Success factors for innovation

management in networks of small

and medium enterprises
Alexandra Rese and Daniel Baier
Chair of Marketing and Innovation Management, Brandenburg University of Technology Cottbus,
PO Box 101344, D-03013 Cottbus, Germany. rese@tu-cottbus.de; daniel.baier@tu-cottbus.de

Because rms today operate in increasingly turbulent and complex environments, they need to
be more proactive and innovative. Networks are gaining in importance, especially for small
and medium enterprises with limited resources as R&D cooperations or cooperations along the
value chain seem to be the only way to succeed with technologically challenging and promising
but also expensive and risky product innovations. One of the key problems of these networks,
however, is the question of how to plan, organize and control the innovation processes that are
distributed over several partners. Theoretically derived and empirically proven success factors
could help as much here as in the traditional success/failure discussion of new product
development within rms. This paper discusses the effects of such factors, which partly derive
from the traditional success/failure discussion within rms (e.g. market potential, product
advantage, technological synergy, prociency of technological or marketing activities) but also
factors derived from recent network research (e.g. trust or dependence on partners). Their
effect on new product performance is discussed on the basis of a comprehensive survey with 271
participating networks. The results conrm the traditional success factors, especially the
product advantage and prociency factors. But they also show that network-related success
factors (especially network cohesion and organization) are of similar major importance.

1. Introduction

etworks of manufacturers, suppliers, marketing intermediaries, service providers and

research institutes trying together to determine
future market needs, to accomplish complex or
interdisciplinary R&D tasks, to convert ideas and
concepts into marketable products and to launch
them, have already been the subject of research
for some time (Kowol and Krohn, 1995;
Koschatzky et al., 2001; Kueppers, 2002). The
characteristics of such networks, their stability
over time and possible control and management
mechanisms, but in particular the question of
which network congurations are particularly
suitable in which industries and for which enter-

138

prises, have been discussed. At the same time, the

opinion that R&D cooperations or cooperations
along the value chain offer the (only) chance to
take part in technologically challenging and economically promising, but also expensive and risky
product innovations, especially for small and
medium enterprises (SME) in emergent industries
or in structurally weak regions, has been increasingly propagated (Semlinger, 1998; Harms, 2001).
Many empirical and theoretical studies on the
management of networks in general can be found
in the literature (see Sydow, 2006 for a general
overview). But there are hardly any recommendations with respect to innovation management in
these networks (Thoms, 2003). On the other hand,
research on the success/failure of new product

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Success factors for innovation management in networks of SMEs

development within one rm has uncovered, accumulated and synthesized the relevant success factors (see e.g. the overviews of Montoya-Weiss and
Calantone, 1994; Henard and Szymanski, 2001;
van der Panne et al., 2003; Cooper and Kleinschmidt, 2007). Because meta-analyses consistently
found predictive factors for new product success,
we also expect some of the rm-level success
factors to have an inuence if products are developed not within a rm but within a network.
In recent years, the concept of innovation has
changed drastically, shifting the focus of attention
to the interactive nature of the innovation process
and the role played by networks involving different organizations (Fischer, 2006). For product
innovation, R&D cooperations or cooperations
along the value chain do not represent a new
phenomenon, but the current scale and proliferation, especially as an organizational component in
the innovation process, is new (for documentation
of this upward trend, see e.g. Hagedoorn, 2002).
In the face of rapid and radical technological
change, shorter product life cycles and intensied
competition (Henderson and Clark, 1990), interrm cooperation is related to the belief that
networks offer time advantages over internal
development in realizing innovations in a shorter
time interval (Fischer, 2006, p. 103). Other assumptions underlying the network mode are a
higher degree of exibility, shared risks and costs,
increased scale and scope of activities, or improved competencies and know-how. They appeal
in particular to SMEs as they reduce existing
(economic) disadvantages.
These cooperative forms were examined in the
scientic literature for different sectors of industry
(e.g. Tether and Tajar, 2008) and countries (e.g.
Tether, 2002; Miotti and Sachwald, 2003). Other
research topics include input-related motives for
cooperating in innovation (Schmidt, 2007) and
effects surrounding R&D cooperation at the rm
level (e.g. knowledge spill-overs, access to complementary knowledge, risk-sharing). The partner
selection process in the formation stages of collaborative new product development has been analyzed by Emden et al. (2006). The outcome of
R&D cooperations is of equal importance. For
example, Aschhoff and Schmidt (2008) have investigated the effect of past R&D cooperation on
current new product performance, but the determinants of the performance of new products
developed in networks have not yet been analyzed.
While in research on innovative networks
usually inter-organizational relationships between
companies were investigated on the rm level (e.g.
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Hagedoorn, 1993; Shan et al., 1994; Dyer and

Singh, 1998; Madhavan et al., 1998), the focus
of interest has recently shifted to the personal
level. For example, in the still rather new debate
about innovation communities, networks of
innovators from different organizations promoting a specic innovative project together are used
to dene this concept (Fichter, 2009). Based on
the assumption that networks of (SME) rms
can be compared with teams of people, the
literature on team and inter-team interactions
was taken as another starting point to derive
factors that determine new product performance
in networks (e.g. Hoegl and Gemuenden, 2001;
Hoegl et al., 2004). In this context, we looked at
so-called longevity factors of cooperations (see
Teusler, 2008). The focus was on those factors
that support the interaction of the partners and
develop during the course of cooperation. In
addition, other longevity factors dealing with
the characteristics of the partners or the coordination of the network were included in the considerations.
Given these ndings and considerations, in this
paper, we want to explore the underlying factors
that affect the performance of new product development by networks of rms and research institutes. One aim of the study is to investigate the
classic within-rm success factors known from
the literature with respect to their transferability
for product development activities in networks.
In addition, the study also attempts to clarify
whether additional factors have to be taken into
account for new product development carried
out in networks. Therefore, in addition to traditional success factors, network-specic factors
that describe the inter-rm cooperation were
also examined. In the following section, based
on the existing literature on within-rm new
product development and the success factors
of team performance, we derive hypotheses
with respect to driving factors in networks. While
the determinants of successful within-rm new
product development are already well described
and operationalized in the literature, this is not
the case for determinants at the network level.
With respect to network cooperation, the question of its measurement is addressed as is the
question of its inuence on performance in comparison with traditional success factors. We derive measures and constructs and test their
inuence using a sample of 271 interviewed German networks. Overall recommendations for the
optimization of innovation management in networks will be given.
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Alexandra Rese and Daniel Baier

