Relationship between new product development activities, product advantage, product newness and new product performance in independent new firms

New-product development (NPD) is argued to be amongst the most significant sources of competitive advantage and capability for firms, which leads to improved firm performance through the introduction of superior products (goods/services) to customers, relative to rivals in the market. An important driver for achieving innovation outcomes is argued to be the execution proficiency of innovation activities. However, there is a lack of scholarly understanding of how the execution proficiency of a comprehensive series of NPD activities might affect product advantage in the independent-new-firm context. Independent new firms play a significant role in the country’s economic development and growth. Independent new firms are firms that act independently of any association with an existing organisation, as well being eight years and younger from the end of the founding episode of the firm (i.e. the firm’s birthdate), which is marked by the first systematic sale of the new product. There are over 2 million SMEs in Australia, with nearly all new firms being independent new firms. The successful launch of first products has been shown to be crucially important to the survival of independent new firms, which suffer from a scarcity of resources. This scarcity is argued to have a significant impact on the execution proficiency of the NPD activities in independent new firms, which could affect not only the successful launch of the new product, but also the firm’s survival or failure. However, despite the number and economic importance of independent new firms, there has been a lack of research regarding investigation of NPD activities in this context. Therefore, this thesis seeks to address this gap in the literature and expand the understanding of the NPD process in the context of the independent new firms. To this end, drawing upon a critical review of the literature, a conceptual model was developed that featured six constructs requiring scholarly attention in the context of independent new firms: NPD activities execution, new-product performance (NPP) and product characteristics, which included product advantage, product newness to the firm and product newness to the customer. Lastly, environmental turbulence was posited to moderate the relationships in the conceptual model. This research adopted a positivist, quantitative research strategy that featured a cross-sectional research design. The sample population was independent new firms in Australia, which were no older than eight years since beginning first systematic sales of their new product. A reputable market-research firm was contracted to provide the sample. Participants completed an online survey, with 164 usable responses received. The hypotheses were tested using Partial Least Squares Structural Equation Modelling (PLS-SEM). The findings of this study revealed that the proficiency of NPD process activities by independent new firms has a significant and positive effect on product advantage, which in turn drives NPP. Also, the degree of product newness to the firm increased the advantage of a new product in the market, whilst the degree of product newness to the customer decreased this advantage. Furthermore, the degree of product newness to the customer had a negative influence on NPP. Whilst the degree of product newness to the firm did not have a significant direct effect on NPP, the further analysis conducted in this study showed that product advantage fully mediated the relationship between product newness to the firm and NPP of an independent new firm. Moreover, product advantage was found to also partially mediate the relationship between product newness to the customer and NPP. The results of the moderation analysis revealed that the influence of product newness to the customer on product advantage, as well as product newness to the firm on NPP, is stronger in a more turbulent environment than under more stable circumstances. The findings of this research make a significant contribution to the body of knowledge in this field, and should assist scholars and innovation managers to better understand the importance of the relationship between NPD activities execution and product advantage, and NPP in turn, in the context of independent new firms. Furthermore, the theoretical and practical contributions of this research are expected to provide a better understanding for scholars, practitioners (e.g. independent entrepreneurs) and policymakers.