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Hitotsubashi University Repository Title Knowledge Retention and New Product Development Performance Author(s) Aoshima, Yaichi Citation Hitotsubashi journal of commerce and management, 31(1): 13-58 Issue Date 1996-10 Type Departmental Bulletin Paper Text Version publisher URL http://doi.org/10.15057/5463 Right

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Page 1: Knowledge Retention and New Product Development Hitotsubashi journal of commerce and ... · 2018-11-07 · Hitotsubashi University Repository Title Knowledge Retention and New Product

Hitotsubashi University Repository

TitleKnowledge Retention and New Product Development

Performance

Author(s) Aoshima, Yaichi

CitationHitotsubashi journal of commerce and management,

31(1): 13-58

Issue Date 1996-10

Type Departmental Bulletin Paper

Text Version publisher

URL http://doi.org/10.15057/5463

Right

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Hitotsubashi Joumal of Commerce and Management 3 1 ( 1996) pp. 1 3-58. C The Hitotsubashi Academy

KNOWLEDGE RETENTION AND NEW PRODUCT DEVELOPMENT PERFORMANCE

YAICHI AOSHIMA

Abstract

Drawing on examples from the Japanese automobile industry, this study investigated how

differences in the ability to retain product-related knowledge across product generations affect

product development performance. Two sets of analyses were conducted on this issue, based on data obtained from 229 key

project members in 25 new product development projects. First, we investigated how knowl-

edge retention infiuences perfornrance within well-established component development, which

we called local performance. We found that, in general, dependence on archival-based mecha-

nisms, such as documents, reports and computerized tools, rather than on individual-based

mechanisms, tended to be associated with higher local perforrnance.

Next, we analyzed our data set at the project level. Data suggested that retention of

individual experience bases and communication with previous project members have positive

impact on several performance indicators at the entire project level. In particular, we found that

these individual-based retention mechanisms affected improvement of system performance

derived from the complex interactions among diffierent engineering and functional domains.

However, data also suggested that retention of prior experience tended to cause problems when

projects have to introduce new market concepts.

l . In trod uction

Large manufacturing companies often have a range of product lines, and successively

introduce new products over time. To adapt to changing customer needs, they may replace

existing products at regular intervals and add new product lines. In most cases, these new

products are not "completely" new for a company, both in terms of technologies and market

concepts. A technology developed for one product may subsequently be used in a range of

products (Cusumano, 1991; Meyer and Utterback, 1993; Meyer and Roberts, 1988; Nobeoka,

1993; Nobeoka and Cusumano, 1992, 1994; Sanderson, 1991; Uzumeri and Sanderson, 1995).

Knowledge about existing customers can also serve as a useful basis for interpreting current

customer needs and translating them into technical parameters and physical products (Chris-

tensen and Rosenbloom, 1995). Successful new product development, therefore, at least partially may depend on the

ability to understand technical and market knowledge embodied in existing products; and

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14 HITOTSUBASHI JOURNAL OF COMMERCE AND MANAGEMENT [october

adapt this knowledge to support new product development (Iansiti, 1 995; Iansiti and Clark,

1993). In addition, due to intensive competitive pressures, a fast product development cycle

has also become a critical source of competitiveness in many industries (Clark and Fujimoto,

1991; Nobeoka, 1993; Nobeoka and Cusumano, 1994; Sheriff, 1988). Under such circum-stances, retaining and quickly utilizing knowledge across generations of projects, and leaming

from past development activities, may become particularly important both for avoiding

redundant problem solving and for finding new solutions to problems in new product develo pment.

Few studies to date, however, have systematically dealt with this issue of knowledge

retention and utilization. Most existing studies have tended to treat each new project as

independent, and implicitly assume that each new product is the outcome of a self-contained

and distinct problem-solving process (Kofman et. al., 1 993). For example, various researchers

have examined a wide range of factors for successful new product development, such as

communication processes (Allen, 1970, 1977; Ancona and Caldwell, 1992), teams' com-positional characteristics (Ancona and Caldwell, 1 992; Katz and Allen, 1982), team structures

and leadership (Clark and Fujimoto, 1 991; Henderson and Cockbum, 1 994; Imai, Nonaka and

Takeuchi, 1985; Larson and Gobeli, 1988), and design of development processes (Clark and

Fujimoto, 1991; Eisenhardt and Tabrizi, 1995; Iansiti, 1992). However, researchers have paid

little attention to organizational and technological linkages across generations of projects.

Although some recent studies explicitly deal with issues cutting across different projects (e.g.,

Cusumano, 1991; Cusumano and Selby, 1995; Iansiti, 1995 a, b; Meyer and Utterback, 1993;

Nobeoka, 1993; Uzumeri and Sanderson, 1995), they are either case-based studies or limited

to specific elements of knowledge transfer, such as particular components and design concepts.

Broad-based empirical investigations exploring the impact of knowledge retention on organi-

zational performance are rare. Compared to continuous improvement activities at the plant

level (e,g., Kaizen, TQC), improvement of product development process over time has received less direct attention in academic research. As a result, we have little systematic

understanding of the effects of managing multiple generations of products.

This paper addresses the issue of the transfer and retention of knowledge as an essential

element in product improvement. Drawing on examples from the Japanese automobile industry, this study investigates how differences in the ability to retain product-related

knowledge across multiple generations of products affect performance in developing new

products.

The automobile industry is an especially suitable setting for this study because automobile

manufacturers continuously introduce new families of products while upgrading existing ones.

Nobeoka ( 1993), for example, showed that, during the period between 1980 and 1991, 2 10 new

automobile products were introduced worldwide, nearly 70% of which were intended to replace existing models. Such characteristics of the automobile industry - successive intro-

duction and replacement of multiple products - provide us with a favorable setting for this

study because improvement of product performance through learning from past development

actrvitres and knowledge retention across generations of projects may be crucial to competitive

advantage in rapidly changing markets where multiple new products are repeatedly introduced

(Cusumano and Selby, 1995; Iansiti, 1995 b, d; Nobeoka, 1993, Wheelwright and Clark, 1992).

While the focus of this study on Japanese companies makes it difficult to generalize, it also

eliminates the potential bias of a country effect, one of the strong performance predictors in

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15 1996] KNOWLEDGE RETENTION AND NEW PRODUCT DEVELOPMENT PERFORMANCE

several existing studies (e.g., Clark and Fujimoto, 1991; Iansiti, 1992; Nobeoka, 1993;

Womack et. al., 1990). By exploring differences within Japanese projects, this paper can

extract explanatory factors independent of the country effect.

2. Conceptual Foundations and Hypotheses

This section provides conceptual foundations of the hypothetical relationships between

knowledge retention and product development performance. Below, we begin by discussing

that different performance attributes involved in new product development activities may call

for different types of knowledge retention.

We then discuss several mechanisms to retain knowledge across product generations. This

is important since an empirical part of this paper focuses projects' dependence on particular

retention mechanisms as an indicator for knowledge retention. We close this section by making

the specific・hypotheses to be tested in the subsequent sections.

2-1. Performance Attributes and Knowledge Types

In the conceptual scheme used in this paper, overall performance of new product development consists of two factors, Iocal performance and system performance, as indicated

in Figure I below. Local performance arises only from the local region of product or of product develop-

ment process, and corresponding development efforts within particular technical and function-

al areas (Iansiti, 1995b; Henderson and Cockburn, 1995; Ulrich, 1995). For example, the

aerodynamic performance of automobiles, as indicated by an air drag co-efficient (Cd), is

almost solely determined by the exterior body shape developed by exterior body designers.

On the other hand, system performance characteristics arise from many related elements

of a product or a product development process, and their interaction. It is thus the outcome of

interactive activities among people in different functional and disciplinary areas. For example,

NVH (noise-vibration-harshness) is a critical performance metric for automobiles. While

NVH can be individually ascribed to particular technological elements, such as material

technologies used in tires and bodies, engine systems, body shapes, and suspension systems, it

also comes from the complex set of interactions between these elements.

We define local performance as the portion of overall performance reducible to particular

technological and functional elements, and system performance as the portion attributed to

FIGURE l. LOCAL PERFORMANCE AND SYSTEM PERFORMANCE

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16 HITOTSUBASHI JOUl~NAL OF COMMERCE AND MANAGEMENT [October

interactive effects among these elements. The local and system distinction is also applicable to

non-technical performance. For example, development lead time may be shortened either by

compressing the lead time of each technical and functional activity (local performance) or by

facilitating overlaps among them through appropriate adjustments (system performance)

Similarly, in some cases, superior engine technology or effective advertising may become a

primary driver for automobile sales in the market-place (local performance); in other cases, an

appropriate combination among a product concept, component performance, and manufactur-

ing quality may become critical for sales performance (system performance).

This distinction between local and system performance becomes important when examin-

ing the impact of knowledge retention on product development performance since projects

may have to retain different types of knowledge to improve different performance attributes.

