The impact of Inter-organizational Cooperation on New Product Development Performance in SMEs

The impact of Inter-organizational Cooperation on New

Product Development Performance in SMEs

Course name:

Research Paper for Pre-MSc BA SB&E

Student:

Mike Horstik

Student number:

S3845117

Date:

20-06-2019

2

Index

2.4 External cooperation and NPD ... 6

2.5 Conceptual framework ... 7

2.5.1 Relationship between inter-organizational cooperation and NPD performance ... 7

2.5.2 Cross-functionality as a moderator ... 7

3. Method & Data ... 9

3.1 Data collection ... 9

3.2 Measures & questionnaire ... 9

3.3 Proposed method of analysis ... 9

4. Results ... 10

4.1 Reliability Analysis for NPD performance ... 10

4.2 Linear Regression Analysis to test H1 ... 10

4.3 Moderator Analysis to test H2 ... 10

4.4 Additional analysis ... 10

5. Discussion ... 11

5.1 Interpretation of the results ... 11

5.2 Limitations and suggestions ... 12

Bibliography ... 13

Appendix SPSS tables ... 17

Figure 1: conceptual model ... 8

Figure 2: histogram inter-organizational cooperation ... 12

Table 1: frequency table inter-organizational cooperation ... 12

Table 2: Cronbach Alpha ... 17

Table 3: Output linear regression H1 ... 17

Table 4: Output linear regression H2 ... 17

Table 5: Output additional individual analyses ... 18

3

1. Introduction

Small- and Medium-sized enterprises (SMEs) are an important aspect of European economies (Leithold, Woschk, Haase, & Kratzer, 2016) It even appears that more than 99% of businesses in the EU are SMEs (European Commision, 2017). However, in order to be successful in business as an SME, innovation is of great importance. This is because product innovation is a key driver of the economic performance and growth of SMEs (Rosenbusch, Brinckmann, & Bausch, 2011) Moreover, innovation appears to be also important for a society as a whole, because it stimulates employment and has positive effects on the economy (Harrison, Jaumandreu, Mairesse, & Peters, 2014). It is even suggested that SMEs need to have an innovative edge to compete against larger firms (de Jong & Vermeulen, 2006). This argument is supported by Schumpeter (1982) who argues that innovation is a fundamental element of 1_{entrepreneurship. Therefore, it is important for SMEs to constantly}

innovate and develop new products in order to attain and maintain a competitive advantage (de Jong & Vermeulen, 2006)

Firms invest a substantial amount of their resources in order to develop these new products (Anderson & Tushman , 1990). Still, there is a high fail rate which is between 30% to 90% (highly dependent on which market) (Castellion & Markham, 2013). This is one of the most important reasons why various companies are aware of the possibility to gain significant advantages through cooperation with other (external) actors in NPD projects (Lorange, Roos, & Brønn, 1992; Doz & Hamel, 1998). This argument is supported by Hǻkansson (1987), who found out that cooperating with external partners is an essential feature of a competitive product development capability. However, most research on this subject focus on large firms (Lorange, Roos, & Brønn, 1992; Doz & Hamel, 1998). Although, there is a difference between large firms and SMEs. While SMEs enjoy greater flexibility than large firms, their resources and skills are more limited and they lack the organizational and marketing capabilities of large firms (Van de Vrande, De Jong, Vanhaverbeke, & Rochemont, 2009). Additionally, NPD implies increased uncertainty and risks (Eisenhardt & Martin, 2000). The differences in characteristics and the increased uncertainty and risks create challenges for SMEs product innovation efforts (Berends, Reymen, & Stuliëns, 2014). Therefore, it is known that SMEs, in contrast with large firms, generally undertake fewer innovation projects (Berends, Reymen, & Stuliëns, 2014).

