Product Launch Product Advantage and Mar

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Product Launch, Product Advantage and

Market Orientation in SMEs
Article in Journal of Small Business and Enterprise Development · February 2008

DOI: 10.1108/14626000810850865
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Journal of Small Business and Enterprise Development
Product launch, product advant age and market orient at ion in SMEs
Ann Ledwith Michele O'Dwyer
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JSBED
15,1 Product launch, product
advantage and market
orientation in SMEs
96
Ann Ledwith
College of Engineering, Enterprise Research Centre, University of Limerick,
Castletroy, Ireland, and
Michele O’Dwyer
Kemmy Business School, University of Limerick, Castletroy, Ireland
Abstract
Purpose – The importance of new product development to the survival and success of firms is well
supported in the literature; however, few studies have investigated new product development in small
to medium-sized enterprises (SMEs). This study aims to examine the impact of product launch,
product advantage and market orientation on new product development performance and
organisational performance in SMEs.
Design/methodology/approach – This model was tested using data collected from 48 small and
large sized firms in Ireland. Findings from 33 small and 15 large firms were compared, and a
correlation analysis was used to establish the relationships defined in the model for both small and
large firms.
Findings – The study identified several significant differences between the impact of product launch,
product advantage and market orientation on new product development and organisational
performance in small and large firms. It also indicated several areas in which small firms can improve
their new product and organisational performance.
Research limitations/implications – This research builds on prior empirical research that has
established a positive link between customer and competitor orientation and performance of small
firms.
Practical/implications – The managerial implications suggest that managers need to place a
greater emphasis on product launch proficiency, new product characteristics and market orientation.
Originality/value – The results show that a market orientation, as well as having a direct impact on
organisational performance, also affects new product development activities.
Keywords Organizational performance, Product development, Small to medium-sized enterprises,
Competitive advantage, Product launch, Market orientation
Paper type Research paper
Introduction
This paper addresses the influence of product launch, product advantage, and market
orientation, on performance in small to medium-sized enterprises (SMEs). The
significance of product launch and product advantage to new product performance has
been documented in literature (Nakata et al., 2005; Hultink and Hart, 1998;
Journal of Small Business and Montoya-Weiss and Calantone, 1994; Cooper, 1979, 2001). Additionally, literature
Enterprise Development suggests that organisations that are market-oriented can better satisfy customers,
Vol. 15 No. 1, 2008
pp. 96-110 thereby improving their organisational performance (Ramaseshan et al., 2002);
q Emerald Group Publishing Limited however these relationships have not been explored to date in the context of SMEs.
1462-6004
DOI 10.1108/14626000810850865 Given that SMEs provide approximately 65 million jobs and represent 99 per cent of all
enterprises in the European Union (EU) (Coelho-Rodriguez, 2001), increasing our Product launch
understanding of the key determinants of successful SME performance is essential. in SMEs
The objective of this study is to investigate the impact of product launch, product
advantage and market orientation on new product development (NPD) performance in
SMEs. The paper starts with a synopsis of the three main streams of literature; product
launch, product advantage, and market orientation and their relationship with
performance, a brief review of NPD in small firms follows, from which the conceptual 97
model and underlying rationale are developed. This is followed by an outline of the
research methodology employed; the results, and survey are then presented and
discussed. Finally, the conclusions address the relationships between performance and
product launch, product advantage, and market orientation.
Product launch and performance

