Organizing NPD networks for high innovation performance:the case of Dutch medical devices SMEs

This research examines which combination of network characteristics (the network configuration) leads to high innovation performance for small and medium sized companies (SMEs). Even though research has paid significant attention to the relation between the external network and the innovation performance of SMEs, research has not yet clearly demonstrated which configurations most affect innovation in particular contexts. The context of the research is the Dutch medical devices sector. This sector is selected because collaboration with external partners for new product development means becomes increasingly important due to the complexity of the products and the fragmentation of the market. In addition the sector is characterized by very strict regulations. These regulations are the cause of the time and cost consuming product development process. In triangulation with quantitative survey data (N=60), qualitative data was gathered through semi-structured interviews in these same companies (N=50), which resulted in a response rate of 61,9%. The systems approach was used to construct the successful network configuration that is related to high innovation performance. By using this approach we are able to simultaneously address multiple network characteristics. Correlation statistics between the Innovation Performance and the Euclidean Distance showed that the more a companies’ network configuration differed from the successful network configuration, the lower the Innovation Performance of that company. Contrary to what we hypothesized from literature, the results of the social systems approach indicate that the network configuration that is related to high innovation performance includes high levels of resource complementarity and goal alignment, and low levels of trust and network position strength. Instead of the social way of networking, both our quantitative and qualitative findings show that a “businesslike” approach which is focused and consistent is related to high innovation performance

Successful New Product Development by Optimizing Development Process Effectiveness in Highly Regulated Sectors: The Case of the Spanish Medical Devices Sector

Rapid development and commercialization of new products is of vital importance for small and medium sized enterprises (SME) in regulated sectors. Due to strict regulations, competitive advantage can hardly be achieved through the effectiveness of product concepts only. If an SME in a highly regulated sector wants to excell in new product development (NPD) performance, the company should focus on the flexibility, speed, and productivity of its NPD function: i.e. the development process effectiveness. Our main research goals are first to explore if SMEs should focus on their their development process effectiveness rather than on their product concept effectiveness to achieve high NPD performance; and second, to explore whether a shared pattern in the organization of the NPD function can be recognized to affect NPD performance positively. The medical devices sector in Spain is used as an example of a highly regulated sector. A structured survey among 11 SMEs, of which 2 were studied also as in in-depth case studies, led to the following results. First of all, indeed the companies in the dataset which focused on the effectiveness of their development process, stood out in NPD performance. Further, the higher performing companies did have a number of commonalities in the organisation of their NPD function: 1) The majority of the higher performing firms had an NPD strategy characterized by a predominantly incremental project portfolio. 2) a) Successful firms with an incremental project portfolio combined this with a functional team structure b) Successful firms with a radical project portfolio combined this with a heavyweight or autonomous team structure. 3) A negative reciprocal relationship exists between formalization of the NPD processes and the climate of the NPD function, in that a formalized NPD process and an innovative climate do not seem to reinforce each other. Innovative climate combined with an informal NPD process does however contribute positively to NPD performance. This effect was stronger in combination with a radical project portfolio. The highest NPD performance was measured for companies focusing mainly on incremental innovation. It is argued that in highly regulated sectors, companies with an incremental product portfolio would benefit from employing a functional structure. Those companies who choose for a more radical project portfolio in highly regulated sectors should be aware that they are likely to excell only in the longer term by focusing on strategic flexibility. In their NPD organization, they might be well advised to combine informal innovation processes with an innovative climate