
• Suppliers are frequently consulted during the design o f new products.
• Suppliers are an integral part o f new product design efforts.
Measurement o f product modularity consists o f four items (Source: H P M project,
• Our products are modularly designed, so they can be rapidly built by assembling modules.
• We have defined product platforms as a basis for future product variety and options.
• Our products are designed to use many common modules.
• When we make two products that differ by only a specific feature, they generally require only one different subassembly/component.
This thesis provides a holistic view o f NPD performance by measuring NPD performance based on diverse dimensions, which is presented in the table 3.1.
Table 3.1 M easurem ent items o f NPD performance
• Speed o f new product introduction into the plant (development lead time)
• On time new product launch.
Ability to customize new products
• We can easily add significant product variety without increasing cost.
• We can quickly adjust the product design based on customers.
Data analysis methodology
The empirical research method effectively addresses gaps in New Product Development (NPD) theory within supply chain and operations management Researchers have previously employed this approach through quantitative methods, such as statistical analysis (Danese & Filippini, 2010), and qualitative methods, including case studies (Hill).
Recent research on New Product Development (NPD) has seen an increase in studies that analyze data from various industries and compare NPD practices across different countries (Johnson & Filippini, 2010) Despite this growth, Craig and Hart noted that a significant portion of NPD literature relies on theoretical prescriptive frameworks rather than empirical evidence (Craig & Hart, 1992) To address this gap, the current study employs empirical methods, utilizing statistical software SPSS 22.0 to analyze collected data and provide robust evidence to enhance the existing NPD literature.
The steps o f data analysis are described as follow:
• Measurement test: To ensure that collected data is reliable and valid.
• Correlation analysis: Bivariate correlation is implemented to test the linkage between independent variables and dependent variables.
• Regression analysis: Linear regression is performed to test the regression effect o f four NPD practices on NPD performance.
• One-way ANOVA: Analysis o f variance (ANOVA) is used to check the similarities and differences between NPD practices among countries.
DATA COLLECTION AND ANALYSIS
Data collection
This study utilizes data collected in framework o f High-Performance Manufacturing (HPM) Project initiated in 1980s The first round o f the survey was conducted in
1989, to collect data from 46 manufacturing factories in the US Afterwards, Round
The HPM project began its second round in 1992, expanding to Germany, Italy, Japan, and the UK, with 146 plants participating globally By 2003, the third round included additional countries such as Korea, Austria, Sweden, Spain, and Finland, with 210 manufacturing factories involved in the survey, excluding those in Spain The fourth round, conducted between 2013 and 2015, gathered data from 305 plants across various nations, focusing on facilities with over 100 employees in the machinery, transportation, and electrical/electronics industries Researchers identified manufacturing companies as either "world-class manufacturers (WCM)" or "non-WCM" based on a review of business literature and financial information This selection method ensured a diverse sample for analyzing industry performance and meeting research objectives.
This study utilizes data from HPM data round 4, encompassing 265 manufacturing companies across 10 countries: Brazil, Germany, Spain, Israel, Italy, Japan, China, Korea, Taiwan, and Vietnam These countries were chosen due to their comparable sample sizes, ensuring consistency in the analysis The respondents of the survey are members of New Product Development teams.
The study utilized three measurement scales to assess NPD collaboration practices, focusing on manufacturing involvement in design, customer involvement, and supplier involvement These practices were evaluated using a 5-point Likert scale, ranging from 1 (Strongly Disagree) to 5 (Strongly Agree) In contrast, the dependent variable, NPD performance, was measured with a 7-point Likert scale, where responses ranged from 1 (Significantly worse) to 7 (Significantly better), as detailed in the Appendix.
Measurement t e s t
The first step o f analytical process is the analysis o f reliability and validity o f five measurement scales.
• Reliability: Cronbach’s alpha coefficient is calculated to evaluate the reliability o f each measurement scale country samples as well as pooled sample with acceptance value as 0.6.
To establish content validity, a comprehensive review of existing literature on New Product Development (NPD) practices and performance has been conducted, drawing from both theoretical and empirical research The measurement scales utilized in this study are primarily derived from previous studies in the field.
