As organizations embark on globalization and internationalization efforts, they are bound to develop new products to serve new markets and fulfill the requirements of existing markets (Nakata & Sivakumar 1996). New products are also associated with enhanced financial growth, increased organizational competitiveness, and reinforced capacity to meet shifting customer preferences (Hammerich & Lewis 2013; Meyer, 2014; Wang, Solan, & Xu 2014).
Research is consistent that, although most organizations consider factors such as technical capabilities, financial endowments, logistics, and market access to make decisions on which countries suit their business and operational needs, they tend to downplay the value and importance of national culture on new product development (Nakata & Sivakumar 1996; Sivakumar & Nakata 2003). The present paper uses the Hofstede’s cultural framework to discuss the role played by national culture on new product development in the American context.
Conceptualizing New Product Development and National Culture
New product development is defined in this paper “as the process of conceiving and creating a new product and the outcomes of that process” (Nakata & Sivakumar 1996, p. 62). The process of developing a new product is affected by factors such as communication mechanisms, teamwork, conflict resolution strategies, and member contributions, while outcomes are evaluated through prisms such as the product’s capacity to satisfy customer needs, uniqueness in the market, as well as return on investment (Ernst 2002; Fain, Kline, & Duhovnik 2011; Blokdijk 2015).
Although the existing literature is inconclusive on the number of stages involved in new product development, the two main stages include “(1) initiation, covering idea generation, screening, and concept testing, and (2) implementation, embracing product development, test marketing, and product launch” (Nakata & Sivakumar 1996, p. 62). These stages and their attendant sub-stages are influenced by cultural-specific considerations and other market-oriented factors (Lin 2009; Ghorbani & Azamni 2014).
National culture, on the other hand, is defined as “the characteristics that create a society’s profile, inclusive of norms, values, and institutions” (Griffith, Yalcinkaya, & Rubera 2014, p. 6). Several studies have underscored the importance of national culture in providing strategic orientation for businesses wishing to compete in international contexts (Chuang, Morgan, & Robson 2012; Zhao et al. 2012).
Justification for using Hofstede’s Cultural Dimensions
Hofstede’s cultural theory identifies “six different national culture dimensions: individualism, power distance, masculinity, uncertainty avoidance, long-term orientation and indulgence” (Griffith, Yalcinkaya, & Rubera 2014, p. 6).
This model is appropriate in the present context because its value-based orientation not only typifies the attitudes and behaviors that affect the development of new products, but also avails a strong theoretical justification for national culture variations in the development, diffusion, and adoption of new products (Griffith, Yalcinkaya, & Rubera 2014). The elements that will form the basis of analyzing the role played by the United States national culture on new product development include individualistic orientations, power distance issues, masculinity concerns, and uncertainty avoidance issues.
According to Hofstede’s cultural framework, individualism is perceived as “the tendency for people to work alone and distance themselves from the larger social group to which they belong” (Griffith, Yalcinkaya, & Rubera 2014, p. 7). The United States national culture is largely individualistic as demonstrated by how Americans value independence and their propensity for self-sufficiency, personal achievement, and distinctive vision (Zhao et al. 2012).
Research has associated high levels of individualism with new product development because this cultural context provides product champions (individuals who nurture doubtful ideas to success through self-confidence and perseverance) with an enabling environment to overcome obstacles (Nakata & Sivakumar 1996; Ghemawat & Reiche 2011). Likewise, available literature suggests that an individualistic orientation is more likely to nurture technical and business innovators (people with scientific resourcefulness and personal vision to develop and implement novel ideas) who proceed to engage in new product development due to capabilities such as independence, influence on others, distinctive vision, and leadership (Xie, Song, & Stringfellow 1998; Thomas & Inkson 2009).
Drawing from the two stages of new product development (initiation and implementation), it can be argued that the individualistic orientations prevalent in the American’s national culture provide businesses with strong, viable, and revolutionary concepts that could be employed during the initiation phase to develop a product that fits into the existing market (Lin 2009; Wang, Solan, & Xu 2014).
