Entrepreneurial orientation, communication strategies, and new product success: a theoretic model.

Author:Chang, Chun-Lan
 
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New product success determines organizational performance such as sales and profits. It is reported that new products account for about 50% of sales and 40% of profits in companies (Cooper, 2000). Likewise, most firms rely on new products to increase sales and profits. The obsolete products cannot satisfy the needs of target customers. To develop new products is crucial to the firms' success. As a result, the firms compete to develop new products in order to achieve organizational performance. Meanwhile, new product development shapes short product life cycles, and the firms cannot but fast develop new products (Rink and Swan, 1979). As we see the rapid development of IT products like iPhones and iPads the firms endeavor to develop new products for financial returns.

With respect to new product success, the literature has already shown that the rewards of new products appear more spectacular in the hi-tech sector (Song & Parry, 1997). Hi-tech firms need to develop new products for profits under short product life cycles. The fast new product development is the firm's lifeblood. For example, Hewlett-Packard and Northern Telecom adopt quick new product development to attain better performance (Oakley, 1996). In Taiwan, the Hsinchu Science Park accommodates the manufacturers of information technology hardware products in semiconductors, computers and peripherals, telecommunications, and optoelectronics (Hu & Li, 2006; Hsinchu Science Park, 2013; Lee & Yang, 2000). They develop high-value products to succeed in the marketplace (Song, Montoya-Weiss, & Schmidt, 1997; Tanzer, 2001).

On the basis of new product success, Wernerfelt (1984) suggests that resources and products may be the two sides of the same coin to convey the association between resources and products given the resource-based view. The resource leads to profitable new products because the resource is valuable, rare, inimitable, and non-substitutable (Barney, 1991). In entrepreneurship and new product development, entrepreneurial orientation is the intangible resource as organizational culture to develop new products (Atuahene-Gima & Ko, 2001; Ireland, Hitt, & Sirmon, 2003). Entrepreneurial orientation comprises the organizational values of innovation, manageable risk-taking, and proactiveness to reflect entrepreneurship culture (Davis, Morris, & Allen, 1991). As the resource, entrepreneurial orientation is engaged in new product development to earn profits. With the antecedent of entrepreneurial orientation, communication is the route to arrive at new product success (Allen, 2007).

Although entrepreneurial orientation and communication both contribute to new product success (Atuahene-Gima & Ko, 2001; Brown & Eisenhardt, 1995; Ireland, Hitt, & Sirmon, 2003), little attention understands their relationship. In entrepreneurship, the research stream hasn't yet focused on how entrepreneurial orientation accomplishes new product success. Following the resource-based view, the present study considers communication strategies to link entrepreneurial orientation and new product success (Barney, 1991; Brown & Eisenhardt, 1995). In a consonant sense, it attributes to the literature gap. First, the literature in the resource-based view mainly focuses on the resource-performance relationship (e.g., Helfat & Peteraf, 2003; Lambe, Spekman, & Hunt, 2002; Masakure, Henson, & Cranfield, 2009; Miller & Shamsie, 1996; Newbert, 2007; Wade & Hulland, 2004; Wu, Yenlyurt, Kim, & Cavusgil, 2006). There are few efforts to center on the resource-strategy-performance relationship. Given this gap, the present study intends to adopt communication strategies to bridge the resource-performance relationship in new product development. Communication strategies focus on information activities (Park & Kim, 2008). Second, entrepreneurial orientation is the firm's resource to achieve new product success (Atuahene-Gima & Ko, 2001). However, the literature seems to lack the debate on how entrepreneurial orientation leads to new product success. Entrepreneurial orientation results in new product performance, but the literature also highlights that communication strategies give rise to new product performance (Allen, 2007). According to the theoretic foundation of the resource-based view, entrepreneurial orientation as organizational culture implements communication strategies to arrive at new product success. Particularly, the study classifies new product success into internal and external new product success (Tatikonda & Montoya-Weiss, 2001). Internal product success is associated with operations success, and external new product success is related to market success.