Current studies on the relationship between external cooperation and NPD is plentiful of references to the importance of enhanced compatibility, product quality, speeding up the product development process, and to reduce product development risks and investments (Anderson, Hakanson, &

Johanson, 1994; Gemünden & Ritter, 1997; Hagendoorn, 1993). Although these (sometimes conflicting) variables are part of NPD performance, individually they do not give a definitive answer in whether the overall NPD performance is successful. For example, if a product has a short product development time with minor risk and development cost resulting in a low-quality product which can’t meet the expectations of customer, then the overall performance is expected to be negative, although some aspects are positive. Basically, this means that current NPD research only has focused on one or two dimensions and therefor has not measured the complete construct of NPD

performance. Accordingly, the net impact of the complete construct of the overall NPD performance remains an open question. Therefore, it is relevant to examine the general relationship between external cooperation and NPD performance and take all the different dimensions of NPD

performance into account. Moreover, these researchers were conducted either at large firms or

4 failed to make a distinction between large and small firms (Hillebrand & Biemans, 2004). Taking this in consideration this research provides new insight in this field by analysing the relationship between external cooperation and NPD performance in SMEs. Moreover, unlike previous studies that only focused on one or two dimensions, this study makes use of a multidimensional performance measure, thus providing a better understanding of the overall performance effects of NPD projects. Hence, it can be argued that cooperating with external partners might even be more critical for SMEs. Because, by collaborating firms can share cost and risk and obtain necessary skills, capabilities and expand their knowledge base (cross-functional interactions) (Schilling & Phelps, 2007).

Therefore, the effect of collaboration could be stronger, as small firms (mostly) do have less inhouse capabilities, knowledge and resources as compared to large firms and cannot take large risks (Van de Vrande, De Jong, Vanhaverbeke, & Rochemont, 2009; Eisenhardt & Martin, 2000).

The general research question of this paper is to examine whether a high degree of external

cooperation within a small firms NPD project has a direct positive impact on its NPD Performance. In order to answer this question several Dutch SMEs will be interrogated concerning the level of

external cooperation within one of their NPD projects and the final NPD performance concerning this project. Since, previous studies have found a positive relationship between external cooperation and enhanced compatibility, product quality, speeding up the product development process, and

reducing product development risks and investments (Anderson, Hǻkansson, & Johanson, 1994; Gemünden & Ritter, 1997; Hagendoorn, 1993). It is expected that the relationship between external cooperation and NPD performance will also be positive.

5

2. Theoretical framework

2.1 NPD Performance

Literature in the field of NPD has not only focused on goods but also on services. This research however will only focus on goods, in which NPD consists of the activities of the firm that lead to a stream of new or changed product-market offerings over time. This includes the generation of opportunities, their selection and transformation into manufactured products (Loch & Kavadias, 2008).

Current literature related to the new product development performance, suggested different definitions of performance. For example, Schleimer & Faems (2016) describe NPD performance as ‘‘the ability to meet the initial expectations of the product/process in development’’ (p. 155). Whereas Avlonitis, Papastathopoulou and Gounaris (2001) defined NPD performance as the success of achieving market objectives. Moreover, literature distinguishes between

In this research, NPD performance will be determined through the ability to meet the initial expectations regarding product development costs, product quality technical performance with respect to specifications, time to market, market share, overall profitability of the product, overall commercial success of the product (Schleimer & Faems, 2016; Ahmad, Mallick, & Schroeder, 2013)

2.2 NPD in SMEs

Improving the performance of NPD within SMEs might require a different approach then within larger firms. Actually, Welsh et al. (1981) suggest that SMEs are not miniature versions of large firms. The official EC definition of SMEs takes account of three different factors, namely: the level of employment, the level of turnover, and the size of the balance sheet. Following these factors, three different categories of enterprises to comprise SMEs arise: micro-enterprises, small enterprises and medium-sized enterprises (European Commision, 2017). In this research micro enterprises will be left out. Therefore, only companies with 30 to 150 employees, who have a yearly revenue between 2 and 50 million will be regarded as SMEs.

However, if SMEs and large firms are not the same, what exactly makes them different? Current literature mentions some key strengths of SMEs: they generally lack bureaucracy (Vossen, 1998), are able to react faster to changing conditions in the environment (Hausman, 2005) and have close customer relationships (Laforet & Tann, 2006). These characteristics facilitate SMEs to be adaptable and flexible and enable them to endure changing conditions (Jenkins, 2009). But on the other hand, SMEs may lack resources and skills as compared to large firms, which could make them more vulnerable. Although all these firm characteristics may have an influence on NPD performance, they are not specifically related to NPD performance. Since it is the objective to identify whether there is a positive relationship between inter-organizational cooperation and NPD performance in SMEs, the previous findings on NPD performance of SMEs must also be reviewed.

