Firms undertaking new product development are faced with an environment which is
characterised by long lead times from basic research to industrial application, a
commercialisation phase with short lead times and an increasingly accelerated rate of
obsolescence under the global competition of the new product development process.
While this is true for all firms, STBFs face further complications from the inherently
higher risks associated with such firms. In examining how STBFs undertake their new
product development (NPD), the relationship between corporate strategy, NPD process
features and new product success factors specifically need to be considered. An
additional consideration is the role that business incubators play in assisting tenant
STBFs to undertake their new product development. As such, the theory of how new
product development is undertaken by STBFs lies across several disciplines including
corporate strategy theory, new product development theory, entrepreneurial theory,
technology management theory, economic development theory and business incubator
theory. Specifically, the research problem for this research is: what are the origins and
nature of new product development processes within STBFs and how do they contribute
to STBF success?
In undertaking a review of the literature some insights were obtained to specifically
explain how STBFs undertake their new product development, the relationship between
NPD process activity and new product and firm success and the role of business
incubators. As a result, a theoretical framework was developed which in turn, resulted in
three research questions:
RQ 1: What elements of NPD are adopted by STBFs when developing new products?
RQ 2: How does the lack of adoption of the elements of NPD contribute to new product
and firm failure in STBFs?
RQ 3: How and in what ways do business incubators influence the performance of the
elements of NPD adopted by STBFs?
A three-stage qualitative research design within the realism paradigm was used for this
research. It combined exploratory interviews with a case study methodology in order to
build theory through induction. This was then followed up with a series of interviews to
discover which firms had experienced product failure, had discontinued their NPD
process and/or had suffered firm failure over the duration of the study. As a result,
meaningful insights were able to be obtained into the relationships between the adoption
of elements of NPD, new product failure and firm failure in the context of STBFs.
The findings revealed that there were several aspects of the ways in which STBFs
undertake their new product development activities which were not identified in the
literature. In this respect, it was evident that unlike larger and established firms in which
new product development activity is derived out of corporate strategy, STBFs undertake
corporate strategy development as a component of new product development. It was also
found that the corporate strategy – product development nexus was not linear but rather
comprised a number of close inter-relationships between elements of corporate strategy,
NPD process features and new product success factors requiring parallel activity.
Furthermore, the majority of STBFs adopted only 15 of the 22 best practice elements of
NPD proposed as part of the theoretical framework of new product development in
STBFs. In addition, it was found that the STBFs that suffered failure over the course of
the study adopted comparatively fewer elements of NPD than did their continuing STBF
Importantly, it was also found that business incubators provided only a modest positive
influence on the performance of NPD activities by their tenant STBFs. Moreover, as
STBFs are commonly single product centric, that is their overall new product
development effort is focused on a single product or a narrow product line, the
relationships between new product development effectiveness, new product success and
firm success are closely aligned. More specifically, ineffective support for NPD activities
can lead to a potential lack of effectiveness of business incubators in reducing the risk of failure of their tenant STBFs. This is despite the more general focus of business
incubators in assisting tenant STBFs with corporate strategy development.
The main contribution of this theory building research was the development of an
empirically confirmed, theoretical and practical model for the development and
management of new product development by start-up technology based firms.