Construct validity is essential for confirming that all measurement items align consistently within a construct, ensuring they measure the same underlying factor To establish this, within-scale factor analysis is conducted, adhering to three key requirements: unidimensionality, an eigenvalue of at least 1, and a factor loading for each item exceeding 0.4.
The results o f measurement test for the pooled sample and each country sample show that all scales reliable and valid as illustrated in Table 4.1 and Table 4.2.
M ean SD B R A G E R ES P ISR ITA JP N CHN K O R TWN VIE
N ote: BRA: Brazil, GER: G erm an, E SP : Spain, ISR: Israel, ITA: Italy, JP N : Japan, CU N : China, KOR: Korea, TW N: T aiw an, VIE: Vietnam
Table 4.2 Validity test for independent variables (pooled sample)
Factor Eigenvalues Percentage of variance Items Factor loadings
To validate the dependent variable of NPD performance, the author conducted an Exploratory Factor Analysis on 16 items related to NPD performance, with the results detailed in Table 4.3 Additional findings from this analysis can be found in the Appendix.
Table 4.3 Validity test for dependent variable (pooled sample)
Extracted factors are satisfied because Eigenvalues are greater than 1 Furthermore,
16 items can explain 63.728% the variation o f those 4 factors, it is satisfied because the required value is 50%.
NPD performance can be categorized into four key factors: quality performance, financial performance, customization ability, and time performance All factor loadings exceed 0.5, indicating they are suitable for further analysis.
The subsequent step of data analysis process is to test the correlation between
“Customer Involvement”, “Manufacturing Involvement”, “Supplier Involvement”,
The study examines "product modularity" in relation to four factors influencing "New Product Development Performance," utilizing a pooled sample The findings, presented in Table 4.4, indicate that all correlations are significant, with the exception of the correlation between manufacturing involvement and customization ability.
Hypothesis testing
Table 4.4 Correlation analysis (pooled sample)
** C orrelation is sig n ific a n t al the 0.01 level (2-tailed) * C orrelation is sign ifica n t at the 0.05 level (2- t ailed)
A correlation analysis of New Product Development (NPD) practices and performance metrics reveals significant positive relationships As detailed in Table 4.5, three collaboration practices, along with product modularity, show strong correlations with nearly all NPD performance indicators, with significance levels of 5% or 1%.
Table 4.5 Correlation analysis o f NPD practices and each NPD performance item
Quality perform ance C onform ance quality 0.317** 0.281** 0.222** 0.198**
U nit cost o f m anufacturing 0.233** 0.154* 0.206** 0.178** perform ance
D evelopm ent lead time 0.172** 0.182** 0.135* 0.190** oerform ance
E asily add product variety 0.094 0.138* 0.102 0.333** ability
C orrelation is sig n ific a n t al the 0.01 le ve l (2-tailed) * C o rrela tio n is sig n ific a n t a t th e 0.05 level (2- uiled)
Correlation analysis indicates that all four hypotheses are supported for the pooled sample, demonstrating that manufacturing involvement, customer and supplier engagement, and product modularity have significantly positive relationships with new product development (NPD) performance in manufacturing companies Notably, product modularity and supplier involvement show a strong correlation with the company's customization ability, while the other two practices exhibit weak or no linkage to customization-related performance This finding highlights that collaborating with suppliers to modularize products enhances customization capabilities, thereby meeting diverse customer needs Additionally, in terms of NPD performance metrics related to quality and financial outcomes, manufacturing involvement shows stronger correlations than the other practices.
Regression analysis
A regression analysis was conducted to examine the relationship between four key New Product Development (NPD) practices—manufacturing involvement, supplier involvement, customer involvement, and product modularity—and NPD performance The study utilized a pooled sample of 265 manufacturing firms across 10 countries, with the dependent variables representing four categories of NPD performance: quality performance, financial performance, time performance, and customization ability Additionally, two dummy variables, AUT and MAC, were employed to assess the industry effects, comparing the automobile and machinery industries against the electric and electronics sector The findings of the regression analysis are detailed in the accompanying table.
