Intern. J. of Research in Marketing 25 (2008) 56 68 www.elsevier.

com/locate/ijresmar

The effect of the marketingR&D interface on new product performance: The critical role of resources and scope
Mark A.A.M. Leenders a,, Berend Wierenga b
a

University of Amsterdam, Amsterdam Business School, Roeterstraat 11, 1018 WB Amsterdam, The Netherlands b Erasmus University Rotterdam, Rotterdam School of Management, The Netherlands First received in September 21, 2005 and was under review for 7 months, Area editor Eitan Muller

Abstract Although the integration of marketing with R&D is widely recognized as a critical factor for a new product's success, this study shows that not all companies benefit equally from more integration. Using data from the worldwide pharmaceutical industry, the authors show that integration is particularly effective in conjunction with high levels of new product development resources. In addition, the effect of the interaction between integration and new product development resources is stronger for companies with a narrow strategic scope. So, although broadly focused companies often have an advantage with respect to innovation because they can more easily leverage resources to different markets, our results indicate that narrowly focused companies can compensate for this by developing and integrating their marketingR&D interface. 2008 Elsevier B.V. All rights reserved.
Keywords: R&Dmarketing integration; NPD resources; Strategic scope; Performance

1. Introduction The survival and growth of companies is increasingly dependent on their ability to develop and market successful new products. As a result, companies need to accumulate, protect, and effectively use critical new product resources and capabilities that maximize their return in terms of new product outcomes (Day, 1994; McEvily, Eisenhardt, & Prescott, 2004; Nerkar & Roberts, 2004; Sorescu, Chandy, & Prabhu, 2003). At a basic level, a company can simply ensure that technological resources and marketing resources are present at a sufficient level in the organization. However, merely possessing such resources does not guarantee their optimal use. To create value in the marketplace, these resources have to be combined into new capabilities to be exploited (Sirmon, Hitt, & Ireland, 2007).

This paper has benefited from many useful suggestions made by Jehoshua Eliashberg and George Day (The Wharton School, University of Pennsylvania). We would also like to thank the editor and the three anonymous reviewers for their constructive comments and suggestions. Corresponding author. Tel.: +31 20 5256078. E-mail address: M.A.A.M.Leenders@uva.nl (M.A.A.M. Leenders). 0167-8116/$ - see front matter 2008 Elsevier B.V. All rights reserved. doi:10.1016/j.ijresmar.2007.09.006

Our study focused on a factor that is expected to play a key role in the combination and exploitation of new product development (NPD) resources, namely the integration of marketing with R&D. Various terms are used in earlier research to describe the notion of people working together to accomplish new product tasks, for example integration, collaboration, cooperation, and harmony. The common denominator is the joint behavior toward some goal of common interest (Pinto, Pinto, & Prescott, 1993). However, the integration of marketing with R&D does not come about without effort, and organizational measures and investments are often required to accomplish more integration; examples of such measures include interdisciplinary project teams, training programs, the hiring of cross-functional specialists, job rotation, relocation and physical facilities design, and collaborative ICT systems (Griffin & Hauser, 1996). Practitioners, consultants, and scholars believe that integration across functional and disciplinary specialties has a positive effect on new product performance (e.g., Griffin & Hauser, 1996; Hoopes & Postrel, 1999; Ittner & Larcker, 1997). This effect has received considerable attention in the marketing literature. For example, Gupta, Raj, and Wilemon (1985, 1986) showed that there is an integration gap between R&D and marketing (i.e., a

M.A.A.M. Leenders, B. Wierenga / Intern. J. of Research in Marketing 25 (2008) 5668

57

difference between the need for integration and the integration achieved), and that the larger the gap, the lower the innovation success. Studies such as Pinto et al. (1993) found that higher levels of integration lead to better task outcomes and to more desirable psychosocial outcomes. After reviewing fifteen studies on the marketingR&D interface, Griffin and Hauser (1996) concluded that higher levels of integration (also called collaboration, cooperation, or harmony) between R&D and marketing produce better new product performance. However, Henard and Szymanski (2001) presented evidence of a weaker effect in their meta-study. Based on fifteen studies that included a measure of integration, they found that the mean correlation between cross-functional integration and new product performance was positive (r = .23) but not significant. Henard and Szymanski argue that their findings bring into question the blanket need for integration across functional areas, and that more integration may not always be a productive approach for directly improving new product performance. In the research so far, there seems to be a lack of attention to the conditions that make integration more or less valuable for firms. The studies mentioned above mostly studied integration in relative isolation. Many did not include the underlying NPD resources, let alone the interaction between integration and NPD resources. The aim of our study was to fill this gap in the literature. Our main premise was that the effect of integration is embedded in the broader organizational context of NPD resources, and that the way in which the resources are used (in terms of scope in the market) affects the interaction between integration and NPD resources. We tested this key hypothesis with international survey data from the pharmaceutical industry and validated our results with factual data on the number of blockbusters (products with more than $1 billion in sales) produced by the firms in our sample. We found that the effect of integration does depend on the underlying NPD resources, which implies that most integration effect models that focused on simple effects without taking into account the underlying

NPD resources are misspecified. Second, we found evidence that the interaction effect between integration and NPD resources is stronger for companies with a narrow market focus in NPD than for companies with a broad focus. We end this paper by discussing our results and providing managerial insights derived from these findings. 2. The framework Fig. 1 shows how the interplay of NPD resources, the integration of R&D with marketing, and the strategic scope is expected to affect new product performance. 2.1. New product performance In our study, new product performance was defined as the extent to which a company has output and market success with its new products (see, for example, Griffin & Page, 1993). New was defined in the most general sense as new-to-thecompany, including the full range of me-too products and newto-the-world innovations. 2.2. NPD resources NPD resources are the tangible and intangible assets that enable a firm to produce and market new products that have value for some market segment (e.g., Day, 1994). It is demonstrated in the literature that both technological and marketing resources have a positive effect on new product performance (see, for example, Dutta, Narasimhan, & Rajiv, 1999; Nerkar & Roberts, 2004). Sorescu et al. (2003) found that for firms with more marketing and technology support, the financial value of innovations is higher. In our study, we defined NPD resources broadly, encompassing both technology as well as marketing resources. Similarly broad resource constructs are used in other studies (e.g., Gatignon & Xuereb, 1997).

Fig. 1. The study's underlying framework.