In line with contingency theory for strategic management (Zeithaml, Varadarajan, & Varadarajan, 1988), strategies are contingent to environmental contingencies to attain better new product performance as contingency theory includes three-type variables: contingency variables, response variables, and performance variables. The fit between contingency variables and response variables achieves better new product performance. The concept of the fit as congruence asserts that the fit is a combination of the contingency and strategy to produce higher new product performance (Donaldson, 2000). The literature hasn't shown the fit between environmental contingencies and communication strategies to obtain better new hi-tech product performance. Therefore, the present study explores the fit between environmental contingencies and communication strategies to attain higher new product performance. Environmental contingencies include technological uncertainties and market uncertainties (Atuahene-Gima & Murray, 2004). Technological uncertainties are associated with the operations side to influence operations communication strategies and thus internal new product performance (Tatikonda & Montoya-Weiss, 2001). Operations communication strategies mean the communication to transform inputs into outputs (Adam, 1983). Market uncertainties are related to the marketing side to affect marketing communication strategies and therefore external new product performance (Tatikonda & Montoya-Weiss, 2001). Marketing communication strategies provide marketing information in this study. Given technological uncertainties and market uncertainties, hi-tech firms adjust communication strategies toward the fit that results in better new product performance.

In the research setting, the objective of this study attempts to build a theoretic model underlying the resource-based view and contingency theory for new product development in the context of the hi-tech sector. In the resource-based view, the model explores the relationship between entrepreneurial orientation, communication strategies, and new hi-tech product success. In contingency theory, it explores how technological and market uncertainties influence communication strategies to get better internal and external new hi-tech product performance. Therefore, this study builds a theoretic model through the literature like prior research (e.g., Bloch & Richins, 1983, Martin, Moritz, & Hall, 1999; Leary & Kowalski, 1990; Lefkowitz, 2010; Miller & Norman, 1979; Nezu, 1987; Seuring & Muller, 2008). Additionally, considering the assessment of theoretic variables such as communication strategies and new product performance, it needs different knowledgeable informants to provide primary data. It's hard to conduct empirical research. Therefore, this study establishes a theoretic model. Consistently, three questions are addressed. First, what communication strategy does entrepreneurial orientation implement to achieve new hi-tech product success? Second, how do technological uncertainties moderate the relationship between operations communication strategies and internal new hi-tech product performance? Third, how do market uncertainties moderate the relationship between marketing communication strategies and external new hi-tech product performance?

The sections of this article are structured as follows. The first section is the theoretic background and literature review. The second section is research findings. The third section is discussion. The fourth section is theoretic contributions and future research. The fifth section is managerial implications and limitations. At last, the final section is the conclusion.

Theoretic Background And Literature Review

According to the theoretic foundations of the resource-based view and contingency theory, the theoretic variables focus on entrepreneurial orientation, communication strategies, new product success, technological uncertainties, and market uncertainties.

The Resource-Based View

The seminal work of the resource-based view is Penrose's (1960) assertion that a firm is a pool of resources. Consistently, Wernerfelt (1984) argues that resources lead to profitable new products. Further, Barney (1991) specifies that the properties of the resource are valuable, rare, inimitable, and non-substitutable to bring about organizational performance. Meanwhile, he proposes that the firm's resource may implement the strategy to attain organizational performance. In the present study, entrepreneurial orientation is the firm's resource to implement communication strategies so as to accomplish new hi-tech product success.

Entrepreneurial Orientation

Entrepreneurial orientation includes organizational values of innovation, manageable risk-taking, and proactiveness and manifests them in organizational behavior (Atuahene-Gima & Ko, 2001). As the firm's resource, entrepreneurial orientation develops profitable new products. New product development is the innovation behavior of entrepreneurial orientation. Meanwhile, new product development faces high failure rates. Manageable risk- taking is necessary to control new product development risks and inputs (Cooper, 2000). Further, proactiveness means the proactive implementation of new products in short product life cycles...

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