Successful new products and services are critical for many organisations, since product
innovation is significant in helping organisations to adapt to changes in markets,
technology, and competition. However, the success rate of new products worldwide has
been low (Bogue and Delahunty, 1999), given the strong correlation between new
product success and a company’s health (Shepherd and Ahmed, 2000) it is essential
that organisations maximise the potential of their new products. Di Benedetto (1999) in
an exploration of key success factors in new product launch found that the cost of
commercialising successful new products was over six times that of products that
failed, indicating the significance of launch budgeting to new product success and
organisational performance.
Hultink and Hart (1998) identified a paucity of literature regarding the nature of the
launch strategy despite its significance to new product performance and in turn
organisational performance. Launch strategy for a new product, according to Hultink
and Schoorsman (1995) is a “crucial decision” made by marketing managers. “In high
tech industries, being the first to launch a new product can bring significant benefits
such as greater market share and price premiums, whereas conversely the delay of the
introduction of new products may lead to a loss of market share or even more critically
a loss of goodwill” (Rosas-Vega and Vokurka, 2000, p. 157). Hart and Tzokas (2000)
posit that product launch success was enhanced by three product launch variables one
of which is high product advantage, which forms one of the foundations of this
research. Di Benedetto (1999) found that, although both product launch tactics and
strategy to have a significant impact on new product success, product launch tactics
were of more significance.
Furthermore, Debruyne et al. (2002) found that the greater the amount of marketing
resources a firm invests in the development and the launch of a new product, the higher
its probability of success. Effective market testing and research are critical in eliciting
information regarding customers, and the effectiveness of marketing efforts at the time
of the product launch (Di Benedetto, 1999). Langerak et al. (2004) demonstrated that
market-oriented culture’s influence is restricted to the launch phase on the NPD
process, however, its effect was found to be critical at the product launch stage, leading
to superior new product performance and organisational performance.
In summation, the literature reviewed indicates the significance of proficiency in
market testing, launch budgeting, launch strategy and launch tactics to new product
success and organisational performance.
JSBED Product advantage and performance
15,1 Product advantage is a critical determinant of the success of new products and services
(Nakata et al., 2005; Hultink and Hart, 1998; Cooper, 1979, 2001; Montoya-Weiss and
Calantone, 1994), and is suggested by Langerak et al. (2004) to lead to superior new
product performance and organisational performance.
Song and Montoya-Weiss (2001, p. 65) define product advantage in terms of
98 competitors as being “a product’s perceived superiority relative to competitive
products”; while Calantone and Di Benedetto (1988) relate product advantage to
customer needs referring to the benefits customers derive from new products. Equally
valid, both definitions reflect the complex nature of product advantage whereby an
over focus on customer needs can lead to less competitive products (Christensen and
Bower, 1996). Slater and Narver (2000) argue that product advantage leads to the
creation of superior value for customers relative to that offered by competitors.
Hua and Wemmerlöv (2006, p. 318) propose that product advantage “is the
perceived level of a product’s design, attributes, and quality relative to competition”,
thus echoing Cooper’s (1979) reference to the significance of successful new products
being of a higher quality than competing products. Product advantage has also been
shown to be a key factor in new product success with Cooper (2001) citing it as the most
important driver of new product success. However, a study of NPD in small US firms
(Yap and Souder, 1994) found that small firms were more likely to succeed with new
products that were compatible with existing processes, products and technologies
rather than highly innovative and superior new products.
In summation, the literature reviewed indicates that product advantage is defined in
terms of a product’s quality, superiority compared to competitor products and its
ability to provide benefits and value to customers. Additionally, product advantage
has been found to be a key determinant of new product success and in turn
organisational performance.
Market orientation and performance