58

M.A.A.M. Leenders, B. Wierenga / Intern. J. of Research in Marketing 25 (2008) 5668

2.3. NPD resources and integration The research on technological and marketing resources often finds positive interactions between the two (Moorman & Slootgraaf, 1999). Teece (1980) provides several examples to illustrate the interdependence of R&D and marketing in the development and marketing of new products ranging from medicines to new cars. This interdependency suggests that the integration of marketing with R&D has a positive effect on the effectiveness of NPD resources. We define integration as the degree to which there is collaboration, communication, and good relationships between marketing and R&D (Pinto et al., 1993). This definition takes into account that there can be conflict between different functional areas as long as the conflict is constructive (Souder, 1988). Lawrence and Lorsch (1967) elaborate on the need for both integration and differentiation (specialized resources) in organizations. Specialization alone is not sufficient for high performance. The specialized groups need to be integrated in order to accomplish the organization's overall objectives (see also Madhavan & Grover, 1998). In general, it is clear that a company needs technology and marketing resources and the ability to integrate these two, and that technology and marketing resources interact. For example, integration is known to lead to more creativity among employees. Creative employees combine and exploit ideas in both marketing and R&D, which leads to potentially more ideas, as well as to more feasible and more effective ideas (Postrel, 2002). In addition, integration can lead to a more effective and more efficient use of resources, as it can reduce coordination problems between marketing and R&D resources in the NPD pipeline (Griffin & Hauser, 1996). 2.4. Strategic scope Although resources are only one source of variance in competitive heterogeneity, the resource deployment strategy and especially the scope of the deployment have to be included in any discussion (cf. Cool & Schendel, 1987; Hoopes, Madsen, & Walker, 2003; Penrose, 1959; Sorescu et al., 2003). In our study, scope is defined as the breadth of the company's target market in terms of customers and needs. It refers to which opportunities are pursued and for which markets. As we explain below, scope may be especially important with respect to the need for joint marketing and R&D involvement in NPD1. A narrow scope involves achieving leadership in specific markets (or market segments) with selected products, while a broad scope involves targeting a broad spectrum of markets with a great variety of products. The narrower the scope, the easier it is to develop market knowledge and to support new products in that particular area. However, knowledge of other markets is

1 In previous scope research, like in the studies on integration, the findings on the effect of scope on performance have been mixed. Negative, positive, and inverted U-shaped relationships have been found (e.g., Hoskisson & Hitt, 1988). In some studies, little or no evidence of a significant effect was reported (Cool & Schendel, 1987).

likely to be less and the ability to leverage certain technologies to other markets is likely to be lower. Companies that have a narrow strategic scope such as the Dutch pharmaceutical company Organon BioSciences (which specializes in oral contraceptives and has few other products) operate in selective markets. However, in these markets, they can operate at a deep level by offering a broad spectrum of products and by catering to a larger number of different market segments or sub-segments2. Treacy and Wiersema (1997) call the underlying value discipline customer intimacy, which is focused on tailoring products for specific customer needs. For example, Organon developed some new contraceptives based on innovative technologies that can be implanted in the arm and stay active for many years. Thus, although new products tend to be close to the customer base, they can be very innovative. On the other hand, firms that have a broad strategic scope have more opportunities to leverage certain technologies across different markets. As a result, they may rely more heavily on the opportunities created only by their R&D, at least until the launch approaches. They may also experience fewer up-front market constraints, which may be positive for their technological breakthroughs and for their radical innovation output if there are actual markets with great customer needs for the product (Postrel, 2002). Since there is less need to focus on key products, there is less need to closely coordinate which technologies are to be developed for which markets. Given the lack of a footprint and high costs related to acquiring indepth market knowledge in those segments, there is probably less market knowledge available to combine with R&D knowledge and to exploit in the first place. Thus, companies can basically follow a narrow or a broad strategy in their NPD policy. Recent studies show indications of a positive effect of a broad strategy (as compared to a narrow strategy) on overall NPD results. For example, Wuyts, Dutta, and Stremersch (2004), who studied the consequences of interfirm R&D agreements, found that agreements covering a more diverse set of technologies (a proxy for a broad scope) produce more innovations. According to these authors, greater technological diversity reduces a firm's tendency to be locked in prior knowledge, and technological diversity enhances radical innovation. According to Wuyts et al. (2004, p. 89), the potential drawbacks for example, that technological diversity may impede a clear focus and complicate the development of specialist competences are outweighed by the positive effects. Sorescu et al. (2003) found that a broader product scope (i.e., a more diverse portfolio of products) has a significant positive relationship with the financial value of an innovation. Can narrow-scope companies be successful, too? The answer is yes. See, for example, the Organon example just mentioned or Allergan, which is focusing on skin and eye care. Some companies in the pharmaceutical industry actively pursue a narrow-scope strategy, for example by buying generic (offpatent) drugs to complement their portfolio. This trend started many years ago when pharmaceutical companies tried to
2 It can be asked whether Organon can keep up its performance now that it has become part of Schering Plough (a company with a broader scope).

M.A.A.M. Leenders, B. Wierenga / Intern. J. of Research in Marketing 25 (2008) 5668

59

integrate healthcare providers. This is likely to be driven by marketing considerations (such as an effort to strengthen customer relationships) and by a need to offer a complete range of products in a certain product-market area, including older and cheaper products along with innovative and new medicines. Many years ago, Teece (1980) showed that the success of new drugs in new markets is often dependent on specialized sales support and on the availability of a full range of products in specific categories. This, again, emphasizes the need for concentrating within a limited scope. We hypothesized that a critical success factor for narrowscope companies is that they can benefit from a strong integration of R&D and marketing. Narrow-focus companies develop innovations that are often driven by deep customer knowledge and involvement. To be successful with such a strategy, both R&D and marketing need processes and structures to coordinate the many activities and decisions related to the selection of key products, key market segments, and key technologies. Here, knowledge creation by means of joint marketing and R&D sessions, the use of market research and feasibility studies, the (joint) selection of product features, the packaging, the launch, and the product lifecycle management all play an important role. For these companies, such knowledge is likely to be obtainable in a cost-effective way because of the strong footprint in their markets (Gatignon & Xuereb, 1997). If managed adequately, this can be an important strategic advantage for focused companies over companies with broad-scope strategies. In the studies cited above, where it was shown that broad-scope strategies are, in general, more successful than narrow-scope strategies, no variable measuring the integration of R&D with marketing was included. Therefore, it was not possible to examine whether the potentially negative effect of a narrow scope could be compensated for by a higher level of integration of R&D with marketing. We addressed this issue in the present study, guided by the hypothesis formulated below. Key hypothesis. There is an interaction effect between integration and NPD resources with respect to new product performance (i.e., higher levels of integration increase the effect of NPD resources). This interaction is stronger for companies with a narrow scope than for companies with a broad scope. 2.5. Control variables Damanpour (1991) and others have shown that formalization and centralization affect new product performance. As key aspects of organizational structure, formalization and centralization seem to affect innovation negatively because a weak emphasis on work rules is known to facilitate innovation, while a concentration of decision-making authority hampers the development of innovative solutions (e.g., Hage & Aiken, 1967; Thompson,1967). As a result, we included centralization and formalization as control variables in our analysis. In addition, we took company size into account. For example, all other things being equal, large companies may generate more new products than may small companies (Henderson & Cockburn, 1996).