Similarly, when the product launch sub-stage of the implementation phase is considered, it is evident that most companies wishing to develop new products may consider the US as a prime market entry country due to Americans’ propensity to use new products as a means to achieve autonomy and personal reward (Griffith & Rubera 2014). Consequently, it can be argued that the American national culture can influence the strategic orientations of companies about new product development and market entry decisions. Because new products permit adopters to distinguish themselves from others, it is highly likely that companies may target the American market to develop and market new products to benefit from a national culture that encourages people to adopt new products with the view to maintaining their social differentiation and uniqueness (Wang, Solan, & Xu 2014).
However, product development teams in the American cultural context may require more external motivation to facilitate the formation of shared group objectives based on the fact that people in an individualistic cultural orientation tend to identify with personal goals and are less cooperative (Xie, Song, & Stringfellow 2003; Lane & Maznevski 2014).
Power Distance Issues
The component of power distance in Hofstede’s cultural framework relates to “the extent to which individuals accept an unequal distribution of power” (Griffith, Yalcinkaya, & Rubera 2014, p. 5). The United States has a low power distance as demonstrated by minimal inequalities of power in the county (a high number of less powerful citizens in the United States are not comfortable with the idea that power is distributed unequally), which in turn translate to few disparities in opportunity, status, and wealth (Sivakumar & Nakata 2003; Hofstede, Hofstede, & Minkov 2010). This cultural orientation has been associated with a decentralized organizational structure, which enhances the change dynamics required for numerous new product development activities (Thoumrungroje 2004).
Available literature demonstrates that decentralized organizational arrangements “enable direct access to people and resources, resulting in speedier decision making and lessened internal competition” (Nakata & Sivakumar 1996, p. 64). Consequently, it can be argued that the low power distance prevalent in the United States national culture plays an important role during the initiation phase of new product development by minimizing information overload at higher organizational levels, enhancing the self-organization of responsible product teams, availing an environment of free exchange of ideas during concept identification and testing sub-stages, and facilitating a more direct and immediate attack on product development challenges as they arise (Wang, Solan, & Xu 2014).
The United States national culture avails individuals with the capacity to balance the distribution of power, which in turn creates an enabling framework for effective communication between diverse populations of the American society (Song & Parry 1997). Such a cultural orientation not only facilitates enhanced knowledge about the new product and diminishes the adoption risk associated with the product, but also encourages fast and critical decision making among relevant stakeholders involved in the development process (Sivakumar & Nakata 2003; Jones 2005).
Drawing from these elucidations, it is possible to argue that the low power distance component of the American’s national culture allows businesses to make faster and decisive decisions on issues relating to new product development. Additionally, it allows for more focussed internal commitment to the objectives that drive new product development and cross-functional integration of product development teams, which in turn generate project-specific sources of advantage (Song & Parry 1997; Hofstede, Hofstede, & Minkov 2010). Lastly, the adoption rate for new products after launch is high in the US due to the blurred hierarchical order of the society as well as effective communication mechanisms and minimal social barriers between different members of the society.
Masculinity is described as “a country’s tendency to value goals such as recognition, competition, and individual achievement over goals such as harmonious social relationships, consensus building, and quality of life” (Griffith, Yalcinkaya, & Rubera 2014, p. 8). The national culture of the United States is masculine in orientation as demonstrated by the fact that individuals are motivated by the desire to become the best through the use of competitive and independent means (The Hofstede Centre n.d.).
Available literature demonstrates that “new product development is promoted by greater levels of masculinity, and in particular, by two dimensions representing it, namely purposefulness and formalization” (Nakata & Sivakumar 1996, p. 64). Purposefulness, which is associated with masculine cultural contexts, is important in the development of new products as it not only enables product teams to have clear project objectives, but also allows leaders to set achievable goals and clarify arising issues (Wang, Solan, & Xu 2014). Purposefulness is also important is it allows for effective alignment of numerous project activities to meet the common objective set by the product development team (Song & Parry 1997; Sivakumar & Nakata 2003; Griffith & Rubera 2014). Formalization is associated with a feminine cultural context.
