American Marketing Association

A Cross-National Comparative Study of New Product Development Processes: Japan and the
United States
Author(s): X. Michael Song and Mark E. Parry
Source: Journal of Marketing, Vol. 61, No. 2 (Apr., 1997), pp. 1-18
Published by: American Marketing Association
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X. MichaelSong and MarkE. Parry
A Cross-National Comparative Study

of New Product Development
Processes: Japan and the
United States
Drawing on the marketing and management literatures, the authors identify strategic, tactical, and environmental
factors that influence the commercial success of new products. They test the resulting conceptual model using data
collected on 788 Japanese and 612 American new product development projects. The results provide insights into
the antecedents and correlates of new product success and failure in both Japanese and U.S. firms, as well as into
successful and unsuccessful management practices.
T oday, in a varietyof companies and markets,technol- tends to focus on a single aspect of the NPD process (e.g.,
ogy-based new productsare the focal point of compe- the research and development [R&D]-marketinginterface)
tition for many firms (Clark and Fujimoto 1991). In or is case-based, focusing on a few large, highly visible
many markets,Japanese firms are perceived as formidable firms.Althoughseveralauthorsexamine case studies of suc-
technological innovators.Over the past two decades, Japan- cessful developmentprojectsin Japanesefirms, their studies
ese companies have capturedgrowing shares of the global typically focus on intermediateoutcomes, such as speed and
market for numerous high-technology products and have flexibility (Imai, Nonaka, and Takeuchi 1985) or lead time
acceleratedthe pace of innovationin many industries.This and productivity (Clark and Fujimoto 1991). As a result,
success has led many to note that, whereas U.S. companies importantcomparativequestions about U.S. and Japanese
are strong in breakthroughresearch,Japan'sstrengthlies in NPD practicesremain.
the application of technology to new products (Kodama In this study, we attemptto answer some of these ques-
1991, 1995; Miyazaki 1995). tions by examining similarities and differences in the NPD
The innovation-basedsuccesses of prominentJapanese processes of Japanese and U.S firms. To this end we
firms have prompteda general interestin Japanesemanage- reviewed the NPD literature and developed a conceptual
ment (e.g., Kotabe 1990; Kotabeet al. 1991; Nonaka 1990) framework that is based on Day and Wensley's (1988)
and a specific interestin Japanesenew productdevelopment source-position-performance (SPP) framework. We then
(NPD) practices (Song and Parry 1992, 1993, 1996). The reviewed constructs and their measures in separate focus-
growing consensus is that the sources of Japanese success group interviews with membersof 16 Japaneseand 12 U.S.
no longer reside in second-mover advantages. Many productdevelopment teams. Using iterative feedback from
researcherssuggest that Japan and the United States have these case studies, focus group interviews,and two panels of
reacheda degree of parityin theircompetitive situation(e.g, experts, we developed a survey and sent it to 500 Japanese
Kodama 1991, 1995). Unfortunately,our knowledge of the companies and 500 U.S. firms, yielding data on 612 U.S.
Japanese NPD process is still sparse. With few exceptions, and 788 JapaneseNPD projects.An empiricaltest of the the-
past researchon the JapaneseNPD process has been largely oretical frameworkand hypotheses provided insights into
anecdotal, focused on the general advantagesof the Japan- the antecedentsof new productsuccess and failure in Japan-
ese managementsystem. To our knowledge, there has been ese and U.S. firms, as well as into successful and unsuc-
no single study that provides a direct comparison of the cessful NPD practices.
determinants of new product success in Japan and the In the remainderof this article, we describe our research
United States. The limited cross-nationalempiricalresearch methodology, data analysis, and results. Our research
methodology follows the guidelines for international
X.MichaelSongis AssociateProfessor
ofMarketing,TheEliBroadGrad- research established by Douglas and Craig (1983). After
uateSchoolof Management, MichiganStateUniversity.
MarkE.Parryis briefly reviewing recent studies of NPD in Japanese firms
AssociateProfessorof Marketing,
TheColgateDarden GraduateSchool and presenting our theoretical framework,we identify the
of BusinessAdministration, of Virginia.
University Theauthorsgratefully specific factors to be examined in our researchand hypoth-
acknowledge the financial
supportof the MarketingScienceInstitute, esize the relevant relationships among these variables. We
Eastman Kodak Company, Hewlett-Packard
Company, D.Little
Arthur Inc., then describethe preparationof our researchinstrument,our
andtheDarden SchooloftheUniversityofVirginia.
sampling procedures, and the administrationof our ques-
Journal of Marketing
Vol. 61 (April1997), 1-18 A ComparativeStudyof NPDProcesses / 1

tionnaires. After presenting our statistical analysis and keting tasks in new product success (e.g., Maidique and
results, we close with a discussion of research limitations, Zirger 1984; Rothwell et al. 1974, Utterbacket al. 1976).
implications for new product management, and directions Finally, the new productliteraturefocuses on the moderat-
for furtherresearch. ing effect of environmentalvariablessuch as marketpoten-
tial and competitive intensity,though the importanceof the
latter variable is disputed by some studies (Cooper 1979a;
Theoretical Framework Cooper and Kleinschmidt1987, 1993).
In an importantdiscussion of competitive advantage, Day
and Wensley (1988) link sources of advantage (skills and Research on Japanese NPD
resources) to positional advantages on the basis of cost Kodama(1995, p. 8) argues that the most importantcapa-
and/orproductdifferentiationadvantages.In turn,positional
bility in NPD is "theability to convertdemandfrom a vague
advantagesinfluence performanceoutcomes, including sat- set of distant wants into well-defined products."This capa-
isfaction, loyalty, market share, and profitability. This
framework provides a useful perspective for summarizing bility, termeddemandarticulation,is a two-step process:the
translationand integrationof marketdata into a productcon-
much of the recent literatureon the determinantsof new
cept and the decomposition of the product concept into
product success, because firm skills and resources, an
developmentprojects.KodamaproposesthatJapanesefirms
importantsource of advantage,have figured prominentlyin
studies of new productsuccess. For example, many studies applying the principles of demand-articulatedNPD have
three prerequisite characteristics:First, top management
have reporteda significantpositive correlationbetween new
takes a long-term view of NPD-that is, a long-termcom-
product success and (1) the level of the firm's marketing mitmentto providingthe necessaryresourcesfor R&D; sec-
resources and skills, which embrace marketing research,
ond, the industryas a whole, within which the firm operates,
advertisingand promotion,and sales force and distribution, has a high degree of technologicalcompetence and therefore
and (2) technical resourcesand skills, which embraceR&D,
has a greatercapacity for absorbingtechnologies from other
engineering, and production(Calantone,Schmidt, and Song
industries;and third,the firm is involved in intense interfirm
1996; Cooper 1979b; Cooper and Kleinschmidt 1987; Parry
and Song 1994; Song and Parry 1994, 1996). competition that motivates it to focus on customers' needs
and innovatecreatively.
Similarly, many NPD studies also identify positional Recent studies of Japanese NPD are consistent with
advantagesas importantdeterminantsof success. For exam- Kodama's description of demand-articulatedNPD. For
ple, in a comparison of projects from Europe and Japan,
Utterbackand colleagues (1976) reportthat successful pro- example, Imai, Nonaka,andTakeuchi(1985) examine seven
case studies of innovativeproductsin Japanesecompanies.
jects were more likely to involve products having a great Their analysis revealsone externalfactorthatsupportsspeed
competitive advantage.Cooper (1979b) and Song and Parry and flexibility in NPD: a self-organizing supplier network
(1994) find a significant positive relationshipbetween the that is characterizedby a shareddivision of labor,learning,
level of new product success and measures of productdif-
informationexchange, and reciprocity.They also identify
ferentiation, such as the presence of unique features, rela-
six internalfactors that supportspeed and flexibility: strate-
tively high productquality,and the capabilityto reducecon-
sumer costs or enable the consumer to perform a unique gic direction from and subtle control by top management,
task. Maidiqueand Zirger(1984) link the probabilityof new self-organizingprojectteams, overlappingproductdevelop-
ment phases, cross-functional learning, and organizational
electronic productsuccess with a high performance-to-cost
transferof learning (see also Nonaka 1990; Takeuchi and
ratio, and a follow-up study emphasizes the provision of
Nonaka 1986). Some of these practices appear consistent
"significantvalue to the customer,"where value to the cus- with Quinn's (1985, pp. 77-79) descriptionof Sony, where
tomer is defined using measuresthatresemble those used by
senior managers focus on "their company's value system
Cooper (1979a). and atmosphereto support"innovation,and where product
New product studies also focus on factors that mediate
the relationship between skills and resources and product developmentincorporates"multipleapproaches"and devel-
differentiation(e.g., Calantone, Schmidt, and Song 1996). opmental shoot-outs. More recent studies of the automobile
This focus is consistent with the competitive advantage industry identify other success factors, such as visionary
team leadersand productintegrity,which referto a product's
frameworkof Day and Wensley (1988, p. 7), who observe
fit with the firm's image (Clarkand Fujimoto 1990).
the following:
We must be careful not to conclude that the characteris-
Superiorskills and resourcesare not automatically con- tics identifiedhere are uniquely Japanese.Some of the new
vertedinto positionaladvantages,nor is therea certain productsuccess factors identified in the studies of Japanese
performance payofffromsuperiorcost or differentiation firms overlap with factors identified in studies of NPD in
positions.Bothconversionsaremediated jointlyby strate- other countries. For example, Hise and colleagues (1990)
gic choices,includingobjectivesandentrytimingandthe
qualityof tacticsandimplementation. report a positive correlationbetween cross-functional inte-
gration and new productsuccess, and Zirger and Maidique
Therefore, many new product studies emphasize the (1990) link top managementcommitment to new product
technicalaspects of NPD (e.g., Cooper 1979a;Maidiqueand success. Moreover,inferences about the general population
Zirger 1984; Parry and Song 1994; Song and Parry 1994, of Japanesefirms warrantcaution, because the conclusions
1996). The literaturealso highlights the role of variousmar- drawnby Imai, Nonaka, and Takeuchi(1985), Takeuchiand
2 / Journalof Marketing,April1997