3. Methods 3.1. The pharmaceutical industry context Companies in the pharmaceutical industry were selected as the research context for several reasons. New products play a very important role in this industry. It is a large and competitive industry in which many companies are active. It is also a very transparent and well-documented industry, one that is often used to study such phenomena as NPD resources, strategic groups, and NPD (e.g., Cool & Schendel, 1987; Henderson & Cockburn, 1994; Nerkar & Roberts, 2004; Sorescu et al., 2003; Wuyts et al., 2004). We recognize the potentially idiosyncratic nature of the industry by paying attention to the validation of earlier research findings, by discussing our measures in detail, and (in the Conclusion and limitations section) by elaborating on generalizations to other industries. 3.2. International survey Data were collected by means of an international mail survey. A random sample of 1000 pharmaceutical companies was drawn from a worldwide ESOMAR (European Society for Opinion and Marketing Research) database and from the EPhMRA (European Pharmaceutical Marketing Research Association) database, both of which contain a broad range of information on organizations, the names of employees, job titles, and addresses. We selected the most senior executive from each company based on job title; if two or more executives were at the same level, we chose randomly. This person could be expected to hold a position that makes him or her the most knowledgeable about the issues being researched (e.g., Campbell, 1951; Seidler, 1974). 3.3. Measurement We used existing scales as much as possible, adapted some existing scales from the literature, and developed new scales if adequate measures were not available. For the integration of R&D with marketing, we adapted an existing scale developed by Pinto et al. (1993) in which the most important elements of integration are present. This scale includes items on communication, collaboration, and cooperative relationships. This scale, along with all of the other scales discussed in this section, is presented in Appendix A. As an example of the nature of the adaptations, we altered an original item such as A friendly attitude exists among project team members to A friendly attitude exists among R&D and marketing. In earlier research, this scale proved to be onedimensional (Pinto et al., 1993), which was validated before use here. The NPD resources of a company were measured in terms of a set of specialized NPD resources in R&D and marketing. Resources refer to uniquely valuable assets for a company, usually accumulated over a large number of years. There were no scales available in the literature that we could use, so we

60

M.A.A.M. Leenders, B. Wierenga / Intern. J. of Research in Marketing 25 (2008) 5668

developed a scale using relevant insights from the literature (Dierickx & Cool, 1989; Dutta et al., 1999; Gatignon & Xuereb, 1997; Teece et al., 1997). As mentioned, this is a joint scale for R&D and marketing resources. As is suitable for valuable, scarce, and difficult to imitate resources, our scale contains many elements that cannot simply be bought on the market, such as goodwill, networks and relationships with outside parties, broad information access, databases, and market knowledge. The scale for NPD resources can be interpreted as a formative (formed) scale; in other words, the elements cover different aspects of the phenomenon and have to be summed to get the overall picture of the state of the company's NPD resources (Rossiter, 2002). The strategic scope measure (wherein higher values indicate a broader scope) is based on product range and is partly founded on Cool and Schendel (1987). The items (a narrow versus a broad product range, etc.) were previously used to cluster pharmaceutical companies into strategic groups and to measure the scope of a pharmaceutical company's strategy. We included the item about the number of therapeutic areas as an additional indicator. To measure new product performance, items were collected from the new product performance literature (e.g., Griffin & Page, 1993). According to Loch, Stein and Terweish (1996), there is a difference between process performance (e.g., decision-making) and outcome performance (e.g., the number of products and their performance in the market). The focus of our measure is on outcomes, measured in terms of the progression in the product development pipeline, the number of new products, and the market performance of new products. The progression of medicines in the pipeline proved to be an important market success indicator for industry professionals. In the questionnaire, respondents were asked to assess the performance of their company, compared to companies of similar size, over a period of five years. We asked this information for the previous five years, and also asked about the expected new product performance scores for the coming five years. This format of seeking performance information (including perceptual information) relative to similar companies in the industry tends to produce findings that are consistent with factual measures and also directly controls for size (Dess & Robinson, 1984). So a score of 5 on the item The performance of the products that have been launched in the last five years means that the company is in the top 20% of all firms in the industry of similar size. The centralization and formalization measures were taken from Hage and Aiken (1967) and Zaltman, Duncan and Holbeck (1984). All of the measures were reviewed by four academics and eight industry executives working in the regions where most pharmaceutical companies are located (USA, Europe, and Japan). In the pretest, the substantive validity of the items was tested by means of the procedure developed by Anderson and Gerbing (1991). Senior managers in this industry speak English very well and use a similar (i.e., industry) vocabulary. This made us decide to develop a single, English-language questionnaire, which is often done in these types of situations (e.g., Hofstede, 1976).

