The Impact of Open Innovation in New Product Development Process
The Impact of Open Innovation in New Product Development Process
The Impact of Open Innovation in New Product Development Process
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IJFPSS, Vol .2, No.1, pp. 7-12 , March , 2012In this sense, the organizational sett<strong>in</strong>g <strong>of</strong> NPD activitieshas become <strong>in</strong>creas<strong>in</strong>gly important to both academics andmanagers (Lee & Souder, 2000). In addition, earlier studies<strong>in</strong>dicated that organizational structure was significant as adeterm<strong>in</strong>ant <strong>of</strong> NPD success but this is a theme that has notbeen adequately addressed by empirical research. In 2002,Howley showed that companies that are successful <strong>in</strong> NPDare likely to use outside advice <strong>in</strong> the NPD process, notablythrough reta<strong>in</strong><strong>in</strong>g specialist consultancies (Howley, 2002).Hence, open <strong>in</strong>novation is a topic important <strong>in</strong> new productdevelopment research and practice.Firms follow<strong>in</strong>g open <strong>in</strong>novation recognize the value <strong>of</strong>external <strong>in</strong>puts to the process <strong>of</strong> new product developmentand seek to utilize these <strong>in</strong>puts <strong>in</strong>ternally. Sisodia (2009) hasshown that it is possible to achieve a superior effect whilefollow<strong>in</strong>g open <strong>in</strong>novation, but it is vital to explore thegeneralization <strong>of</strong> this success. Hence, open <strong>in</strong>novation can bestudied <strong>in</strong> successful new product development throughvarious perspectives. Besides, previous researches has shownthat dimensions <strong>of</strong> organizational structure and context arekey issues <strong>in</strong> the <strong>in</strong>novation process and play an importantrole <strong>in</strong> all stages <strong>of</strong> the <strong>in</strong>novation process (Sisodiya, 2009).Moreover, Lee and Sounder (2000) stated that the newproduct development is a complex activity that is related toorganizational structure and contextual factors; that itscharacteristics affect the NPD process (Lee & Souder, 2000).<strong>The</strong> follow<strong>in</strong>g section describes the literature onorganizational structure factors to provide a view <strong>of</strong> thesesubjects and how these factors aid open <strong>in</strong>novation as amoderat<strong>in</strong>g factor <strong>in</strong> the NPD success.ORGANIZATION STRUCTUREOrganization structure provides a way for the organizationto coord<strong>in</strong>ate its activities and establish and pursue commongoals despite diversity among <strong>in</strong>dividual members(Brockman & Morgan, 2003). In addition, organizationalstructure is the way responsibility and power are allocated,and work procedures are carried out among organization’smembers (Dewar & Werbel, 1979; Germa<strong>in</strong> & Gitterman,1996; Gerw<strong>in</strong> & Kolodny, 1992; McCla<strong>in</strong>, Pichel, & Walton,1985; Ruekert, Walker Jr, & Roer<strong>in</strong>g, 1985). Moreover, Daft(2001) provides a list <strong>of</strong> structural dimension that <strong>in</strong>cludesformalization, specialization, and standardization, hierarchy<strong>of</strong> authority, complexity, centralization, pr<strong>of</strong>essionalism, andratios <strong>of</strong> personnel. <strong>The</strong>y create a basis for measur<strong>in</strong>g andcompar<strong>in</strong>g organizations. Organizational structure has beencharacterized on a variety <strong>of</strong> measures that have been used toassess the structure’s dimensions (Blackburn, 1982;Fredrickson, 1986). Markedly, three dimensions <strong>of</strong> structure;centralization, formalization and complexity have receivedmore attention than any others (Aiken & Hage, 1971;Anderson, 1999; Daft, 2001; Daft & Lew<strong>in</strong>, 2008; Dewar &Werbel, 1979; Ettlie, Bridges, & O'keefe, 1984; Kanter,2003; Pierce & Delbecq, 1977; Simon, 1962; Thompson,2003); each <strong>of</strong> these dimensions is also the dom<strong>in</strong>antcharacteristic <strong>of</strong> a well-known structural type. <strong>The</strong>se factorsare discussed and also deemed <strong>in</strong> this study and are listed anddescribed <strong>in</strong> Table 2.S. MonsefTable 2: List <strong>of</strong> sub-dimensions for organizational structurefactorsDimension Def<strong>in</strong>itions LiteratureDimension <strong>of</strong> organizational structure<strong>The</strong> degree to which Aiken and Hageworkers are provided with (1971), Dewar andFormalizationrules and procedures that Werbel (1979),deprive versus encourage Ettlie et al. (1984),creative, autonomous workand learn<strong>in</strong>gPierce andDelbecq (1977)CentralizationComplexity<strong>The</strong> degree <strong>of</strong> authority tomake a decision that refersto the hierarchical level.<strong>The</strong> degree <strong>of</strong> activities orsub systems <strong>in</strong> anorganization that measuresthe 3 dimensions: vertical,horizontal and spatialAiken and Hage(1971), Thompson(1961), Kanter(2003) Daft (2001)Daft (2008),Anderson (1999),Simon (1962)Hence, accord<strong>in</strong>g to Table 2, there are three selectedvariables; Formalization, Centralization, and Complexity,from the structure dimension as effective variables on therelation <strong>of</strong> open <strong>in</strong>novation and NPD success. <strong>The</strong>refore,after the brief literature review <strong>of</strong> open <strong>in</strong>novation, NPD,organizational structure, the research framework andmethodology will be described <strong>in</strong> the follow<strong>in</strong>g section.RESEARCH FRAMEWORK AND METHODOLOGYAccord<strong>in</strong>g to the f<strong>in</strong>d<strong>in</strong>gs from the comprehensive review<strong>of</strong> exist<strong>in</strong>g reference <strong>in</strong> the literature <strong>of</strong> new product successand open <strong>in</strong>novation, a conceptual model has been designedas presented <strong>in</strong> Figure 3. Thus, <strong>in</strong> the proposed model, open<strong>in</strong>novation is expressed as an <strong>in</strong>dependent variable and thenew product development success is managed as thedependent variable. Hence, this study is focused on the NPDprocess Stages (Plann<strong>in</strong>g, Develop<strong>in</strong>g, Market<strong>in</strong>g andcommercialization). It is remarkable that for design<strong>in</strong>g thismodel, a comb<strong>in</strong>ation <strong>of</strong> models and theories that werementioned <strong>in</strong> literature has been used. As shown, the researchexpects that open <strong>in</strong>novation impacts the success <strong>of</strong> NPD.Figure 3: Conceptual ModelImportantly, the research argues that organization structurefactors will moderate the relationship between open<strong>in</strong>novation and NPD success. In this relationship, based onthe objectives, it deploys a quantitative method and us<strong>in</strong>g aquestionnaire for data collection from companies <strong>in</strong>Technology Park <strong>of</strong> Malaysia (TPM) as the population.Moreover, sample size was selected through a stratifiedrandom technique which is a form <strong>of</strong> probability sampl<strong>in</strong>g.10