2. Theoretical background and research

hypotheses
Success factors of new product development within
rms have been examined and described for decades. Attempts have been made to answer the
following decisive questions in particular: What
makes new products successful? What must be
changed during their development to make them
more successful? The keys to success, the so-called
success factors, were the focus of interest. In his
NewProd studies (Cooper, 1979; Cooper and
Kleinschmidt, 1987b; Cooper and Kleinschmidt,
1993), Cooper examined the factors that inuence
the potential success of new products (see Brown
and Eisenhardt, 1995 for an overview). He used a
paired comparison approach, comparing successful and unsuccessful new products, and identied
success factors by looking for correlations and
signicant mean value differences. A theory or an
underlying theoretical concept in the strict sense
was not tested.
In the meantime, further empirical research on
new product performance has provided a wide
variety of factors that can inuence the outcomes
of new product development activities. In different meta-analyses, these factors were accumulated, synthesized and analyzed with respect to
their effect on new product performance. Montoya-Weiss and Calantone (1994) identied a
total of eighteen factors that can be assigned to
the following four major categories: (1) strategic
factors (e.g. product advantage, technological
synergy), (2) development process factors (e.g.
prociency of technological activities, prociency
of marketing activities), (3) market environment
factors (e.g. market potential) and (4) organizational factors (e.g. intensity or quality of external
relations). The framework of Henard and Szymanski (2001) with twenty-four predictors and
the product, strategy, process and marketplace
characteristics categories resemble MontoyaWeiss and Calantones typology, except that
product-related factors were separated out into
the product category and organizational factors
were integrated into the process category. Product- and market-related factors can also be
found in the meta-analysis of van der Panne et
al. (2003), but here, the rm-related factors category comprises strategic and organizational
(structure) factors while the project-related factors category consists partly of development process factors (see Table A1 in the Appendix A for
an overview of the categories and factors summarized in the meta-analyses).
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In the rst meta-analysis of Montoya-Weiss

and Calantone (1994) looking at 18 causal studies
(i.e. using correlational, regression, path or structural equation analyses), strategic factors and
development process factors were identied as
being most frequently included in the studies
reviewed, having the most consistently reported
supportive statistics and being signicant determinants of new product performance. The four
most frequently utilized factors prociency of
technological activities, prociency of marketing
activities, protocol (product and project denition) and product advantage were identied as
primary discriminators between success and failure in new product performance. With respect to
the two market environment factors and organizational factors categories, the question of insignicance was raised. The meta-analysis of van der
Panne et al. (2003) conrmed that product-related
(product advantage) and rm-related (e.g. strategic and also organizational) factors had a signicant inuence on success. Product advantage (and
meeting customers needs) also had a strong
signicant impact on market performance in the
meta-analysis of Henard and Szymanski (2001),
together with predevelopment task prociencies
(and market potential and dedicated resources). It
is expected that well-known success factors from
new product development within rms (e.g. product advantage, prociency of technological activities, prociency of marketing activities,
protocol) are also relevant for new product development in inter-rm networks. In contrast to
Montoya-Weiss and Calantone (1994) and van
der Panne et al. (2003), market potential is a
success factor in the meta-analysis of Henard
and Szymanski (2001). This factor will therefore
be included in the empirical analysis. In addition,
we believe that organizational factors will play
a major role in networks due to the complex
organization.
Hypothesis 1: The new product performance in
inter-rm networks is positively related to the
traditional success factors product advantage
(in the eyes of the customer), prociency of
technological activities, prociency of marketing
activities, protocol (quality of product and project
denition), market potential and (quality of) project team organization.
With respect to additional potential success
factors, we started with research dealing with
team and inter-team interaction within and across
rms (Hoegl and Gemuenden, 2001; Hoegl et al.,
2004). The results show that communication and
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Success factors for innovation management in networks of SMEs

coordination (intensity and quality), balance of
member contributions, mutual support, effort
and cohesion within and between these teams
are positively related to the success of innovative
projects. Therefore, it can be assumed that these
aspects are also related to success in inter-rm
new product development.
Similar to research on team interaction, research
on inter-rm cooperation (Powell, 1998) also stems
from sociology and organizational theory (e.g.
Granovetter, 1985; Uzzi, 1996). This perspective
analyzes the relational capability of organizations
and adopts a process-based focus in which the
factors securing the continuation of a cooperation
are the focus of interest. The longevity of networks
has been used alongside classical performance
measures, e.g. achieved milestones, budget and
intended quality, as a proxy for success. We are
concentrating here on internal longevity factors
(for a differentiation of internal and external longevity factors, see Schwerk, 2000). They are further
distinguished by Teusler (2008) into factors specic
to the enterprises when entering the network and
factors specic to the cooperation, e.g. supporting
the interaction of the partners or regarding the
coordination of the network. In the following, we
describe the factors that we have chosen for our
analysis.
Factors supporting the interaction of the partners in a network are conceptualized most frequently based on the discussion in the literature of
the commitment of the partners to the network
and trust between the network partners (Teusler,
2008). The concept of commitment as dened as
the intention of exchange partners to continue a
relationship has been addressed by several theorists. These authors have suggested that the investments made to establish and maintain exchange
relations lead to attachment between the partners,
because the (specialized) investments cannot be
sold outside without a loss of value (Blau, 1964;
Williamson, 1975; Cook, 1977). Besides this calculated commitment for inter-organizational relationship, affective commitment is important.
The underlying motive to maintain a relationship
is a positive regard for and emotional attachment
to the partners (for an overview, see Seabright et
al., 1992; Geyskens et al., 1996). Another important antecedent of cooperation is trust, which is
dened as an expectancy held by an individual or
group that the word, promise, verbal or written
statement of another individual or group can be
relied on (Rotter, 1967, p. 651). Bradach and
Eccles (1989) claim that trust increases the willingness to share resources, because the fear of
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opportunistic behavior by one of the exchange