3.4. Questionnaire The introduction letter, reminder, and draft questionnaire we developed were pretested by two academics and two pharmaceutical managers. This resulted in minor refinements before the 20-page questionnaire was finalized (in the form of a small booklet that took about 15 min to complete). We used the guidelines provided by Dillman (1978) to give the questionnaire a good look and feel, and to ensure that respondents could progress quickly through it. All questionnaires carried a stamped number in order to be able to add factual company data afterwards. For example, factual data on the number of blockbusters (products that generate more than $1 billion in sales) were obtained from trade journals and annual reports and were added to the dataset. The questionnaire contained a brief introduction, and respondents whose company had a multidivisional form were explicitly asked to consider only the pharmaceutical part of their company (the respondents were always from the pharmaceutical part). 3.5. Mailing procedure and response The mailing consisted of a first wave, a reminder, and a second wave for those who had not responded after three weeks. A total of 211 questionnaires were returned unopened (wrong address, the respondent moved, etc.). Therefore, the effective sample size was 789. A total of 148 usable questionnaires were returned (19%). This response rate is satisfactory compared to other international surveys, where response rates are often in single digits (Jobber et al., 1985). Of all responses, 29.7% came from U.S. companies, 14.9% from the UK, 12.8% from Japan, 10.1% from Germany, and 8.1% from Switzerland. The remainder came from companies in other European countries. All companies have both marketing and R&D. The companies tend to be large, generating revenues of more than US$3 billion on average (US$1.1 billion was the median). This is in line with our objective to have a sample of pharmaceutical companies instead of R&D-driven biotech companies. A comparison of the respondent profiles and the company characteristics of early and late responses revealed no significant differences at the = .05 level. A pooling test on all constructs in the model and on the characteristics of the companies such as revenues and the number of employees (the means and variances) revealed no significant differences between respondents with a marketing background (61%) and respondents with an R&D background (39%). In addition, sample means seemed to resemble the population means very well. The companies in the sample invest an average of 16% of sales in R&D, and 33% of sales are generated by products introduced in the previous five years, which is representative of the industry at large according to Scrip Magazine's annual reviews over the last ten years. 4. Results 4.1. Reliability and validity To examine the reliability and validity of our measures, we first screened the item-to-item correlations and the item-to-total

M.A.A.M. Leenders, B. Wierenga / Intern. J. of Research in Marketing 25 (2008) 5668 Table 1 The determinants of new product performance Variables Integration (INT) NPD resources (RES) Strategic scope (SCO) Centralization Formalization 2-way INT RES INT SCO RES SCO 3-way INT RES SCO N R2 Adjusted R2 F-value Model 1 (OLS) beta .07 .51 .08 .08 .14 (.14) (.01) (.09) (.12) (.12) Model 2 (GLS) beta .06 .48 .09 .12 .13 .13 (.14) (.01) (.09) (.13) (.12)

61

correlations; they were all satisfactory. With respect to the variable NPD resources, it turned out that the companies in our sample are active in both R&D and marketing. Although this is not strictly necessary for the NPD resource variable (since this is a formative scale), the NPD resources items are strongly correlated and positive, ranging form r = .20 to r = .80. This supports our bringing together of R&D and marketing resources in one NPD resources scale. Confirmatory factor analysis (CFA) was used to assess the overall measurement model. The CFA containing all of the measures and all of the items resulted in an adequate fit (RMSEA = .062). The standardized loadings were all significant. However, the number of data points per parameter may have resulted in estimates that are not trustworthy. Therefore, a partially disaggregated model was composed by averaging sets of items to obtain only three composite indicators for the integration measure and three composite indicators for the resources measure (cf. Bagozzi & Edwards, 1998). This resulted in a good fit as well (2 = 722, df = 545, p = .0001, RMSEA = .051, CFI = .90, TLI = .90). The discriminant validity was assessed by means of the inter-factor correlations and their confidence intervals. Setting the inter-factor correlations to 1 resulted in very poor-fitting models in all instances. In addition, the confidence intervals for the 's did not contain the value of 1. To establish the internal consistency of the measures, we computed Cronbach's alpha coefficients to calculate the reliability of the scales. All scales exceed the .70 level: the integration of R&D with marketing (15 items, = .91), the NPD resources (10 items, = .86), the strategic scope (3 items, = .77), formalization (4 tems, = .76), centralization (6 items, =.78), future new product performance (4 items, = .90), and new product performance (4 items, =.83). Finally, since the number of items affects the favorably, sensitivity analysis was conducted on smaller sets of three items per construct. These alpha coefficients still exceeded the = .70 level. As a result, composites were calculated by averaging the scores of all of the items for all constructs. 4.2. Correlations The correlations between the dependent and the independent variables are presented in Appendix D. Interestingly, the bivariate correlation between integration and new product performance is .20 (p b .05), and that between integration and the expectations about future new product performance .24 (p b .01). These values are close to the average value of .23 found by Henard and Szymanski (2001) in their meta-study. The NPD resource variable clearly has the strongest correlations with the new product performance measures: r= .54, p b .01 (for new product performance), r= .40, p b .01 (for expected future new product performance), and r= .42, p b .01 (for blockbusters). In line with the studies mentioned earlier, a broader scope seems, in general, to be associated with better new product performance (r =.12, p b .10). 4.3. Analysis To test our hypothesis, we estimated four regression models, including moderated regressions with interactions

Model 3 (GLS) beta .10 .45 .10 .12 .14 (.14) (.01) (.09) (.13) (.12)

(.02)

.19 (.02) .06 (.18) .15 (.01) .17 (.03) 121 .41 .36 8.48

121 .36 .34 13.26

121 .37 .34 11.07

Standard errors in parentheses. Significant at p b .10. Significant at p b .05. Significant at p b .01.

(Jaccard et al., 1990). Because of the multicollinearity between interactions and its component variables, we meancentered the variables nested in the interactions (Jaccard et al., 1990). In addition, we applied generalized least squares (GLS) to come up with efficient estimates that take into account the inherent heteroscedasticity from the model specification (Hildreth & Houck, 1968; Gatignon & Vosgerau, 2006). See Appendices B and C for the specification of the inherent heteroscedasticity. Table 1 shows the results of the regressions. Note that the first two models are preparatory stages for the comprehensive Model 3. We tested the hypothesis with the comprehensive model, but the numerical results of the nested models are interesting in themselves. The results for Model 1 provide strong evidence for the importance of NPD resources (beta = .51, p b .01). Model 1 explains 36% of the variance in new product performance (adjusted R2 = 0.34). Model 2 includes the interaction between integration and NPD resources, which obtains a significant coefficient (beta = .13, p b .05). The other coefficients do not substantially change. The increase in R2 is small but significant (p b .05). The implication is that, in itself, the integration of R&D with marketing seems to have a limited direct effect on new product performance; however, integration does have a significant effect in conjunction with more NPD resources. This is in agreement with the first part of our hypothesis, but we have to take into account that these models are basically misspecified because scope is disregarded. The control variables, centralization and formalization, attained generally negative coefficients. This is in line with meta-studies on the effects of formalization and centralization (e.g., Damanpour, 1991) and reflects the threatrigidity cycle.