Former studies found that resources from SMEs for NPD projects are limited and that this was one of the largest constraints they have regarding NPD, which has the consequence that SMEs cannot sustain many failures (Tödtling & Kaufmann, 2002; Pitta, 2008; Hausman, 2005). Furthermore, SMEs may lack skills as compared to large firms, especially the organizational and marketing capabilities to exploit new products (Scozzi, Garavelli , & Crowston, 2005). However, these arguments are

6 attributes of small and large firms, it is rather clear that both have different positive and negative effects on NPD performance and therefore probably need another approach.

2.3 NPD and cross-functionality

Current literature mentions several positive relationships between cross-functional teams and NPD performance variables. Some findings are; cross-functional teams enhance knowledge creation (Lin, Wang, & Kung, 2015), which is supported by the research from Blindenbach-Driesen and van den Ende (2010) who argue that diverse knowledge and information may be critical for a project team’s performance and innovativeness. Furthermore, they have accelerated the product development cycle (Cooper & Kleinschmidt, 1994), reduced development costs (McDonough, 2000), increased the quality of new products (Valle & Avella, 2003), increased product success in the market (Valle & Avella, 2003) and led to a more frequent introduction of new products (Jassawalla & Sashittal, 1999). This shows that cross-functional teams are a useful method to improve NPD performance. However, several researches also indicated barriers, namely problems with the integration of the differentiated expertise of members (Nonaka & Takeuchi, 1995; Kotlarsky, Hoof van den, & Houtman, 2015), and the misalignment of goals and priorities (Tjosvold & Tjosvold, 1995). It is not known whether this positive relationship also holds when cross-functionality comes from outside the own organisation. A cross-functional team can be broadly defined as a group of people with different functional

expertise working toward a common goal (Krajewski & Ritzman, 2005). Robbins, Judge and Campbell (2010) add to this, that to be a cross-functional team, at least 3 different departments must

participate. Thus, if there are less than three departments participating in a NPD team, the team cannot be seen as cross-functional. However, these definitions are not specific enough regarding this research, because in this research it is about an inter-organizational cross-functional team.

Therefore, some additions were made to describe the cross-functional composition of an inter-organizational NPD team as a group of people consisting of at least three people of various stakeholders, with different functional expertise, involved in an NPD project, to achieve collective goals. In which various stakeholders refers to the different organisations (like suppliers, universities, incubators, etc.) in an NPD project and functional expertise refers to the expertise about the

functions purchasing, manufacturing, marketing/sales, engineering, service, and finance/cost accounting (Eisenhardt & Tabrizi, 1995).

2.4 External cooperation and NPD

Several researches have defined external cooperation in literature, one of the most well know definition is of Anderson and Narus (1990) who described external cooperation as coordinated actions taken by actors in interdependent relationships to achieve mutual outcomes or singular outcomes with expected reciprocation over time. This definition is rather broad, Khan (1996) is somewhat more specific and describes it as a shared process where two or more actors work together, have mutual understanding, have a common vision, share resources/information and resources and achieve collective goals. However, both do not specifically describe who the actors in these external cooperative relationships are or at least can be. Following Dwyer et al. (1987) these relationships can refer to suppliers, customers, non-profit organizations, public authorities and even competitors.

7 is the attitudinal approach which refers to a shared nature of working together and cognitive and affective processes for example like an open and cooperative work atmosphere, teamwork ethics, and harmony in the working relationship of different functions (Ernst & Fischer, 2014). Despite that literature proposes two dimensions, this research will only focus on the behavioural dimensions. This is because the attitudinal dimensions are about the emotional perception (subjective) of the people in the teams and will therefore be hard to measure in a quantitative way. The behavioural

dimensions are more objective, which makes them easier to regulate or change. This research intent to solely include inter-organizational cooperation and will therefore exclude the customer. Therefor the final definition will be: external cooperation (inter-organizational cooperation) is a shared process where two or more organizations work together, have mutual understanding, have a common vision, share ideas/information and resources, and achieve collective goals.