Nonaka (1986), and Nonaka (1990) are based on a small success factors identified in the productliterature.Here, we
numberof case studies. provide a comparativeperspective,adding data collected on
On the basis of our review of the NPD literature,we con- 612 U.S. projects and employing multivariateregression to
clude that there is currentlyinsufficientevidence to general- compare explicitly the determinantsof new product sales,
ize about the relative importanceof various NPD factors in market share, and profitability performance in U.S. and
Japaneseand U.S. firms, because much of the currentliter- JapaneseNPD projects.
atureon JapaneseNPD provides only a sketchy description
of a few large Japanese corporations (for exceptions, see
Song and Parry1996, 1997). Partof the problemmay be the Proposed Model and Research
difficulty of obtaining valid data at the division level from Hypotheses
foreign companies, particularlyJapanesefirms. The lack of According to Douglas and Craig (1983), the first step in
data is compoundedby cross-countryvariationsin measures internationalmarketingresearch is to specify factors to be
of new product performance. Many studies of U.S. and studied and hypotheses that relate these factors to one
Canadian firms examine the determinantsof new product another.As noted previously,we explore the determinantsof
sales, share, and profits (e.g., Calantoneand Cooper 1979, new productsales, share, and performancein Japaneseand
1981; Cooper 1979b; Crawford 1977; Zirgerand Maidique U.S. firms. Following Day and Wensley (1988), we link
1990). In contrast,studies of JapaneseNPD focus on other sources of advantageto the positional advantageof product
measures of new product performancesuch as speed and differentiation, which in turn is linked to product perfor-
flexibility of the NPD process (Imai, Nonaka, and Takeuchi mance. Within this SPP framework, the relationship
1985) or lead time and productivity (Clark and Fujimoto between sources of advantageand productdifferentiationis
1991). mediated by the quality of implementationduring the NPD
To address these problems, we build on our previous process, and the relationship between product differentia-
work (Song and Parry 1996), which analyzed data on 788 tion and productperformanceis moderatedby environmen-
new product projects collected from 404 Japanese compa- tal and other variables.These relationshipsare summarized
nies. We reported bivariate correlations between several in Figure 1, and the underlying hypotheses are discussed
measures of new product success and measures of several subsequently.
FIGURE 1
A Conceptual Framework for Studying the NPD Process in Japan and the United States
Function-Specific Sources of Advantage

?Marketingskill and resources
1 En vironmental Factors
-Intemal commitment
Quality of lmplementation in
-Mairketpotential
the NPD Process
I *Competitiveintensity
*Ideadevelopmentand screeningproficiency
?Businessand marketopportunityanalysisproficiency
?Producttesting proficiency
*Productcommercializationproficiency
t
Project-Specific Sources of Advantage
Positional Advantage of
*Internalcommitment
Product Differentiation *Relativeprofitability
*Cross-functionalintegration *Moreinnovative *Relativesales
*Higherquality *Relativemarketshares
*Meetscustomers'needs better
I
Ouality of Implementation in the
NPD Process
?Technicaldevelopmentproficiency
Functional-Specific
Sources of Advantage
?Marketingskill and resources
Functional-Specific Sources ofAdvantage
*Technicalskill and resources
A ComparativeStudyof NPDProcesses / 3

Sources of Advantage viduals can include members of top management,project
Successful new productsemerge from a combinationof the leaders, project team members, and other productchampi-
firm's existing capabilities, skills, and resources (Clark and ons within the firm (Griffin and Hauser 1992, 1993; Maid-
Wheelwright 1992; Day and Wensley 1988; Prahaladand ique and Zirger 1984; Zirger and Maidique 1990). These
Hamel 1990; Stalk 1988; Stalk, Evans, and Shulman 1992). committedindividualsensurethatthe projectremainsa high
According to resource dependency theory (Pfeffer and priority within the firm, funnel and/or attractresources to
Salancik 1978), the existing experiencebase for a task deter- the project, and work to maintainindividual and corporate
mines the pool of expertise, information, and other enthusiasmwhen the project encountersdifficulties. These
resources available to solve the problem at hand. This sug- activities raise the level of technical development profi-
gests thatfirm-specifictechniquesand understandingof var- ciency and enhance productcommercializationefforts.
ious informationand proceduresfor creating and dissemi- Several studies of JapaneseNPD emphasize the impor-
tance of some different aspects of internal commitment.
nating knowledge enable effective NPD (Leonard-Barton
1992). In the discussion that follows, we distinguish Clark and Fujimoto (1990) point to powerful and visionary
betweenfunction-specific sources of advantage,which span team leaders as one crucial component in the success of
new productprojects,andproject-specificsources of advan- some JapaneseNPD efforts. Froma study of five innovative
tages, which span functions. Japaneseproducts, Imai, Nonaka, and Takeuchi(1985, pp.
342-44) conclude that Japanese top managementprovides
Function-specific sources of advantage. New products the initial kickoff to the developmentprocess by "signaling
are generally more likely to be successful if they build on a broadstrategicdirection or goal for the company,"giving
the firm's existing marketingstrengths(Day 1981; Day and the project team "a side degree of freedom" and "setting
Nedungadi 1994; Day and Wensley 1988; Song and Parry very challenging parameters."In addition, top management
1994, 1996; Zirgerand Maidique 1990). A good fit between exercises "subtle control" by establishing shared values,
existing marketingskills and resourcesand the development assigning team members, creating an open work environ-
project'sneed raises the projectteam's ability to gathermar- ment, encouraging information collection and exchange,
ket and competitive information and enhances the team's and rewardingteam (as opposed to individual)performance
ability to interpretthat information.This in turn provides (pp. 358-59; see also Clark and Fujimoto 1991; Quinn
greaterinsight for and focus to idea generationand screen- 1985; Takeuchiand Nonaka 1986). Therefore,we hypothe-
ing and to business and marketopportunityanalysis (Calan- size the following:
tone, Schmidt, and Song 1996; Cooper 1979a). This same
informationalso can provide direction to productcommer- H3:ForU.S. andJapaneseNPDprojects,the level of internal
cialization efforts, permittingthe efficient use of marketing commitment to a projectis positivelyrelatedto proficiency
resources and enhancing the firm's ability to differentiate
in the followingstagesof productdevelopment: (a) idea
development and screening, (b) business and market
the new productfrom competitive offerings. Therefore, we
opportunity analysis,(c) technicaldevelopment, (d) prod-
expect high levels of fit with existing marketingskills and ucttesting,and(e) productcommercialization.
resources to enhance development proficiencies and
strengthenthe relationshipbetween product differentiation Cross-functionalintegrationrefers to the level of unity
and relative productperformance: of effort across functionalareas in developing and launching
a new product.The need for cross-functionalintegrationin
Hi: For U.S. andJapaneseNPD projects,a project'sfit with NPD activities is well established(Griffinand Hauser 1992,
the firm's existing marketingskills and resources is posi-
1993; Olson, Walker, and Ruekert 1995; Song and Parry
tively relatedto proficiency in the following stages of the
NPD process: (a) idea development and screening, (b) 1992, 1993). Many NPD studies identify cross-functional
business and marketopportunityanalysis, (c) producttest- integration as an important mechanism for information
ing, and (d) productcommercialization. transfer(e.g., Ruekert and Walker 1987), cross-functional
learning, and problem solving (e.g., Clark and Fujimoto
The firm's existing base of technical strengths is also 1990; Imai, Nonaka, and Takeuchi 1985; Nonaka 1990;
important.A high level of fit with the firm's existing techni- Quinn 1985; Takeuchiand Nonaka 1986).
cal resources and skills enhances the proficiency of techni-
High levels of cross-functional integrationenhance the
cal activities undertakenby the firm in the NPD process
projectteam's effort to gather and disseminate information,
(Cooper 1979a). This increase in technical proficiency which in turnaffects the proficiencyof NPD activities such
should increase product competitive advantage by raising as productdesign and testing. These informationflows are
the actual performanceof the new productrelative to com- also critical for the developmentof effective sales forecasts,
petitors (Calantone, Schmidt, and Song 1996; Song and product modifications, and product support. Moreover,
Parry 1997). cross-functional integration early in the development
H2: For U.S. and Japanese NPD projects, a project's fit with process can reduce the numberof redesigns and respecifica-
the firm's technical skills and resources is positively tions, thereby reducing development time, lowering devel-
related to proficiency in the technical development stage opment costs, and raising new product success rates (Nor-
of NPD. ton, Parry,and Song 1994). Therefore, we hypothesize the
Project-specificsources of advantage. Internal commit- following:
ment refers to the existence within the firm of a group of H4:ForU.S. and JapaneseNPD projects,the level of cross-
individualswho push a developmentprojectforwardtoward is positivelyrelatedto proficiencyin
functionalintegration
completion and successful commercialization.These indi- the following stages of product development: (a) idea