62

M.A.A.M. Leenders, B. Wierenga / Intern. J. of Research in Marketing 25 (2008) 5668

To interpret the 3-way interaction in Model 3, we divided the sample into companies with a narrow strategic scope and companies with a broad strategic scope (again, by means of a median split). For each sub-sample, the relationship between integration and new product performance is presented for a group of companies with a relatively high level of NPD resources and a group with a relatively low level of NPD resources. To find support for our hypothesis, the slopes (i.e., the direction coefficients, or Dc) of the regression lines between integration and new product performance need to be steeper (more positive) for the narrow-scope sample than for the broadscope sample. Fig. 3 shows that the effect of integration is the strongest for the group with a narrow strategic scope. The difference between the effect of the low NPD resources group and that of the high NPD resources group is considerable, since the
Fig. 2. The relationship between integration and new product performance.

4.4. NPD resources, integration, and strategic scope Model 3 is our comprehensive and adequately specified model. It is clear that there is a significant main effect of NPD resources (beta = .45, p b .01), a significant interaction of R&D marketing integration with NPD resources (beta = .19, p b .05), a significant interaction of NPD resources with scope (beta = .15, p b .05), and a significant 3-way interaction among NPD resources, integration, and scope (beta = .16, p b .05). The last-mentioned is a first step toward confirming our key hypothesis, but we still have to look at the nature of this interaction. For now, it shows that the 3-way interaction explains additional variance in new product performance that is not explained by its components. To visualize the nature of the interactions, we first discuss the relationship between integration and resources on new product performance, and then include scope in the discussion. Fig. 2 presents the relationship between integration and performance for different levels of the moderator variable (i.e., NPD resources) in a graphical representation. The sample is partitioned by means of a median split to illustrate the nature of the interaction only. The plots show a clear difference in slopes. For companies that score high on NPD resources, more integration leads to better new product performance. Here, the effect of integration is considerable. For a company that scores high on NPD resources, it can mean the difference between performing just above the industry average (a new product score around 3) or being among the best-performing 20% with respect to new products (a new product score N 4). For companies that score low on NPD resources, the effect of integration on performance is hardly visible, and even tends to be negative rather than positive. So, for companies with few NPD resources, putting more effort into the integration of R&D with marketing may yield limited returns.

Fig. 3. The relationship between integration and new product performance for companies with a narrow or a broad strategic scope.

M.A.A.M. Leenders, B. Wierenga / Intern. J. of Research in Marketing 25 (2008) 5668 Table 2 The determinants of the expected future new product performance Variables Integration (INT) NPD resources (RES) Strategic scope (SCO) Centralization Formalization 2-way INT RES INT SCO RES SCO 3-way INT RES SCO N R2 Adjusted R2 F-value Standard errors in parentheses. Significant at p b .10. Significant at p b .05. Significant at p b .01. Model 4 (GLS) beta .21 .32 .03 .04 .09 .13 .01 .15 .16 121 .24 .17 3.71 (.17) (.15) (.12) (.15) (.15)

63

(.05) (.22) (.02)

(.06)

increase in direction coefficient is very large (Dc = .59 (246%)). This indicates that for a company in this group, increases in integration have relatively high returns, especially if integration is accompanied by higher levels of NPD resources. The lower part of Fig. 3 shows that the interaction effect of integration is weaker for companies that have a broad strategic scope. There is a slightly negative slope for the high NPD resources sample (Dc = .04), while the low NPD resources group has a somewhat stronger negative slope (Dc = .08). 4.5. Validation Working with survey data has methodological limitations. One element we addressed is the issue of causality. Although an inverse causal relationship namely that new product performance would generate more NPD resources and more integration is theoretically less plausible, it is worthwhile to carry out an additional analysis. In the pharmaceutical industry, development cycles tend to be long and therefore investments in NPD resources and in R&D marketing integration may also be expected to also have a positive effect on future new product performance. With respect to future new product performance, reverse causality is even less plausible. Therefore, we also carried out the analysis with future new product performance as the dependent variable. The results of Model 4 (Table 2) are encouraging because they find similar results as were found when current new product performance was used. The signs and significances of the coefficients generally show a picture similar to that in Table 1. The main effect of integration is somewhat stronger and is significant (beta = .21, p b .01), although this effect has

to be interpreted with care as there are significant interactions with integration in the model. The key 3-way interaction obtains a similar coefficient as before (beta = .16, p b .05). We conclude that our findings hold not only for current new product performance, but also for future new product performance, and this strengthens the belief in our theoretical model. Structural characteristics, such as centralization (beta = .04, p = .73) and to a lesser extent formalization (beta = .09, p = .35), seem less important for future new product performance than do the other variables, such as integration, resources and scope. Another potential problem with using survey data is the possibility of mono-method bias. In the analysis so far, we have used perceptual data for the performance measure. Although in other studies the approach developed by Dess and Robinson (1984) resulted in strong correlations between perceptual and factual performance measures, we tried to validate our results with objective data. We had factual information about the number of blockbusters that each of 65 companies had in the year under study. This is a measure that is conceptually very close to our new product performance measure, as it is an output measure in terms of the number of blockbusters and also has a market performance side, as it only counts products that have very large sales (i.e., sales of over $1 billion). Since one of the items in our performance measure is the number of breakthroughs, one would expect a significant correlation. This is indeed the case; the correlation between blockbusters (as measured by the factual information) and our subjective performance measure is r = 0.47 (p b 0.01). Next, we ran the complete model as in Table 1 and used the factual blockbuster measure in our analysis. The results are presented in Table 3.

Table 3 The determinants of the number of blockbusters in the firm (a factual measure for 65 companies in the sample) Variables Integration (INT) NPD resources (RES) Strategic scope (SCO) Centralization Formalization 2-way INT RES INT SCO RES SCO 3-way INT RES SCO N R2 Adjusted R2 F-value Standard errors in parentheses. Significant at p b .10. Significant at p b .05. Significant at p b .01. Model 5 (GLS) beta .09 .46 .17 .04(.24) .21 .16 .03 .20 (.32) (.02) (.19) (.25)

(.05) (.40) (.02)

.08 65 .40 .34 7.29

(.06)

64

M.A.A.M. Leenders, B. Wierenga / Intern. J. of Research in Marketing 25 (2008) 5668

