Business Administration

New product performance (NPD) has a critical impact on a company’s profitability and thus
on its long-term survival. This study identifies two important dimensions of new product
performance: business performance and knowledge performance. The business performance
of a new product in the market can be regarded as the outcome of exploitative NPD
activity, while knowledge performance, the degree of new knowledge creation, can be seen
as the outcome of NPD exploratory activity. While recent studies have suggested the importance
of organizational ambidexterity in terms of exploration and exploitation, few have
investigated its determinants at the product-level. This study addresses this issue, focusing
on controllable factors in NPD, through an empirical examination of sixty NPD projects in the
information and telecommunications service industry. We find that while product quality
contributes to business performance, organizational support and NPD marketing and technical
proficiency contribute to performance in both dimensions. The trade-off relationship
between the two is illustrated by the level of NPD technical challenge, which has a negative
effect on business performance but a positive effect on knowledge performance. Overall, our
study shows that exploration can be compatible with exploitation in NPD. Based on the results,
we derive managerial implications over various stages of an NPD project.