developmentand screening,(b) businessand marketing variables. In the first class, the firm's marketingskills and
opportunity analysis,(c) technicaldevelopment,
(d) prod- resources influence its ability to obtain distribution and,
ucttesting,and(e) productcommercialization.
through advertising, sales, and promotion, convert prefer-
This hypothesis is consistent with several studies that ence into trial and repeat purchasebehavior.Therefore,we
identify cross-functional communication as an important hypothesize the following:
tactical success factor in U.S. (Hise et al. 1990; Maidique
H6:ForU.S. andJapaneseNPD projects,a highlevel of pro-
and Zirger 1984) and Japanese firms (Imai, Nonaka, and ject fit with the firm's marketingskills and resources
Takeuchi 1985; Norton, Parry,and Song 1994; Song and strengthensthe relationshipbetweenproductdifferentia-
Parry 1992; Takeuchiand Nonaka 1986). tionandrelativeproductperformance.
Quality of Implementation in the NPD Process The second class of variablesthat moderatethe relationship
between differentiationand performancedescribe the pro-
Many studies point to differentNPD activities as important ject's environment.The level of internalcommitmentinflu-
determinantsof new productsuccess. For example, Ruben- ences the zeal with which resources are applied to market-
stein and colleagues (1976) study 54 U.S. new productpro-
ing a new product, which in turn increases the likelihood
jects and conclude that superiortechniquesfor data gather- thata differentiatedproductwill be successful in the market.
ing, analysis, and decision making is one importantfacilita- High levels of internalcommitmentshould also increasethe
tor of success (see also Rothwell 1974; Rothwellet al. 1974;
efficiency of marketing and manufacturingexpenditures,
Utterbacket al. 1976). Maidique and Zirger (1984, p. 201) thereby increasing new productprofitability.Therefore,we
also conclude that new productsuccess is more likely when hypothesize the following:
(1) "the developing organizationis proficient in marketing
and commits a significant amountof its resourcesto selling H7:ForU.S. andJapaneseNPD projects,a high level of
internalcommitmentto a projectstrengthensthe rela-
and promoting the product"and (2) "the R&D process is
tionship between productdifferentiationand relative
well planned and executed."Similarly,Cooper (1979a) and productperformance.
Song and Parry(1994) reportpositive and significantcorre-
lations between new productsuccess and measuresof devel- We also distinguishtwo environmentalvariablesthatare
opment proficiency,which includes measuresof proficiency external to the firm. Marketpotential refers to the attrac-
in screening, preliminarymarketand technical assessments, tiveness of a targetmarket,which reflects marketcharacter-
marketresearch, product development, test marketing,and istics such as size and growth. Marketpotentialalso reflects
marketlaunch. the need level of target market customers and the impor-
Within the context of the SPP model described previ- tance to customers of products addressing those needs.
ously, technical and marketing development proficiencies Therefore,a high level of marketpotential increases a new
can be interpretedas "mediatingevents that determine the product's potential sales, share, and profit performance
degree of leverage an investment in a particularskill or (Cooper 1979b; Cooper and Kleinschmidt 1987; Song and
resource has on cost or differentiation"(Day and Wensley Parry 1994). We thereforehypothesize the following:
1988, p. 6). Specifically, these proficiencies affect the H8:ForU.S. andJapaneseNPD projects,increasesin the
strength of the relationship between sources of advantage level of marketpotential strengthenthe relationship
and the positional advantages of product differentiation. betweenproductdifferentiationandrelativeproductper-
formance.
Therefore,we hypothesize the following:
H5:ForU.S. andJapaneseNPDprojects,the levelof product Competitive intensity refers to the nature of interfirm
differentiation
is positivelyrelatedto proficiencyin the rivalry within the firm's target market. When competitive
followingstagesof productdevelopment: (a) ideadevel- intensity is high, a new product introductionshould elicit
opmentandscreening,(b) businessandmarketing oppor- aggressive responses from competitors, which should
tunityanalysis,(c) technicaldevelopment,
(d)producttest- adversely affect new product performance.The empirical
ing, and(e) productcommercialization. evidence for this hypothesis is mixed. Many of the Japanese
Positional Advantage: Product Differentiation and U.S. managersin our case studies attributedthe failure
of theirhigh-qualityproductsto an intensecompetitiveenvi-
The SPP frameworklinks productdifferentiationto product ronment.A study of the U.S. electronics reportedthat "fail-
performance,because differentiatedproducts offer greater ures were more likely for products introducedinto highly
potential for customer satisfaction and loyalty (Day and competitive markets"(Zirger and Maidique 1990, p. 878;
Wensley 1988). Consistent with this reasoning,severalstud- see also Cooper 1979a, b). However,other studies of North
ies suggest that product differentiationis one of the most Americanfirms have failed to find a significantrelationship
importantpredictors of new product success (e.g., Cooper between market competitiveness and new product success
and Kleinschmidt 1987, 1993; Parryand Song 1994, 1996). (e.g., Cooper 1979a; Cooperand Kleinschmidt1987, 1993).
However,Day and Wensley (1988) arguethatthe conversion Nevertheless, because the intuition is compelling, we
of a positional advantageinto performanceoutcomes is not hypothesize the following:
automaticbut is moderatedby other factors.Withinthe con-
text of NPD, we distinguish two classes of moderatingvari- H9:ForU.S. andJapaneseNPDprojects,increasesin thelevel
of competitive intensity weaken the relationshipbetween
ables: source-of-advantage variables and environmental productdifferentiation
andrelativeproductperformance.
A ComparativeStudyof NPDProcesses /5

