Integrated product development practices and competitive capabilities: the effects of uncertainty, equivocality, and platform strategy

Abstract

Product development occurs more frequently as product life cycles shrink and new product offerings expand. In this high‐change and complex environment, firms face high levels of uncertainty and equivocality, and in response, they seek integrative structural mechanisms. In these organizations, product development is characterized by the use of heavyweight product development managers, concurrent engineering, and computer usage. These mechanisms give product development efforts the senior leadership to overcome resistance, the ability to integrate and coordinate activities, the access to relevant information, and the ability to process it effectively. This research describes a framework for product development practices, and it discusses relations among these variables as well as important performance variables (product innovation, quality, premium pricing, and profitability). Based on responses from 244 manufacturing firms, the study suggests that heavyweight product development managers drive the application of concurrent engineering and computer use. Computer use has a significant and positive impact on product innovation, and concurrent engineering has a positive effect on quality. Product innovation also seems to have an influence on quality. Both quality and product innovation have a significant and positive impact on premium pricing, which, in turn, influences profitability. The extent to which a firm uses a product platform strategy seems to be an important contextual variable that affects the nature of the relationships among product development practices and competitive capabilities. Firms operating in uncertain or equivocal environments appear to adopt higher levels of integrated product development practices than firms operating in low uncertainty or low equivocality environments.