A Survey Of New Product Development: Can Decentralization Alone Deliver?

Abstract

Geographic decentralization of the new product development (NPD) process is seen by many as a necessary means to increase innovation and its cost-effectiveness.  Decentralization promotes innovation in many ways, especially by allowing better access to local knowledge pools.  This study's results, based on a survey of top executives in large manufacturing firms around the globe, give only mixed support to this view.  Decentralization is associated with increases in revenues from new product but the performance of firms with geographically decentralized NPD is inferior otherwise.  The key culprits seem to be the decrease in involvement of NPD stakeholders in firms with geographically decentralized NPD and the inability of firms with geographically decentralized NPD to generate a greater level of radical innovations. The study results are broadly consistent with academic research in this area.