Tabic 4.6 Regression analysis (pooled sample)
M a n u fa ctu rin g involvem ent 0.345 4.520
M a n u fa ctu rin g involvem ent 0.268 3.438
C u s to m er in v olvem ent
M a n u fa ctu rin g in v olve m e nt
** The effect is sig n ific a n t at the 0.01 level (2-tailed) * The effect is sig n ific a n t at the 0.05 level (2-tailed)
The adjusted R² values indicate that independent variables account for 21.7%, 18%, 6.3%, and 4.3% of the variation in quality performance, financial performance, time performance, and customization ability, respectively Notably, manufacturing involvement in design shows a significant regression relationship with quality performance, particularly in the automobile industry compared to machinery, electric, and electronics sectors Together, manufacturing and customer involvement emerge as key predictors of new product financial performance Furthermore, product modularity stands out as the only factor with a significant positive relationship to a firm's customization ability However, no significant regression relationship is observed between new product development practices and time performance.
Country effect on NPD practices and their correlation with NPD performance 44 1 Differences in NPD among countries
4.5.1 Differences in N PD am ong countries
One-way ANOVA is utilized to examine the impact of country on collaboration practices and product modularity across ten countries, aiming to identify both similarities and differences in new product development (NPD) practices The results, including the F-statistics and p-value, are presented in the last two columns of Table 4.7.
It can be seen that all o f four NPD practices are significantly different between countries at 1% significant level.
Table 4.7 NPD practiccs across countries
(BRA vs GER), (BRA vs ESP), (BRA vs KOR), (BRA vs TWN), (GER vs VIE), (ITA vs CHN), (JPN vs KOR).
(BRA vs JPN), (GER vs ISR), (GER vs CHN), (ESP vs JPN), (ISR vs JPN), (JPN vs CHN).
The article discusses various international matchups, highlighting key encounters such as Brazil versus Germany, Brazil versus Spain, and Brazil versus Italy It also covers Brazil's games against Japan, China, Taiwan, and Vietnam Additionally, the article mentions Israel's matches against Germany, Italy, Japan, China, Taiwan, and Vietnam Other notable matchups include Japan against Taiwan and South Korea against Taiwan.
N ote: BR A : Brazil, G ER: Germ an, ESP: Spain, ISR : Israel, ITA: Italy, JP N : Japan, CHN: China, KO R: Korean, TWN: Taiwan, VIE: Vietnam
The Turkey pairwise comparisons test reveals significant differences in collaboration practices and product modularity among various countries Notably, supplier involvement shows minimal variation, with significant differences only between Israel and China In contrast, Brazil exhibits substantial differences in product modularity practices compared to Germany, Sweden, Korea, and Taiwan Additionally, Japanese companies demonstrate significant differences in customer involvement when compared to Spain and China Brazil leads in both manufacturing and customer involvement, while Italy ranks the lowest in these practices Regarding supplier involvement, China has the highest mean, whereas Spain has the lowest The results emphasize the key practices that are most focused on across these countries.
The involvement in new product development (NPD) practices varies significantly across countries, with Brazil and Japan focusing on manufacturing, while Germany, Spain, Israel, South Korea, Taiwan, and Vietnam emphasize customer involvement Additionally, supplier involvement is prominent in Italy and China These differences in NPD practices can be attributed to diverse geographical, cultural, and environmental factors that influence how each country assesses the importance of these practices.
4.5.2 Differences in linkage between NPD practices and NPD performance across countries
The binary correlation analysis reveals the impact of four practices on New Product Development (NPD) performance, as shown in Table 4.8 In Japan, a significant correlation is observed between manufacturing involvement and supplier involvement with NPD performance, while customer involvement and product modularity show no significant correlations In contrast, Vietnamese manufacturers exhibit significant correlations between customer and supplier involvement and NPD performance factors Notably, Brazilian manufacturers find a significant link between NPD practices and customization ability.
