The link between NPD activities and market volatility : an empirical study

New products are unquestionably imperative for business sustainability and success. Firms need to maintain their competitive advantage, and a major determinant of sustaining competitive advantage is the ability of the firm to develop and launch successful new products. There are highly volatile market situations where changes are so rapid and dynamic, which poses many challenges for new product development (NPD) activities. Creating a new product is important, but getting new products to market forms the underpinning motivation of firms which compete in dynamic and volatile markets. This paper investigates the links between NPD activities and market volatility. The nature of the marketplace is an important determinant of how a business positions its NPD activities. In stable markets there is little need for change while in dynamic and turbulent markets with high levels of volatility businesses are under constant pressure to innovate products to address the dynamism of the market demand. The findings indicate that market volatility influences the product volume but not product mix. In terms of NPD strategy the level of volatility in the market has a minor effect on NPD goals but would appear to have little effect on the overall strategy. NPD trajectories are not easily altered and our results confirm this as volatility in the market has no effect on the direction and nature of NPD activities and little effect on NPD process activities with the exception of idea generation in some environments.