Fit among business strategy, strategy formality, and dynamic capability development in new product development

Abstract

Taking new product development (NPD) as the unit of analysis, this study, based on strategic fit approach, investigates the effects of NPD strategy formality and dynamic capabilities (sensing, seizing, and reconfiguring) on NPD performance for different business strategy types (prospectors, analyzers, defenders). The sample of the study includes 203 companies from nine countries: Australia, Denmark, Finland, Norway, the Netherlands, Slovakia, Portugal, Spain, and Turkey. The study finds that a formal NPD strategy is an important driver of NPD performance for all companies regardless of the strategy pursued. Of the dynamic capabilities, sensing capabilities have significant performance effects for all strategy types. Seizing capabilities have stronger effect on NPD performance for prospectors and analyzers, than for defenders while reconfiguring capabilities is a driver of performance only for defenders. Furthermore, dynamic capabilities explain NPD performance above and beyond strategizing, irrespective of the strategy pursued.