Achieving high local performance may require specialized or domain-specific functional

knowledge, often based on fundamental scientific understanding. No chassis engineer in

automobile development, for example, would join a company without a mechanical engineer-

ing background (though engineers of suspension control systems may require electronic

backgrounds). While based on fundamental scientific knowledge, development of actual

component systems requires a more substantial engineering knowhow that goes beyond what

is learned from university education. Such knowhow may be gradually accumulated within

companies through long-standing development experiences. Current component system devel-

opment should benefit from such historically accumulated knowhow. We thus conjecture that

differences in local performance, at least partially, depend upon how engineers effectively

retain and utilize specialized or domain-specific engineering know-how obtained from prior

development activities.

On the other hand, system performance may primarily depend on knowledge that goes

beyond functional and technical boundaries, which we call integrative knowledge. Develop-

ment of new "system" products invariably calls for knowledge to integrate potentially

fragmented and specialized knowledge to apply specific contexts. In the case of automobile

development, for example, body design must be integrated with suspension system design to

minimize the noise level and to improve body strength; product design must be integrated into

process design to achieve smooth ramp-up and high manufacturability; and the whole product

design must be integrated into user contexts to satisfy user needs. All these require knowledge

to integrate different functional domains.

Some recent studies have realized the importance of such integrative knowledge in the

development of complex system products, and have proposed normative mechanisms appropri-

ate for cross-functional and inter-disciplinary coordination, such as co-located cross-

functional teams (Imai et. al., 1985), the heavyweight project manager system (Clark and

Fujimoto, 1991; Wheelwright and Clark, 1992), and project organizations (Allen and Haupt-

man, 1987, Allen, 1987). However, it seem that these structural solutions are easy to imitate

(Kusunoki et. al., 1995; Henderson, 199). Thus, we doubt that they become sustainable

sources of difference in new product development. In our view, a capability for cross-

functional integration is, rather, a historical product (Fujimoto, 1994), and effective retention

of integrative knowledge is of fundamental importance to form a project's ability to solve

cross-functional problems, which may have a particular impact on the system portion of new

product development performance.

The above discussion can be summarized as the following propositions:

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19961 KN0wL㎜G喧㎜丁酬丁10NA㎜N・wPROD㏄・DEv肌oPM酬丁冊RF㎝MANcE    17

Proposition1:E価㏄tive retention of domain spec脆c md fu1lctiona1knowledge across

generations of projects is positively associated with the1ocal po11:ion of new product

development performance・

・・・…iti…:・脆・ti・…t…i…fi・t…そti・・㎞・・1・d・…m・・・…「・tionsof・「oj㏄ts

lsposltlvelyassoclatedwththesystempo竹mofnewpmductdevelopmentperfomance

2-1.Pos附veo・Neg州▼eEπ㏄値ofKmwledgeRetemti㎝

    Contra町to tllese propositions,innovation studies have tended to discuss a negative e価ect

.f㎞・w1・dg…t・・ti・・㎝im…ti・・p・・f・㎜・・㏄(・・9・,Al1㎝・・dM・・q・i・・1964;L・㎝・・d-

Ba計on,1992;Dougherty,1992;Henderson and Clark,1990).A common claim in tllese.t.di。。i・th・tpd・・t・・㎞・1.9i・・1㎞・w1・dg・i・・ft・…t・pP1i・・b1・i・・・…1・it・・ti・・

characterized by innovation;rather,it becomes an obstacle for bringing in new ideas(e.g.,

Anderson and Tushman,1990;Hendemon and Clark,1990;Christensen and Bower,1994)。

Emph・・i・i・gth・…ti・i・・d・・p・・t・fth・p・・t㎞・wl・dg・,・・dth・i…it・b1…d・・t・m・ti・

mtureof㎞owledgeretrieval,studiesofi㎜ovationtendtoaddresstheissuesofhow tobreak・・・・…m・ti…t・…f・・i叩・・・・…g・1・・・…t・…k…1ed・e・}nco甲・a「ison・P「ocesses

・f・・1・t1㎎㎞・wl・dg…t・・tm,・pPll・・t1・・,・・dt・…f・・h・・・・…1・・d11ttl・・tt・・tm

    Organizatiom11eaming literature has also somew1lat contradictory conclusions on tlle

e脆ct of knowledge retention on organizationa1performance,0n the one hand,it has been

…ξ・・t・・t・・t・m・1・・・・・・…中・・・・…弓b!i・dd・・i・ig・make「stonewis・ectsof

envlmnm㎝ts and thereby compromlse an orgamzatlon’s e価ect1v㎝ess(March,1972,Nystrom

and Starbuck,1984;Walsh and Fahey,1986).Memo町ret㎝tion facilitates a si㎎le-loop

learning(ArgyHs and Schon,1972)and,thus,enhances the existing mutines that may not be

apP・ophat・fo・thenewsitu・ti㎝s・    0n the other hand,successful organizations embed their adaptation activities as organi-

zational routines.Such routines,often reHected ill the standard operating Procedures・Pro-

9・・m・,・t・bl・・。mm・i・・ti…h・m・1・,・・d・・g・・i・・ti・ml・tm・t・・…f・m・・dti・・lp・・t・f

organizational memories.Since organizational memories stored as such routines are automat-

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and thus increase task e冊ciency(March and Sim㎝,1959;Ne1son and Winter,1982;

Thompson,1967).    This contradiction is pa㎡ia1ly explainable by considering d冊erences in organizations’

environmental characteristics.Memory retenti㎝may increase organizati㎝al perfomance。・lywh㎝・・g・・i・・ti・・・…f・・i・g・t・b1…d㏄れ・i・…i・・㎜・・t・th・t・・11f・…p・titi・・

problem so1ving.Routines in tlle form of standard operating procedures md programs can

m。。t・価・・ti・・lyf・・i1it・t…g・・i・・ti…1m・mb…’1・・mi・gf・・…hp・・b1・m・・1・i・g・P・・pl・

wh・・mph・・i・・dp・・iti・…p㏄t・。f㎞・wl・dg…t・・ti・・m・ypHm・・ily1・・k・t・・g・・i・・ti㎝・

f・・i・g・・1・ti・・ly・t・bl・㎝・i・㎝m・・t・.0・th・・th・・h・・d,th…wh…d・・・・…d・・g・ti・・

・・p・・t・・fp・・t㎞・wl・dg・mightp・y・tt・・ti・・t…g・・i・・ti…f・・i・g・…1・・d・・…t・i・

situations.This is why studies of innovation tend to emphasize problems associated with

㎞owledge ret㎝tion.     The above discussion leads to t1le fo1lowing proposition:

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HITOTSUBASHI JOURNAL OF COMMl3RCE AND MANAGEMENT

Proposition 3: The relationship between knowledge retention and product development

performance is moderated by the degree of task newness involved in new product development activities.

However, other researchers have suggested that prior experiences are important, and even

help firms adapt to new environments (Cusumano, 1991; Cusumano and Selby, 1995; Neustadt

and May, 1986; Huber, 1991; Walsh and Ungson, 1991). Recent theoretical argument in the

area of design studies also tend to assume that any design work is based on past experiences

and accepted tradition, and that past knowledge becomes critical, even to non-routine and

creative design work (Gero, 1990; Oxman, 1990). As an empirical study, Iansiti (1995 a, b, d)

found that system integrators' past experiences in developing the same type of product are

positively correlated with development efficiency and technical performance.

Furthermore, different types of task newness may differentially moderate the relationship

between knowledge retention and product development performance. While some studies found that technological discontinuity substantially changes market dominance, from incum-

bents to new entrants (e.g., Henderson and Clark, 1990; Tushman and Anderson, 1986; Suarez

and Utterback, 1991), others claimed that a change in the customer base and associated

changes in product functionality pose a more serious threat to incumbents than technological

change (Christensen and Rosenbloom, 1995; Christensen and Bower, 1994; Iansiti and Khanna, 1994). We shall take into account these factors in our data analyses.

2-3. Retention Mechanisms and Product Development Performance

One of the critical problems involved in the empirical research dealing with knowledge

retention is that it is not an easy task to measure the amount of retained knowledge, especially

when considering less observable integrative knowledge. One way to overcome this problem

may be to focus on several possible mechanisms for knowledge retention and specify boundary

conditions as capabilities to facilitate knowledge retention across generations of projects. They

are, for example:

1 . the transfer of project members

2. communication with people who have substantial experiences in past development pro jects

3 . the involvement by organizational units that coordinate development activities across

generations.

4, the use of documents and reports describing past problematic and successful practices

5, the use of design standards, design tools and standard design/test procedures

6. the use of computerized information systems, such as CAD and CAE

If any of these mechanisms prove to be more appropriate to retain integrative knowledge

than domain specific knowledge, we can use a projects' dependence on such mechanisms as an

indicator of the retention of integrative knowledge. To do so, however, we need to understand

a difference of the nature between integrative knowledge and domain-specific one.