Many studies support the existence of a positive relationship between organisational
performance and the adoption of a market orientation (Deshpandé et al., 1993; Ruekert,
1992; Narver and Slater, 1990). Organisations that are market-oriented, tracking and
responding to customer needs and preferences, can better satisfy customers thereby
improving their organisational performance (Ramaseshan et al., 2002).
Slater and Narver (1994) found that market orientation is positively associated with
return on assets, sales growth, and new product success as measures of business
performance; additionally they found that competitor orientation is not significant in
the relationship between organisational performance and market orientation. More
recently, Brown et al. (2005) found that the implementation of market orientation leads
to improved financial and marketing performance. Additionally, Slater and Narver
(2000) found that market orientation and business performance are positively related;
and Kohli and Jaworski (1990) claimed that market orientation enhances the
performance of an organisation through return on investment, profits, sales volume,
market share, and sales growth. Positive performance is supported by interfunctional
co-ordination, which is essential to maximise the effectiveness of marketing and
non-marketing activities (Di Benedetto, 1999).
Jaworski and Kohli (1993, p. 63) state that market orientation is “significantly Product launch
related to business performance” a finding echoed by Slater and Narver (2000, 1994). in SMEs
However, in contrast Langerak et al. (2004) found that market orientation has no
significant direct relationship with organisational performance.
In summation, the literature reviewed indicates the significance of customer
orientation, competitor orientation, and interfunctional co-ordination to new product
success and organisational performance. 99
NPD in small firms
Literature on the management of NPD in small firms is scarce but what has been
published does suggest that there are significant differences between NPD
management in small and large firms. There is a level of consensus that small firms
should develop new products that are compatible with existing technical standards
(Yap and Souder, 1994), that they should adopt one core technology and avoid high
levels of diversification (Dodgson and Rothwell, 1991). This impacts the marketing
strategies adopted by small firms. Several authors have taken a contingent approach
claiming that there is no “best” process for developing new products but rather that the
process should be selected to suit the context, including the firm size, within which the
firm operates (Bessant and Francis, 1997; Loch, 2000).
A key difference between small and large firms is that NPD processes in small firms
tend to be informal (Roper, 1997; Hoffman et al., 1998). Some studies have linked more
complete, or formal, NPD processes with increased success (Cooper and Kleinschmidt,
1988; Rochford and Rudelius, 1997), although no studies were found that linked NPD
process formality (or completeness) with new product success in small firms. Top
management support and skill have been highlighted as important for new product
success in small firms (Hoffman et al., 1998) though most NPD projects undertaken by
small firms have been found to have the support of top management (Maidique, 1980).
Finally, small firms are considered to be more “organic” than large firms and to
have better communications between functional groups. Therefore interfunctional
coordination on NPD projects is not considered to be a problem for small firms
(Dodgson and Rothwell, 1991). In summary, there are areas where there is some
consensus about how NPD in small firms should be managed, but there are many more
areas where research into NPD management in small firms is lacking.
Based on the literature reviewed a working model was developed that relates
product advantage, product launch performance, interfunctional coordination,
customer orientation and competitor orientation with the two performance measures
of interest – new product performance and organisational performance. This is shown
in Figure 1.
Research sample
The research reported is a cross-sectional survey of a sample of 48 firms located in
Ireland. The research strategy adopted was to use the survey to identify the key
relationships between new product development, new product performance,
organisational performance, interfunctional coordination and customer/competitor
orientation. The firms included in the survey were selected from within the mid-west
region of Ireland to represent the industry sectors active within the Irish economy. The
decision to compare small and large firms was made because much of the research in
JSBED
15,1
100
Figure 1.
Working model
this area has focussed on large firms. This study will help to clarify whether or not
these findings can also apply to small firms.
The survey included both small independent start-up firms and business units of
large multinational firms operating in a range of industries. Firm size was classified in
terms of ownership, employment levels and annual turnover, in-line with the definition
of SMEs adopted by the EU Commission in May 2005 (see http://europa.eu.int/comm/
enterprise/enterprise_policy, accessed 13 April 2006). Small firms were defined as
those under the direct supervision and control of the owner, having fewer than 250
employees, an annual turnover below e50 million. Large-size firms were defined as
those having more than 200 employees and an annual turnover greater than e100
million. A breakdown of the firms included in this study is shown in Table I.
The research instrument was a structured questionnaire administered via a postal
and electronic mail survey in line with expectations of the interviewees. At the outset of
the research process respondents were asked to identify a project or portfolio of
projects launched by their firm in the last five years. Based on this the research
instrument addressed the following research measures; market orientation, product
launch proficiency, new product performance, organisational performance, product
advantage and market description these measures are described in detail in the
following section.
Research measures
The research measures used were based on those used by Langerak et al. (2004) in their
study of the impact of market orientation on new product and organisational
performance. Seven composite measures were selected; several of these were broken
down into sub measures. These are detailed below:
.
Organisational performance was measured using six financial and market
performance indicators including sales growth, profitability, market share, sales
and return on investment relative to those of all other competitors in the firm’s
principal served markets.
.
New product performance was also based on the work by and consisted of three
sub measures: market level measures, financial measures and timing measures.
Product launch
Characteristics Number of firms (n ¼ 48)
in SMEs
Firm type
Small firm 33
Large firm 15
Industry
Pharmaceutical and medical equipment 13 101
Electrical and electronics 11
ICT 15
Industrial engineering 4
Financial services 4
Packaging 1
Owner/management
Owner 13
Management 35
Annual sales turnover (e million)
Under 3 7
3-50 23
51 and over 18
Product/service
Products 34
Services 12
Product and service 2
Industrial/consumer Table I.
Industrial 33 Characteristics of firms
Consumer 12 surveyed and profile of
Industrial and consumer 3 respondents
.
Product advantage was measured using a scale which included eight items
describing the nature of the advantage of the new product compared to existing
products and also the benefits offered to customers.
.
Product launch proficiency was assessed using four sub measures: proficiency
in: market testing, launch budgeting, launch strategy, and launch tactics. Each of
these sub measures consisted of four or more items.
.
Interfunctional coordination was measured using seven items that described the
coordination between the different functional groups within the firm specifically
when dealing with customers.
.
Customer orientation was measured using a scale that consisted of six items
measuring the extent to which the firm was familiar with and focused on their
customers.
. Competitor orientation was also measured using a scale that consisted of a
further seven items measuring the firm’s knowledge of their competitors.
The measures were reported using seven-point Likert type scale which either
required respondents to agree with the statement on a scale of 1 ¼ Strongly disagree to
7 ¼ Strongly agree, or to rate their firms performance on a scale from 1 ¼ Very poorly
to 7 ¼ Excellent.
Table II summarises the reliability of the measures for the complete sample of 48
firms. The Cronbach’s alphas were also above 0.7 for each measure when tested
measures
Summary of research
Table II.
102
15,1
JSBED
Median all firms Median small firms Median large firms Comparison of
Research measure No. of items Cronbach’s Alphaa (n ¼ 48) (n ¼ 33) (n ¼ 15) medians
Organisational performance 6 0.861 5.50 5.33 5.83 0.033 *