partners is alleviated. Thus, trust is considered
essential for the emergence and repetition of
cooperative behavior (see Thoms, 2003).
If rms cooperate, they automatically give up
part of their autonomy and proceed into a relationship of dependency, as they need to maintain a
relationship with their partner(s) to achieve their
goals. Symmetric interdependent relationships,
where the partners are equally dependent on
each other, in particular lead to higher stability
for cooperations because of less conict, stronger
motivations to use positive and collaborative
methods to gain a partners cooperation, or
valued resources are invested in the network
(Kumar et al., 1995, 1998). Regarding antecedents of the partners themselves to cooperate,
the compatibility of network partners is another
important factor for an efcient and smoothly
run cooperation that is frequently mentioned in
the literature. Network partners should keep in
mind the superordinate goal of the network and
align their goals to this (Schein, 1969; Deutsch,
1973). In addition, compatibility in strategic and
organizational aspects is advantageous, e.g. similar quality or other evaluation standards and
ways of proceeding (Teusler, 2008).
Altogether, we argue that more stable networks
are benecial for new product performance. Network stability and the dimensions related to the
social exchange are likely to bring sustainable
advantages in terms of innovation and cost economics (Lorenzoni and Lipparini, 1999). For
example, trust-based relationships promote information exchange with the partners, ease of interaction and constructive management of conict
(Gulati, 1998). If new technologies are to be
developed in networks, trust seems to be a basic
ingredient so that complementary knowledge can
be shared between partners. With respect to cost
economics, repeated transactions can lower the
transaction costs over time (Lorenzoni and Lipparini, 1999). Network-related success factors are
therefore expected to have a signicant positive
inuence on the new product performance in
inter-rm networks.
Hypothesis 2: The new product performance in
inter-rm networks is positively related to the network-related success factors trust, commitment,
dependency and compatibility.
In addition, we assume and test exploratorily
that the inuence of network-related success
factors is as strong as the inuence of strategic
and process development factors.
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Alexandra Rese and Daniel Baier

Hypothesis 3: Network-related success factors are
of equal importance for new product performance in inter-rm networks as traditional success
factors.

3. Research methodology
3.1. Sample
In Germany, there are no statistical data on the
total number of networks available (see Maa
and Wallau, 2003, p. 28). However, in order to
identify relevant enterprise networks, detailed
single-network-related information from websites, industry-related workshops, promotional
competitions, the funding programs of different
German federal and federal state ministries and
network lists of (regional) chambers of Industry
and Commerce is widespread and can be used.
The focus was on networks that jointly develop
innovative products (including processes and procedures) and have a high proportion of SME, in
order to avoid too strong an impact on the network by a dominant (large) enterprise. In the
questionnaire, the current denition of the European Commission was used to explain the category of SME. SMEs were described according to
the denition as enterprises that employ fewer
than 250 persons and that have either an annual
turnover not exceeding h40 million or an annual
balance sheet total not exceeding h43 million
(European Commission, 2006, p. 13).
Altogether, 623 German networks consisting of
rms and research institutes were identied. They
received a questionnaire in summer and autumn
2005. The networks so-called network manager
was asked to respond. Altogether, 271 questionnaires were returned, resulting in a very high
response rate of 43.5%. The signicant interest in
the study was reected in numerous additional
telephone inquiries and expressions of interest by
the respondents. Besides, four out of ve network
managers (79.4%) believed that enterprise networks will signicantly increase in importance
over the next 10 years. Because of the large sample
and the high response rate, it can be assumed
despite some statistical bias (e.g. by the greater
willingness to respond of networks supported by
state funding) that the sample represents German
product development SME networks (rst pretest
results with a smaller sample were presented in
Baier et al., 2006).
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3.2. Descriptive statistics

Networks occurred in particular in the research
and innovation intensive industries (see Table 1).
These industries are also conrmed to be cooperation intensive for Germany in other empirical
studies (e.g. Eggers and Kinkel, 2002; Frietsch,
2007). The networks were set up on a long-term
basis and had existed on average for 3.45 years.
Regarding the number of partners involved, networks were relatively small, with 60.9% of the
networks having up to 10 partners (see Table 1).
Most networks were distributed either regionally
(40.3%) or nationally (46.6%); only a few had
international partners (9.7%). Smaller networks
tended to be coordinated monocentrically by one
of the partners (e.g. 54.5% of the networks with
less than four partners), while in larger networks,
all partners were more frequently equally involved in decision making (e.g. 81.3% of the
networks with over 50 partners).
With respect to network formation, above all,
the active efforts of the network management
played an important role in seeking potential
partners intensively. Previous cooperation in projects as well as meeting opportunities, e.g. conferences, also helped when looking for partners.
Motives and goals for taking part in a network
included, in addition to the development of new
products and/or technologies, nancial and economic advantages, for example state funding, the
improvement of the participating enterprises market position and synergy effects. Substantial obstacles and difculties for the networks concerned
in particular a lack of resources, e.g. nancial
resources, R&D resources or manpower. The coordination between partners was also assessed as
difcult, e.g. due to the allocation and assignment
of work packages to partners far away, or the
emergence of conicts because of different interests
and goals, or even because of personalized disagreement or individual disaffection.
Regarding innovativeness, about half of the
products developed in such networks can be classied as incremental innovations (see Table A2 in
the Appendix A for more detail). The differentiation between radical and incremental innovations
is based here on the newness of the knowledge
generated (for different dimensions of radical innovations, see e.g. Danneels and Kleinschmidt,
2001; Garcia and Calantone, 2002). Incremental
innovations were quicker to market. Products that
were already introduced on the market were predominantly based on existing knowledge (81.3%).
So far, only very few networks had successfully
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Success factors for innovation management in networks of SMEs

Table 1. Descriptive statistics of the networks
Industry sector of the network
Mechanical engineering
Biotechnology
Environmental technology
Micro-system technology
Medicine technology
Sensor technology

16.6%
12.2%
8.5%
8.1%
6.6%
4.8%

Finding partners
Active effort of network
management
Personal contacts of
network managers
Previous cooperation in
projects
Conferences, workshops,
trade shows
Recommendation of
network partners

Number of partners

Age of the networks

o4
410
1120
2150
51100
4100

Under 1 year
Under 2 years
Under 3 years
Under 4 years
Under 5 years
5 years and more

4.1%
56.8%
15.4%
13.5%
6.0%
4.1%

Motives, goals
34.9%
33.6%
25.5%
19.1%
4.3%

Obstacles and difculties

Development of
new products
Financial/economic
advantages
Strengthening of
market position
Acquisition of
know-how
Synergy effects

nished the product development process, which

took about 5.4 years. About half of the networks,
being rather young, with on average 2.4 years,
were still in the planning stage (with respect to the
stage gate approach, see Cooper, 1983, 1994;
Cooper and Kleinschmidt, 1987a).