2.5 Conceptual framework

2.5.1 Relationship between inter-organizational cooperation and NPD performance

Little research is conducted regarding the relationship of inter-organizational cooperation and NPD performance within SMEs. However, as mentioned before, small firms (mostly) do have less inhouse capabilities, knowledge and resources as compared to large firms and cannot take large risks (Van de Vrande, De Jong, Vanhaverbeke, & Rochemont, 2009; Eisenhardt & Martin, 2000). Which means that these attributes have the potential to hinder NPD projects, or at least limit the options of a NPD project (Berends, Reymen, & Stuliëns, 2014). Therefore, the expectation is that SMEs can share cost and risk and obtain necessary skills, capabilities and expand their knowledge base by cooperation with other organizations to increase the potential of NPD projects. Thus, in conclusion, cooperating with other firms in NPD projects has the potential to overcome some main barriers and therefore will lead to a higher NPD performance. This leads to the following hypotheses:

H1: The increase of inter-organizational cooperation within SMEs NPD teams positively influences its NPD performance.

2.5.2 Cross-functionality as a moderator

8 is to adopt this person in a cross-functional NPD team. In this situation a member from an external party embays additional value to the NPD team. therefore, has the potential to improve the overall performance of the NPD team.

Thus, in conclusion, although it is expected that cross-functionality in an inter-organizational setting is more complex, it still is expected that cross-functionality in an inter-organizational setting

improves the overall performance of the NPD team. Because cross-functionally has already showed its value in an in-house setting. Hence, it is expected that inter-organizational members embay additional value to the NPD team, as compared to an only in-house setting. This leads to the following hypotheses:

H2: The greater the cross-functionality of inter-organizational NPD teams, the stronger the impact of inter-organizational cooperation on an SMEs NPD project performance.

The conceptual model shows the proposed hypothesises and is illustrated in figure 1.

Figure 1: conceptual model

9

3. Method & Data

3.1 Data collection

Data was collected by multiple students from the University of Groningen. Each student tried to conduct at least four interviews in total, at two SMEs from various industries. The firms needed to have between 30 and 150 employees and their main business activity had to consist of developing physical products (no service companies).

Interviews were conducted with one supervisor or manager who is hierarchically responsible for the new development project and a member of the new product development team from within the same company. The data was obtained by calling/visiting companies who matched the boundary conditions. This was done by firstly asking whether they would agree to participate in this study. When they agreed, a general predefined questionnaire was used (this meant that each student asked the same questions) to interview the most suitable persons within the company.

3.2 Measures & questionnaire

The independent variable inter-organizational cooperation between firms was measured by how intensive the cooperation with other organisations (suppliers) in an NPD project was. It was calculated whether there was involvement from an external organisation (supplier), by asking the degree of cooperation during the NPD project and was measured on a 7-point Likert scale from 1 to 7 (1 = never, 7 = quit frequently).

The dependent variable New Product Development Performance was measured by 7 items with a 7-point Likert scale (1 = significantly worse than initial expectations, 7 = significantly better than initial expectations). These items are: product development costs, product quality, technical performance with respect to specifications, time to market, market share, overall profitability of the product and overall commercial success of the product (Schleimer & Faems, 2016; Ahmad, Mallick, & Schroeder, 2013).

The dimension cross-functionality was measured by whether people from specific functions were involved on the product development team. The functions were purchasing, manufacturing,

marketing/sales, engineering, service, and finance/cost accounting (Eisenhardt & Tabrizi, 1995). The number of functions is calculated by counting the total number of functions which were involved in a NPD project.

3.3 Proposed method of analysis

A linear regression analysis with NPD Performance as the dependent variable and inter-organizational cooperation as the independent variable is conducted in order to test the first hypothesis.

Then, in order to test whether cross-functionally within an inter-organizational NPD team will

positively influence the relationship between Inter-organizational cooperation and NPD performance a moderator analysis is performed. The moderator will be included in the regression analysis by including the independent variable, the moderating variable and the multiplication of the independent and the moderator variable at the independent side of the equation. If the

multiplication term of the independent variable and the moderator variable is positive and significant then “cross-functionally within an inter-organizational NPD team” positively influences the

10

4. Results

4.1 Reliability Analysis for NPD performance

To test the first hypothesis, a linear regression analysis is used. However, before calculating the mean for “NPD performance” a reliability analysis is conducted in order to determine whether the

reliability of the scale is internally consistent (see Appendix table 2). The reliability analysis for NPD performance shows that the Cronbach's Alpha (α) is slightly higher than the required .7 namely 0,775. Thus, the scale of NPD performance shows sufficient reliability.