New product performance 11 0.952 4.77 4.64 5.82 0.023 *
Market level measures 4 0.959 4.66 4.50 6.00 0.004 *
Financial measures 4 0.926 5.00 4.50 5.75 0.031 *
Timing measures 3 0.875 5.33 5.33 5.67 0.332
Product advantage 8 0.799 5.82 5.75 5.88 0.373
Product launch proficiency 20 0.941 5.09 4.85 5.55 0.050 *
Proficiency in market testing 5 0.761 4.70 4.40 5.20 0.024 *
Proficiency in launch budgeting 4 0.894 4.88 4.75 5.75 0.091
Proficiency in launch strategy 6 0.929 5.50 5.00 5.67 0.221
Proficiency in launch tactics 5 0.895 5.40 5.40 6.00 0.018 *
Interfunctional coordination 7 0.911 5.14 5.14 5.14 0.876
Customer orientation 6 0.820 5.67 5.50 5.83 0.332
Competitor orientation 7 0.843 5.14 5.00 5.29 0.242
Notes: a Because of the nonparametric nature of the data care needs to be taken in interpreting these results; * statistically significant, p # 0:05
separately on the sample of 33 small firms and 15 large firms. As the data collected is Product launch
non-parametric the medians for the complete sample and also for small and large firms in SMEs
are also shown and compared in Table II using the Mann-Whitney U test
Table II illustrates that there are significant differences between small and large
firms in development practice and performance. Large firms reported higher levels of
organisational and new product performance, specifically in terms of market level and
financial measures. Large firms were also found to be more proficient in launching new 103
products, they were better at market testing and at launch tactics. Interestingly there
were no differences between large and small firms in any of the three market
orientation measures used. While Table II reports the values of the research measures
used, it is also interesting to look at the relationships between the measures, this is
presented in the next section.
Results
For the purpose of analysis the data from small and large firms were analysed
separately in order to explore the impact of firm size on the research measures:
organisational performance, new product performance, product advantage, product
launch proficiency, interfunctional coordination, customer orientation and competitor
orientation. The data gathered are ordinal and have therefore been analysed using
non-parametric statistical tests including Spearman rank order correlation.
The large firms correlations are presented in Table III demonstrating significant
relationships between organisational performance and new product performance as
indicated in the literature reviewed. Additionally, product launch proficiency is seen to
be significantly correlated with both organisational and new product performance.
However, the anticipated link between product advantage and performance,
organisational and new product, is not apparent. Furthermore, the measures relating
to market orientation were also found not to be related to performance.
Table IV replicates the above analysis on small firms. The expected relationships
between organisational performance, new product performance and product launch
proficiency found in large firms are also present in the small firm data. However, in
contrast to the large firms, the market orientation variables are significantly related to
performance and to product launch proficiency. Again, the anticipated link between
product advantage and performance is not apparent.
In order to explore the above results in more depth the sub measures were
individually analysed in the context of large and small firms. Tables V and VI explore
(n ¼ 15) 1 2 3 4 5 6 7
1. Organisational performance 1
2. New product performance 0.854 * 1
3. Product advantage 0.322 0.138 1
4. Product launch proficiency 0.656 * 0.695 * 0.424 1
5. Interfunctional coordination 0.495 0.364 0.079 0.173 1
6. Customer orientation 0.179 0.278 0.051 0.072 0.449 1
7. Competitor orientation 0.328 0.441 0.431 0.411 0.009 0.261 1
Table III.
Note: * Correlation is significant at the 0.01 level (two-tailed) Large firm correlations
JSBED
(n ¼ 33) 1 2 3 4 5 6 7
15,1
1. Organisational performance 1
2. New product performance 0.794 * * 1
3. Product advantage 0.308 0.101 1
4. Product launch proficiency 0.591 * * 0.610 * * 0.283 1
104 5. Interfunctional coordination 0.389 * 0.407 * 0.126 0.456 * * 1
6. Customer orientation 0.403 * 0.296 0.278 0.383 * 0.654 * * 1
7. Competitor orientation 0.590 * * 0.558 * * .0280 0.572 * * 0.471 * * 0.606 * * 1
Table IV. Notes: * Correlation is significant at the 0.05 level (two-tailed); * * correlation is significant at the 0.01
Small firm correlations level (two-tailed)
the relationship between product launch proficiency and performance in large and
small firms.
Tables V and VI demonstrate the strength of significance of the relationship
between proficiency in product launch across all measures (organisational
performance, new product performance, market level measure, financial measure
and timing) for both small and large firms. However in large firms there is no
significant relationship between performance and proficiency in market testing and
launch budgeting (with the exception of market level measures). By contrast, in small
firms all four types of proficiency (market testing, launch budgeting, launch strategy
and launch tactics) are significantly linked to new product and organisational
performance, the only exception being the lack of relationship between launch strategy
and tactics and financial performance measures.
The results presented in Tables III and IV show no significant link between product
advantage and performance. In order to explore this unexpected finding in more detail
the relationships between the individual items used to measure product advantage and
performance in small and large firms were examined. This analysis demonstrated that
there were no statistically significant correlations between any of the product
advantage variables and any of the performance measures in large firms. The same
was found for small firms with the exception of a link between the ability of a new
Organisational New product Market level Financial Timing