3.3. Measures
All constructs are developed as multidimensional
concepts measured using a seven-point scale ranging
from 1 strongly disagree to 7 strongly agree.
The items were mostly drawn from existing studies
and adapted especially with respect to the network
situation (see Appendix B). Preliminary versions of
the questionnaire were pretested to reduce ambiguities or difculties in responding to the scale items
and to ensure clarity. The measures and items are
discussed below.

3.4. Dependent variable: new product

performance
When analyzing rms and their position with
respect to new product development, the success
of individual products is used as a dependent
variable. Grifn and Page (1993) identied, in
their broad approach, several categories of new
product performance measures at the rm level.
We relied here on the three categories of market
performance, technological performance and nancial performance, which were used in the
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8.3%
14.7%
14.3%
24.1%
10.9%
27.8%

44.3%

Lacking resources

42.4%

33.2%

34.3%

28.4%

Coordination between
partners
Schedule problems

17.7%

22.9%

Bureaucracy

16.2%

22.5%

Finding partners/partner
uctuation

15.1%

studies included in the meta-analysis of Montoya-Weiss and Calantone (1994). These three
categories should be assessed with respect to the
products developed in the networks. The items
measuring nancial and market performance
were derived from Cooper et al. (1994). Financial
performance is measured using two items covering sales and the total sales (revenues) of the new
products. Market performance is captured by one
item on the degree to which the innovations
opened up new markets. Two product-related
items asked whether the innovation was technically successful (Grifn and Page, 1993) and led
to the development of further new products
(Cooper et al., 1994). In new product development success studies, nancial and market share
objectives are summarized as measures for commercial performance while technical measures
were rarely considered (Montoya-Weiss and Calantone, 1994). Besides new product performance
measures, product-level measures were also taken
into account, e.g. cost goals were met, the product
was launched on time or met quality guidelines
(Grifn and Page, 1993). The triple constraints of
time/achieved milestones, budget and quality
are also referred to as efciency when measuring
team performance (Hoegl and Gemuenden, 2001;
Hoegl et al., 2004). In the following, therefore,
these items are referred to as network efciency.
The constructs are conceptualized as stand-alone
measures to test performance effects separately,
but they are also compiled into a second-order
factor for a general overview.
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We are relying here on subjective assessments
of performance, which have been shown to be
sufciently reliable for performance assessment
(Dawes, 1999). One reason for using a self-assessment construct is that innovations are often
highly complex and uncertain (Calantone et al.,
2003). On the other hand, because the networks in
our sample were rather recently formed, we assumed that clear and precise performance objectives (e.g. nancial data) would often not be
available (see similar Talke, 2007). The items
were formulated in the past with respect to
realized success, but it was made clear in the
questionnaire that if the products developed in
the network had not been introduced on the
market yet, the questions should be answered
with respect to expected success.

3.5. Antecedents: Traditional success

factors
We based our research on the factors of the metaanalysis of Montoya-Weiss and Calantone (1994)
and selected those factors that were most frequently included in the studies reviewed. Of the
strategic factors product advantage, technological synergy and marketing synergy and of the
development process factors, prociency of technological activities, prociency of marketing activities, protocol (product and project denition)
and the prociency of predevelopment activities
were included. The items are based for the most
part on Cooper (1979), Cooper and Kleinschmidt
(1987b) and Cooper and Kleinschmidt (1994),
and were textually adapted, if necessary, with
respect to networks. In the case of the quality
of executing marketing activities, two items of
Bstieler (2005) dealing with the marketing concept
were added. Of the three market environment
factors, only market potential was included in
the analysis, because market competitiveness was
shown to not be a signicant determinant of new
product performance (see Montoya-Weiss and
Calantone, 1994) and external environment was
also rather rarely included in empirical studies.
Finally, the (quality of the) networks project
team organization was taken into account as an
organizational factor. Here, the items of Cooper
and Kleinschmidt (1987b) were adapted to investigate whether the project team was interdisciplinary (see Roure and Keeley, 1990), the team was
accountable insomuch that it undertook the project from the beginning to the end, the team was
led by a strong champion, the team was only
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dedicated to this project (two items) and had the

commitment of the top management of the network partners. In addition, it was asked whether
the teams were motivated, the communication
between the partners was intensive and the project
organization was supported by software.

3.6. Antecedents: Network-related

success factors
Altogether, we concentrate on the following four
constructs that have been shown to be important
longevity factors of cooperations: commitment of
the network partners, dependency of the networks
partners, trust between the network partners and
compatibility of the network partners.
The ve-item scale assessing commitment addressed the interest of the partners in long-term
investments in the network (Anderson and Weitz,
1992), the loyalty of the partners to the cooperation (Mehta et al., 2006), e.g. partners would not
leave or join another network and the relevance of
the cooperation for the partners (Hoegl and
Gemuenden, 2001). The measurement scale for
the dependency of the network partners consisted
of ve items on the interdependence of the partners on the network, the importance of the
partners for the cooperation (Kumar et al.,
1998), e.g. covering the entire value-chain, necessary strategy changes if partners exit and the high
quality of collaboration with the present partners.
If the latter were not the case, this would e.g.
result in the search for alternative partners (Kim
and Frazier, 1997). The measurement scale for
trust was based on the beliefs in the trustworthiness of the partners (Jap, 1999) e.g. due to
previous cooperation, the willingness to exchange
information (Monczka et al., 1998), the openness
for change and equal rights for all partners. The
network partners compatibility is expressed as
compatibility in goals, nancial affairs, quality
specications, schedules and deadlines and performance evaluation. As an additional factor, the
ability of the network partners to cooperate with
a special focus on the resource facilities of the
network partners was included, capturing the
communication behavior, bureaucratic structures, manpower resources, information technology resources and nancial resources.