One of the reason why researchers have paid significant attention to knowledge cutting

across different specialized domains, integrative knowledge, is that such knowledge tends to be

less articulable, thus, it may form the foundation of firm-specific capabilities.

There are a couple of reasons why integrative knowledge tends to less articulable. First,

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1996] ICNOWLEDGE RETENTION AND NEW PRODUCT DEVELOPMENT PERFORMANCE 19

there is no established languages to communicate integrative knowledge. Domain-specific and

scientific knowledge is often supported by particular disciplinary areas with well-established

languages for teaching and communication. We have social mechanisms for accumulating

disciplinary knowledge, such as professional communities and educational and research

institutions. On the other hand, there is no universal language to communicate integrative

knowledge. There is no social support for its accumulation. In particular, since integrative

knowledge involves knowledge to translate different languages between different thought

worlds, it tends to be difficult to articulate.

Second, integrative knowledge tends to be context-specific: it is knowledge of the

particular circumstances of time and place. It may also be embedded in specific personal

relationships (Badaracco, 1991; Spender, 1994). Thus, it may be difficult to express it in the

fonn of facts and propositions. For example, in the case of automobile development, while the

best vehicle styling to solely maximize aerodynamic performance can be theoretically deter-

mined and generalizable, appropriate linkages between the styling, the body structure, the

engine shapes, and the suspension types may be different among vehicle types with different

sizes, platforms, and customer bases. The most direct way to transfer and retain less-articulable and context-specific integrative

knowledge may be to transfer to or retain individuals with first-hand experience in appropriate

decision settings. For example, Cohen (1991) pointed out that the concept of procedural

memory proposed by Anderson (1983), which refers to methodological knowledge in use as

opposed to facts and propositions, may be better transferred by means of personnel rotation.

When knowledge is embedded in specific relationships between people, it might be

required to make a group of people active for long time. For example, Wilson and Hlavacek

(1984) found that firms which benefited from technologies created in past projects kept

knowledge alive by the active presence of a core group of people.

However, there are obvious limitations in completely depending on a particular individual

or group: when people leave, knowledge disappears. If integrative knowledge can be shared

with, and transferred to, other people and groups, firms can more effectively leverage that

knowledge. In this respect, Nonaka ( 1 994) suggested that tacit knowledge embedded in

individuals can be transferred among individuals by having shared and common direct experiences. He called this type of knowledge transfer (conversion) "socialization." Thus, if

companies can create a chain of overlapped common experiences among people, tacit knowl-

edge can be retained for a long time.

Direct face-to-face interactions may also help individuals share integrative knowledge.

Although fully embedded knowledge may not be directly expressed by words, direct interac-

tions lead to gradual understanding of contextual factors behind artifacts, providing better

ways of knowledge retention than documents or blueprints.

Accordingly, we hypothesize that integrative knowledge is most effectively retained

through individual-based retention facilities, such as the direct transfer of individuals and a

group of people, shared experiences among individuals, and intensive face-to-face interactrons

among individuals. On the other hand, domain-specific and functional knowledge tends to be more articulable

and generalizable. Therefore, retention of such knowledge will most benefit from the use of

archival mechanisms, such as documentation, standardization, and computerized systems

In accordance with the above discussion, Propositions I , 2, and 3 can be rewritten to the

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20 HITOTSUBASHI JOURNAL OF COMMERCE AND MANAGEMENT [October

following hypotheses.

Hypothesis I : The use of archival-based knowledge retention mechanisms, reflected in

documents, reports, standards, and computer-aided design systems, will be associated

with high local performance in new product development.

Hypothesis 2 : The use of individual-based knowledge retention mechanisms, reflected in

continuity of project members across generations of projects and communication among

project members in successive generations of projects, will be associated with high system

performance in new product development.

Hypothesis 3 : The relationship between the degree of projects' dependence on knowledge

retention mechanisms and product development performance will be moderated by task

newness, reflected on either or both technical and market newness.

3. Research Methods

This study used a cross-sectional questionnaire survey to address the research questions.

In common with most previous studies, the focal unit is an individual project, but the level of

analysis (Rousseau, 1985) is the inter-project level. Therefore, the questionnaire has a

particular emphasis on the transfer of product-related knowledge from past development activities, focusing on linkages between present and past development activities.

We distributed a questionnaire instrument between March and May 1995 to key members

of projects at seven major Japanese automobile manufacturers. In distributing the question-

naires, we asked a contact person at each company to select recent new product development

projects that satisfy the following two conditions. First, projects should be responsible for

"major" new product development. The meaning of "major" is fairly clear among Japanese

companies since they divide product development projects into "minor model change" projects, "full model change" projects, and "new model development" projects based on the

common criteria. The latter two types are categorized as major new product development

projects to which the Ministry of Transport imposes additional testing requirements not

applicable to minor model changes. The second condition is that projects should develop new

models that replace existing models, that is, "full model change" projects.

The number of projects we requested varied from company to company depending on its

size. We asked for a total of 29 projects and received data on 25 projects. Ten key members of

each project were asked to respond. Those ten key members include a project manager, vehicle

test engineers, Iayout engineers, body design engineers, chassis design engineers, exterior/

interior designers, engine design engineers, electronic component design engineers, marketing

planners, and production engineers. We tailored the questionnaire according to the needs of

different team members to account for the uniqueness of their tasks.

While we obtained all 10 responses from 17 projects, there is some missing data for the

remaining eight projects, since we were unable to obtain responses from some project core

members. As a result, the sample comprises 229 core members.

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1996] KNOWLEDGE RETENTION AND NEW PRODUCT DEvaLOPMENT PERFORMANCE 21

We also conducted in-depth interviews with project managers and other core-members at

14 projects. Of the 14 projects, 10 projects participated in the questionnaire research as well.

Therefore, we were able to use qualitative information obtained from in-depth interviews to

interpret the survey results as well as to design the questionnaire instrument.

3. I Research Design

To examine the hypotheses discussed above, we conducted two sets of analyses. First, we

focused on development activities within each component development area, such as body

design, engine design, and chassis design, to explore the impact of knowledge retention on local

performance. We thus empirically regarded local performance as performance of particular

component development attributed only to activities within each component design group.

Next, we analyzed data at the project level. As already mentioned, performance of an

entire project can be infiuenced both by each functional or component development activity

and interaction between them. Therefore, comparison of the results between component level

analyses and project level ones presumably identifies differences between capabilities to

improve system performance and those to improve local performance. The comparison of results obtained from different samples, however, has limitations.

Therefore, we also attempted to compare between factors affecting system performance and

those affecting local performance within the same project-level sample. Finally, we examined

the moderating effects of market and technological newness on the relationships between

experience-based retention and project performance as a partial test for Hypothesis 3.

4. Knowledge Retention and Local Performance

4. I Sample

Out of the 229 entire sample, we focused on only component design engineers to examine

local performance. Although our data sets comprises 1 18 component design engineers, the final

sub-sample analyzed included only 83 engineers because of missing values for some explanato-

ry variables. All these 83 members were key project members, representing five different

engineering or design areas, exterior/interior design, chassis design, body design, engine

design, and electronics component design

4. 2 Performance Measurement

In the questionnaire, we asked respondents to assess perforrnance derived only from

design activities within their engineering areas, as opposed to the performance of overall

product development projects. Using 5-point Likert scales, they rated their satisfaction in

development cost performance, component cost performance, adherence to schedules, manu-

facturability of component systems, novelty of component systems, and technical performance

of component systems. Table I below shows summary statistics for these performance

indicators.

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22mTOTSuEASH1JOu皿NAL OF COMMI…RCE^ND MANAGEMENT  ・ 【Ootobor

TA肌E1. DEscR1PTIvE STATIsTlcs FOR PERF0RMANcE INDIcAT0Rs

N=83 Mem  S.D. Min. M田■.

Component cos-Pe㎡ormヨ皿06

DewIopm6nt oost perfomanoe

Adhor611ce to sch6dul0

Manufo伽rability of compon㎝t systems

Novoltyofoomp㎝㎝tsyslemsT㏄hllicaI perromla皿ce of compomellt systems

3,33

3,04

3,13

3,14

3,21

3.74

1,04

0,09

1,01

0,70

1,01

0.74

1,OO

一.o0

1.O0

1,O0

1.O0

2.OO

5.O0

5,00

5,00

5.O0

5,00

5.OO

           5-poin1L此帥Sca]es,fmm l E llot s田tisf田c-oη,to5三ve町satisf刮ctoη.

4.31≡:叩1amatory V8血阯es

    Table2below illdicates descriptive statistics for explanatory variables considered in the

・・b・・q…t…1y・…E・・h・・plm・t・・y・・由bl・・・・…p・・d・t・・…fth・・i・㎞・wl・dg・

「etentionmechチnisms:d…m・・t…d・…れ・…子・d子・d・…叩・t・・一・id・d…t・m…i・㏄t

trms此r of prqject members,face-to-face commumcatlon,and mvo1vemellt of mdependent

orga1lizational units.Below,we brieHy explain how we constmcted t1lese measures.