(n ¼ 15) performance performance measures measures measures
Product launch
proficiency 0.656 * * 0.695 * * 0.832 * * 0.551 * 0.564 *
Proficiency in
market testing 0.463. 0.463 0.614 * 0.301 0.318
Proficiency in
launch budgeting 0.451 0.510 0.628 * 0.415 0.380
Proficiency in
launch strategy 0.818 * * 0.872 * * 0.908 * * 0.733 * * 0.786 * *
Proficiency in
launch tactics 0.628 * 0.620 * 0.762 * * 0.517 * 0.513
Table V.
Product launch vs Notes: * Correlation is significant at the 0.05 level (two-tailed); * * correlation is significant at the 0.01
performance: large firms level (two-tailed)
Product launch
(n ¼ 33) performance performance measures measures measures in SMEs
Product launch
proficiency 0.591 * * 0.610 * * 0.561 * * 0.447 * * 0.616 * *
Proficiency in
market testing 0.507 * * 0.502 * * 0.399 * 0.373 * 0.489 * * 105
Proficiency in
launch budgeting 0.625 * * 0.617 * * 0.617 * 0.423 * 0.679 * *
Proficiency in
launch strategy 0.423 * 0.475 * * 0.457 * * 0.343 0.512 * *
Proficiency in
launch tactics 0.459 * * 0.433 * * 0.354 * * 0.307 0.488 * *
Table VI.
Notes: * Correlation is significant at the 0.05 level (two-tailed); * * correlation is significant at the 0.01 Product launch vs
level (two-tailed) performance: small firms
product to solve customer’s problems and the timing measures (the Spearman
correlation coefficient measures was 0.423, this was significant at the 0.05 level). It is
also noteworthy that in small firms the relationship between financial measures of new
product performance and product advantage is negative (the Spearman correlation
coefficient measures was 2 0.066), though not statistically significant.
Finally, the relationships between the measures of market orientation (customer
orientation, competitor orientation and interfunctional coordination) and performance
in small and large firms are examined in more detail in Tables VII and VIII. Again
some key differences between large and small firms emerge.
All three measures of market orientation are significantly linked with
organisational performance in small firms but not in large firms. When this is
further explored it is found that competitor orientation is the most important aspect of
market orientation for small firms being significantly linked to both market and timing

