| Our study examines the effects of strategic business type on the importance of product development (PD) performance measures. Firms clearly should measure their product development performance relative to their business strategies.; We first advance a model of the relationships among the three key strategic business types, as defined by Miles and Snow (1978 and 1994), and product development program performance, as supported by the literature. Second, we catalogue the many factors of program success and classify them into program performance measures to use in testing the proposed business strategy—performance measurement model. Third, we identify strategy-based performance measures for new service development programs.; We propose that firms vary by strategic business type and that they find appropriate solutions to their characteristic business problems, in part, by way of their programs. Therefore, certain measures of performance, which reflect successful solutions to their most important problems, may be more appropriate for one or more of the established strategic business types. For example, Prospector-type firms solve their dominant entrepreneurial problem of recognizing and exploiting new business opportunities by continuously introducing new products to new markets. This implies that the more important measures of success for Prospectors are those that reflect innovative solutions to their entrepreneurial problems, such as future market opportunities, the new product revenues and profits. On the other hand, Defender-type firms seek efficient solutions to their technical engineering problems. Therefore, the more important measures for Defenders may be those that reflect the necessary large capital investments and the effective use of firm resources, such as, improving returns on the fixed investments.; Another critical dimension of firms' PD programs is the composition of their project portfolios. Firms decide which types of projects to include in their portfolios as solutions to their critical entrepreneurial problem of defining their product and market domains. Firms that are likely to pursue innovative projects may also be likely to use measures that reflect success with new technologies and in new markets. Therefore, we also propose that firms' commitment of resources to different project types and the importance of different performance measures for these PD projects may vary by strategic type. |
