The Effects of Firm Experience and Relational Resources on Firm Product Development Capabilities

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Virginia Tech

Given that the focus of strategic management research is understanding the determinants of firm performance, and that product development capabilities have been shown to influence firm performance, the research question this dissertation attempts to answer is: what factors influence a firm's product development capabilities? Building on the resource based view and evolutionary theory, this dissertation proposes that firms leverage knowledge generating resources to modify or develop their routines. Firm level routines are theorized to influence the capabilities of the firm. This dissertation focuses on two firm-level product development capabilities: effectiveness and efficiency. Effectiveness refers to a firm's ability to develop desirable products and efficiency refers to the firm's ability to develop those products quickly.

The knowledge generating resources this dissertation examines is the firm's prior experience in product development and the firm's relational resources pertinent to product development. Specifically, this dissertation develops theory on four types of experience: market niche, component technology, platform technology, and general product development. Additionally, theory is developed regarding the effects of platform relational resources, as well as the breadth and depth of co-developers a firm utilizes in the development of their products.

Using the videogame development industry as the empirical context, few hypothesized relationships are statistically or substantively significant. Prior experience with component technologies lowered the effectiveness of a firm' product development capabilities, but were found to increase efficiency. In addition, older firms tended to create more desirable products despite controlling for the four types of experience which may suggest that the age of the firm contributes something to the firm's ability to create desirable products beyond specific types of experience.

This dissertation makes contributions to the theory on how capabilities are developed and enhanced by introducing mechanisms regarding how firms can leverage knowledge generating resources to improve their capabilities. More specifically, this dissertation provides contributes to the product development literature as well as the literature on how experience and relational resources influence a firm's product development capabilities.

Experience, Relational Resources, Product Development, Effectiveness, Efficiency