σ舵ヴル・”リ・1〃・伽沁㎜∫・1)㏄・㎜θ〃M・〃印・舳,・〃∫伽伽必

    Ou「oセse「vation「evealsthatJ・・・・・・…t?m・bi1…m・子・i・・…t・・t・・・・…。・㎜g・t・

to store pr1or knowledge The趾st type descnbes standard1zed knowhow such as techmca1

standards,standard desigll procedures,and standard test met110ds,which engineers must

follow.Non-standardized knowhow or lessons obtained耐om past activities were retained

thmgh several other foma1and infomal repo血s and memos such as the test repoれs,the

kllow110w documellts,alld the user-claim repo11=s,t11e problem-11andling document,and t1le

COmmuniCatiOn memOS.    A1tlloug1l the boundary betweell standards and noll-standardized knowhow is not clearly

         TAB岨2. DEscR1PTlvE STATIsTlcs F0R Ex肌ANAT0RY VARlA肌Es

N=80 Mean S.D. Mi皿. Max.

Ref61-ence to doo11mellts與皿d reporユs

Impo肘a皿㏄ofst㎝dards

US60f COmputer Si血阯OtiOn

Compu倣一b㏄ed d6sign祀telltioll

Dir㏄t oreation of p耐s pm酊om by CAD/CAM

I皿tm-f㎜Cti0皿al COmmu血Cati0皿

Cross-fmction』comm皿micatio皿

Comm皿nicatio皿witll ot116r proj㏄t m6mbers

Com㎞cati㎝舳prlvio岬ojlctmemb1耐Re1ativepoweroff㎜oti㎝alma㎜ge胴

R61atiwpoworofl㎝g・templ㎝mi㎎9mps9る of P1-evi0皿s p1-0ject me血1bers

 3,78

 3,92

 3,22

 3,63

 3.48

193,2

 47,0

 22,7

 21.O

-O.24

-1I55

 0.18

O.91

0,99

1,25

0,90

1.32

72,9

19,7

18,4

18.4

1,23

1,56

0.14

1,00

1.O0

1.O0

2,00

1.O0

12.0

4.0

2.5

2.5

-3,OO

-4,00

0,OO

5,00

5,O0

5.O0

5,00

5.00

240.0

110,8

94,3

67.1

2,00

3,O0

0.75

Page 12: Knowledge Retention and New Product Development Hitotsubashi journal of commerce and ... · 2018-11-07 · Hitotsubashi University Repository Title Knowledge Retention and New Product

1996] KNOWLEDGE RETENTION AND NEW PRODUCT DEVELOPMENT PERFORMANCE 23

defined, we tried to separate them in the qu.estionnaire. First, we asked respondents to rate how

frequently they referred to documents and reports that described design solutions and

problems identified in the past development activities on a 5-point Likert Scale, from I = not

refer at all, to 5 = refer very frequently (mean = 3.78, s. d. = 0.91). Second, respondents

rated the importance of standards in designing components during the project on a 5-point

Likert scale, from I = not important at all, to 5 = very important (mean = 3.78, s. d. =

0.99). Standards here include design standards, standard testing procedures, standard design

procedures, and sfandarej design tdols.

Use of Computer-aided Systems We requested respondents to rate the importance of computer-aided systems within six

different areas: CAE simulation (vehicle performance), CAE simulation (structural analysis),

CAD/CAM with direct creation of parts programs, sharing of design information among engineers by CAD/CAE, standardized parts database, and reuse and edit of past design

information stored in CAD/CAE. Respondents rated the importance of each of these

according to a 5-point Likert scale. Some of these six variables are conceptually distinct. For example, the first two variables

together indicate the use of CAE simulation tools; the last two variables indicate the use of

computer-stored past information. Along with this conceptual distinction, a principal compo-

nent analysis enabled us to group these variables into three indicators. The first is the use of

computer simulation consisting of CAE simulation for structural analysis and CAE simulation

for vehicle performance (alpha = 0.83). The second indicates the computer-based past design

retention that consists of the standardized database and the reuse and edit of past design

information (alpha = 0.78).] Third, we preserved a variable of CAD/CAM with direct

creation of parts programs as a separate variable.

Continuity of Engineers Across P?ioduct Generations Each respondent provided the total number of engineers in his or her area involved in the

project. They were then asked for the number of these engineers who also had been responsible

for the previous generation of a project. Based on these numbers, we calculated the percentage

of engineers having experience in the previous project generation. Because of confidentiality

issues, some respondents did not provide us with these numbers. We obtained data only from

90 out of 1 1 8 respondents, which 'significantly decreased our sample size. The average

percentag~ of engineers having experience in the previous projects as estimated by the

engineers themselves was 18% (s.d. = 0.14).

Communication Respondents estimated how often, on average during projects, they communicated with

nine types of individuals indicated by the 3 x 3 matrix' in Table 3 below.2

Respondents rated the frequency of communication on 6-point scales, with I = two to

l The second factor obtained from the principal component analysis consisted of these two variables as well as

the design information sharing variable. However, the computer-based past design retention is conceptually different from design information sharing. Therefore, we excluded the information sharing variable, and then

averaged seores for the remaining two variables. 2 Although our speeific concern is the impact on local performance of communication with individuals who

previously developed the same component systems, we also considered other types of communication, since the

Page 13: Knowledge Retention and New Product Development Hitotsubashi journal of commerce and ... · 2018-11-07 · Hitotsubashi University Repository Title Knowledge Retention and New Product

24HITOTSUEASH110URNAL OF COMME皿CE^ND MANAGEMI…NT [o吃to㎞r

TABLE3. TYPEs0F C0MMUNlcATI0N RBP0RTED

(Ineasur6d in app正oxhnate days per year,N = 80)

Communication with the same project another project the previous

Project Members generation of the

belonging to . pro ject

the same engineering area (1) (2) (3)

Mean: 193.2 Mean: I13.l Mean: 84.83 S.D.: 72.9 S.D.: 91,l S.D.: 94, 1 1

different engineering (4) (5) (6)

areas within the product Mean: 58.7 Mean: 17.2 Mean: 18.0 engineering department S.D.: 29.8 S.D.: 19.2 S.D.: 15.8

different functional (7) (8) (9)

departments Mean: 36.0 Mean: 15.1 Mean: 15.1 and suppliers S.D.: 19,l S.D.: 17.9 S.D.: 16.5

         The di価erent fullctio皿a]d6paれments sllown in tlle -hird row i皿c]ude production,

         m町k6ti皿g/pmdlIct p1a㎜1ing,蘭1os,quality imsumnce,purchasing,cost momgem6nt,

         1ong-term planni1lg groups,aIld supPliers.

three days per year or less,2=once a month,3=two or three days a month,4=on㏄a

week,5=two or tl1ree days a week,and6=every day.Based on a240-day working year,

eachscorewastmnsfomedtothcmmberofdaysinthefollowingway:1=2.5days;2=12days;3=30days;4=52days;5=120days;and,6=240days.Then,we calculated scoresfor the above nine types of communication,if required,by averaging tlle number of days for

communication with appmpriate individuals.The means and standard deviations are s110wn in

the table3above.

    To id㎝tify an under1ing pattem,we subjected these nine indicators to a principal

components analysis.Four factors emerged.Based on tllis amlysis,we collstmcted four

measures for d冊erent types of communication by averaging coπespondil1g communication

scores・These are intra-fmctional and withill-Project communication,cmss-functional and

within-project communication,inter-project communication,and commullication wit1l the

previous proj㏄t members(cmss-9㎝emtiona1communication).3

07goπ乞αゴoηo1∫ψ〃ε肌θ

    Respondellts rated the inHuences of functional mamgers,1ong-term teclmology plaming

groups,and project ma1lagers in technology selection decision-m早king,on5-point Likeれ

sca1es,from1=not involved at a11to5:played a very impo11=ant role.Based on these

answers,we constmcted indicators of t1le relative inHuence between project mamgers,

functional managers,and long-tem plaming groups,by subtmcting scores for project

managers’mHuences fmm scores for t11e otller two1㎡1uences As a result,we obtamed two

indicators for relative innuences:olle indicates the in肋ence of a・functioml manager re1ative

to that of a project ma㎜ger;the other refers to the inOuence of a lo㎎一tem t㏄㎞o1ogy

existing studies deal with both imtm-md in16r-functiom1commuIlication wit11people within/ouふde proj㏄t

b㎝mdaHes asi岬舳ntp6rfomo㏄ep祀diot㎝(e-g一,杣㎝,et.刎.,1979;Anoon“皿d C副1dw61止1992a). ,How6ver,the㏄m6砥u燗am mt completeIy i皿depend6nt,since some proj㏄t moml〕e冊mi曲t be tmmfeπ6d

fmm the p祀vious gen町ation of pmj㏄ts,o-11洲o worked on multiple projects simuItaneo㎜1y.In suoh c砥es,

。om㎜ni・・ti㎝withi・th・pmj・・ti・m・・干・…1・・・・…1榊dwithi・脈Pmj㏄・㎝di皿t・・一g・…舳mlOOmmuniCati011.