have high consistency and face validity. A Japanese ver-
Methodology sion was then preparedusing the parallel-translation/dou-
Overall Design
ble-translationmethod (Adler 1983; Song and Parry 1996;
Our overall research design, which combines case studies Sekaran 1983): Two Japanese professional translators
and survey research, follows the procedurefor conducting independently preparedJapanese versions of the question-
cross-nationalcomparativeresearchoutlined in Douglas and naires, and two others independently translatedthe Japan-
Craig (1983) and extended by Song and Parry(1996). Key ese translations back into English. Minor inconsistencies
tasks include specifying and categorizing variables,design- were resolved in a group meeting with all four translators,
ing an appropriate research instrument, and developing and the appropriatenessof the final Japanese version was
appropriatesampling and survey administrationtechniques confirmed through discussions with selected participants
and procedures(for details, see Song and Parry 1996). To from the case-study interviews.
develop appropriatemeasures for cross-cultural research, Two pretestsfollowed, the first with six Japanesegradu-
we adaptChurchill's(1979; see also Gerbing and Anderson ates from two well-regardedU.S. business schools and four
1988) paradigmfor developing measures of marketingcon- Japaneseexecutives. These bilingual respondentscompleted
structs. We refine relevant measurement scales identified the questionnairein the presence of the first author,asking
from the NPD literaturethrough in-depth case studies and questions as problems or ambiguities arose. The second
focus group interviews with U.S. and JapaneseNPD teams, pretest involved a professionally draftedquestionnairethat
follow-up interviews with individual team members, and was administeredto all the participantsof the 36 case stud-
consultation with academic "experts" from Japanese and ies in the 12 U.S. and 16 Japanese NPD teams mentioned
U.S. engineering and business schools. In particular,we previously.Both pretestsyielded only minor suggestions for
conducted 36 in-depth case studies and focus group inter- improvement,which were incorporatedinto the final version
views with 12 U.S. and 16 Japanese NPD teams and con- of the questionnaire. (A detailed description of the case
cluded with 92 follow-up interviews with individual team studies and survey development processes is contained in
members. Song and Parry 1996.)
The focus group-interview questionnaire contained
more than 180 open-ended and semistructuredquestions. Japanese Sample Design and Responses
One subset of questions was designed to elicit salient con- Our Japanese sampling frame was defined by identifying
structs and team-member definitions of those constructs. all 792 nonservice Japanese companies traded on the
Team members were first asked their opinions regarding Tokyo, Osaka, and Nagoya stock exchanges. A presurvey,
importantissues in NPD. These discussions permitted an administered by phone or mail, narrowed the sampling
assessment of conceptual equivalence of constructs (Dou- frame to 611 firms that had developed at least four new
glas and Craig 1983; Song and Parry 1996). A second sub- physical products since 1991. Because of budgetary con-
set of questions was designed to elicit team-memberevalu- straints, we randomly selected 500 of the 611 firms in the
ations of a theoreticalmodel of the NPD process to describe sampling frame for our survey. Following the total design
their own NPD experiences.These discussions permittedan method for survey research (Dillman 1978), the first mail-
assessment of the functional equivalence of constructs ing packet included two copies of a personalized letter
(Douglas and Craig 1983; Song and Parry 1996). A third (one in English and one in Japanese), two identical Japan-
subset of questions addressedteam-memberperceptionsof ese-language questionnaires, and two international
the relevance and completeness of scale items drawn from express postage-paid envelopes with individually typed
our literaturereview and earlier case studies. These discus- return-addresslabels. Each participatingfirm was asked to
sions enabled us to evaluatethe category equivalence of our select two projects introduced after 1991. To maximize
constructs(Douglas and Craig 1983; Song and Parry1996). potential variance and avoid perceptual biases, each com-
The results from these case studies suggest that several pany was asked to select one successful project and one
scales used in North American studies could be used (with failure.
minor modifications)in a comparisonof Japaneseand U.S. Our focus group interviews uniformlyindicatedthat the
NPD processes. project managers/leaderswere good informants.Neverthe-
less, we requestedthatthe projectmanagerfor each selected
Survey Instrument Development
project obtain responses from team members. To increase
After completing the first round of focus group inter- the response rate, we supplementedour extensive personal
views, we followed the recommendations of Churchill contacts and networkingefforts with numerous incentives.
(1979) and identified subsets of items that were unique Four follow-up letters and multiple phone calls and faxes
and possessed "different shades of meaning" to infor- yielded 788 usable questionnairesfrom 404 Japanesefirms,
mants. We then submitted a list of constructs and corre- an effective company response rate of 81% (404/500).
sponding measurementitems to a panel of eight academic Through follow-up telephone interviews and mail sur-
"experts" from prominent business and engineering veys, we examined concerns about the validity and reliabil-
schools in Japan and the United States for critical evalua- ity of the information provided by respondents. We con-
tion and suggestions for additional measures (Song and cluded that the informationwas reliable and valid, because
Parry 1996). Following minor revisions and a second (1) each questionnairewas completed by a project manager
review by four academicians and five NPD managers, we identifiedas a knowledgeablesource regardingall aspects of
constructed a questionnaire using those items judged to the project's development (Phillips 1981), (2) 95% of the

project managers consulted with other managers before The use of the subjective scale may be criticized for not
completing the questionnaire,and (3) 83.6% of the project generating standardizedmeasures of product success and
managers had five team members complete the question- failure across firms, industries,and countries(e.g., the scale
naire,after which the team membersmet to reachconsensus would permitthe same productto be rateda success by one
on the ratings. project team and a failure by another).However, this is an
artifact of real-world differences among firms, industries,
The U.S. Sample Design and Responses economic conditions, accountingrules, temporalsituations,
The sampling frame for the U.S. sample consisted of a mail- and decision criteriaratherthan a criticism of these scales.
ing to all companies listed in the High-TechnologyIndus- As suggested by both U.S. and Japanese managers during
tries Directory. The research design used in the Japanese our case study interviews, using the perceived performance
sample was strictly followed for the U.S. sample except that measurementscales permits comparisons across firms and
everything was in English. After assessing the similarityof countries, on the basis of each project team's assessments
industry representationin the Japanese and U.S. sampling within its own particularindustry, culture, time horizon,
frames, we narrowedthe U.S. list to 643 firms that met the economic condition, and expectations. Furthermore,many
criteriaof developing and commercializingat least four new recent marketing studies also use subjective measures of
physical products since 1990. Like the Japanese sample, a performance(Jaworskiand Kohli 1993; Olson, Walker,and
random sample (with industry stratificationto match the Ruekert1995).
Japanesesample) of 500 firms was selected for the final sur- Marketing skills and resources (oa = .97; axus = .89)
vey. In administeringthe mail survey,we followed the exact refer to a project's fit with the firm's existing marketing
proceduresdescribedin the Japanesesample with the excep- capabilities. This construct was measuredwith eight items
tion thatall materialswere in English. Once again, members that addressed the firm's marketing research, sales force,
in our researchteam were instructedto follow the same data distribution,and advertising/promotionresourcesand skills.
collection protocol in the entire data collection process. These measures were adaptedfrom the items developed by
As in the Japanese sample, we offered many incentives Cooper (1979a). Technical skills and resources ((a = .95;
to increase the response rate in addition to extensive per- oaus = .84) refer to a project's fit with the firm's existing
sonal contacts and networking efforts. Furthermore,we technical capabilities. The six-item scale used to measure
heavily promotedthe researchreportand briefs designed to this construct addresses the firm's R&D, engineering, and
summarize the findings of the Japanesesample as an addi- manufacturingresources and skills. All items were adapted
tional incentive for U.S. sample respondents.After four fol- from Cooper (1979b).
low-up letters and several phone calls, we received usable Internal commitment(aJ = .52; aus = .65) refers to the
questionnaireson 612 NPD projects(312 successes and 300 existence of individuals in the firm who were dedicated to
failures) from 312 U.S. firms (excluding the responses from the success of the project.This constructwas measuredwith
6 companies that were not usable). Thus, the effective com- three items that assessed senior management support, the
pany response rate for the U.S. sample was 62.4% existence of a project champion, and the firm's confidence
(312/500). In the follow-up survey, 87% of the respondents regarding the project's future commercial success. These
reportedthatthey had at least consulted with team members. measures were also adapted from the items developed by
Cooper (1979b). Cross-functionalintegration(ca = .79; aUs
Measures = .88) refers to the level of unity of efforts across functional
All variables were measured with multiple-item scales. areas in developing and launchinga new product.We use a
Although many items were developed specifically for this four-item scale to measure cross-functional integration.
comparative study, other measurementitems derived from These items emerged from the work of Maidiqueand Zirger
existing, well-validatedscales. In AppendixA, we reportthe (1990; see also Maidique and Zirger 1984) and from the
items used to measure each of the constructs,the response case study interviews with NPD team members.The items
formatemployed in the questionnaire,and selected sources address the degree to which NPD and commercialization
for each item. All items employed a zero-to-tenpoint scale. were cross-functional team efforts, as well as the level of
In the discussion thatfollows, let (a and (aXsdenote the reli- integrationbetween (1) R&D and manufacturing,(2) R&D
ability coefficients from the Japanese and U.S. samples, and marketing,and (3) manufacturingand marketing.
respectively. Because both product differentiationand relative prod-
To measure relative productperformance,we use three uct performancereflect the firm's actual product develop-
differentscales. One four-itemscale measuredrelativeprof- ment efforts, we included five scales designed to measure
itability(ca = .97; ocus= .96), one three-itemscale measured the firm's proficiencyin key stages of the NPD process:idea
relativesales ((a = .93; aus = .929), and a second three-item developmentand screening (five items), business and mar-
scale measuredrelative marketshare ((J = .96; xus = .94). ket opportunityanalysis (seven items), technical develop-
On the basis of our 36 in-depthcase studies and focus group ment (nine items), product testing (four items), andproduct
interviews with both Japaneseand U.S. firms, these subjec- commercialization(seven items). In every case, the reliabil-
tive scales are appropriate,because they capturethe percep- ity coefficients for these quality-of-implementationscales
tions of the respondentsthat underlietheir decision-making exceeded .75 for both Japaneseand U.S. samples. Six items
processes and permitcomparisonsacross firms, on the basis composing these scales were drawnfrom the NPD literature,
of firms' individualassessments given theirparticularindus- and the others were developed from our case studies and
tries, time horizons, economic conditions, and goals. focus group interviews with 28 U.S. and Japanese NPD
A ComparativeStudyof NPDProcesses / 7