Customer orientation 0.179 0.278 0.255 0.201 0.239 Table VII.

Competitor orientation 0.328 0.441 0.449 0.334 0.458 Market orientation vs
Interfunctional coordination 0.0495 0.364 0.426 0.337 0.079 performance: large firms

Customer orientation 0.406 * 0.296 0.308 0.066 0.403 *

Competitor orientation 0.509 * * 0.558 * 0.528 * 0.318 0.601 *
Interfunctional coordination 0.389 * 0.407 * 0.254 0.331 0.509 * *
Table VIII.
Notes: * Correlation is significant at the 0.05 level (two-tailed); * * correlation is significant at the 0.01 Market orientation vs
level (two-tailed) performance: small firms
JSBED measures of new product performance. Notably, none of the market
15,1 orientation measures are significantly correlated to the financial new product
performance measures. In larger firms unexpectedly there were no links found between
market orientation measures and any of the performance measures.
Discussion and implications

106 The research measures presented in Table II show that the performance of large firms
is significantly higher than that of small firms; with large firms gaining higher market
share and reporting higher levels of financial success. In examining some of the
reasons for this the research results demonstrate that organisational performance is
linked to new product performance in both small and large firms. This is supported by
earlier findings (Langerak et al., 2004; Cooper, 2001, Hultink and Hart, 1998). In
addition product launch proficiency is linked to both new product and organisational
performance in both large and small firms. Although product launch proficiency was
found to be important for both large and small firms, see Tables V and VI, as predicted
by Di Benedetto (1999) and Hultink and Hart (1998), large firms are significantly more
proficient at market testing and launch tactics (Table II). The implication of this for
small firms is that product launch is a critical activity impacting new product success
and organisational performance, at the same time small firms have been found to be
less proficient at launching new products than large firms. In other words by
improving product launch proficiency small firms should improve their new product
success.
The analysis failed to identify a significant relationship between product advantage
and new product and organisational performance in either large or small firms. The
results suggest that when small firms try to develop unique, innovative and superior
products they tend to experience poor financial returns. A possible explanation for this
could be found in Yap and Souder’s (1994) research, which suggests that small firms
are more likely to succeed with compatible rather than innovative new products.
Moreover, it is difficult to define best practice for small firms because they operate
under very volatile conditions making the link between practice and performance less
deterministic than in large firms, this is reflected in Bessant and Francis (1997) who
suggested a contingency approach to new product development in SMEs. To gain a
clearer understanding of the link between new product characteristics and
performance would require a more complex research instrument than was used in
this study.
The study shows that in small firms there was a significant link between market
orientation and performance, this was not reflected in large firms. However, there are
no significant differences in the degree of market orientation in small and large firms,
as shown in Table II. In other words, the findings illustrated that market orientation
has a more significant impact for small firms, than large firms. Moreover, research by
Langerak et al. (2004) also identified the absence of a relationship between market
orientation and performance, as also found in the large firms in this study. It is
interesting to note that in small firms competitor orientation is most strongly linked
with new product performance than either customer orientation or interfunctional
co-ordination.
Reflecting on Table II small firms reported poor performance on many of the
measures used, for example, the median new product performance reported was 4.64,
this was less than “Somewhat good” on the scale used. Additionally they reported lack Product launch
of proficiency in launching new products, with a median value of 4.85, this is between in SMEs
“Undecided” and “Somewhat good” on the scale used. This indicates the level of
performance improvement required by small firms.
The discussion above suggests the following implications for small firms:
.
Product launch proficiency is a key determinant of new product success;
currently small firms are performing significantly less well than large firms. 107
Small firms need to improve their ability to successfully launch new products.
.
Small firms need to understand the new product characteristics that are linked
with success, focusing on the financial and organisational performance outcomes
of their new product development process.
.
Market orientation is critical for success in small firms. Small firms need to
understand their customers and competitors while involving all functions in the
development of new products that satisfy customer needs.
Returning to the research model presented in Figure 1, it is found to be more relevant to