Page 14: Knowledge Retention and New Product Development Hitotsubashi journal of commerce and ... · 2018-11-07 · Hitotsubashi University Repository Title Knowledge Retention and New Product

1996] KNOWLEDGE IU~TENTION AND NEW PRODUCT DEVELOPMENT PERFORMANCE 25

planning group relative to that of a project manager.

Control Variables In addition to the above explanatory variables, we considered five control variables that

presumably have strong infiuences on component development performance. These control

variables are summarized as follows.

Bubble economy: respondents involved in the projects that introduced new models

during 1991 were coded as 1: O otherwise

Micromini Car: respondents who worked on micromini car development were coded as 1; O otherwise

Design Newness: the percentage of change in the component from the existing

design

Engineering area: a dummy variable indicating respondents' engmeenng areas

Company: a dummy variable indicating respondents' companies

4. 4 Results and Discussions

Table 4 below shows the correlations among performance variables and explanatory

variables.

Results in Table 4 appears to support our proposition that local performance is positively

associated with archival-based knowledge retention capability.4 For example, component cost

performance was positively correlated with the reference to documents and reports (r = .33,

p < .O1), the use of standards (r = .25, p < .05), and computer-based design retention (r =

. 3 1 , p < .Ol). Development cost performance has a positive association with the reference to

documents and reports (r = 0.27, p < 0.05). Technical performance was positively related

.44, p < .O1), and the use of CAE with the reference to documents and reports (r =

simulation (r = .32, p < .O1). On the other hand, organization-based and individual-based mechanisms tended not to be

associated with performance indicators. First, none of the communication-related variables

was significantly associated with performance. Second, among the organizational influence

variables, the functional manager's relative power against a project manager had a positive

association only with component cost performance (r = .22, p < .05). Third, the percentage

of engineers who worked on the previous project was found to be positively related with

technical performance (r = .25, p < .05), but has no association with any efficiency-related

4 Among the explanatory variables, the reference to documents and reports, and the use of standards, are highly

correlated (r = 0.58, p < 0.01). As we see in later analyses, this high correlation seems to cause problems in

parameter estimates for some of the fitted regression models. However, we preserved these two as separate because

we are interested in how differently knowledge retention in standardized forms affects performance from that in

non- standardized fonns.

Page 15: Knowledge Retention and New Product Development Hitotsubashi journal of commerce and ... · 2018-11-07 · Hitotsubashi University Repository Title Knowledge Retention and New Product

[October HITOTSuEASm JOURNAL OF COMMERCE AND M^NAGEMENT

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Page 16: Knowledge Retention and New Product Development Hitotsubashi journal of commerce and ... · 2018-11-07 · Hitotsubashi University Repository Title Knowledge Retention and New Product

1996] , KNOWIJ3DGE RETENTION AND NEW PRODUCT DEVELOPMENT PERFORMANCE 27

performance indicator. ' Table 5 below shows the results of , fitted regression models for each performance

dimension. Model I includes only control variables for each performance indicator. When sets

of dummy variables indicating engineering areas and firms were not significantly associated

with performance, we excluded them in the subsequent models.5 Model 2 includes variables

related to archival-based retention mechanisms in addition to control variables; ' Model 3

includes variables for organizational capabilities. Model 4 for each performance indicator

shows the full fitted regression model. However, we found that the observed high correlation

between the reference to documents and reports, and the use of standards (r = 0.58), seemed

to cause some problems in parameter estimates, so we excluded either of these variables in turn

from Model 5 and Model 6, respectively. Results from the regression analyses are mostly consistent with those from the correlation

analyses. First, as shown in the full models (Model 4), data suggest that the more frequently

engineers referred to documents and reports, the higher performance they reported, in general.

Specifically, this variable was positively associated with component cost performance (p <

.05), development cost performance (p < .O1), manufacturability (p < .O1), and technical

perforrnance (p < .Ol). This implies that reference to documents and reports to learn from

past component development practices has a broad impact on local performance dimensions,

both in terms of development efficiency and technical performance, as hypothesized

Contrary to our hypothesis, the full regression models show that the use of standards is

negatively related to development cost performance, manufacturability, and technical per-

formance. However, all these negative relationships were no longer significant after excluding

the use of documents and reports as shown in Model 5, indicating a problem of multi-collinearity.6

Second, computer-based design retention was positively associated with component cost

performance at the 5% significance level. Since a high score for this variable also indicates the

high degree of reuse of previously-designed parts, this result is understandable. However,

computer-based design retention was not significantly related to any other performance indicators. Although it was consistently positively associated with efficiency-related perform-

ance indicators, the relationships were not statistically significant.7

Third, the use of computef simulation tools was significantly associated with technology-

5 we conducted thc increment-to-R-square test to examine the impact of sets of dummy variables. When either the firm or area dummy variables together did not significantly increase values of R-square (5% Ievel), we

excluded them in the subsequent regression models. 6 The signs of regression coefficients were, however, still negative. It might be that there is some real negative

influence from the use of standards on performance. Problems of dependence on technical standards generally arise when engineers use outdated technical standards and take it for granted. New products were introduced after

1993 in 21 out of the 25 projects in our sample. This means that most projects developed new products after the

record-breaking economic boom in the late 1980s. As we mentioned in the previous section, engineers had to significantly change the way to develop component systems to adapt to much more price-conscious customers in the 1990s. For example, engineers were required to dramatically reduce component costs and the nunrber of parts.

In such circumstances, companies had to revise many existing technical standards that had tended to put too much

quality on component systems by sacrificing cost performance (Fujimoto, 1994), as several interviewees pointed

out. Thus too much reliance on existing technical standards during this period might lead to low performance,

particularly in efficiency-related performance dimensions, at least, in the engineer's subjective evaluation.

7 In the additional analysis which excluded exterior/interior designers from the sample, we found that the

CAD/CAM variable was significantly associated with manufacturabi]ity.

Page 17: Knowledge Retention and New Product Development Hitotsubashi journal of commerce and ... · 2018-11-07 · Hitotsubashi University Repository Title Knowledge Retention and New Product

28 HITOTSuEASHI mURNAL OF COMMI…RCE AND MANAGEMl≡NT 【Ootobe正

TA肌E5. REsULTs0F T朋FITTED REG㎜ssI0N ANALYsEsP0R LOcAL PERFORMANcE INDIcAT0Rs

Compo06皿t Cost

 岬‘om皿㏄

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D6sign Ncw皿偉蝿         O.07   0.08  -0,06   0.02  -0,03   0-03

Fim        NotSig.EllgimeH-1g A祀a     Sig.  Im,  I皿o.  Im.  I皿c.  Illo.

Roforo皿c6to Dooumc11ts        O.20壮       O.28一ヰ       0.19‡

U舵of D6sig11St旦皿dards        -O.09        -O.16  -O,02

ComplIt6一一b舶ed D巴筥igI1R巴to11ti011 0.17‡     O.21抽 0.21柚 O.1畠‡

Di祀ct P舳昌Pmgrom by CAD/CAM0.16     006 0-11 0-06

U舵of CAE S㎞阯1ation       O.02      0.05 -O.01  0.02

Rc1帥i冊Power=FM            O.10 0I08 0,09 0.07

Rc1舳c Power=L㎝壇一tem Plm    -O.07-O.02 -O-07 -O,04

Com皿㎜1ic田ti01i1冊皿ctio皿a]        刈.12 -O.04 -0.05 -O.03

      =Cm艶一FuI1ctio-ial         -O.02  0,03  0,01  0.03

      Cm5s-G6ncmtio皿        一〇.04 -O.19 -0.17 -O.16

      =I皿ter-Prqエeot               -0.19‡ 一〇.12  -O.07  -013

%of P1=evio山5Mcmb6rs               O.10   0,01   0,02   0.01

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                   1   II   I11   1V

Eubble Economy         -O.06  -O-01   0.01  -O.04

Mic正o Cπ           O.41  0,04  0,08  0.02

D閑ig皿Now血醐      刈一31榊一〇.26壮一〇.28拙一〇。22‡

Fim        Not Siε.E皿gimorillg A爬a     Not Sig.