teams. The decision to use five scales to assess quality of tionships between productdifferentiationand relativeprod-
implementationis based on our conversationswith members uct performance.
of U.S. and Japanese NPD teams and is consistent with We performedseveraldiagnostic tests and requestedand
other descriptions of the NPD process (e.g., Urban and examined scatterplotsof the residuals as part of the initial
Hauser 1993). Moreover,the inclusion of these variables in regression analysis to test for appropriateness of the
the regressionanalyses described subsequentlyis consistent assumptions of normality, linearity, and homoscedasticity.
with a variety of studies that emphasize the importanceof An examination of residual plots suggests that these
proficientlyexecuting various tasks duringproductconcep- assumptionswere appropriatein both samples. An applica-
tualization, development, and launch (e.g., Calantone and tion of the Belsley, Kuh, and Welsch (1980) multicollinear-
Cooper 1979, 1981; Cooper and Kleinschmidt 1987). ity diagnostic test indicates no serious multicollinearity
Productdifferentiation(aJ = .90; aus = .89) refers to a problems.
product'sperceivedsuperiorityrelativeto competitive prod-
ucts. We measuredthis constructwith ten items drawnfrom Quality of Implementation: The Development
Cooper (1979b) and Zirger and Maidique (1990). These Proficiency Regressions
items addressthe product'sinnovativeness,relative unique- In Table 1, we report the results of testing H1-H4. The
ness, relativequality,and relative performance. adjustedR2s rangedfrom .22 to .49 in the U.S. sample and
Market potential (cJ = .75; a(us = .73) refers to the from .20 to .49 in the Japanesesample. In both samples, all
potentialdemandwithin the targetmarketfor the firm's new coefficients were positive and significant in all five equa-
product.The four-item scale used to measurethis construct tions with one exception (the coefficients of internalcom-
addressesthe numberof potentialcustomers,the strengthof mitmentin the U.S. producttesting equation [H3] are nega-
their need for the firm's product,the dollar size of this mar- tive but insignificant).Therefore,HI-H4 are supported.
ket, and the market'sgrowth rate. Competitiveintensity (ca
= .74; o(us = .77) refers to the nature of interfirmrivalry Product Differentiation Regressions
within the firm's target market.The six items used to mea- In Table2, we reportthe resultsof OLS regressionsof prod-
sure this constructaddress the numberof firms in the target uct differentiationon the independent variables identified
market,the existence of a strong competitor,the importance previously.The adjustedR2s were .18 and .23 for the U.S.
of price and new product rivalry, and the loyalty of cus- and Japaneseregressions,respectively.In both the U.S. and
tomers to existing firms as well as their satisfactionwith the Japanesesamples, productdifferentiationwas positively and
products offered by those firms. Most of these items were significantly relatedto proficiencies in business and market
adapted from Cooper (1979b), but one (frequency of new analysis, technical development,and producttesting. These
product introductions) emerged from the case studies results supportH5b,H5c,and H5d.Note also that in both the
described previously. Japaneseand U.S. regressions,proficiencies in business and
Appendix A reports item-total correlations for each of marketanalysis appearto have the greatest impact on prod-
the scales defined here. With one exception (internalcom- uct differentiation.
mitment), construct reliabilities in both the Japanese and Not all hypotheses, however, were supported in both
U.S. samples exceed .70 and lie in the acceptablerange sug- samples. The coefficient of proficiency in commercializa-
gested by the literature (Peter 1979, 1981). Moreover, a tion was positive in both samples but was insignificantin the
majority of the constructs have reliability coefficients that Japanesesample. Moreover,the coefficient of proficiencyin
meet or exceed .80. Examinationof the patternsof item-item idea generationand screening was negative in both samples
correlations and item-total correlations also indicates that and significant at the 5% level of confidence in the U.S.
the measureswere satisfactory. sample. Therefore,H5ewas supportedonly in the U.S. sam-
ple, and H5awas not supportedin either sample.
Model Estimation and Results Relative Product Performance Equations

We evaluatethe researchhypotheses in three steps. First, we In Table 3, we reportthe results of OLS regressionsof rela-
use ordinaryleast squares(OLS) regressionto estimate five tive profitability,sales, and marketshare on four variables
models explaining the level of proficiency in various stages created by multiplying productdifferentiationby measures
of the NPD process. These models permitus to evaluatethe of marketing competency, internal commitment, market
relationship between sources of advantage and quality of potential, and competitive intensity. The adjusted R2s for
implementation in the NPD process (i.e., the hypotheses these regressions ranged from .37 to .44. In each equation,
linking development proficiencies with marketing compe- all four interaction terms were significant and had the
tencies, technical competencies, internalcommitment, and hypothesizedsigns, supportingH6-H9.
cross-functional integration).Second, we estimate an OLS A comparison of the U.S. and Japanese regressions in
model explaining product differentiation.This model per- Table 3 reveals two interestingresults. First, regardlessof
mits us to evaluateH5, which links productdifferentiationto the performancemeasure used, the magnitudeof the stan-
quality of implementationin the NPD process. Third, we dardizedcoefficient on the interactionbetween productdif-
estimate an OLS model assessing relative product perfor- ferentiationand marketpotential in the Japanese sample is
mance, which permitsus to assess the moderatingeffects of approximatelythree times the magnitudeof the correspond-
sources of advantageand environmentalfactors on the rela- ing coefficient in the U.S. sample. Therefore, the relation-

TABLE 1
Results of OLS Estimation: Standardized Coefficients from the Equations of Quality of Implemen
Proficiency in the Proficiency in the Proficiency in Profi

Idea Development MarketOpportunity the Technical Pro
and Screening Stage Analysis Stage Development Stage
Sources of Advantage U.S. Japanese U.S. Japanese U.S. Japanese U.S.
Factors Sample Sample Sample Sample Sample Sample Sampl
MarketingSkillsand .11* .20* .12* .28* .18
Resources (Hla-Hld) (3.03) (6.25) (3.40) (9.63) (4.25
TechnicalSkills and .38* .32*

Resources (H2) (11.57) (11.01)
InternalCommitment .33* .18* .22* .24* .15* .26** -.03n

(H3a-H3e) (8.80) (4.70) (5.86) (7.01) (3.99) (7.87) (-.72
Cross-FunctionalIntegration .32* .28* .41* .30* .32* .30* .38

(H4a-H4e) (8.15) (7.41) (10.47) (8.56) (8.80) (9.65) (8.44
AdjustedR-Square .40 .26 .40 .39 .42 .49 .22
0 Regression F-Value 137.52* 92.77* 137.16* 168.07* 144.20* 252.04* 58.09

0
Notes:The numbersin parentheses are t-statistics.Test of significanceis based on one-tailedtest.
*p< .01.
**p< .05.
0. nslndicatesnot significantat 95% confidence level.
z
10
0
0,
0
u,
Co
(n
()

ship between product differentiation and relative product in convertingproductdifferentiationadvantagesinto relative
performanceappearsto be more heavily influenced by mar- performance outcomes, but in high-potential markets,
ket potentialin Japanesethan in U.S. NPD projects. On the Japaneseprojectteams are relativelymore effective. On the
one hand,this resultmay indicatethat, in low-potentialmar- other hand, it may mean that, in high-potential markets,
kets, Japaneseand U.S. project teams are equally effective Japaneseand U.S. projectteams are equally effective in con-
TABLE 2
Results of OLS Estimation: Standardized Coefficients from
Positional Advantage of Product Differentiation Regression
Product Differentiation
Quality of Implementation Variables U.S. Sample Japanese Sample
Proficiencyin the Idea Developmentand Screening Stage (H5a) -.11** -.04ns
(-2.21) (-.91)
Proficiencyin the Business and MarketOpportunityAnalysis Stage (H5b) .30* .31*

(5.20) (6.18)
Proficiencyin the TechnicalDevelopmentStage (H5c) .10** .18*

(2.10) (3.41)
Proficiencyin the ProductTestingStage (H5d) .10** .09*

(2.18) (2.40)
Proficiencyin the ProductCommercializationStage (H5e) .10** .01ns
(1.85) (.11)
AdjustedR-square
.18 .23
Regression F-value 26.92* 48.75*

Notes:Thenumbersinparenthesesaret-statistics.
Testof significance
is basedon one-tailedtest.
*p<.01.
**p<.05.
nslndicatesnot significantat 95% confidence level.
TABLE 3
Moderator Effects of Environmental and Marketing Competencies Factors on
Relative Product Performance
Relative Profitability Relative Sales Relative Market
Equation Equation Share Equation
U.S. Japanese U.S. Japanese U.S. Japanese
Moderating Factors Sample Sample Sample Sample Sample Sample
x (MarketingSkillsand
(ProductDifferentiation) .27* .07** .27* .09* .28* .11*
Resources) (H6) (5.22) (1.90) (5.29) (2.33) (5.72) (2.69)
x (InternalCommitment)
(ProductDifferentiation) .34* .39* .31* .31* .39* .44*
(H7) (5.48) (8.97) (5.06) (6.84) (6.49) (9.92)
x (MarketPotential)
(ProductDifferentiation) .12** .31* .13** .32* .11** .22*
(H8) (2.02) (6.83) (2.16) (6.80) (1.86) (4.66)
x (CompetitiveIntensity)
(ProductDifferentiation) -.11 * -.11* -.10* -.06** -.15* -.13*
(H9) (-2.83) (-3.44) (-2.41) (-1.72) (-3.80) (-3.90)
AdjustedR-square .37 .44 .37 .40 .42 .41
Regression F-value 92.58* 153.13* 90.61* 131.17* 110.74* 139.22*
Notes:The numbersin parentheses are t-statistics.Test of significanceis based on one-tailedtest.

