The interplay between entrepreneurial orientation and control mechanisms on decision-making and new product performance

Civilai Leckie · Heath McDonald

14 citations0/0 files storedJournal of Business and Industrial Marketing

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Entrepreneurship Studies and Influences Innovation and Knowledge Management Product Development and Customization

Abstract

Purpose This study aims to investigate whether an organization that is entrepreneurial oriented can benefit from having a formal control structure and process in new product development (NPD). This study investigates two well-known control mechanisms in NPD, namely, stage-gate system (SGS) and project management (PM), as well as decision-making comprehensiveness (DMC), reflecting the amount of information processing and investigative activities undertaken. Design/methodology/approach Survey data were collected from 238 Australian small and medium enterprises. Structural equation modeling was used to test the hypotheses. Findings The findings of this study suggest that entrepreneurial orientation (EO) directly impacts new product performance and indirectly does so through DMC. While both control mechanisms positively impact DMC, they affect the EO–DMC relationship differently. While SGS positively moderates the EO–DMC relationship, PM negatively does so. However, the use of SGS and PM enhances the effect of EO on DMC. Practical implications This research provides managers with insights into the design of structure and process in NPD to support interfunctional coordination and firm strategy. The findings of this study suggest that managers should be amenable to the application of control mechanisms and DMC. The calibration of the right mix of control systems is required to ensure that EO can contribute to decision-making in the NPD process. Originality/value On the surface, the implementation of EO requires flexibility while the control mechanisms and extensive information processing are seen as restricted structures for NPD activities. However, rather than viewing EO and control structure as counterintuitive elements in NPD, the results suggest that appropriate use of control structure can support organizational strategy and decision-making activities, which subsequently enhance NPD outcomes.

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References

1981Evaluating Structural Equation Models with Unobservable Variables and Measurement Error 2003Common method biases in behavioral research: A critical review of the literature and recommended remedies.1991Exploration and Exploitation in Organizational Learning 2000Dynamic capabilities: what are they?1996Clarifying the Entrepreneurial Orientation Construct and Linking It To Performance 1993Market Orientation: Antecedents and Consequences 1990The Effect of a Market Orientation on Business Profitability 1992Core capabilities and core rigidities: A paradox in managing new product development

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