Re‘or61100to DoouIne皿t5         0,17         0.19

Use o『Desig皿St田皿d田rd5       -O-14       -O.1喀

Computer-bas6d Dosi筥11Roto皿tio皿  0-05       0.07

Di■㏄t P耐s Pmgr㎜by CAD/CAM-O,02     -O.01U舵o『CAE Si皿1凹1ation      一一〇I01      0.02

Ro1巴tiw Pow航:FM           0,01 0IOO

Re1砒ive Power=Loilg-term Pla日          O-09   015

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      =Cmss-F山mtio皿al         O.OO  O.02

      Cro鵬一Gellcmtlo皿         0.03 -O.04

      ・I皿t6r_Projcct              0,14   0,14

%of P祀vio唖Mombe耐         一〇.03 0.10

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0,02   0.08

-O.26,ヰ ーO.22

刈一08

0,08

0,02

0,01

0,02

0.13

-O.12

0,02

0,03

0,13

0.11

O.10

一〇.03

0,05

0.04

刈.01

0.12

刈.11

0,01

0.Ol

O.17

0.03

  IIlIIIIVVVI-OI31‡一一〇、36榊一〇.26榊一〇.34榊一〇.27‡一一0.27甘

O.=一9串一 〇.09   0,12   0,11   0,11   0,16

0,06   0,11   0.O0   0.05  -O.03   0.06

Not Sig-

Not Sig一

O.34榊

一0.32}

O.02

0.i2

0.11

O.06

-0.01

-O.Oヨ

ーO.03

0.09

-OI21オ

¶.15

0.40}ヰ       O.21‡

一〇.36軸一〇.15

O.O]

O.06

0,08

0,05

0-02

刈.01

-O.01

-O.03

刈.16

-O,18

O.04

0,12

0,05

0.09

-0.04

-O.03

-O.02

0.11

-O.19

{.15

O.06

0.03

-O.18

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刈.02

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d.rof-esid山田1s

Adj㎜ted R一明u肛e

 69   75

-0,01  0.Ol

 68   68

0.02  -O.02

 69   69

-O.03 -O.02

 69

0.13紳

 75  680.14榊O.05

 68   69   69

0.I2‡  0,03   0.05

㌔< .1,柚pく .05,榊p<.O1

Page 18: Knowledge Retention and New Product Development Hitotsubashi journal of commerce and ... · 2018-11-07 · Hitotsubashi University Repository Title Knowledge Retention and New Product

1996】     KN0wu≡DGl≡㎜…丁酬丁10N AND M…w PRoI〕ucT D旧v肌oPMl…NT PERF0RMANcE       29

TA肌E5. REsULTs0F THE F1TTED REG㎜…ss10N ANALYsEs   F0R LocAL PERF0RMANcE IND1cAT0Rs(continued)

丁畠o1111ic田1

NowltyT㏄h㎞cal

I,01=fO『口1田11C巴

                   IIl1IIIVVVI IIlI1IIVVVI旧11bblo I…ε01iomy      0-16  0.19ヰ O.20‡ O.19‡ 0.19‡ O.18  -O.09 -O.03  0.08 -O-05  0,04  0.01

Miom C趾        O.23 -0.05 -O.14 -O.12榊一0-12柚刈.13  0,24 0-04 -O.06 -0.06 刈.06 -O.Ol

D齪ig皿N・㎜。・・   O.13 0.l10-00 0.l10・12 0・11 刈・07 0・OO¶・30-0・04仙5刈・03

Fim       NotSig-            NotSig・E㎎㎞・・d㎎ル・・  NotSig-           N・tSig・M鵬皿o.t.D。。。m㎝t.   0.08  -O.04   0,02   0.55榊  O.50榊  O-38榊U・。。fD齪卿S伽由{   0,05  0.l1O.09    -0・22}  一〇・24#0・02C㎝叩t肚一b冊ωD㏄i即R・t・皿ti㎝O.03  -0-09-O.09伽8   -0・06  ■0・07-O・05■O・151)iI㏄t P舳s Pmg正a皿by CAD/CAM-0-05     0,09 0,08 0.11     -O.13     -O,09 -0-02 -O.07

UsE0f CAE Si皿汕刮ti011       0,13      0.27帥 O.27# O.30#      O.32榊     O.38I蛛O.35伸一〇。38帖=

Ro1田t~e Powr=FM            0,07 0,04 0,04 0,05          0.19‡ O.11 0,16 0.09

R.1.tiΨ。p.w。。:L㎝g一。。mpl。皿  刈.2g榊一〇.35榊一〇。34榊刈。34榊    一〇.28榊一〇一25榊一〇.31榊一〇.27榊

Co皿munic田ti011=F凹mti011a1        -0.22壮一0.25榊刈.25柚刈.25柚          刈.17 -O.19ヰ ー0.22柵刈.18‡

      =Cmss.Functi011al         O.00  0,05  0,05  0,05            0,04  0,12  0,11  0,10

      Cross.Gemmtio皿         0,10  0,07  0,06  0,07           0.13 -0,11  0.06 -O.06

      :1皿蛇・一Pmj舳     0,17 0.30壮〇一30林O.30柚    一〇・10 0・080・04 0・09

%of Provio㎜Mombe晒         O.05 0.OS O.08 0,07         0,13 0,14 0,18 0.12

d.f of I=csidods           69    75    68    68    69    69      69    75    68    68    69    69

Adju5t巴d R一判11趾e     -〇一04 刈.01  0.11榊 O.13帥 O.14榊 0.15軸  0」2‡ O・25榊一〇・12# O・32榊〇一17# O・29蝸‘

㌻〈.1,柚p〈.05,榊p〈。Ol

related perfommce:novelty ofcomp㎝ent systems and compone皿t technicalperfomance.

However,it was negatively associated with development cost performance.This result may

suggest that tlle use of CAE too1s resu1ts in higher t㏄hnica1performan㏄at the cost of

development e術ciellcy,In this respect,several engineers poi1lted out that,whi1e CAE tools

signincantly impmved qua1ity of the first design prototype,it llad Ilot yet achieved projected

development e冊ciency improvement,partia11y because CAE tools tel1d to make engineers

spendtoomuchtimefomarginal perfo㎜an㏄improvement・Contrary to archiva1mecllanisms and computerized systems,organization-based and

individual-based㎞owledge ret㎝tion mechanisms did mt show any positive impact㎝

perfomance indicators:some were actualiy found to havea negativeimpact.

Amollg the communication-related variables,communication with the previous project

membershadnosign岨cantassociationwithanyperfo㎜anceindicator.SurpHsing1y,commu一nication with engineers in the same engineering area was negative1y associated w仙technical-

related perfomance such as novelty of comp㎝ent systems and technical perfomance of

components.。

    011the other hand,communication with the other prqj㏄t members was positive1y

associated with performance in novelty of component systems(p<0.05).This may indicate

l・・1甲・i・・…1・・…乎・1l・戸…h・i・.…t・・h干・1・・i・・1i亨…p・com㎜nic干tin・with

mdlv1duals outslde thelr pm]ects There ls anothe正mterpretat1on Smce tec1mo1og1ca11y-new

 8This m劃y i皿dicate t]le inhe祀nt pf0b]ems ill communioation studies=lhe mo正e pmblems o㏄叫the more

f正明11e皿t1y6皿gi鵬crs h別ve to commullicate with t11e other engi皿e帥to solve pmb16ms一

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HITOTSUBASHI JOURNAL OF COMMERCE AND MANAGEMENT

components are typically developed for multiple projects, newness of component systems

might require engineers to communicate with ・ other project members to adjust component development activities across projects (Nobeoka, 1 993). '

Organizational influence variables also had no positive impact on any performance

indicators. Although correlation analyses showed that a stronger influence by functional

m4nagers than project managers is associated with better component cost performance, this

association was no longer significant in the regression analysis.

Involvement of long-term planning groups had a significant negative impact on techno-

logy-related performance such as novelty of component systems _(p < 0.01) and technical

performance (p < 0.01). Since long-term technology planning groups often play a critical role

in facilitating carry-over of existing component systems, it is understandable why their

involvement may lead to less novel component systems. Finally, continuity of engineers in successive generations of projects had no significant

association with any performance indicators. This result implies that knowledge retention

through people may not be critical to improve local performance.

In summary, results in this section partially supported Hypothesis I . We found that

dependence on documents and reports for knowledge retention had a broad positive impact on

local performance; dependence on computer-stored prior design information improved prod-

uct cost performance; and use of computer simulation tools was associated with higher technical perfonnance of component systems. On the other hand, organization-based and

individual-based mechanisms for knowledge retention had either no association or negative

associations with performance indicators.

These results imply that investment in formalizing and articulating knowledge may be

critical to improve performance within well-defined component system development areas.

5. Knowledge Retention and New hloduct Development Performance at the Project Level

5-1 Sample

The project level analyses below include data obtained from 229 respondents at 25 new

product development projects. Some project-level data was obtained directly from question-

naires specifically designed for project managers; other data was constructed by aggregating project members' responses, as'described below. Because of 2 1 missing responses, we could not

includes all 25 projects in our analyses. We excluded the three projects from the analyses which

lacked responses from the project managers, resulting in a usable sample of 22 projects.

5-2 Analysis Strategy

Because of the small sample size, we could not utilize fully multivariate techniques to

specify the relationships between project performance and knowledge retention capabilities.

Instead, we take the following steps in the subsequent analyses.