*p< .01.
**p< .05.
nslndicatesnot significantat 95%confidence level.

verting productdifferentiationadvantages into relative per- Finally, team members reported that high levels of cross-
formance outcomes, but in low-potential marketsJapanese functionalintegrationsimplified the process of obtainingthe
projectteams are relativelyless effective. Both scenarios are necessaryconsensus from marketing,engineering,and man-
consistent with our results; distinguishing between the two ufacturingto kill a project.Thus, high levels of cross-func-
remainsa topic for furtherresearch. tional integrationincrease the likelihood that unsuccessful
Second, regardlessof the performancemeasureused, the new productswill be withdrawnfrom the marketrelatively
magnitudeof the standardizedcoefficient on the interaction soon, therebydecreasingthe financiallosses associatedwith
between product differentiation and marketing skills and the project.
resources in the U.S. sample is approximatelythree times Third, this study confirmed the importanceof tactical
the magnitudeof the correspondingcoefficient in the Japan- implementation in mediating the relationship between
ese sample. Therefore,the relationshipbetween productdif- sources of advantage and positional advantage. For both
ferentiationand relative productperformanceappearsto be U.S. and Japanesesamples, proficiencies in three stages of
more heavily influenced by marketingskills and resources productdevelopmentappearto assume special significance:
in U.S. NPD projects than in Japanese NPD projects. This business and marketopportunityanalysis, product testing,
and productcommercialization.Moreover,in both Japanese
may reflect structuralcharacteristicsof the Japanese econ-
and U.S. firms, proficiencies in business and marketanaly-
omy that limit the impact of variations in marketingskills
and resourceson the relationshipbetween productdifferen- sis appearto have the greatestimpact on productdifferenti-
tiation advantages and relative product performance. ation. This finding underscores the importance of careful
Because the verification of this hypothesis is beyond the analyses of customer segments and competitors to deter-
mine desired product features and benefits. This analysis
scope of the present study, we leave it as a topic for further
research. should be complemented by technical and manufacturing
feasibility analysis and a business plan that establishes the
standards for assessing product performance and market
Discussion acceptance.
The results summarizedhere confirm the usefulness of our Fourth, our findings indicate that the relationship
conceptual framework in understanding the relationship between productdifferentiationand relative productperfor-
between new product performance and sources of advan- mance reflects the impact of marketingskills and resources
and internalcommitment.These resultshighlightthe impor-
tage, quality of implementation,and positional advantages.
In particular,the large-scaleJapaneseand U.S. new product tance of motivationand resources (e.g., distribution,sales,
dataexamined here clearly supportthe following seven con- and promotionresources)in translatingperceptionsof prod-
clusions. First, increases in a project's fit with the firm's uct differentiationinto sales, marketshare, and profit.
existing base of marketingand technical skills and resources Fifth, our findings strongly suggest that the relationship
lead to increases in the quality of implementationduringthe between productdifferentiationand relative productperfor-
NPD process. The importanceof technical fit assumes spe- mance is strengthenedby increases in marketpotential.As
cial significance given Kodama's (1995, p. 54) description noted previously,one possible interpretationof this result is
of Japanesetechnology strategy: that, relative to U.S. firms, Japanese firms competing in
high-potentialmarketsdo a betterjob of convertingproduct
[In Japanesefirms] a localizedtechnicalknowledgeis differentiation advantages into product performance out-
developedandappliedto less demanding low-endmarkets. comes. This interpretationis consistent with the perceptions
As thetechnologyis masteredandproduction experiences of Japanese executives reported by others (Kotabe et al.
accumulated, development is directedtowardthehigh-end
market....Only afterthe processand the technologyis 1991) and observedin our case studies, as well as with stud-
masteredis the technologyintroducedin marketswith ies that have attributedthe successes of prominentJapanese
highermarginsandmorespecializedapplications. firms in U.S. marketsto a successful analysis of large mar-
kets in which "demandsfor quality,productfeatures,value,
Second, our resultssupportthe notion thatthe concept of after-sales service, and so on were not being met" (Lazer,
"sources of advantage"embraces more than simply func- Murata, and Kosaka 1985, p. 78). If this interpretationis
tion-specific skills and resources. Also importantare pro- correct,it may suggest thatJapanesecompanies have a com-
ject-specific sources of advantagesuch as internalcommit- parativeadvantage,relativeto U.S. firms, in a key competi-
ment and cross-functional integration that span individual tive rationalityskill (Dickson 1992): the ability to nurture,
functional areas. Although many new productsstudies have build, and dominate potential high-growthmarkets.There-
recognized the importanceof internalcommitment,our case fore, researchersin the futureshould examine the compara-
study interviewswith U.S. and JapaneseNPD teams offered tive speed with which Japanesefirms leverage initial differ-
several interestingperspectiveson cross-functionalintegra- entiation advantagesto develop and expand high-potential
tion. Project-teammembersarguedthat high levels of cross- markets.I
functional integrationenhance the diffusion of marketand Sixth, our findings indicatethat the relationshipbetween
customer knowledge among all members of the project productdifferentiationand productperformanceis weakened
team. In addition,high levels of cross-functionalintegration by increasesin competitiveintensity.This resultis consistent
were perceived to facilitate close R&D-customer contact
during the later stages of development, including customer
tests of productprototypes,test market,and marketlaunch. IWe thank an anonymous reviewer for this observation.
A ComparativeStudyof NPDProcesses / II

with the observationsof Kotlerand Fahey (1982, p. 6), who functions. Learningby importinginvolves includingperson-
attributedthe success of some prominentJapanesefirms to nel from outside the function's traditionalboundaries in
targetedmarketingefforts that avoid aggressive competitors functionalactivities for the purposeof increasingthe variety
in favor of "weak and complacent competition,"choosing of perspectives and acquiring extrafunctionalknowledge
"productmarketsectors where competitorsare unableand/or (Moneart and Souder 1990). For example, R&D can gain
unwilling to respond vigorously to their market entry and better understandingabout consumers and competition by
where competitorsmay cede to the Japanese entire market jointly visiting major customers and conducting market
sectors"(see also Kotler,Fahey,and Jatusripitak1985; Sims researchstudies with marketingpeople, as well as by includ-
1986). The moderatingrole of competitionalso may explain ing marketingpeople in the productdesign process. In addi-
why some studies thatexamine the correlationbetween com- tion, by involving manufacturingpeople in the NPD process,
petitive intensity and productperformancefail to find a sig- firms can avoid costly redesigns and respecifications.
nificant relationship between market competitiveness and With regardto the actual developmentprocess, analyz-
new productsuccess (e.g., Cooper 1979a). ing business and marketopportunityassumes special impor-
Seventh, perhapsone of the most surprisingaspects of tance. Proficiency at this stage of product development
our resultsis theirconsistency across U.S. and Japanesenew embracesnot only the identificationof desired productben-
productprojects.This was unexpectedgiven the many dis- efits, but also the technical features that potentially drive
cussions of "unique" Japanese approaches to NPD (e.g., desired benefits.A full business analysis also includes feasi-
Imai, Nonaka, and Takeuchi 1985; Nonaka 1988, 1990). A bility assessments of technical development and manufac-
closer examination of these studies, however, reveals that turing requirements,as well as a clear statement of con-
most discussions of differences between Japaneseand U.S. sumer acceptance and productperformancegoals. Finally,
firms focus on processes such as ways to enhance imple- the moderatingeffect of market potential and competitive
mentation, whereas our study emphasizes the relationships analysis clearly indicates the importanceof incorporating
among sources of advantageand implementation,positional, these assessments into a complete business analysis.
and performance outcomes. Our findings suggest that,
regardlessof the methodsused to enhanceimplementationof Model Extensions
the NPD process, the impact of implementationquality on The researchpresentedhere arguesfor the usefulness of Day
the relationshipbetween sources of advantageand positional and Wensley's (1988) SPP framework in new product
advantage is consistent across Japanese and U.S. cultures. research. In two key respects, however, our application of
This consistency raises questions about the possible exis- that frameworkis incomplete.First,Day and Wensley argue
tence of some universalprinciplesin the NPD process. that sources of advantagecan lead to two types of positional
advantage:product differentiationand cost. Here, we have
Managerial Implications explored the first; the second remains a topic for further
The results presented here have clear implications for the research. It is possible that the cross-culture uniformity
project selection process. From a technical perspective, reportedhere only applies to new products in which posi-
firms are advised to assess a potentialproject'sfit with inter- tional advantageis based on productdifferentiation.Some
nal R&D, engineering, and manufacturingcompetencies. supportfor this speculation appearsin the work of Kotabe
From a marketingperspective,the importantdimensions of (1990, p. 30), who arguesthatthe relativelygreaterextent of
project fit include marketing research, distribution, sales outsourcing among U.S. multinationalsmay cause them to
force, and communicationcompetencies. "lose touch with emerging manufacturingknow-how and
Our results also have importantimplications for project technology thateventuallymay lead to process innovations."
management.We argue that two aspects of project manage- As a result, cost-based positional advantages may be less
ment-internal commitment and cross-functional integra- accessible to these firms thanto theirJapanesecounterparts.
tion-can create project-specific sources of advantage.To Second, Day and Wensley argue that positional advan-
foster internalcommitment,senior managementcan directly tages lead to two kinds of success: commercialsuccess and
communicate a project's importance.This communication consumersatisfactionsuccess. The measuresemployed here
can be reinforced over time by allocating personnel and enabled us to assess commercial success, but we had no
resources that signal management'scontinued commitment measuresof consumersuccess such as customersatisfaction
to the project. These efforts can be supportedby selecting or loyalty. In part, this omission reflects the sheer cost of
project or team leaders capable of attractingresources and conductingadditionalsurveys.Moreover,attemptsto collect
maintaining individual and corporate enthusiasm for the these kinds of data would have undoubtedlydecreased the
developmentproject. numberof participatingfirms. A study incorporatingthese
The second project-specificsource of advantage,cross- types of data might reveal other important differences
functional integration, arises from information sharing, between U.S. and Japanesefirms.
coordination,and participationin the development process
Data Limitations and Implications for Further
by R&D, manufacturing,and marketing.Our case studies
Research
suggest that a high level of cross-functionalintegrationand
learning can be realized by promoting "exploring" or The resultspresentedhere must be qualifiedin severalways.
"importing."Learning by exploring involves "out-of-role" First, though the empirical evidence discussed here is con-
behaviors and/or extension of an individual's functional sistent with hypothesized causal relationshipsamong vari-
knowledge domain throughparticipationin the activities of ables, the cross-sectional natureof the data cannot be used
121 Journalof Marketing,April1997

