J PROD INNOV MANAG 2011;28:503–520
r 2011 Product Development & Management Association
Does Strategic Planning Enhance or Impede Innovation and
Michael Song, Subin Im, Hans van der Bij, and Lisa Z. Song
Does strategic planning enhance or impede innovation and ﬁrm performance? The current literature provides contradictory views. This study extends the resource-advantage theory to examine the conditions in which strategic planning increases or decreases the number of new product development projects and ﬁrm performance. The authors test the theoretical model by collecting data from 227 ﬁrms. The empirical evidence suggests that more strategic planning and more new product development (NPD) projects lead to better ﬁrm performance. Firms with organizational redundancy beneﬁt more from strategic planning than ﬁrms with less organizational redundancy. Increasing R&D intensity boosts both the number of NPD projects and ﬁrm performance. Strategic planning is more effective in larger ﬁrms with higher R&D intensity for increasing the number of NPD projects. The results reported in this study also consist of several ﬁndings that challenge the traditional views of strategic planning. The evidence suggests that strategic planning impedes, not enhances, the number of NPD projects. Larger ﬁrms beneﬁt less, not more, from strategic planning for improving ﬁrm performance. Larger ﬁrms do not necessarily create more NPD projects. Increasing organizational redundancy has no effect on the number of NPD projects. These empirical results provide important strategic implications. First, managers should be aware that, in general, formal strategic planning decreases the number of NPD projects for innovation management. Improvised rather than planned activities are more conducive to creating NPD project ideas. Moreover, innovations tend to emerge from improvisational processes, during which the impromptu execution of NPD activities without planning spurs ‘‘thinking outside the box,’’ which enhances the process of creating NPD project ideas. Therefore, more ﬂexible strategic plans that accommodate potential improvisation may be needed in NPD management since innovation-related activities cannot be planned precisely due to the unexpected jolts and contingencies of the NPD process. Second, large ﬁrms with high levels of R&D intensity can overcome the negative effect of strategic planning on the number of NPD projects. Speciﬁcally, a ﬁrm’s abundant resources, when allocated and deployed for NPD activities, signal the high priority and importance of the NPD activities and thus motivate employees to acquire, collect, and gather customer and technical knowledge, which leads to creating more NPD projects. Finally, managers must understand that managing strategic planning and generating NPD project ideas are beneﬁcial to the ultimate outcome of ﬁrm performance despite the adverse relationship between strategic planning and the number of NPD projects.
reater emphasis on the importance of increasing new product development (NPD) projects has emerged because globalization and
hypercompetition essentially demand that increasing
NPD projects can ‘‘reinvent the wheel’’ for organizaAddress correspondence to: Michael Song, 318 Bloch School, University of Missouri-Kansas City, Kansas City, MO 64110-2499. E-mail: firstname.lastname@example.org. Tel: (816) 235-5841. Fax: (816) 235-6529.
Ã All authors contributed equally to this research. The authors wish to thank the JPIM Editor, C. Anthony Di Benedetto, and two reviewers for their constructive comments on earlier versions of the manuscript. This research was funded in part by the Institute for Entrepreneurship and Innovation at University of Missouri-Kansas City, the Ewing Marion Kauffman Foundation, and the China Natural Science Foundation (Award #: 70528002). The contents of this publication are solely the responsibility of the authors....
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