small rather than large firms. The model is updated based on the research results and
presented again in Figure 2 for small and large firms.
Conclusion
The empirical findings presented in this paper contribute to existing literature by
demonstrating that market orientation as well as having a direct impact on
organisational performance also affects new product development activities. The study
has identified several significant differences between the impact of product launch,
Figure 2.
Updated working model
JSBED product advantage and market orientation on new product development and
15,1 organisational performance in small and large firms. These differences can be
summarised as follows:
.
Small firms perform less well than large firms in terms of organisational
performance, new product performance, and product launch proficiency.
. Market orientation, comprising interfunctional coordination, customer
108 orientation and competitor orientation, is significantly linked with new
product success in small but not in large firms.
.
Proficiency in market testing and launch budgeting are linked with
organisational and new product performance in small but not in large firms.
The study has indicated several areas in which small firms can improve their new
product and organisational performance. These include improving the product launch
process; maintaining high levels of customer orientation, competitor orientation and
interfunctional coordination; and determining the new product characteristics linked
with new product success.
During the course of this study several limitations have become apparent. The
research instrument failed to identify any relationships between product advantage and
new product performance, this contradicts many previously published results and while it
could be a factor of the firms studied it could also point to a limitation in the research
instrument used. This study was conducted in Ireland a relatively small economy and the
number of firms who responded to the questionnaire was limited to 48, the number of
large firms involved was particularly low. This limited the quality of the analysis that
could be performed. An expansion of the sample size could yield further results. The
research instrument was selected to provide compatibility with earlier studies but on
reflection a more complex research instrument could have been useful in understanding
some of the issues addressed by this study. Finally the firms included in the study came
from several different sectors, it could be argued that the new product development
process varies so dramatically between sectors that limiting the research sample to one
industrial sector would result in more specific and applicable findings.
Finally, while the quantitative methods used above are useful in identifying trends
and relationships a greater understand of the impact of product launch proficiency,
product advantage and market orientation on new product and organisational
performance could be achieved by employing more qualitative research methods.
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About the authors

Ann Ledwith is a Lecturer in the Department of Manufacturing and Operations Engineering at
the University of Limerick. Her research interests include the management of new product
development and project management in small firms. Ann Ledwith is the corresponding author
and can be contacted at: ann.ledwith@ul.ie
Michele O’Dwyer is a Lecturer in Entrepreneurship at the University of Limerick. Her
research interests focus on issues at the Marketing/Entrepreneurship interface, research which is
aided by her continuing close links with industry.
To purchase reprints of this article please e-mail: reprints@emeraldinsight.com

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Article in Journal of Small Business and Enterprise Development · February 2008

Ann Ledwith Michele o'dwyer

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Product launch and performance

Market orientation and performance

Organisational performance 6 0.861 5.50 5.33 5.83 0.033 *

Organisational New product Market level Financial Timing

level (two-tailed) performance: small firms

Organisational New product Market level Financial Timing

Customer orientation 0.179 0.278 0.255 0.201 0.239 Table VII.

Organisational New product Market level Financial Timing

Customer orientation 0.406 * 0.296 0.308 0.066 0.403 *

Discussion and implications

Returning to the research model presented in Figure 1, it is found to be more relevant to

About the authors

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