Table 3 shows that the coefficients are largely similar to the ones in Table 1. The 3-way interaction has the same sign, but is not significant. This is probably related to the smaller sample size and the lack of statistical power. However, the two 2-way interactions that were significant in Model 2 are significant again, indicating the interdependence between integration, NPD resources, and scope, as before. Overall, the pattern in the data seems to be very similar. Formalization now has a positive and significant coefficient (beta = .21, p b .05). However, since the blockbuster measure is not controlled for size (unlike our perceptual measures), this variable is probably picking up the effect of size that plays a role in NPD, as larger firms are known to be more formalized. Overall, we find good support for our models with different types of data. 5. Conclusion and limitations As the importance of new products for companies increases, so does the attention that is paid to the marketingR&D interface in academic research and in the popular press. Much, but not all, of the academic research and anecdotal evidence suggests that more integration of R&D with marketing (i.e., communication, collaboration, a cooperative relationship, and common thought worlds) leads to better new product performance. Many consulting companies are involved in implementing cross-functional structures, new IT solutions, and human resource management approaches that build the integration of marketing with R&D. Our research shows that the positive effect of integration on new product performance is conditional upon certain factors, and that these factors have to be taken into account when studying and managing the marketingR&D interface. With high levels of NPD resources, there is a strong positive effect of integration on new product performance. If a company has limited NPD resources, however, investments in integration may not produce the desired beneficial effects. Furthermore, companies that do not have precise target markets and that spread their efforts over many market segments and product groups (i.e., companies with a broad focus), will experience fewer benefits from increased integration in conjunction with NPD resources than will companies that compete in fewer segments with a selected number of products and that pursue a strong footprint in certain productmarket areas. We found that in companies with a narrow strategic scope, more integration results in important increases in new product performance, especially if the company has high levels of NPD resources. We note that, with the comprehensive model, up to 41% of the variance in new product performance is explained; this is good compared to other studies (see, for example, Henard & Szymanski, 2001). A large proportion of the remaining variance might be explained by such factors as specific entrepreneurial individuals, serendipity in the laboratory, and pure luck. There seem to be natural limits to what can be explained in this type of research. Also, environmental factors (e.g., technological or economic turbulence) could play some role, even among

companies in the same industry. Finally, we did not pay attention to the costs of integration, which would give an investment perspective to the question of whether or not to pursue more integration. Although our empirical findings relate to a specific industry, our decision to focus on this industry was not arbitrary. Apart from the considerations mentioned before, it is important to note that pharmaceuticals are a core part of the life sciences that together represent about 40% of all R&D expenses. In 2006, the pharmaceutical industry spent about $80 billion on R&D (Scrip R&D data book and yearbook 2006). If the integration of R&D with marketing is so important even in an industry with development cycles that are as long as they are in the pharmaceutical industry, mindful integration is definitely important in industries with shorter development cycles and shorter times to market. A positive consequence of concentrating on one industry is the opportunity to study in depth the effect of company characteristics on new product performance without too much interference from external noise. The fact that we focused only on companies that have both marketing and R&D in their business model further reduces potential biases. Our model is general, is not based on any industry-specific knowledge, and can easily be tested in a broad range of industries. Applications to other industries would enrich our insights with respect to the role of the R&Dmarketing integration. 6. Managerial implications Our results have several implications for managers in marketing, strategy, and product development, and for consultants who are working on improving the new product performances of companies. The main managerial implication is that management should not automatically think of increasing the integration of R&D with marketing in the case of poor new product performance. Instead, there are specific conditions with respect to NPD resources and strategic scope that determine what priority management should give to increasing integration. The conditions are presented schematically in Fig. 4. Consider a company with low NPD resources and a broad strategic scope that aims to improve its new product performance (see the lower-left cell of Fig. 4). Our study shows that in such a situation, investments in integration are expected to yield modest returns. For these companies, it would be more profitable to invest the efforts and resources used for achieving more integration into something else, for example, hiring better scientists or marketers, or into developing R&D relationships with partners in order to become more dominant in terms of NPD resources. In contrast, a company with a narrow strategic scope and large NPD resources (see the upper-right cell) can obtain substantive rewards by increasing integration. In addition, integration is likely to be somewhat beneficial for companies with low

M.A.A.M. Leenders, B. Wierenga / Intern. J. of Research in Marketing 25 (2008) 5668

65

Fig. 4. Summary of the findings of this study.

NPD resources and a narrow strategic scope (see the upperleft cell), and somewhat beneficial for companies with high NPD resources but a broad strategic scope (see the lowerright cell). We can illustrate this with the case of the Allergan company. At first, Allergan management did not seem very satisfied with the efforts to increase integration3 (Scrip Magazine, March 1996). Our research enables us to explain this dissatisfaction. Initially, Allergan was a company with a broad strategic scope and limited NPD resources (Allergan Annual Report, 2001), which placed it in the lower-left cell of Fig. 4. For such a company, increasing the integration of R&D with marketing becomes worthwhile only after it has acquired more NPD resources (which moves the company to the lowerright cell). In 2002, Allergan sold off some parts of its noncore business and used the money to invest in specific eyecare and skin-care areas, resulting in more focus in their NPD strategy and additional NPD resources. Our model predicts that Allergan is now in a position (with more NPD resources and a narrower strategic scope) to harvest its investments in the marketingR&D interface. Given that the company is achieving considerable sales growth with new products such as Botox and Acular, and that the stock price has performed relatively well compared to the industry average over the last years, this may indeed be the case (Allergan Annual Report, 2004). 7. Future research So far, research has been dominated by studies that identify critical success factors for new product performance (Henard & Szymanski, 2001; Montoya-Weiss & Calantone, 1994). However, effects on new product performance do not come from

single factors. Depending on the specific situation of the company, factors can be more or less critical, because it is a combination of factors that determines success (see also Olson, Walker, Ruekert, & Bonner, 2001). More work is needed on the role of the marketingR&D interface in influencing new product performance. The approach taken in this paper can be extended to different industries. An interesting question, for example, is whether the same relationships will be found in industries that have a much lower R&D expenditure level or in less technologyintensive industries, such as the fast-moving consumer goods industry. Also, Henard and Szymanski (2001) propose that some factors, such as market orientation, may be less important in low-technology markets than in high-technology markets. Second, as a follow-up to our survey research design, it might be worthwhile to gather additional insights into the role of the marketingR&D interface by monitoring the results from actual efforts to achieve more integration of R&D with marketing in companies. Sometimes companies make sudden changes in the way R&D and marketing are organized or physically located, which offers the possibility of natural experiments (e.g., Van den Bulte & Moenaert, 1998). Appendix A. Measures used in this study A.1. Integration of R&D with marketing (1 = strongly disagree, 5 = strongly agree) A friendly attitude exists between R&D and marketing Open communication of relevant information occurs between R&D and marketing R&D and marketing intentionally provide each other with misleading information R&D and marketing search for solutions that are agreeable to each other R&D and marketing are more like teammates than competitors If disagreements arise between them, R&D and marketing are usually able to resolve the disagreements R&D and marketing openly share their ideas with each other R&D and marketing help each other to more effectively perform their tasks R&D and marketing often fail to communicate information to each other (Reverse) R&D and marketing are always blaming each other for failures (R) It is difficult for R&D and marketing to contact each other (R) Conflicts between R&D and marketing are of a constructive kind R&D and marketing perceive their problems as mutual problems R&D and marketing recognize each other's talents and expertise R&D and marketing share resources to complete tasks