3.7. Reliability of the constructs

To verify the reliability of the constructs, Cronbachs a was calculated. Altogether, four of the
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Success factors for innovation management in networks of SMEs

eighty-six items were excluded, because of their
low item to total correlation. Of the factor technological synergies, the (synergy in) production
item was omitted, with respect to the project team
organization, the assignment of team members to
only one project and the organizational support
by software applications were left out and for the
dependency factor the change in strategy after
partners left was excluded. The number of (initial
and remaining) scale items, related scale reliabilities and the mean and standard deviation for
each of the constructs above described are presented in Table 2. All Cronbachs a values are
40.6, which is suggested as acceptable by Malhotra (1999) and Murphy and Davidshofer
(2001). Ten of the fteen constructs even met
Nunnallys (1978) criteria of 0.70 for exploratory
research. All items corresponding to a construct
were totalled to yield a composite score for that
construct. The mean value of the commitment
factor is the lowest, with 4.65, while the highest
mean value was for the technological synergy
factor, with 6.50.

4. Research results
The results of hypothesis testing are presented in
this section. Hypotheses were tested using grouplevel data, analysis of correlation, a t-test for
difference and regression analysis.

4.1. Hypothesis testing

A correlation analysis of the success factor scales
with the new product performance scale (see

Table 3) showed in agreement with traditional

success factor studies that product advantage is
the most important success factor and the only
success factor signicantly correlated with all
detailed success measures. Similarly, high correlation values could be found for the traditional
success factor project team organization, the network success factors compatibility and dependency and the traditional success factor
prociency of technological activities. In addition, the networks were grouped according to
their new product performance construct by
means of a one-dimensional cluster analysis
(method: Ward) in 167 successful and 90 less
successful networks (14 networks could not be
assigned due to missing data). The four success
factors product advantage, project team organization, compatibility and dependency also
came up with the highest t-values when comparing the mean values of the successful and less
successful networks (see Table 4). The data are
very robust in that only the prociency of activities during development (prociency of technological activities, prociency of marketing
activities) was signicantly higher in networks
being more progressed in product development.
Networks that had proceeded in product development (e.g. being either shortly before launch or
had products on the market) were also more
optimistic about the outcome of the network
because they had received feedback from the
market.
Altogether, we found that hypothesis 1 and
hypothesis 2 are supported. The traditional and
the network-related success factors are positively
associated with the networks new product performance. Network-related success factors as well

Table 2. Summary statistics, construct reliability

New product performance

Product advantage
Technological synergy
Marketing synergy
Prociency of technological activities
Prociency of marketing activities
Prociency of predevelopment activities
Protocol (product and project denition)
Market potential
Project team organization
Commitment
Trust
Dependency
Compatibility
Ability
1

Number of items

Mean1 (standard deviation)

Cronbachs a

9
9
2(3)
5
4
7
6
5
5
6(8)
5
5
4(5)
5
5

5.49
5.37
6.50
4.93
4.77
4.93
5.51
5.56
4.94
5.94
4.65
5.57
5.47
5.62
5.19

0.854
0.766
0.660
0.891
0.741
0.850
0.685
0.778
0.732
0.640
0.678
0.650
0.747
0.843
0.795

(0.91)
(0.92)
(0.71)
(1.38)
(1.56)
(1.38)
(0.89)
(0.95)
(1.10)
(0.75)
(1.07)
(0.79)
(1.01)
(0.96)
(1.03)

Mean construct values across respondents on Likert-scales ranging from 1 . . . is low to 7 . . . is high.

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R&D Management 41, 2, 2011

145

Alexandra Rese and Daniel Baier

Table 3. Correlations between success factors and performance in general (new product performance) and different
aspects (e.g. market performance, technological performance, network efciency)

Product advantage
Technological synergy
Marketing synergy
Prociency of technological activities
Prociency of marketing activities
Prociency of predevelopment activities
Protocol (product and project denition)
Market potential
Project team organization
Commitment
Trust
Dependency
Compatibility
Ability

Network
success

Market
performance

Technological
performance

Financial
performance

Network
efciency

0.477**
0.284**
0.223**
0.342**
0.290**
0.283**
0.233**
0.285**
0.430**
0.346**
0.226**
0.381**
0.423**
0.320**

0.320**
0.163*
0.157*
0.275**
0.302**
0.300**
0.264**
0.340**
0.265**
0.320**
0.104
0.314**
0.158*
0.105

0.533**
0.307**
0.162*
0.304**
0.258**
0.281**
0.339**
0.177*
0.270**
0.284**
0.199**
0.327**
0.258**
0.197*

0.419**
0.076
0.255**
0.322**
0.498**
0.315**
0.378**
0.400**
0.242**
0.421**
0.180*
0.362**
0.201*
0.131

0.367**
0.313**
0.177**
0.251**
0.189**
0.212**
0.267**
0.189**
0.469**
0.262**
0.323**
0.335**
0.464**
0.385**

**Signicant with Po0.01,

*Signicant with Po0.05.