Additionally, masculinity in the American cultural context plays an important role in new product development and launch as it provides businesses and individuals with the freedom to decide on what they want and how they want it. Here, new product developers have the leeway to design products according to the tenets of competition, aspiration, wealth, and other social considerations that serve to expand the market and reach of the new additions (Xie, Song, & Stringfellow 2003).
It is important to note that organizations that aspire to develop new products are often inclined to evaluate how their target audiences will react to the products upon rollout (Song & Parry 1997; Thoumrungroje 2004; Kahn 2012). The effects of national culture are experienced during the launch sub-stage of the implementation phase, as materialistic cultures such as the United States are more likely to purchase new products than collective (feminine) cultures due to the demonstrated need for achievement and self-fulfillment (Sivakumar & Nakata 2003; Kumar 2014). Consequently, people in these cultures are more likely to accept new things in life and assert their status (wealth, prestige and success) by making early purchases of the new products.
Uncertainty Avoidance Issues
The component of uncertainty avoidance is used to define “a society’s tolerance for uncertainty and ambiguity” (Griffith, Yalcinkaya, & Rubera 2014, p. 9). The American national culture has a low uncertainty avoidance index as demonstrated by the society’s greater tolerance to the opinions of other people, flexibility in codes of belief and behavior, and willingness to change (Griffith & Rubera 2014).
The role of this component in new product development may be understood within the planning and risk-taking contexts, where scholars have established a positive correlation between low uncertainty avoidance cultures such as the United States and the propensity for organizations to “facilitate the initiation phase of new product development through risk-taking and minimal planning and controls” (Nakata & Sivakumar 1996, p. 66).
Here, product developers are likely to be highly innovative during the initiation phase due to the fact the country’s culture programs its citizens to feel comfortable in high-risk situations and unstructured contexts (van Everdingen, Fok, & Stremersch 2009). Owing to that fact that innovation plays a central role in new product development in terms of conceptualizing and testing new ideas, it is therefore correct to argue that national culture has an important role to play in new product development because it influences innovation success (Griffith & Rubera 2014; Kumar 2014).
Lastly, product development teams with a more diverse workforce are more successful than culturally homogenous teams, particularly in terms of coming up with innovative ideas and concepts that are harnessed during the initiation phase to develop new products with the capacity to meet the current market needs (De Brentani, Kleinschmidt, & Salomo 2010; Trompenaars & Hampden-Turner 2012). Using the uncertainty avoidance component, it is evident that companies in America are better placed to come up with heterogeneous product development teams as Americans “have greater tolerance of foreigners’ opinions, accept people from other races as neighbors more easily, tolerate immigrants better, and show a more open-minded mentality in search for information than citizens of countries high in uncertainty avoidance” (van Everdingen, Fok, & Stremersch 2009, p. 640).
This observation translates to the fact that American product development teams are more likely to have a wide base of new ideas and concepts than their counterparts in high uncertainty avoidance societies. The creation of new knowledge has been documented in the literature as an important factor in product development and innovation (Subramaniam, Rosenthal, & Hatten 1998). Furthermore, the new products are likely to be adopted at a faster rate after being launched into the American market due to the low uncertainty avoidance index.
Using Hofstede’s cultural theory and the two phases of new product development (initiation and implementation), this paper has underscored the role played by national culture on new product development within the American cultural context. Drawing from the discussion and analysis, it is clear that national culture has an important role to play in determining how new ideas are conceptualized, how technical and business innovators are nurtured, and how power distance issues influence the success of new product development by decentralizing organizational structures.
Additionally, the paper has established how the predispositions of American’s national culture (e.g., purposefulness, diversity and innovativeness) influence new product development by providing an enabling environment for effective alignment of project activities and conceptualization of innovative ideas. Overall, it is evident that national culture qualifies as one of the positional and strategic orientations that should be used by organizations in making decisions on where to develop their new products.
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