Organizational Structures for New Service Development

Abstract

Although previous research has demonstrated that many critical success factors for new service development (NSD) relate to how the NSD function is organized, few attempts have been made to examine the organizational arrangements for NSD in more detail. This study explores what kind of organization structures firms use for NSD, and what implications such structures have for NSD. To expand the previous research heavily focused on standardized services, a qualitative, in‐depth study of NSD in knowledge‐intensive business service firms was conducted. The study uses a multiple case comparative research strategy where empirical data was collected in nine companies. The study empirically identifies four key organizational arrangements for NSD: NSD in customer relationships, NSD in temporary project teams, NSD in business development units, and NSD in separate R&D units. These arrangements are conceptualized as organization structures characterized by their level and nature of specialization, standardization, formalization, and centralization. The study shows that these key NSD structures can coexist in organizations despite their different and even contradictory characteristics, and highlights the unique opportunities and challenges that each structure brings for NSD. Challenging extant research that has focused on examining particular structural characteristics as success factors for NSD, this study demonstrates that NSD performance may be driven by a configuration of several, simultaneously operating NSD structures rather than by one superior structure. Accordingly, firms should establish organizational approaches that support close connections between different NSD structures.

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