3 Consulting battalions are wandering across the corridor (citation from the R&D director, Scrip Magazine March 1996).

66

M.A.A.M. Leenders, B. Wierenga / Intern. J. of Research in Marketing 25 (2008) 5668

A.2. NPD resources (1 = among the 20% of companies of comparable size with the fewest resources, 5 = among the 20% of companies of comparable size with the most resources) The sophistication of R&D equipment Goodwill at medical institutes Database and library facilities Contacts with universities Worldwide market information Top scientists Contacts with top medical specialists Cooperative R&D relationships Relationships with governmental bodies Knowledge of competitors A.3. Strategic scope (The first two items are 5-point semantic differential scales and the third item has discrete choices [13], [46], [79], [1012], [13b]) Narrow product rangebroad product range Few market segmentsmany market segments The number of therapeutic areas that the company is involved in with respect to marketing (e.g., cancer, antibiotics, cardiovascular) A.4. Formalization (1 = strongly disagree, 5 = strongly agree) In my company, formal procedures are followed before making a decision In my company, many paper forms are used In my company, decision-making responsibilities within a job are described in detail In my company, employees have detailed task descriptions A.5. Centralization (1 = strongly disagree, 5 = strongly agree) My company has a flat organizational structure (R) In my company, departments have a large degree of autonomy (R) In my company, many decisions are taken low in the hierarchical structure of the organization (R) The organization of my company is very centralized Making decisions in my company is strongly bound to hierarchical lines In my company, most decisions have to be approved by higher management A.6. New product performance (1 = among the 20% of companies of comparable size with the worst performance, 5 = among the 20% of companies of comparable size with the best performance) The performance of the products that have been launched in the last five years The number of new products in the last five years The number of breakthroughs in the last five years The quality of the R&D pipeline in the last five years

Appendix B. GLS for Model 2 For Model 2 (see Table 1), the response equation is: yi b0 b1i x1i Ai with the following moderating equation: b1i c0 c1i x2i ei where: y = new product performance x1 = NPD resources x2 = integration. When we substitute Eq. (2) in Eq. (1), we obtain Eq. (3) y b0 c0x1i c1i x1i x2i ex1i Ai : 3 2 1

The error term in Eq. (3) now shows heteroscedasticity with 2 2 V [x1i + i] = (x1i)2 + . This implies that a generalized least squares estimator that takes into account the mechanism that creates the error term is more efficient. Appendix C. GLS for Model 3 For Model 2 and Model 3 (see Table 1) and for the models in Tables 2 and 3, we have the following response Eq. (4) and moderating Eqs. (5) and (6): yi b0 b1i x1i b2i x2i Ai with the following moderating equations: b1i c0 c1i x2i ei c1i d0 d1x3i di where: y = new product performance x1 = NPD resources x2 = integration x3 = scope. Substituting Eq. (6) in Eq. (5) leads to: b1i c0 d0x2i d1x3i x2i di x2i ei : Substituting Eq. (7) in Eq. (4) leads to: y b0 c0x1i d0x2i x1i d1x3i x2i x1i di x2i x1i ex1i b2x2 Ai : 7 5 6 4

Again, Eq. (4) shows heteroscedasticity, but in a somewhat 2 2 different form. Var (i x2i x1i + i x1i + i) = (x2i x1i)2 + 2 2 (x1i) + . As a result, a generalized least squares estimator that takes this into account is, again, more efficient.

M.A.A.M. Leenders, B. Wierenga / Intern. J. of Research in Marketing 25 (2008) 5668

67

Appendix D. Descriptive statistics and the correlations between the variables

No. (1) (2) (3) (4) (5) (6) (7) (8)

Variable Integration NPD Resources Strategic scope Centralization Formalization New product performance Future new product performance Blockbusters

Mean 3.50 3.48 (34.8) 3.25 3.13 3.25 3.14 3.20 1.3

Standard deviation .57 .65 (6.5) .86 .66 .71 1.00 1.10 1.6

(1)

(2)

(3)

(4)

(5)

(6)

(7)

.23 .16 .33 .02 .20 .24 .10 .11 .22 .10 .54 .40 .42

.04 .22 .12 .08 .27

.42 .27 .16 .02

.16 .05 .12

.53 .43

.27

The composite score of the 10-item formative NPD resource scale is given in parentheses. p b .10 (two-tailed). p b .05. p b .01.

References
Anderson, J. C., & Gerbing, D. W. (1991). Predicting the performance of measures in a confirmatory factor analysis with a pretest assessment of their substantive validities. Journal of Applied Psychology, 76, 732740. Bagozzi, R. P., & Edward, J. R. (1998). A general approach for representing constructs in organizational research. Organizational Research Methods, 1, 4587. Campbell, D. T. (1951). The informant in quantitative research. American Journal of Sociology, 60, 339342. Cool, K. O., & Schendel, D. (1987). Strategic group formation and performance: The case of the U.S. pharmaceutical industry, 19631982. Management Science, 33(9), 11021124. Damanpour, F. (1991). Organizational innovation: A meta-analysis of effects of determinants and moderators. Academy of Management Journal, 34, 555590. Day, G. S. (1994). The capabilities of market-driven organizations. Journal of Marketing, 58, 3752. Dess, G. G., & Robinson, R. B. (1984). Measuring organizational performance in the absence of objective measures. Strategic Management Journal, 5, 265273. Dierickx, I., & Cool, K. O. (1989). Asset stock accumulation and sustainability of competitive advantage. Management Science, 35, 15041511. Dillman, D. A. (1978). Mail and telephone surveys. New York: John Wiley and Sons. Dutta, S., Narasimhan, O., & Rajiv, S. (1999). Success in high-technology markets: Is marketing capability critical? Marketing Science, 18, 547568. Gatignon, H., & Vosgerau, J. (2006). Stochastic moderated regression: an efficient methodology for estimating parameters in moderated regression, INSEAD Working Paper Series, 30 pp. Gatignon, H., & Xuereb, J. M. (1997). Strategic orientation of the firm and new product performance. Journal of Marketing Research, 34, 7790. Griffin, A., & Hauser, J. R. (1996). Integrating R&D and Marketing: A review and analysis of the literature. Journal of Product Innovation Management, 13, 191215. Griffin, A., & Page, A. L. (1993). An interim report on measuring product development success and failure. Journal of Product Innovation Management, 10, 291308. Gupta, A. K., Raj, S. P., & Wilemon, D. (1985). The R&Dmarketing interface in high technology firms. Journal of Product Innovation Management, 2, 1224. Gupta, A. K., Raj, S. P., & Wilemon, D. (1986). A model for studying the R&D marketing interface in the product innovation process. Journal of Marketing, 15, 717. Hage, J., & Aiken, M. (1967). Relationship of centralization to other structural properties. Administrative Science Quarterly, 12, 7292. Henard, D. H., & Szymanski, D. M. (2001). Why some new products are more successful than others. Journal of Marketing Research, 38, 362375.

