Dynamic capabilities in new product development: The case of the world auto industry

This dissertation explores changes in new product development capabilities in the world auto industry from the 1980s to the 1990s. Previous work by Clark and Fujimoto (1991) found significant differences in product development performance between firms in Japan and those in the United States and Europe. This study addresses three primary questions: (1) Do differences in new product development performance persist over time? (2) Do changes in organizational capabilities require significant investment? (3) What strategies help firms to change more effectively than others?; This study reports on the statistical analysis of data from 27 auto development projects completed in the U.S., Europe and Japan during the 1990s and compares it to data from 29 projects in the Clark and Fujimoto dataset from the 1980s. Over this time period, U.S. and European auto companies closed most of the competitive gap that existed relative to Japanese firms. Projects from the 1990s show that the gap in development lead time is negligible across regions and differences in engineering productivity, measured by product engineering hours, are no longer statistically significant. U.S. and European firms have adopted many product development practices from the best performing Japanese firms including heavyweight project managers, overlapping problem solving cycles, supplier involvement in design and effective manufacturing skills during development. However, parity within the industry had not been achieved by the early 1990s; Japanese firms continued to maintain a lead in some areas particularly for lead times within specific stages of the development process.; Changes to product development systems can require significant investment. Firms have to trade-off the long term benefits of changing development systems against possible switching costs. This study finds that after controlling for overall trends in development costs over time, projects that involve switches to new product development regimes are generally more expensive than others, but that costs fall quickly thereafter. Interestingly, projects that immediately precede a switch are the most costly.; And finally, this dissertation explores strategies for managing change in development capabilities by integrating the literature on organizational change with case histories of change from the auto industry. Evidence suggests that crisis, changes in senior managers' mental models and pilot projects are critical elements of successfully managed, large-scale organizational change.