The dilemma of downstream market stakeholder involvement in NPD: Untangling the effects of involvement and capabilities on performance

In many industries, new product development (NPD) success depends on whether products simultaneously provide value to multiple stakeholders on the demand-side of the firm like buyers, users, payers and regulators. Building on the open innovation and stakeholder literatures, we explore the dilemma of downstream market stakeholder involvement: it can help firms to create value for the market and increase their NPD financial performance but it can also negatively affect NPD efficiency. In addition, we test whether three dimensions of stakeholder involvement capabilities (identification, interaction and integration), allow firms to benefit from stakeholder involvement without impairing efficiency. The results of a survey in the medical device industry show that stakeholder involvement breadth has a positive effect on NPD financial performance and that stakeholder involvement intensity leads to less efficient NPD processes. Finally, we find that interaction and integration capabilities contribute to NPD efficiency, while identification capability is detrimental.