First, we explore the bivari,ate relationships between project perforn}ance and perform-

ance predictors, In the analyses, ' we consider both overall performance aid system perform-

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1996] KNOWLEDCE ' RBTENTION AND NEW PRODUCT DEVELOPMENT PERFORMANCE '3 1

ance. System performance is statistically separated from overall performance as desc,ribed

below. One of the objectives of this correlation analysis is to explore whether there is any

difference between factors affecting overall performance and system performance. The corre-

lation analysis also identifies important control variables which should be considered to specify

the relationships between project performance and knowledge retention capabilities.

Additionally, we examine the fitted regression models to further confirm results of the

correlation analyses. Since we have only 22 sample projects, these models include only selected

control variables and indicators for knowledge retention capabilities.

Finally, we examine Hypotheses 3, which refers to an interaction effect between ex-

perience-based knowledge retention capability and task newness. We fit regression models

including interaction terms between a technical or a market newness indicator and individual-

based knowledge retention capability indicators, and examine how newness indicators moder-

ate the relationships between individual-based retention capabilities and product development

performance.

5-3 Performance Measurement

Selected project members rated each of the following seven project performances in a 5

-point Likert scale, from I = not satisfactory to 5 = very satisfactory. They also rated this

performance relative to the previous generation of projects in a 5-point Likert scale, from I =

the same level or worse than the previous project (model) to 5 = much better than the

TABLE 6. SUMMARY STATISTICS FOR PERFORMANCE INDICATORS RATED BY SELECTED PROJECT MEMBERS

Pcrformance Satisf action

Perf ormance

Improvement from the Previous Projects

Indicators Descri ption

Mean S.D. Mean S.D.

Product cost

performance

Rated by project managers, Iayout

engineers, and marketing planners 3.21 O. 8 1 3.18 l .03

Development cost perfonnance

Rated by Project managers 3.02 1.01 3,25 1.41

Adherence to schedule

Rated by project managers, Iayout

engineers, and marketing planners 3.15 0.61 2.83 o.69

Manuf acturability Rated by project managers and

production engineers 3.39 0.81 3.23 0.97

Match to customer need

Rated by project managers, Iayout

engineers, and marketing planners 3.54 0.69 3.34 0.77

Technical Novelty Rated by project managers. 3.46 1.14 3.23 1.38

Technical

Performance

Rated by projeet managers with respect to 15 technical performance items *

3.97 o.37 3.78 o.s9

* The 15 items are: space utility, comfortability, nois,~vibration-harshness, driving stability, acceleration,

braking performance, engine performance, handling response, safety, painting quality, body strength, exterior/

interior styling, aerodynamics, and vehicle weight.

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32 HITOTSUBASHI JOURNAL OF COMMERCE AND MANACEMENT [october

previous project (model) . In the questionnaire, we clearly requested them to rate overal/ project

performance, as opposed to performance of activities within each engineering area. Scores

obtained from multiple respondents were averaged for each project to construct project level

performance measures. Performance ratings encompass seven areas: product cost perfonn-

ance, development cost performance, adherence to schedule, manufacturability, technical

performance, technical novelty, and degree of match to customer needs. Table 6 shows

summary statistics for these performance indicators. In the following analyses, we call a set of

indicators shown in the third column of this table, which relate to the current project only, as

performance satisfaction , and another set of indicators in the fourth column, which compare

perfonnance to the previous project, as performance improvement.

In addition, we considered market performance, measured by the ratio of realized average

monthly sales volume to the targeted volume announced at the time of introduction. We calculated sales achievement ratios only for the first year of model introduction so as to

maintain data comparability across sample projects. The mean score of this indicator across

sample projects was 1.01 (s,d. = 0.36).

54. Decomposition of Overall Performance

To separate system performance from local performance, we regressed each of the six

indicators for overall performance (product cost performance, development cost performance,

adherence to schedule, manufacturability, technical novelty, and technical performance) on

corresponding local performance indicators. For example, overall product cost performance

was regressed on component cost performances, as rated by component engineers representing

body, chassis, electronics component, engine, and exterior/interior design areas. Indicators for

local performance were the same as used in the analyses in the section 3. Since two

market-related performance indicators, "degree of match to customer needs" and "sales achievement," have no corresponding local performance indicators, we did not make a system

and local distinction for these two.

From the fitted regression models, we used the sets of residuals as indicators for system

performance. We thus conceptualize system performance as the portion of overall perform-

ance that cannot be explained by performance reducible to the outcome of activities within

each engineering and functional area. Since residuals capture all the variance not explainable

by selected local performance variables, our system performance indicators may include more

than the exact system performance. However, they reflect system performance more accurate-

ly than do original performance indicators. Thus, the comparison between factors affecting

original overall performance indicators and those affecting residuals enables us to identify fac-

tors that have a stronger association with system performance than with local performance.9

9 Appendix 2 shows the results of regression models. The results mdicate that efficiency-related perfomrance is

strongly related to performance within body engineering, implying that the body design may be a critical path in

automobile development. Among these overall performance indicators, product cost performance and technica] novelty were most explained by local performance. This implies that these two performance indicators havc fewer system performance characteristics.

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19961 KNOWLEDGE Rl~TENTION AND NEW PRODUCT DEVELOPMENT PERFORMANCE

TABLE 7. DESCRIPTIVE STATISTICS FOR EXPLANATORY VARIABLES

33

N = 22 Mean S D Mm Max Experience-based retention

Cross-generational communication

Reference to documents and reports

Use of standards and computer-stored

inf ormation

Use of computer simu]ation

Involvement of long-term planning groups

Involvement of super-project managers

O,OO

15.7

3,73

3.76

l.OO

7.02

0.22

0.3 1

- 1.59

5.06

3.43

3 . 20

1.78

29.3 l

4.28

4.37

3.53 0.41 2.65 4.21 2.06 O. 79 1 .OO 3 .46

3.05 1.40 1.00 5.00

5-5. Explanatory Variables

Table 7 below indicates descriptive statistics for a set of explanatory variables examined

in the subsequent analyses. Below, we briefly explain each of these variables.

Experience-Based Knowledge Retention We considered four indicators for experience-based knowledge retention capability. These

four indicators are particularly related to integrative knowledge retention as explained below.

First, we took a percentage of integrators transferred from the previous generation of

projects to indicate experience-based knowledge retention capability (mean = 0.59. s,d. =

0.29),ro We regarded project managers, vehicle layout engineers, and vehicle test engineers as

such integrators in automobile development. Direct transfer of these individuals from the

previous generation of projects thus indicates a project's ability to capture integrative knowl-

edge embodied in the past product.

Second, we considered a percentage of project core-members responsible for the previous

generations of a project to be the second indicator (mean = 0.34, s.d. = 0,19),. Integrative

knowledge may be stored in these people as collective memories (Badaracco, 1991; March,

1988; Huber, 1991; Spender, 1994; Walsh and Ungson, 1991). Third, degree of common past experiences at the project level was considered. To measure

it, we asked respondents whether or not they had worked with the other project core-members

in anypast major development project. Based on this information, we made a 10 by 10 matrix

that demonstrated the combination of project core-members who had worked for the same

project before. Since 10 project core-members were included in each sample project, the

maximum number of combinations was 45. We divided the observed number of combinations

of people with common experiences by 45, which gave us an appropriate indicator for degree

of common past experiences at the project level (mean = 0.61, s.d. = O. 14)

Fourth, we considered how much project members had expected to be assigned to the

focal project before their actual appointment. The idea here is that people who have a high

expectation of assignment to a particular project may store usable information for that project

in advance, and th~t transfer of such people will be associated with retention of useful prior

ro As explained in the previous section, only when projeet members spent an average of a minimum of 30% of

their time for six months in the previous project did we count them as previous project members.

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HITOTSUBASHI JOURNAL OF COMMERCE AND MANAGEMENT

knowledge. Respondents wdre asked to rate how much they had expected the appointment to

the focal project on a 5-point scale, from I = O% sure, 2 = 25% Sure, 3 = 50% sure, and 4

= 75% sure to 5 = 100% sure. Obtained percentages were averaged for each project (mean = 0.51, s.d. ~ 0.17).

We subjected the above indicators to a prinpipal component analysis to identify an underlying pattern. One factor emerged (eigenvalue = 2, 38).ll We thus used the frst factor as

a composite measure for experience-based knowledge retention capability.

Communication-Based Retention

We examined the frequency of project members' cross-functional communication with

members in the previous generation of projects as an indicator for the communication-based

retention capability. Since we are interested in the retention of integrative knowledge, we

distinguished this from communication with the previous project members within the same

engineering areas. Respondents rated frequency of communication with previous generations

of project members outside their engineering areas on a 6-point scale. Then, we converted each

point to an estimate of the number of days, as explained in the previous section. Scores

obtained from these project members were averaged to form project level measures.

Archival and Computer-Aided Mechanisms for Knowledge Retention We examined five indicators for archival-based knowledge retention capability: ( I ) the

reference to documents and reports to learn from the past; (2) the use of standards; (3) the

reuse or editing of computer-stored information (including parts database); (4) the use of

computerized simulation tools (CAE); and (6) the creation of direct parts programs by CAD/

CAM. Component engineers, vehicle test engineers, vehicle layout engineers, and production

engineers rated these five indicators on a 5-point Likert scale. Project managers rated the

importance of these archival and computer-based systems for several design and testing

activities on behalf of the entire project. For each of the above five indicators, scores obtained

from these project members were averaged to construct project level measures.

