Data analysis Case Study 6: Hypothesis-testing practice-oriented research

11.2.5 Results and implications

Our hypothesis was confirmed. The degree to which standard designs are reused in a new product in this firm has a direct positive relation to the annual sales volume and, we assume, to market share. An increase of 50 per cent of sales can be achieved by reusing standard designs for 30 per cent of the components of the new product. Because the firm considered all six scenarios as realistic including the one with 30 per cent reuse of standard designs, it is concluded from the positive test result that this firm had sufficient operational flexibility to realize a sufficient level of strategic flexibility.

11.3 Methodological reflection on Case Study 6

11.3.1 Practice

Case Study 6 is oriented to a leading European firm’s practice of new product development. This firm, which develops, produces, and mar- kets high-technology electronic products of a relatively short product life cycle, was interested in an assessment of whether its current resource-based capabilities were sufficient to develop new products and launch them on the market successfully.

11.3.2 Research objective

The result of exploration of practice for this study was the identifica- tion of a problem-finding knowledge need regarding the firm’s ability to launch successfully new products on the market. In the exploration of theory, some propositions were identified, on the basis of which the following hypothesis was formulated: Hypothesis:The degree to which standard designs are reused for components in a new product in this firm has a direct positive relation to the market share of that new product. This hypothesis represents a deterministic relation. The research objective of this hypothesis-testing study, thus, was to con- tribute to the new product development strategy of this firm by testing whether this hypothesis is true. A confirmation of the hypothesis would inform the firm about for how many components of new products standard designs should be reused in order to achieve a specific level of market share. A rejection of the hypothesis would inform the firm that market share cannot be increased by increasing the number of components for which standard designs are used, but will not be informative about alternative ways of increasing market share.

11.3.3 Research strategy

The experiment was the preferred strategy for testing a hypothesis that represents a deterministic relation. The firm could use standard designs to different degrees in a number of new product developments and then discover how market share varied. However, such an experiment, which would involve assigning different levels of reuse to different new product developments, would require considerable cost and risk that could not be justified by the objective of this research, i.e. merely problem find- ing. The next preferred strategy for testing the deterministic hypotheses would be a case study. A longitudinal case study of new product devel- opment in this firm in which the independent variable varies in time in the real life context, did not seem realistic. The use of a computer simu- lation model, which allows for the generation of virtual outcomes for analysis, was a solution for all mentioned problems, a the lack of suffi- cient variance in the independent variable in the practice of this firm, b the cost of collecting data about new product development projects, and c the costs and risks of experiments. As in Case Studies 3 and 4 see Chapters 6 and 7, the computer simulation model generated data on multiple cases scenarios for comparison.

11.3.4 Candidate cases

The domain of instances relevant for this practice new product devel- opment projects in this firm consisted of all possible ways in which new products could be developed by this firm. Obviously, this domain was limited to the range of new products that were realistic new prod- ucts for this firm.

11.3.5 Case selection

A product group was chosen in discussions with the “focus group” con- sisting of two senior managers. In the simulation, a range of new products