4.2 Linear Regression Analysis to test H1

A linear regression analysis has been executed with inter-organizational cooperation as the independent variable to predict the function of the dependent variable NPD performance (Hypothesis 1). The mean of the different items of NPD performance has been calculated and therefore a new variable called “perf_complete” has been constructed in SPSS.

The output of the linear regression shows insufficient results (see Appendix table 3): the model is highly insignificant with F=.013 and a p-value of p=.911. Therefore, it can be concluded that the model does not provide any value in predicting the outcome variable. Thus, no variation in NPD performance can be explained by the degree of inter-organizational cooperation within the sample. Thus, in conclusion, the results show that a high degree of inter-organizational cooperation within small and medium enterprises do not have any significant influence on NPD performance. Therefore, the null hypothesis of the first hypothesis cannot be confirmed.

4.3 Moderator Analysis to test H2

A moderator analysis has been executed with inter-organizational cooperation as the independent variable, NPD performance as the dependent variable and cross-functionality as the moderator, in order to test whether the relationship between inter-organizational cooperation and NPD

performance depends on the value of cross-functionality.

To add the moderator in the regression analysis, the independent variable (inter-organizational cooperation), the moderating variable (cross-functionality) and the multiplication of the independent variable and the moderator variable (inter-organizational cooperation* cross-functionality) were added at the independent side of the equation. The dependent side of the equation consisted of the dependent variable NPD performance.

The output of the linear regression shows insufficient results (see Appendix table 4): the model is highly insignificant with F=.001 and a p-value of p=.999. Therefore, cross-functionality does not moderate the relationship between inter-organizational cooperation and NPD performance in SMEs and because of that, the second hypothesis is not confirmed.

4.4 Additional analysis

After conducting a linear regression analysis with each of the different dimensions of NPD

performance (product quality, product development costs, time to market, technical performance, market share, overall profitability of the product and overall commercial success of the product) as a dependent variable (see Appendix table 5) the results confirmed that several of the different

dimensions of NPD performance (product development costs, market share and overall commercial success of the product) are significant. However, they are only slightly predicted by

11 6). Thus, in conclusion, it has to be stated that the first hypothesis is not significant and therefore cannot be verified.

5. Discussion

5.1 Interpretation of the results

The results of this study show that inter-organizational cooperation within an SME is not able to significantly predict the NPD performance of an SME. The expectation was that this could be due to the large number of dimensions regarding NPD performance, which means that some dimensions perhaps are significant while others are not.

The results from the additional analysis indeed confirmed that several of the different dimensions of NPD performance (product development costs, market share and overall commercial success of the product) are significant. This could mean that cooperating with other organisations only is beneficial for these three performance criteria while it doesn’t foster the other ones. By all means, Schilling and Phelps (2007) mention that sharing risk and cost is a possible way of cooperation. Logically, this would mean lower product development cost. Unfortunately, current research does not mention anything regarding the other two dimensions, which makes it difficult to fully substantiate this argument.

An explanation for the insignificant result can be that inter-organizational cooperation has some extensive barriers which hinder cooperation. For example, in what way knowledge is acquired and transferred between actors (Argote, McEvily, & Reagans, 2003), the additional extensive

coordination and intensive management they require (Littler, Leverick, & Bruce, 1995), differences in norms and values within organisations (Edmondson & Reynolds, 2016) and the concerns about trust between actors (Bstieler, 2006; Supratpo, Wibowo, & Harsono, 2018). Thus, that inter-organizational cooperation only is beneficial if these barriers between the different actors are not there or can be resolved within a short time period. This argument is also supported by research from Tjosvold and Tjosvold (1995). Thus, in conclusion, this would mean that in this database there are positive and negative cooperation’s (which is presumable) and that these positive and negative cooperation’s cancelled each other out, causing no significant result.

