New product development capability – A mechanism perspective

New product development has become one of the central ways in which companies change their day-to-day activities. To understand how these changes take place, dynamic capability perspective offers a view into how organizations match and even create market change. These capabilities are driven by underlying mechanisms that I examine in this study to shed light on how a specific form of dynamic capabilities, i.e. new product development capability generates change. To do so, this study provides a historical analysis of a Finnish meteorological instrument company Vaisala to map out how new product development capability drove change in the company during 1970s and enabled it to become a multiproduct firm. The findings of this study explicate new product development mechanisms and how these mechanisms can explain new product development both on the project level as well as on the organizational level. I introduce and develop three categories of mechanisms that reveal how new product ideas are developed, how the projects are evaluated for commercialization and the impact that these projects have on the organization. Subsequently, I explore how combinations of these mechanisms produce success paths on the new product development project level. I also investigate how the mechanisms enable us to understand changes in the organizational level that are driven by new product development. In doing so, I highlight how the capability can operationalize strategy, enable the realignment of the organization to its market and how exercising this capability contributes to the transformation of the organization into a multiproduct firm. Overall, this study is among the few studies to provide an empirically grounded examination of the mechanism of dynamic capabilities and their internal functioning. Therefore, it provides empirical evidence on how the mechanisms of dynamic capabilities explain change in organizations. By doing so, the study draws attention to the abstract nature mechanisms-based theorizing in the field of dynamic capabilities and proposes a more nuanced understanding of mechanisms that explain these capabilities.