Table 4. Mean values of success factors in successful and less successful networks (sorted in descending order
with respect to the size of the t-values)

Product advantage
Compatibility
Project team organization
Dependency
Ability
Prociency of marketing activities
Commitment
Prociency of predevelopment activities
Technological synergy
Prociency of technological activities
Protocol (product and project denition)
Trust
Market potential
Marketing synergy

Successful networks
(n 167)

Less successful networks

(n 90)

t-value

5.66
5.89
6.17
5.74
5.42
4.36
4.88
5.69
6.66
5.10
5.74
5.70
5.11
5.16

4.83
5.13
5.55
5.00
4.76
3.50
4.26
5.18
6.24
4.20
5.25
5.32
4.58
4.55

7.29**
6.33**
6.28**
5.80**
4.83**
4.70**
4.57**
4.52**
4.48**
4.40**
4.01**
3.67**
3.66**
3.21**

**Signicant with Po0.01.

as the project team organization are especially

important for the efciency of a project concerning the achievement of constraints as time/
achieved milestones, budget or quality. Looking
at the nancial performance, we found a high
correlation with marketing activities and market
potential (of the product) as well as with product
advantage and product denition (protocol),
commitment and dependency. These two network-related success factors (and market potential) are also highly correlated with market
performance. Product-related success factors
(product advantage, protocol) play an important
role together with technological factors (techno146

R&D Management 41, 2, 2011

logical synergy, prociency of technological activities) with respect to technological performance.

4.2. Importance of the success factors

Regarding the individual predictive power of the
success factors on new product performance, the
data set was rst tested for multicollinearity. In a
multiple regression model with highly correlated
explanatory variables, the computational accuracy
of the individual coefcients and therefore their
interpretation is disturbed. First, pairwise, simple
correlation coefcients were calculated for the
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Success factors for innovation management in networks of SMEs

success factor constructs (see Table A3 in the
Appendix A). The highest correlation between
the constructs was 0.58, which is in a range similar
to those found in other success factor studies (see
e.g. Hoegl and Gemuenden, 2001; Hoegl et al.,
2004). The correlations were below the suggested
multicollinearity threshold of 0.6 at which it is
considered to be a problem (Grewal et al., 2004).
Variance ination factors with the highest being
2.48 were also well below the suggested limit of
seven to ten (Belsley, 1991, p. 28). In order to
detect more complicated patterns of multicollinearity, auxiliary regressions were used. Each independent variable was sequentially regressed on
all the remaining variables in the original model.
The resulting R2ks (k indicates the regressed independent variable) were then compared with the
original full model R2, but not all were below this
value. The evidence therefore suggested that multicollinearity was a problem in this data set.
Consequently, similar to the NewProd model, a
factor analysis of the fourteen success factor
constructs was used to nd dimensions that
were independent of each other (Cooper, 1985).
We computed uncorrelated varimax-rotated principal components and used them as predictors.
With the help of the elbow criterion, six factors
could be identied that are still quite similar to
those used previously (see Table 4). For (textual)
interpretation of the new factors, all variables
with a factor loading above 0.6 were included.
The four most relevant success factors of new
product development within rms product advantage, prociency of technological activities,
prociency of marketing activities and protocol
are reected in the newly formed second-order
factors. Again, product advantage is the most
important success factor, followed by a factor
we have called network cohesion and organization, which comprises almost all network success
factors and additionally the classic success factor
project team organization. A third relevant and
signicant factor is the prociency of activities
during development, which is followed by market
potential and activities before development. In
contrast, marketing synergy did not have an effect
on new product performance.
With respect to other variables of potential
inuence on networks new product performance
or the robustness of the model, we considered
several control variables, e.g. innovativeness, maturity of the networks new products or number of
partners (see Table 5). Innovativeness and the
maturity of the new products had a low signicant
inuence on new product performance. Altogether,
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the model is very stable, with product advantage,

network cohesion and organization and prociency of activities during development being the
most important success factors for networks new
product performance. Not surprisingly, the importance (signicance) of market potential and prociency of activities before development decreased
as the product development process proceeded
(maturity of new products). Overall, we found
support for hypothesis 3. With network-related
success factors ranking between product advantage
and prociency factors, they are of equal importance for new product performance in inter-rm
networks as traditional success factors.

5. Discussion
This research studied success factors for innovation management in networks of SMEs. In a
broad-based approach, altogether fourteen different success factors were included in the analysis to
explain (networks) new product performance.
Well-known traditional success factors for new
product development within rms as well as new
network-specic success factors were used for
hypotheses development. These hypothesized relationships were tested on the basis of a comprehensive sample of 271 German networks of SMEs
and research institutes.
It was shown that besides the traditional success factors (e.g. product advantage), the new
network-specic success factors (e.g. compatibility of the network partners, dependency of the
network partners) are also of major importance.
In agreement with traditional success factor studies, product advantage was derived as the most
important success factor, followed by a construct
comprised of network-related success factors and
the organizational factor (quality of) project team
organization. These factors in particular support
the smooth and efcient running of the project
within the single rms and the network. Activities
during development, e.g. marketing and technological activities, are also considered to be important. In contrast, the prociency of activities
before development, market potential and marketing synergies is rather lower-ranked in terms of
importance.

5.1. Research limitations

From a methodological point of view, this study
is confronted with the limitations of success factor
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Alexandra Rese and Daniel Baier

Table 5. Results of regression analyses of network success measure on the success factors (Standard regression
coefcients)
Key factor or dimension

Variables loading on factor

Product advantage
Network cohesion and
organization
Prociency of activities
during development
Prociency of activities
before development
Market potential
Marketing synergy
Innovativeness
Number of partners
Product maturity
R2
Adjusted R2
F
r

Product advantage
Project team organization, dependency,
compatibility, ability, trust
Prociency of technological activities,
prociency of marketing activities
Prociency of predevelopment activities,
protocol (product and project denition)
Market potential
Marketing synergy

Model 1

Model 2

Model 3

0.392**
0.331**

0.366**
0.321**

0.392**
0.331**

0.388**
0.336**

0.304**

0.345**

0.306**

0.261**

0.134*

0.160**

0.140*

0.099

0.132*
0.094

0.145*
0.089
0.104+

0.136*
0.096

0.099
0.091

0.025
0.400
0.380
20.020
0.000

0.431
0.408
19.026
0.000

0.401
0.377
17.105
0.000

Model 4

0.118+
0.397
0.372
16.339
0.000

**Signicant at the 0.01 level,

*Signicant at the 0.05 level,
+
Signicant at the 0.10 level.

analysis. There are the usual problems of survival

bias, key informant bias or retrospective bias
(Nicolai and Kieser, 2002). Information about
the dependent variable itself can have an impact
on the possible causes (March and Sutton, 1997,
p. 701). Therefore, there is a problem of selffullling prophecy, with successful networks
tending to overestimate the explanatory success
factors and success factors being affected by
multicollinearity. Nevertheless, Homburg and
Krohmer (2004) defend good empirical success
factor analysis as a substantial contribution to
progress in management science. Other shortcomings are that only networks of SMEs were analyzed and the focus was on a single country.
Additional work could compare these results
with those of networks including large companies,
concentrating on specic industries, or SME networks in other countries. Another research limitation is that one person was questioned for an
entire network even if the networks were rather
small, allowing one person to provide complete
insight. Although pretests of our survey had
shown that the interviewed network managers
were able to judge the specic items validly, it
would be interesting to include multiple perspectives from each network in the analysis (e.g.
Hoegl and Gemuenden, 2001; Thoms, 2003).