Henderson, R., & Cockburn, I. (1994). Measuring competence? Exploring firm effect in pharmaceutical research. Strategic Management Journal, 15, 6384. Henderson, R., & Cockburn, I. (1996). Scale, scope, and spillovers: The determinants of research productivity in drug discovery. Rand Journal of Economics, 27, 3259. Hildreth, C., & Houck, J. P. (1968). Some estimators for a linear model with random coefficients. Journal of the American Statistical Association, 63, 584595. Hofstede, G. (1976). Nationality and espoused values of managers. Journal of Applied Psychology, 6, 146155. Hoopes, D. G., Madsen, T. L., & Walker, G. (2003). Guest editors' introduction to the special issue: Why is there a resource-based view? Towards a theory of competitive heterogeneity. Strategic Management Journal, 24, 889902. Hoopes, D. G., & Postrel, S. (1999). Shared knowledge, glitches, and product development performance. Strategic Management Journal, 20, 837865. Hoskisson, R. E., & Hitt, M. A. (1988). Strategic control systems and relative R&D investment in large multiproduct firms. Strategic Management Journal, 9, 605621. Ittner, C. D., & Larcker, D. F. (1997). Product development cycle time and organizational performance. Journal of Marketing Research, 34, 1323. Jaccard, J., Turrisi, R., & Wan, C. K. (1990). Interaction effects in multiple regression. Thousand Oaks, California: Sage University Papers. Jobber, D., Allen, N., & Oakland, J. (1985). The impact of telephone notification strategies on response to an industrial mail survey. International Journal of Research in Marketing, 2, 291296. Lawrence, P. R., & Lorsch, J. W. (1967). Organization and environment. Boston: Harvard Business Press. Loch, C., Stein, L., & Terwiesh, C. (1996). Measuring development performance in the electronics industry. Journal of Product Innovation Management, 13, 320. Madhavan, R., & Grover, R. (1998). From embedded knowledge to embodied knowledge: New product development as knowledge management. Journal of Marketing, 62, 112. McEvily, S. K., Eisenhardt, K. M., & Prescott, J. E. (2004). The global acquisition, leverage, and protection of technological competencies. Strategic Management Journal, 25, 713722. Montoya-Weiss, M., & Calantone, R. (1994). Determinants of new product performance: A review and meta-analysis. Journal of Product Innovation Management, 11, 397417. Moorman, C., & Slotegraaf, R. J. (1999). The contingency value of complementary capabilities in product development. Journal of Marketing Research, 35, 239257. Nerkar, A., & Roberts, P. W. (2004). Technological and productmarket experience and the success of new product introductions in the pharmaceutical industry. Strategic Management Journal, 25, 779799. Olson, E. M., Walker, O. C., Ruekert, R. W., & Bonner, J. M. (2001). Patterns of cooperation during new product development among marketing, operations

68

M.A.A.M. Leenders, B. Wierenga / Intern. J. of Research in Marketing 25 (2008) 5668 Teece, D. J. (1980). Economics of scope and the scope of the enterprise. Journal of Economic Behavior and Organization, 1(3), 223233. Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18, 509533. Thompson, J. D. (1967). Organizations in action. New York: McGraw-Hill. Treacy, M., & Wiersema, F. (1997). The discipline of market leaders. Perseus Books Group. Van den Bulte, C., & Moenaert, R. K. (1998). The effects of R&D team colocation on communication patterns among R&D, marketing, and manufacturing. Management Science, 44, S1S18. Wuyts, S., Dutta, S., & Stremersch, S. (2004). Portfolios of interfirm agreements in technology-intensive markets: Consequences for innovation and profitability. Journal of Marketing, 68, 88100. Zaltman, G., Duncan, R., & Holbeck, J. (1984). Innovations and organizations. New York: John Wiley and Sons.

and R&D: Implications for project performance. Journal of Product Innovation Management, 18, 258271. Penrose, E. (1959). The theory of the growth of the firm. Oxford University Press. Pinto, M. B., Pinto, J. K., & Prescott, J. E. (1993). Antecedents and consequences of project team cross-functional cooperation. Management Science, 39, 12811297. Postrel, S. (2002). Islands of shared knowledge: Specialization and mutual understanding in problem solving teams. Organization Science, 13, 303320. Rossiter, J. R. (2002). The C-OAR-SE procedure for scale development in marketing. International Journal of Research in Marketing, 19, 305335. Seidler, J. (1974). On using informants: A technique for collecting quantitative data and controlling for measurement error in organization analysis. American Sociological Review, 39, 816831. Sirmon, D. G., Hitt, M. A., & Ireland, R. D. (2007). Managing firm resources in dynamic environments to create value: Looking inside the back box. Academy of Management Review, 32, 273292. Sorescu, A. B., Chandy, R. K., & Prabhu, J. C. (2003). Sources and financial consequences of radical innovation: Insights from pharmaceuticals. Journal of Marketing, 67, 82102. Souder, W. E. (1988). Managing relations between R&D and marketing in new product development projects. Journal of Product Innovation Management, 5, 619.

Further reading
Moenaert, R. K., Souder, W. E., de Meyer, A., & Schoolmeester, D. (1994). R&Dmarketing integration mechanisms, communication flows, and innovation success. Journal of Product Innovation Management, 11, 3145.