Explaining trade-offs in new product development speed, cost, and quality: The case of high-tech industry in Taiwan

Abstract

The new product development literature offers divergent views of the relationship between innovation speed and project success. Innovation speed, defined as the period of time in which an idea moves from conception to introduction into the marketplace, has an ambiguous relationship with development cost and product quality. While several studies argue for the trade-offs between innovation speed, development cost, and product quality in which accelerating innovation speed may result in inflating costs and sacrificing quality, some research identifies a synergy under which rapid innovation speed may lead to decreasing costs and improving quality. This study provides a framework for addressing these conflicting results. An empirical study of 168 projects of high-tech manufacturers in Taiwan is analysed by structural equation modelling. Our findings show that the impact of innovation speed on project success is mediated by development cost and product quality. In addition, product innovativeness is found to moderate the impacts of innovation speed on development cost and product quality. Implications of the results for theory and managerial practice are offered.

Keywords:

• innovation speed
• development cost
• product quality
• product innovativeness
• project success

Notes

We determined adequate sample size following Rummel's (1970) suggestion that the item-to-response ratio is 1 : 4.