5.2. Suggestions for further research

In our analysis, we still remained on the rm level
even if longevity factors took organizational or
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R&D Management 41, 2, 2011

sociological aspects of networks into account.

The starting point of the analysis was the assumption that networks of (SME) rms can be compared with teams of people. On the personal level,
the specied facets of the collaborative team
process (see Hoegl and Gemuenden, 2001) could
be investigated in more detail within networks. In
addition, the formation, dynamics and stability of
these innovative groups could be analyzed taking
boundary and interface issues into account.
Within one company, the initiators and key
participants of the innovation process have already been empirically extensively examined regarding different functional roles (Gemuenden
et al., 2007; Rost et al., 2007). In this context,
the distribution of the functional roles of key
people in networks would be of interest. To gain
a complete picture, all persons in a network
should be included in the analysis.

5.3. Implications for managerial practice

The results of this study also offer some valuable
insights for managers. They indicate that networkrelated success factors should not be neglected and
that measurement scales could help to conduct an
assessment of the status quo and show decits
regarding the network features and management
but also regarding the important traditional success factors, e.g. product advantage and the prociency of marketing and technological activities.
The study also conrms well-known decits
of SME networks. The networks in general still
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Success factors for innovation management in networks of SMEs

focus too much on niche markets. About half of
the networks (40.6%) placed their products on a
small market with a relatively low customer
demand (41.0%). At least the growth of the
market was predominantly expected to be positive
(70.9%). Other problems include market research
as well as resources. Not surprisingly, over half of
the networks (57.8%) did not have sufcient skills
and resources for market research. Likewise,
nances proved to be problematic. Less than
half of the partners (44.3%) had sufcient nancial resources available; therefore, the willingness
to invest even more in their network was rather
low (43.4%).

Acknowledgements
The authors would like to thank two anonymous
referees for providing helpful comments to improve the form and the contents of this paper.
The authors would also like to thank Dipl.-Ing.
Steffen Freund and Dr. Marko Queitsch for their
support in developing the questionnaire and
collecting the data.

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Appendix A

Table A1. Success categories and factors on the rm level

Montoya-Weiss and
Calantone (1994)

Henard and Szymanski (2001)

van der Panne et al. (2003)

Strategic factors:
Product advantage
Technological synergy
Marketing synergy
Strategy
Company resources
Development process factors:
Protocol
Prociency of technological
activities
Prociency of marketing activities
Prociency of predevelopment
activities
Top management support/skill
Speed to market
Financial/business analysis
Organizational factors:
Internal/external relations
Organizational factors
Market environment factors:
Market competitiveness
Market potential
Environment

Product characteristics:
Product advantage
Product meets customer needs
Product price
Product technological sophistication
Product innovativeness
Firm strategy characteristics:
Marketing synergy
Technological synergy
Order of entry
Dedicated human resources
Dedicated R&D resources
Firm process characteristics:
Structural approach
Predevelopment task prociency
Technological prociency
Launch prociency
Reduced cycle time
Market orientation
Customer input
Cross-functional integration
Cross-functional communication
Senior management support
Market place characteristics:
Likelihood of competitive response
Competitive response intensity
Market potential

Product-related factors:
Relative price
Relative quality
Innovativeness
Technologically advanced
Firm related factors:
Firm culture
Experience
R&D team
Strategy towards innovation
Organization structure
R&D intensity
Project-related factors:
Complementarity
Management style
Top management support
Market-related factors:
Concentration of target market
Timing market introduction
Competitive pressure
Marketing

Table A2. Network innovativeness, age and stage of product development

Innovation basing
on . . .

In %

Stage

In %

Age of
networks

New
knowledge
(%)

Existing
knowledge (%)

New knowledge
Mainly new knowledge
New and existing knowledge
Mainly existing
knowledge
Existing knowledge

2.6
24.8
22.9
41.7

Planning
Development
Testing and validation
Shortly before launch

47.3
17.7
16.9
11.9

2.4
3.8
4.3
4.5

35.2
9.1
23.3
29.0

41.8
56.8
53.5
51.6

6.2

5.4

18.8

81.3

152

7.9

R&D Management 41, 2, 2011

Product on market

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Appendix B
New product response scale and item list
(translated from German)
**Signicant at the 0.01 level,
*Signicant at the 0.05 level,
1
Variance ination factor: 1/(1R2k), R2k is the coefcient of determination for regression of the ith independent variable on all the other independent variables: Xk Xothers.

0.30**
0.36**
0.37**
0.23**
0.38**
0.28**
0.17**
0.48**
0.27**
0.38**
0.37**
0.18**
0.40**
0.21**
0.16**
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)

Product advantage
Technological synergy
Marketing synergy
Prociency of technological activities
Prociency of marketing activities
Prociency of predevelopment activities
Protocol (product and project denition)
Market potential
Project team organization
Commitment
Trust
Dependency
Compatibility
Ability

0.35**
0.21**
0.39**
0.29**
0.26**
0.37**
0.31**
0.28**
0.24**
0.18**
0.35**
0.30**
0.24**