to establish such relationships.In particular,because some personalprocesses that were not capturedin our measures.2
of the variablesassess behaviorover an extended period of Case study and focus group data should permit further
time, it is possible that some relationships actually reflect researchto shed greaterlight on this issue.
simultaneous causality. For example, high levels of profi- Despite these limitations, we believe our study makes
ciency in the early stages of productdevelopmentmay have several importantcontributions.First, because many Japan-
improvedboth internalcommitmentto the projectand cross- ese corporationsplay significant roles in the global econ-
functional cooperation in later stages of the development omy, direct comparative study of the antecedents of new
process. For this reason, relationshipsamong these variables productsuccess and failure in Japaneseand U.S. firms is an
must be interpretedwith some caution. essential steppingstone to a fuller understandingof the NPD
A second, relatedlimitationinvolves the potentiallyevo- process. Second, explicit and direct comparisons between
lutionary nature of internal commitment and cross-func- the determinantsof new product success in Japan and the
tional integrationover time. The retrospectivenatureof the United States are necessary to help distinguish culturally
data collection process constitutesa thirdlimitation,raising specific success factors from more general factors that span
the possibility that memories are incomplete and may be different cultures. To our knowledge, our study is the first
colored by the known success or failure of a project. All large-scale direct comparison of the determinantsof new
three problems could be addressed by a longitudinalstudy product success in Japan and the United States. Third,
methodology assessing cross-functional integration and whereas much past researchhas focused on bivariatecorre-
internal commitment at various points during the NPD lations, we use a series of multivariateregressionmodels to
cycle. Unfortunately, such a methodology would have evaluate the impact of six factors that have been hypothe-
increased the cost of our study significantly and undoubt- sized to influence new product success. Fourth, we con-
edly reduced participationrates in both the United States ducted case study interviews to assess the validity of the
and Japan.Nevertheless, such a study remains an ambitious measures drawn from the literatureand develop new mea-
goal for furtherresearch. surements. Taken together, the theoretical frameworkand
A fourth direction for further research involves the the new constructs and measurements developed for this
impact of productinnovativenesson the relationshipsexam- comparative study can serve as a foundation for further
ined in this study. Olson, Walker,and Ruekert(1995, p. 52) research in cross-country comparison of NPD practices.
argue that increases in product innovativenessincrease the Finally,the presentstudy has contributedto a more compre-
difficulties encountered in the NPD process, because firm hensive understandingof the key similaritiesand differences
personnelhave "less relevantexperience"to "drawon when in the "best practices" between Japanese and U.S. firms.
developing and commercializing a given productconcept." Lilien (1979) argues that understandingof successful firms
This reasoning suggests that increases in product innova- can provide a useful benchmarkfor futuremanagerialdeci-
tiveness may change the relativeimportanceof core market- sions. The implications of our results should be interesting
ing and technicalcompetencies, as well as the importanceof to both academicians and practitioners.In particular,our
internalcommitmentand cross-functionalintegration. findings may be of considerablevalue and interestto execu-
A fifth direction for furtherresearchinvolves the impact tives faced with the complex task of selecting NPD projects
of cultural differences on NPD in Japan and the United as well as to those firms experiencing competition from
States. The measuresemployed in this study focus on profi- Japanesefirms.
ciency in various stages of development,though the impact
of culturaldifferences may be reflected in cognitive or inter- 2Wethankan anonymous
reviewerforthisobservation.
APPENDIX A
Measurement Items, Response Formats, and Selected Sources
Please circle the answer that best represents yourjudgmentabout each aspect on "howthings actuallywere duringthe devel-
opment of this project"ratherthan on "howthings ought to be."
I.The followingsteps are frequentlyparts of a new productdevelopmentprocess. Duringthe developmentof this project,how
well was each of the followingactivitiesundertaken?Please indicatehow well or adequatelyyour firmundertookeach activ-
ity in this productdevelopmentprocess-relative to how you thinkit should have been done-by circlinga numberfrom0 to
10 on the scale to the rightof each statement. Here:0 = done very poorlyor mistakenlyomittedaltogether,10 = done excel-
lently,and numbersbetween 0 and 10 indicatevariousdegrees of adequacy.
Item-Total
Correlation
United Selected
Japan States Sources
Proficiency in the Idea Development and Screening Stage

(Reliability:Japan = .80, United States = .81)
Initialscreening of the productidea-the firstreviewof the venture. .51 .52
Expandingthe idea into a fullproductconcept. .59 .71 Case
Case Studies
Studies
A ComparativeStudy of NPDProcesses /13

Item-Total
Correlation
United Selected
Translatingthe productconcept into business terms (such as marketshare,

marketability)
profitability, .63 .68 Case Studies
Identifyingthe key business implicationsof the productconcept
and its development. .62 .68 Case Studies
Preparinga writtenproposalof the productconcept. .54 .43 Case Studies
Proficiency in the Business and MarketOpportunityAnalysis Stage

Determiningthe desired productfeatures and theirfeasibility. .60 .63 Case Studies
Determiningmarketcharacteristicsand trends. .72 .63 Case Studies
Conductinga marketstudy or marketresearch-a detailed study of
marketpotential,customer preferences, purchase process, etc. .60 .58 # & ##
Appraisingcompetitorsand their products-both existingand potential. .68 .55 # &##
Identifying"appeal"characteristicsthat woulddifferentiateand sell the product. .61 .60 Case Studies
Evaluatingthe feasibilityof developingand manufacturinga product
withthese features. .58 .52 Case Studies
Assessing the requiredinvestment,time and risks of the productconcept. .53 .47 Case Studies
Proficiency in the Technical Development Stage

Conductingpreliminaryengineering, technicaland manufacturing
assessments. .59 .59 # & ##
Buildingof the productto designated or revised specifications. .69 .69 Case Studies
Evaluatinglaboratorytests to determinebasic performance
against specifications. .68 .63 Case Studies
Establishingthe standards by which productperformanceand market
acceptance willbe judged. .59 .51 Case Studies
Executingprototypeor "inhouse"sample producttesting. .59 .58 # &##
Designing and testing manufacturingfacilities. .58 .55 Case Studies
Determiningthe finalproductdesign and specifications. .61 .69 Case Studies
Specifyinga detailed programfor full-scale manufacturing. .64 .61 Case Studies
Workingcontinuouslyfor cost reductionand qualitycontrol. .59 .54 Case Studies
Proficiency in the Product Testing Stage

Selecting customers for testing marketacceptance. .63 .73 Case Studies
Submittingproductsto customers for in-use testing. .59 .59 #&*
Executingtest marketingprogramsin line withplans for
commercialization. .60 .69 #&*
Interpretingthe findingsfromin-house and consumer trials,
test markets,and trade surveys. .47 .62 Case Studies
Proficiency in the Product Commercialization Stage

Completingthe finalplans for manufacturing. .64 .40 Case Studies
Completingthe finalplans for marketing. .68 .77 Case Studies
Establishingthe over-alldirectionfor commercializationof
this product. .73 .81 Case Studies
Designatingthe individualsresponsiblefor each part of the
commercializationprogram. .62 .69 Case Studies
Launchingthe productin the marketplace-selling, promoting
and distributing. .65 .65 # & ##
Studyingfeedback fromcustomers regardingthis product. .60 .55 Case Studies
Specifyingactivitiesand tentativeplans for the product
commercializationphase. .48 .59 Case Studies
II.To what extent does each statement listed below correctlydescribe this selected successful project?Please indicate your
degree of agreement or disagreement by circlinga numberfromzero (0) to ten (10) on the scale to the rightof each state-
ment. Here:0 = stronglydisagree, 10 = stronglyagree, and numbers between 0 and 10 indicatevariousdegrees of agree-
ment or disagreement.
14/ Journalof Marketing,April1997

