Knowledge Stocks and Information Flows in New Product Development*

Abstract

abstract Although firms increasingly invest in systems (e.g. ISO, knowledge centres, IT systems) for utilizing stored knowledge and acquiring market information during new product development, few manage to benefit from these investments. To explore this issue, we suggest that firms rely on two distinct types of knowledge stocks– procedural and declarative memory – that affect new product short‐term financial performance and creativity in distinct ways. Additionally, we suggest that internal or external information flows can have distinct moderating impact on the memory types–product outcomes relationship. Our empirical study of product development activities indicates that there is an inverted U‐shaped relationship between procedural memory and product outcomes as well as a positive relationship between declarative memory and financial performance. Also procedural and declarative memory may work in a complementary fashion enhancing both outcomes. Finally, procedural memory is found to reduce the value of internal or external information flows for product creativity. These findings have important implications for the organizational knowledge, capabilities, and product development literatures as well as for practice and they open ways for future research.

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