0.21**
0.15*
0.13
0.22**
0.30**
0.23**
0.35**
0.17**
0.29**
0.39**
0.36**
0.36**

0.27**
0.40**
0.31**
0.30**
0.43**
0.29**
0.32**
0.18**
0.37**
0.27**
0.23**

0.52**
0.38**
0.37**
0.23**
0.32**
0.48**
0.09
0.38**
0.30**
0.16*

0.44**
0.44**
0.40**
0.34**
0.45**
0.16*
0.32**
0.09
0.11

0.23**
0.34**
0.12
0.40**
0.24**
0.18**

0.46**
0.46**
0.54**
0.50**
0.42**

1.56
1.58
1.49
2.09
2.46
1.78
1.83
1.64
2.03
2.03
0.35**
1.75
0.58** 0.51**
2.48
0.41** 0.46** 0.52**
2.15
0.28** 0.42** 0.50** 0.53** 1.84

7
6
1

Table A3. Intercorrelations of the explanatory constructs

10

11

12

13

VIF1

Success factors for innovation management in networks of SMEs

Response scale: 1 strongly

7 strongly agree

disagree, . . . ,

New product performance:

1. Because of the innovations new markets could
be opened (market performance).
2. Because of the innovations other new products
became possible (technological performance).
3. The innovations were technically successful
(technological performance).
4. Sales objectives could be met (nancial performance).
5. Sales gure objectives could be met (nancial
performance).
6. The schedule was met (network efciency).
7. The budget was met (network efciency).
8. The time was used efciently (network efciency).
9. Quality specications could be met (network
efciency).
Product advantage:
1. Products offered unique benets to the customer.
2. Products were superior to competitive products
in the eyes of the customer.
3. Products were innovative (the rst of its kind in
the market).
4. Product benets are easy to deliver to the
customer.
5. The products were better value for money
compared with the competitors.
6. Our products were higher quality than competing products.
7. Products reduced costumers costs.
8. Products solved a problem the customers had
with competing products.
9. The products were based on a technology
which is new for the network.
Technological synergy:
There is a good t between the skills of the
network and the project with respect to:
1. Research and development (product development).
2. Engineering.
3. Production.
Marketing synergy:
There is a good t between the skills of the
network and the project with respect to:
1. Market research.
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Alexandra Rese and Daniel Baier

2.
3.
4.
5.

Sales force/distribution system.

Advertising and promotion.
Customer services.
Management.

Prociency of technological activities:

Within the projects the following activities were
carried out well:
1.
2.
3.
4.

Product development.
Testing the product in the network.
Trial/pilot production.
Production start-up.

Prociency of marketing activities:

Within the projects the following activities were
carried out well:
1.
2.
3.
4.
5.
6.
7.

Detailed market study/marketing research.

A marketing concept developed in advance.
Sufcient tests of the marketing concept.
General customer tests.
Customer tests of prototype.
Test on a test market.
Comprehensive market launch.

Prociency of predevelopment activities:

Project team organization in the network:

1. The person leading the network had the necessary qualities and skills.
2. The project teams in your network were interdisciplinary.
3. There was intensive communication between
the network partners.
4. The teams were assigned to only one project
during the life span of the project.
5. Team members did not change during the project.
6. The teams were motivated.
7. The top management of the partners was
committed to the projects.
8. The project team organization was supported
by different software applications (for example
MS Project).
Commitment
1. Their network is important to the partners.
2. The partners would not join another network.
3. The partners would abandon the network only
as a result of serious changes.
4. The partners are willing to invest even more in
their network.
5. The partners are willing to assign people/
resources permanently to their network.

Prior to the (product development) projects the

following tasks were carried out well:

Trust

1.
2.
3.
4.
5.
6.

1. The partners knew each other already before

starting the cooperation.
2. The partners mutually trust each other.
3. The partners are equal in their network.
4. The partners are willing to share knowledge.
5. The partners are open to the necessary changes/
adjustments.

Idea screen.
Preliminary market assessment.
Preliminary technical assessment.
Financial analysis.
Product concept development.
Product concept testing.

Protocol (product and project denition):

Dependency

Prior to product development the following

items were well dened:

1. The partners cover the entire value chain.

2. The partners depend on the network.
3. The partners work well with one another.
4. The partners need their network in order to
reach full potential.
5. The strategy of the network would have to be
changed if partners leave.

1.
2.
3.
4.
5.

The target market.

A positioning strategy (product denition).
The customers wants and preferences.
The product concept.
The product specications and requirements.

Market potential:
1. Products are placed on a large market.
2. The market growth is large.
3. The customers requirements change rapidly on
the market.
4. Customer demand for the product is high.
5. The product is of great importance for the
costumer.

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R&D Management 41, 2, 2011

Compatibility of the network partners

The opinions/attitudes of the network partners
go very well together with respect to
1.
2.
3.
4.
5.

Goals.
Financial affairs.
Quality specications.
Schedules and deadlines.
Performance evaluation.

r 2011 The Authors

R&D Management r 2011 Blackwell Publishing Ltd

Success factors for innovation management in networks of SMEs

Ability
The network partners are equipped with
1.
2.
3.
4.
5.

Good communication behavior.

Adequate bureaucratic structures.
Sufcient man-power resources.
Sufcient information technology resources.
Sufcient nancial resources.

Alexandra Rese is Assistant Professor at the Chair

of Marketing and Innovation Management, Brandenburg University of Technology Cottbus, Germany. She received her PhD in sociology and
entrepreneurship from the University of Karlsruhe
while working at Fraunhofer Institute for Systems
and Innovation Research ISI in Karlsruhe. Her
current research focuses on innovative and entrepreneurial teams, competencies in entrepreneurship, conicts, information need and computer-

r 2011 The Authors

R&D Management r 2011 Blackwell Publishing Ltd

based methods in new product development. She

teaches business planning to students.
Daniel Baier is Full Professor of Marketing and
Innovation Management at Brandenburg University of Technology Cottbus, Germany. He
received his PhD and his venia legendi in marketing-oriented product development from the University of Karlsruhe. His works have appeared in
Journal of Econometrics, Annals of Operations
Research, Zeitschrift fur betriebswirtschaftliche
Forschung (zfbf), Zeitschrift fur Betriebswirtschaftslehre, Marketing ZFP. His current research focuses on market-oriented development
of innovative products and services, innovation
management in networks as well as data analysis,
statistics and operations research. He teaches
marketing and innovation management to bachelor and master students in economics and industrial engineering, as well as PhD students and
executives.

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