Can a good organizational climate compensate for a lack of top management commitment to new product development?

Abstract

This study examines the marketing—R&D relationship at different levels of top management commitment to determine if such commitment moderates the effect of the climate between departments on new product performance. Four key variables of relationship marketing–cooperation, communication, trust, and internal commitment–serve to measure the interfunctional climate, and the measures of top management commitment rely on both top management support and risk aversion. According to surveys of R&D directors from 178 Spanish innovative firms pertaining to 345 products, low top management commitment enhances the importance of effective cross-functional communication flows for new product performance. Furthermore, this unique research (1) uses a relationship marketing approach to investigate intrafunctional relationships, (2) measures new product performance as a formative construct, and (3) includes top management commitment as a possible moderator.

Introduction

New product development demands innovative and risky processes and strategies with a high probability of failure. Results from existing innovation literature indicate the key role top management plays in such processes, but no empirical evidence clarifies whether top management commitment is essential in all types of situations or if other factors can compensate for such commitment in certain circumstances. For example, the internal organizational climate among departments involved in new product development may affect the relationship between top management commitment and new product performance. Because developing new products is a multidisciplinary process, most recent works study interfunctional integration, understood as the cooperation and communication among different areas involved in the innovation process, especially marketing and R&D. Prior results reveal the important role played by cooperation and communication, as well as the presence of other, more affective factors of the interfunctional climate, such as trust and internal commitment.

When the marketing—R&D relationship entails a good interfunctional climate, top management commitment (at least certain types) appears less crucial than when the organizational climate contains conflict or is underdeveloped. In other words, when top management commitment is scarce, the effect of a good internal organizational climate on new product performance may be significantly stronger than the influence of that climate when top management support is intense, such that top management commitment and organizational climate compensate for each other, up to a certain point.

Therefore, the present work analyzes the relationship between marketing and R&D during new product development in different situations and with varying types of top management commitment. Specifically, this article determines whether the effect of four key variables of relationship marketing–cooperation, communication, trust, and commitment–on new product performance gets moderated by the level of top management support and risk aversion.

The study is structured as follows: initially, the article provides an overview of interfunctional integration literature, combined with relationship marketing literature, to conceptualize the basic organizational climate constructs. The subsequent section introduces a brief explanation of the moderating role of top management commitment in the relationship between the organizational climate and new product performance. This explanation leads to the development of a theoretical model. Next, this article explains the methodology used to carry out the analysis and discusses the empirical results. The final section comments on conclusions drawn from the study, as well as the main limitations and possible lines of further research.