Another possible explanation is that inter-organizational cooperation within an SME is already so high that an increase would not have any (additional) effect on the NPD performance of an SME. Figure 2 shows that the histogram is negatively skewed and the average inter-organizational

cooperation within this sample is x̅= 5.35, which indeed is relatively high. Additionally, table 1 states that 74,5% of the SMEs in the sample have indicated a high degree of inter-organizational

12

Table 1: frequency table inter-organizational cooperation Figure 2: histogram inter-organizational cooperation

The moderator shows no significance, which means that the cross-functional composition of an inter-organizational NPD team does not fosters the linear relationship between inter-inter-organizational cooperation and NPD performance. This can be explained by the measure, that was not completely adequate because it was quite unclear whether cross-functional team members were in house staff members or external members.

5.2 Limitations and suggestions

Although this study’s hypothesises were not confirmed, it still shows potential. Especially because the database had some major constraints. For example, that it was not allowed to answer the questionnaire when a product was made in cooperation with other firms. This ensures that organisations with a very high inter-organizational cooperation were left out. Furthermore, it was only possible to answer whether an organisation had cooperated with suppliers. Thus, other organisations were left out, like for example universities and triple helix organisations (incubators). These organisations also have the potential to improve certain performance related aspects. Therefore, allowing organisations who developed new products in cooperation with other

organisations and using a broader inter-organizational scale (also including non-profit organizations, public authorities and competitors) has the potential to produce other (more related) outcomes. Another application would be to adjust the cross-functional dimension. Regarding the moderator, it was quite unclear whether these people were in house staff members or external members. While the intention of this research was to measure the cross-functional composition of an

inter-organizational NPD team. Regarding this research, it could mean that all members of a cross-functional NPD team were in house staff members and therefore it would not have been an inter-organizational NPD team. Thus, to resolve this issue, it would be useful to make a clear distinction between in-house and external members of NPD teams.

Moreover, it might be useful to look at potential barriers and the strength of the relationship. Because as mentioned as a potential explanation for the insignificance, a (inter-organizational) cooperation has the potential to create extensive barriers which hinder cooperation. Thus, instead of only looking at the fact that organizations made use of cooperation they should also look at the nature of the cooperation.

As mentioned, the NPD performance measure was rather broad, while the results showed that three of the seven measures NPD performance measures were significant. Thus, further research regarding this subject could focus on market share and overall commercial success.

13

Bibliography

Ahmad, S., Mallick, D., & Schroeder, R. (2013). New product development: impact of project characteristics and development practices on performance. Journal of Product Innovation

Management, 30(2), 331-348.

Anderson , P., & Tushman , M. (1990). Technological discontinuities and dominant designs: a cyclical model of technological change. administrative Science Quar-terly, 35: 604 – 633.

Anderson, J., & Narus, J. (1990). A model of distributor firm and manufacturer firm working partnerships. . Journal of Marketing, 54(1), 42-58.

Anderson, J., Hakanson, H., & Johanson, J. (1994). Dyadic Business Relationships within a Business Network Context. .Journal of Marketing, 58:1–15.

Argote, L., McEvily, B., & Reagans, R. (2003). Managing Knowledge in Organizations. Management

science, 571-582.

Avlonitis, G., Papastathopoulou, P., & Gounaris, S. (2001). An empirically‐based typology of product innovativeness for new financial services: Success and failure scenarios. Journal of Product

Innovation Managemen, 18(5), 324-342.

Berends, H., Reymen, M., & Stuliëns, R. (2014). Product innovation processes in small firms: Combining entrepreneurial effectuation and managerial causation. Journal of Product

Innovation Management,, 31(3), 616-635.

Blindenbach-Driessen, F., & van den Ende , J. (2010). Innovationmanagement practices compared: The example of product-based firms. The Journal of Product Innovation Management, 27 (5): 705–24.

Bstieler, L. (2006). Trust formation in collaborative new product development*. Journal of Product

Innovation Management, 23(1), 56-72.

Castellion , G., & Markham, S. (2013). Perspective: New Product Failure Rates: Influence of

Argumentum ad Populum and Self-Interest. Journal of Product Innovation & Management, 976-979.

Ciccantelli, S., & Magidson, J. (1993). Ciccantelli, S., & Magidson, J. (1993). From experience: Consumer idealized design: Involving consumers in the product development process. The

Journal of Product Innovation Management, 10(4), 341-347.

