Is more always better? An exploration of the differential effects of functional integration on performance in new product development

The objective of this paper is to explore the relationship between performance in new product development (hereinafter NPD) and functional integration under different conditions of project uncertainty. Functional integration is conceived as a two-dimensional concept, encompassing a behavioural - collaboration - and a structural - interaction - dimension. This study is based on 92 questionnaires looking at NPD activities in more than 40 British and Dutch companies from various industrial sectors. The results suggest that the nature of the relationship between integration and performance is contingent upon the project stage and the degree of novelty in the new product. Integration in the initial stages of the project assumes a prominent role in the quality of the end product, whereas in later stages it is more associated with time to market than with costs and end product quality. Results further show that the dimension collaboration of integration may be more relevant under circumstances of high new product innovativeness than when minor variations are introduced in a new product. The paper ends with a discussion of the use of universal approaches to NPD management.