Integration capabilities as mediator of product development practices-performance

The use of integration practices, both internal (where various functions work together) and external (links with customers and suppliers during development), are espoused in the new product development (NPD) literature. However, empirical findings in the literature suggest adoption of integration practices does not necessarily lead to positive performance. We introduce the concept of integration capabilities to explain the relationship between use of integration practices and NPD performance. We tested a mediation model using data from 141 Japanese and American firms and found that effects of both types of integration on time and product performance were mediated by the integration capabilities developed. We also found differential effects of the type of integration. The findings demonstrate that developing superior integration capabilities are needed for companies to meet and exceed product development expectations in terms of both product and time performance. Simply, a company may utilize integration practices but if it does not utilize them in such a way as to generate real capabilities, the use of integration practices may not lead to positive performance effects.