Determinants of IT Usage and New Product Performance

Abstract

Explosive growth of information technologies (IT) has prompted interest in examining the role of IT in new product development (NPD). Through desk-top software and web-based tools, IT has been used to aid idea generation and product testing as well as for NPD activities such as process and portfolio management. Recent research suggests, however, that a gap exists between IT availability and usage. Given the importance of IT in creating business value through the development of new products and services, this study seeks to identify factors that affect IT usage. Further, anecdotal evidence and conceptual studies intimate that the usage of IT tools for NPD can shorten time to market, improve product quality, and increase productivity. However, empirical substantiation of this impact is mostly non-existent. The current study investigates the relationship between IT usage and two measures of new product performance, speed to market and market performance. Employing a mail survey methodology, our study uses data from a sample of practitioner members from the Product Development & Management Association (PDMA) to examine the effect of project risk, existence of a champion, autonomy, innovative climate, IT infrastructure, and IT embeddedness on the extent of IT usage. This data is also used to explore the impact of IT usage on speed to market and market performance. The results indicate that project risk, existence of a champion, and IT embeddedness positively affect the extent of IT usage for NPD. Additionally, IT usage positively and significantly influences the performance of the new product in the market place. Surprisingly, and contrary to popular belief, IT usage does not have any impact on speed to market. An important implication of our study is that IT usage influences performance but not in the way managers expect. Specifically, IT usage does not seem to affect speed to market but rather positively impacts the performance of the new product in the marketplace. This result suggests that IT usage in NPD provides far more value to firms than previously thought and provides evidence to support greater investments in IT for product development efforts. Other implications of our study are that unless IT is embedded into the NPD process and champions for IT tools exist, chances are that IT won’t be used and its benefits will not be realized.