Item-Total
Correlation
United Selected
MarketingSkills and Resources

Ourcompany'smarketingresearch skills were more than
adequate for this project. .95 .56 # &*
Ourcompany'ssalesforce skills were more than adequate
for this project .69 .73 # &*
Ourcompany'sdistributionskills were more than adequate
for this project. .90 .68 # &*
Ourcompany'sadvertising/promotion skills were more than
Ourcompany'smarketingresearch resources were more than
Ourcompany'ssalesforce resources were more than adequate
Ourcompany'sdistributionresources were more than adequate
forthis project. .91 .71 # &*
Ourcompany'sadvertising/promotion resources were more than
Technical Skills and Resources

Ourcompany's R&Dskills were more than adequate
forthis project. .71 .66 # &*
Ourcompany'sengineeringskills were more than adequate
Ourcompany'smanufacturingskills were more than adequate
Ourcompany's R&Dresources were more than adequate
Ourcompany'sengineering resources were more than adequate
Ourcompany'smanufacturingresources were more than adequate
Internal Commitment
This productwas stronglysupportedby senior management
throughoutthe entiredevelopmentprocess. .43 .51 # & ##
A clearly identifiedindividualwas an activistin promotingthis product's
developmentthroughoutthe productdevelopmentand the introduction
cycle. .24 .32 # &##
We were not confidentabout the commercialsuccess of the product.(R) .35 .55 # &##
Cross-Functional Integration
(Cross-functionalintegrationis defined as the process of achievingeffectiveunityof effortsin the accomplishmentof new prod-
uct developmentsuccess. The degree of the integrationrefersto the level of cross-functionalinteractionand communication,
level of information-sharing,
degree of cross-functionalcoordination,and level of jointinvolvementin conductingspecific new
productdevelopmenttasks. )
The degree of integrationbetween R&Dand manufacturingwas high
duringthe entire developmentprocess. .87 .88 ## & *
This productwas developed fromfrequentinteractionsbetween
customers and our cross-functionalproductdevelopmentteam-it
was a trulya cross-functionalteam effort. .60 .44 Case Studies
The degree of integrationbetween marketingand R&Dwas high
duringthe entire developmentprocess. .73 .90 ## & *
The degree of integrationbetween marketingand manufacturingwas
high duringthe entire developmentprocess. .72 .78 ## & *

Item-Total
Correlation
United Selected
MarketPotential
There were many potentialcustomers forthis product-a mass
market-as opposed to one or a few customers.
(10 = mass market; 0 = one customer) .55 .43 # & ##
Potentialcustomers had a great need forthis class of product. .62 .60 #
The dollarsize of the market(eitherexistingor potential)for this product
was very large. .61 .61
The marketfor this productwas growingvery quickly. .41 .47
Competitive Intensity
There were no price competitionin the market.(R) .43 .54 # & ##
There were many competitorsin this market. .58 .54 #
There was a strong, dominantcompetitor-with a large market
share-in the market. .41 .52
Potentialcustomers were very loyalto competitors'products
in this market. .49 .54
Potentialcustomers were not satisfied withcompetitors'products.(R) .53 .60
New productintroductionsby competitorswere frequentin this market. .40 .38
Product Differentiation
This productreliedon technology never used in the industrybefore. .55 .48 Case Studies
This productcaused significantchanges in the whole industry. .58 .63 Case Studies
This productwas one of the firstof its kindintroducedinto the market. .63 .66 # &##
This productwas highlyinnovative-totally new to the market. .65 .66 # &##
Comparedto competitiveproducts,this productoffered
some uniquefeatures or attributesto the customer. .73 .66 # & ##
This productwas clearly superiorto competingproducts
in terms of meeting customers'needs. .75 .76 # & ##
This productpermittedthe customerto do a job or do something
he [or she] could not presentlydo withwhat was available. .64 .61 # & ##
This productwas higherqualitythan competingproducts-tighter
specifications,stronger,lasted longer,or more reliable. .58 .51 # & ##
This producthad superiortechnical performancerelativeto
than competingproducts. .67 .65 # & ##
We were the firstinto the marketwiththis type of product. .69 .63 #
III.New productperformancecan be measured in a numberof ways. Please indicate,fromwhatyou knowtoday,how successful

this selected productwas or has been using the followingcriteria.
Relative Profitability
How successful was this productfroman overallprofitability standpoint?
(0 = A great financialfailure,i.e., far less than our minimumacceptable
criteria;10 = A great financialsuccess, i.e., far exceeded
profitability
our minimumacceptable profitability criteria). .92 .91
Relativeto yourfirm'sother new products,how successful was this product
in terms of profits?(0 = Farless than our other new products;10 = Far
exceeded our other new products). .94 .93
Relativeto competing products,how successful was this product
in terms of profits?(0 = Farless than the competingproducts;
10 = Farexceeded the competingproducts). .88 .85
Relativeto yourfirm'sobjectives forthis product,how successful was
this productin terms of profits?(0 = Farless than the objectives;
10 = Farexceeded the objectives). .93 .92
161 Journalof Marketing,April1997

Item-Total
Correlation
United Selected
Relative Sales (Reliability: Japan = .93, United States = .92)
Relative to your firm's other new products, how successful was this
product in terms of sales? (0 = Far less than our other new products;
10 = Far exceeded our other new products). .90 .87 #&*
Relative to competing products, how successful was this product in terms
of sales? (0 = Far less than the competing products; 10 = Far exceeded
the competing products). .82 .80 Case Studies
Relative to your firm's objectives for this product, how successful was
this product in terms of sales? (0 = Far less than the objectives;
10 = Far exceeded the objectives). .88 .86 #&*
Relative MarketShare (Reliability:Japan = .96, United States = .94)

Relativeto yourfirm'sother new products,how successful was this product
in terms of marketshare? (0 = Farless than our other new products;
10 = Farexceeded our other new products). .93 .91 Case Studies
Relativeto competing products,how successful was this productin
terms of marketshare? (0 = Farless than the competingproducts;
10 = Farexceeded the competing products). .89 .85 Case Studies
Relativeto yourfirm'sobjectives for this product,how successful was
this productin terms of marketshare? (0 = Farless than the objectives;
10 = Farexceeded the objectives). .90 .88 Case Studies
NOTES:
Case Studies:These items are typicallybased on discussion in conceptual,descriptivearticles, pilotstudies, and the 36 in-depthcase study
interviewswithboth Japanese and U.S. firms.The items also were pretestedextensivelyin bothJapanese and U.S. firms.
#Itemdeveloped by Cooper (1979a, b) and Cooper and Kleinschmidt(1986), and used by Calantoneand Cooper (1981), Cooper and Klein-
schmidt(1993), Parryand Song (1994), and Song and Parry(1994).
##ltem developed and/orused by Zirgerand Maidique(1990) and Maidiqueand Zirger(1984).
*Itemrewordedor modifiedon the basis of the case studies and pretests.
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A Cross-National Comparative Study of New Product Development Processes: Japan and the

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A Cross-National Comparative Study

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Function-Specific Sources of Advantage

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Model Estimation and Results Relative Product Performance Equations

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Proficiency in the Proficiency in the Proficiency in Profi

TechnicalSkills and .38* .32*

InternalCommitment .33* .18* .22* .24* .15* .26** -.03n

Cross-FunctionalIntegration .32* .28* .41* .30* .32* .30* .38

AdjustedR-Square .40 .26 .40 .39 .42 .49 .22

0 Regression F-Value 137.52* 92.77* 137.16* 168.07* 144.20* 252.04* 58.09

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Proficiencyin the Business and MarketOpportunityAnalysis Stage (H5b) .30* .31*

Proficiencyin the TechnicalDevelopmentStage (H5c) .10** .18*

Proficiencyin the ProductTestingStage (H5d) .10** .09*

Regression F-value 26.92* 48.75*

Regression F-value 92.58* 153.13* 90.61* 131.17* 110.74* 139.22*

Notes:The numbersin parentheses are t-statistics.Test of significanceis based on one-tailedtest.

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121 Journalof Marketing,April1997

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Proficiency in the Idea Development and Screening Stage

A ComparativeStudy of NPDProcesses /13

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Translatingthe productconcept into business terms (such as marketshare,

Proficiency in the Business and MarketOpportunityAnalysis Stage

Proficiency in the Technical Development Stage

Proficiency in the Product Testing Stage

Proficiency in the Product Commercialization Stage

14/ Journalof Marketing,April1997

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MarketingSkills and Resources

Technical Skills and Resources

A ComparativeStudyof NPDProcesses /15

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III.New productperformancecan be measured in a numberof ways. Please indicate,fromwhatyou knowtoday,how successful

161 Journalof Marketing,April1997

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Relative MarketShare (Reliability:Japan = .96, United States = .94)

A ComparativeStudyof NPDProcesses /17

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