Cooper, R., & Kleinschmidt, E. (1994). Determinants of Timeliness in Product Development. Journal of

Product Innovation Management , 11 (5):381–396.

de Jong, J., & Vermeulen, P. (2006). Determinants of product innovation in small firms. International

Small Business Journal, 24(6), 587-609.

Doz, Y., & Hamel, G. (1998). Alliance advantage : The art of creating value through partnering. Boston: Harvard Business School Press.

Dwyer, F., Schurr, P., & Oh, S. (1987). Developing Buyer–Supplier Relationships. Journal of Marketing, 51 (2): 11–27.

14 Eisenhardt, K., & Martin, J. (2000). Dynamic capabilities: what are they? Strategic management

journal, 21(10‐11), 1105-1121.

Eisenhardt, K., & Tabrizi, B. (1995). Accelerating adaptive processes: Product innovation in the global computer industry. Administrative science quarterly, 40(1), 84-110.

Ernst, H., & Fischer, M. (2014). Integrating the R&D and patent functions: implications for new product performance. Journal of Product Innovation Management, 31, 118-132. . European Commision. (2017). ANNUAL REPORT ON EUROPEAN SMEs 2016/2017. Manchester:

European Union.

Gemünden, H., & Ritter, T. (1997). Managing Technological Networks: The Concept of Network

Competence.In:Relationships and Networks in International Markets. HOxford, UK: Elsevier Sc. Oxford: Elsevier science.

Hagendoorn, J. (1993). Understanding the Rationale of Strategic Technology Partnering:

Interorganizational Modes of Cooperationand Sectoral Differences.Strategic Management Journal14(5):371–85. Strategic Management Journal, 14(5):371-385.

Håkansson, H. (1987). Industrial technological development : A network approach. London: Routledge.

Harrison, R., Jaumandreu, J., Mairesse, J., & Peters, B. (2014). Does innovation stimulate employment? a firm-level analysis using comparable micro-data from four european countries. International Journal of Industrial Organization, 35, 29-43.

Hausman, A. (2005). Innovativeness among small businesses: theory and propositions for future research . Industrial Marketing Management, Vol. 34 No. 8, pp. 773-782.

Hillebrand, B., & Biemans, W. (2004). Links between internal and external cooperation in product development: An exploratory study. Journal of Product Innovation Management, 21(2), 110-122.

Jassawalla, A., & Sashittal, H. (1999). Building Collaborative Cross‐Functional New Product Teams.

Academy of Management Executive, 13 (3):50–63.

Jenkins, H. (2009). A ‘business opportunity’ model of corporate social responsibility for small- andmedium-sized enterprises. Business Ethics: A European Review, Vol. 18 No. 1, pp. 21-36. Kahn, K. (1996). Interdepartmental integration: A definition with implications for product

development performance. The Journal of Product Innovation Management, 13(2), 137-151. Kotlarsky, J., Hoof van den, B., & Houtman, L. (2015). Are We on the Same Page? Knowledge

Boundaries and Transactive Memory System Development in Cross-Functional Teams.

Communication Research, 42(3), 319-344.

Krajewski, L., & Ritzman, P. (2005). Operations Management: Processes and Value Chains. Upper Saddle River: Pearson Education.

Laforet, S., & Tann, J. (2006). Innovative characteristics of small manufacturing firms. Journal of Small

Business and Enterprise Development, Vol. 13 No. 3, pp. 363-380.

15 Lin, Y., Wang, Y., & Kung, L. (2015). Influences of cross-functional collaboration and knowledge

creation on technology commercialization: Evidence from high-tech industries. Industrial

Marketing Management, 49, 128-138.

Littler, D., Leverick, F., & Bruce, M. (1995). Factors affecting the process of collaborative product development: A study of uk manufacturers of information and communications technology products. Journal of Product Innovation Management, 12(1), 16-32.

Lorange, P., Roos, J., & Brønn, P. (1992). Building successful strategic alliances. Long Range Planning, 25(6), 10.

McDonough, E. (2000). Investigation of Factors Contributing to the Success of Cross‐Functional Teams. Journal of Product Innovation Management , 17 (3):221–235.