Table 4.8 Correlation o f NPD practices and each type o f NPD performance among countries
P, CHN, GER, ITA, JPN, KOR
P, CHN, GER, ESP, JPN, KOR
P, GER, ITA, JPN, KOR P, KOR, VIE P, TWN VIE
Customization ability BRA P, BRA P, TWN, VIE P, BRA, TWN
Note: BRA: Brazil, GER: German, ESP: Spain, ISR: Israel, ITA: Italy, JP N : Japan, CH N : China, KOR:
K orean, TW N: Taiwan, VIE: Vietnam (*): neg a tive correlation
A correlation analysis was performed to assess the relationship between New Product Development (NPD) practices and NPD performance across different countries The analysis revealed that Japanese companies exhibited 10 significant correlations, while Vietnamese companies showed a higher count of 15 significant correlations In contrast, Spain had the fewest significant correlations, with only 3, whereas Israel demonstrated the most robust linkage, recording 20 significantly positive correlations.
Table 4.9 Correlation Analysis between NPD practices and NPD performance items across countries
Functionality P, GER, ISR, ITA, JPN,
KOR P, BRA, ITA,VIE P, ITA, VIE
K OR, VIE P, ISR, K O R P, BR A, JPN* P, ITA, K O R
Durability P, CHN, ISR P P, ISR P, JP N
Reliability P, CHN, GER, ISR P, ISR, T W N P, BRA, T W N P, CH N
C o n fo rm an cc quality P, ITA P, ISR, JPN, KOR P P
Aesthetic appeal P, ISR, ITA, JPN, K O R P, ISR, JPN, KOR P P, KOR
C u s to m e r s ’ perception P, GER, ISR, ITA, VIE P, GER, ISR, KOR P, VIE P, ESP
Serviceability P, CHN, ITA, T W N P, CH N , ISR, KOR P, CH N , VIE P, CHN, KOR,
M arket share P, ESP, ITA, JPN, KOR P, GER, KOR, VIE P, T W N , VIE P
Unit cost o f m a nufacturing P, GER, ISR, JPN P, G ER P, BRA*, GER,
ROI P, ISR, ITA, JPN P, ISR, KOR, VIE P, ESP*, GER, VIE P, ISR, KOR, VIE Profitability P, GER, ISR, ITA P, CH N , GER, ISR P, G E R , ISR, T W N P, K O R
D evelopm ent lead time T W N P T W N , VIE P, BRA
On tim e launch BRA P, BRA, K O R P P, BRA
Easily add product variety P P, JPN*, VIE P P, CHN
Adjust product design P, TW N P, VIE P, VIE P
Note: BRA: Brazil, GER: German, ESP: Spain, ISR: Israel, ITA: Italy, JPN: Japan, CNN: China, KOR: Korean, TWN: Taiwan, VIE: Vietnam (*): negative correlation
Interestingly, although most correlations are positive, some instances reveal a negative correlation between new product development (NPD) practices and performance Specifically, studies in Brazil and Spain identified negative correlations between customer involvement and financial performance Engaging a particular group of customers in the NPD process can adversely impact market performance, as their needs may differ significantly from those of the broader market.
In Japan, a negative relationship exists between supplier involvement and product development time, where collaboration with suppliers can actually prolong the new product development (NPD) process This phenomenon arises as Japanese companies increasingly seek foreign suppliers, resulting in the management of extensive supplier networks Consequently, engaging with numerous but less integrated suppliers can lead to delays Overall, cultural and environmental differences across countries can negatively impact NPD practices.
Analysis result summary
To summary, four NPD practices are found to correlate significantly positively with NPD performance.
• Hypothesis 1: This hypothesis is partly accepted because manufacturing involvement in design correlate significantly with all NPD performance factors except customization ability.
• Hypothesis 2: This hypothesis is accepted because supplier involvement has significantly positive correlation with all NPD performance factors.
• Hypothesis 3: This hypothesis is accepted because customer involvement has significantly positive correlation with all NPD performance factors.
• Hypothesis 4: This hypothesis is accepted because product modularity has significantly positive correlation with all NPD performance factors.
Regression analysis indicates that manufacturing involvement significantly impacts both financial and quality performance in new product development (NPD) Additionally, customer involvement and product modularity serve as predictors for financial performance and the ability to customize new products, respectively Furthermore, variations in NPD practices and their relationships with NPD performance across different countries have been confirmed.