Nonaka, I., & Takeuchi, H. (1995). The knowledge-creating company. New York: Oxford University Press.

Pitta, D. (2008). Product innovation and management in a small enterprise. Journal of Product &

Brand Management, Vol. 17 No. 6, pp. 416-419.

Robbins, S., Judge, T., & Campbell, T. (2010). Organizational Behaviour. New York: Pearson Education.

Rosenbusch, N., Brinckmann, J., & Bausch, A. (2011). Is innovation always beneficial? a meta-analysis of the relationship between innovation and performance in SMEs. Journal of Business

Venturing, 26(4), 441-457.

Schilling, M., & Phelps, C. (2007). Interfirm collaboration networks: The impact of large-scalenetwork structure on firm innovation. Management Science 53, 1113–1126.

Schleimer, S., & Faems, D. (2016). Connecting interfirm and intrafirm collaboration in NPD projects: Does innovation context matter? Journal of Product Innovation Management, 33(2), 154-165.

Schumpeter, J. (1982). The "crisis" in economics-fifty years ago. Journal of Economic Literature, 1049-1059.

Scozzi, B., Garavelli , C., & Crowston, K. (2005). Methods for modeling and supporting innovation processes in smes. European Journal of Innovation Management, 8(1), 120-137.

Supratpo, Y., Wibowo, A., & Harsono, H. (2018). Intra-firm causal ambiguity on cross-functional project team’s performance: Does openness and an integrative capability matter?

International Journal of Managing Projects in Business, 901-912.

Tjosvold, D., & Tjosvold, M. (1995). Cross-functional teamwork: The challenge of involving professionals. Elsevier Science, 1-34.

Tödtling, F., & Kaufmann, A. (2002). Smes in regional innovation systems and the role of innovation support--the case of upper austria. The Journal of Technology Transfer, 27(1), 15-26.

Valle, S., & Avella, L. (2003). Cross‐Functionality and Leadership of New Product Development Teams.

European Journal of Innovation Management , 6 (1):32–47.

16 Vossen, R. (1998). Relative strengths and weaknesses of small firms in innovation. International Small

Business Journal, Vol. 16 No. 3, pp. 88-94, Vol. 16 No. 3, 88-94.

17

Appendix SPSS tables

Scale Cronbach Alpha (a) Number of items

New product development performance

0,775 7

Table 2: Cronbach Alpha

Model summary H1 Model R R2 Adjusted R square Standard error H1 0,011 0,000 -,009 0,72313

Anova linear regression H1

Model Sum of squares df Mean

square

F Sig.

Regression 0,007 1 0,007 0,013 0,911

Residual 54,384 104 0,523

Total 54,391 105

Table 3: Output linear regression H1

Model summary (H2): Cross-functionality as moderator

Model R R2 Adjusted R

square

Standard error

H2 0,005 0,000 -,020 0,72305

Anova linear regression H2

Model Sum of squares df Mean

square

F Sig.

Regression 0,002 2 0,001 0,001 0,999

Residual 51,757 99 0,523

Total 51,759 101

18

Model summary additional analysis

Model R R2 Adjusted R square Standard error Perf_A 0,237* 0,056* 0,047* 1,24392 Perf_B 0,041 0,002 -,008 1,07321 Perf_C 0,039 0,002 -,008 0,99858 Perf_D 0,098 0,010 0,000 1,27157 Perf_E 0,201* 0,040* 0,031* 1,16730 Perf_F 0,030 0,001 -,009 1,07663 Perf_G 0,188* 0,035* 0,026* 1,01871 *asignificant

Table 5: Output additional individual analyses

Model summary H1 including control variables

Model R R2 Adjusted R

square

Standard error

H1a 0,199 0,040 -,040 0,72162

Anova linear regression H2

Model Sum of squares df Mean

square F Sig. Regression 0,729 3 0,243 0,467 0,708 Residual 17,705 34 0,521 Total 18,434 37 Coefficients Model Unstandardized B Coefficients std. error Standardized coefficients beta t Sig. constant 4,581 0,375 12,227 0,000 Ext-cooperation P_Budget M_Employees 0,000 3,415E-8 -,002 0,069 0,000 0,002 -,001 0,133 -,126 -,004 0,758 -,721 0,997 0,454 0,476