Using a principal component analysis, these indicators yielded two factors. The first three

indicators, all of which are directly related to knowledge retention, seemed to be clustered: the

use of documents and reports, the use of standards, and the use of computer-stored informa-

tion. However, a factor loading for the use of documents and reports was less than the 0.7

cut-off line, and it is also conceptually distinct from the other standard-based retention

mechanisms, so we kept it as a separate variable. We averaged scores for the use of standards

and the use of computer-stored information to measure the standard-based retention capability

(mean = 3.76, s. d. = 0.31, alpha = 0.69).

While the use of computer simulation was clearly loaded on the second factor, the use of

CAD/CAM was almost equally loaded on two factors. We kept only the use of computer simulation as a separate variable for the later analyses to indicate degree of the use of computer

simulatioh.

ll Factor loadings are O.82 for the integrators' experience variable, 0.79 for the core-members' experience, 0.74

for the common experience, and 0.75 for the expectation for assignment.

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19961      KN0wL嘔DG旧

TABLE8、

Rl≡TENTlON AND N旧W PRODUCT Dl…Vl…LOPM1…NT P1…RP0RMANcI…        35

SUMMARY STATIsT1cs0F INDIcAT0Rs F0R TEcHNIcAL C0NTENT,SUPPLIER INv0LvEMENT,AND Ec0N0M1c C0NDITl0Ns

Indic田tors Description Mem    S.D.

1≡‘ubble EconOIny A dummy柵dable that indicates pmj㏄t e皿ded

befo1=e1992

Micro C町 A dlmmy vari田ble th^t indicates proj㏄ts町e

miCm C趾pmj㏄t.

New Parts Rotio Per㏄nt田geof血ew1ydosigmdp劃rts(i皿

血umbcrofpais)一

0,69       0.17

New Plal=folrm Ratio Peroent副ge of mw desigll in u皿de正一佃oor

panels alld suspension systems(ob帖i皿ed

fmmthequeStiOnnai祀S〕

O.43       0.27

New Platfo㎜Mio2 Newness of platform d6sigIl based on

Nobeok田’s cliss胴cation scheme(Nobcok田,

1993)

New     O]d(code- 1)  (code=0)

9       16

Agsembly Propriet田町P囲rts Pe1℃ent田ge of p邑rts developed6ntire1y by

asscmbly make耐(see C1趾k a皿d Flユjimoto,

1991for the de血血ition)

O.09       0.23

Black Box P割r的 Pa竹s whose b田sic e皿gineering is done by ca正

皿田kefs a皿d whos6detailed engi鵬ehng is

doIle by pa灯s suppliers(see C]ark and

Fujimoto,1991)

O.45       0.25

SupPlier]旦ngi皿eehllg Parts Parユs d6vcloped entiroly by l〕arts s11pP]i6耐

(sc6,C1趾k ond Fujimoto,1991)

O.一6       0.15

〃ソoル2㎜θ〃ψ〃此μ〃ゐ〃0rgoπ‘z〃jo〃σ1σ〃施

    There are severa1independent orgallizational units tllat coordinate new product develop-

ment activities across generations ofprojects.In the questiomaire,we asked project managers

about the degree of inf1uence of t11e following organizational units or individua1s:the

long-tem tec㎞ology plami㎎group,the1ong-tem pmductplami㎎group,the design for

manufactuh㎎group,the1ong-tem1ayoutp1劃minggmp,andtheseniomanagers1ocatedabove individual project mamge正s(we cal1t11is super-Project manager・)・Proj㏄t managers

rated the degree of in肋ence of these groups or individuals across a mnge of deve1opment

activities and d㏄ision makillg,on a5-point Lik帥scale.

    Aprincipa1componentana1ysisyie1dedtwofactors.Thefourindicato㎎wereclustered.We thus averaged scores for these four㎞dicators to generate a measure of the degree of

involvement by1㎝g-tem p1ami㎎gmups(mean=2.06,s.d.=O.79,alpha:O.70)。Wekept an indicator for invo1vement by s叩er-pmject managers as a separate variable.

τεc伽たα1Co〃ε〃,∫〃〃1’α〃リo1リε胴2〃,oπ∂0肋〃Po∬必1εCo〃701吻〃o〃ε∫

    Fina1ly,Table8sllows the other variab1es we considered in t1le analyses,wllich inc1ude

teclmica1content,the degree of supplier invo1vement,and economic conditions。

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36HlTOTSUEASHl,OuRNAL OP COMMERCl…^ND MANAG1≡MENT 工Octobcr

5-4.Ros111ts amd I〕is61Issi0皿s

Coπε肋fo〃ルψ∫2∫

    Tab1es g to12be1ow show results of correlation analyses betweel1sets of exp1anatory

variab1es andindicators forovemllperfomancesatisfactionandperfomanceimpmvement.

Table11and12speci丘cauyshowresu1tsfo正systemperfoman㏄thatwestatisticallysepamted

   TA肌E g C0R㎜…LATI0Ns BETw朋N ExPLANAT0RY VARIA肌Es AND1NDIcAT0Rs                    F0R OvEMLL PERFORMANcE SATIsFAcTI0N

Exped㎝㏄一B鵬dRet6ntioIl

X-Gemratio皿^1

Commu皿ioation

L㎝g-Te㎜PlamingGr㎝ps

Super-PI=oject

Man田gersStalld趾ds&ComputerStored I㎡omati㎝

Dooumcnts andRcports

Computer Simu1田tion

(CAE Tools)

#P<.10 榊p<.05

Pmd皿ct Development Adhe-

Cost Per・ Cost Per一 祀nc6to

‘o㎜mce iom田㏄e Schedule

O,11     0,35     0.41ホ‡

一〇.09    -O.17     0.04

一0.32    -O.13    -0.07

0,27    -O.03     0.06

O.14    -O.11    -O.08

O.19     0,01     0.13

O.19     0,28     0.38ホ

‡オ‡I〕<、01

M㎜ufac-t皿rability

Match to T㏄lmic田1T㏄hnical

C1ユstomer Novelty  Perfor・

 N㏄ds        maI1㏄

一0,08     0.47申^   0.16

O.15     0.47‡‡   0.47“ヰ

O.08    -O.45‡ホ   0.23

一0,08     0,35     0.07

O.35‡  一〇.07     0.43ヰ^

O,26     0,10     0.22

O.50‡‡ 一0,05     0,29

 S創6s

Achiev6-

 monO.06    -O.12

O.23    -O,15

O.29    -O.32

一〇.05     0.07

一〇.04    -O.13

一〇.02     0.07

0.60‡‡‡一〇.06

TABLE10. C0RRELATI0Ns B1…TwE酬Ex肌ANAT0RY VAR1A肌Es AND lNDlcAT0Rs      FOR OvEMLL PERFORMANcE IMPROvEMENT

Exped㎝㏄一Bas記Rete皿ti011

X-Gene祀tiomlCommunication

L㎝g-T6m P1田mi㎎Groups

Super-P1-ojeot

M田皿age耐

Standards&ComputerSto祀d Infomati㎝

Documents andR6po■s

Computcr Simulation

(CAE Tools)

‡pく、lO 榊p<.05

 Pmd㏄一Dev61opm㎝t Adher㎝㏄Monufact1■ra-Motoh to

   Cost    Cost  to Sohedu1e  bimy  Custom6r

P6rfoma皿㏄Pe㎡oma㏄e          Needs0,17      0.36‡     O,44‡‡

一〇、01      0,01      0,19

一〇.30     -O.24     -O,55‡‡‡

O,14     -0,02      0.29

一〇.05      0.04     -O.06

O.09      0,14      0.15

O.22      0.37‡     O.04

榊‡p<.Ol

Tech皿ical T㏄hnical

Nove1ly Perfom㎝㏄

0,05      0,13      0.01

0,21      0,22      0.26

一0.11    -0,08      0.31

O.10      0,16      0,02

一〇.14      0.39ホ     O,30

0,01      0,11      0.17

O.28     -0,20      0.26

O.47榊

O.56榊‡

一0.09

一〇.20

0,17

O.08

O.22

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1996]

TABLE11.

KNOWu≡DGE R1…TENTlON AND N1;W PRODUCT DEV肌0PMl…NT PERF0RMANcE        37

C0RR肌ATI0Ns BETwEEN ExPLANAT0RY VARIABLEs AND INDIcAT0Rs                FOR∫γ∫胞㎜μψ7㎜0〃Cθ

Experience-BasedRetentioIl

X-Generationa1

Communicatioll

L㎝g-T6m PlmningGf0ups

SupeI=一P1=oject

Mmagc祀St田nd肛ds&Comp汕erStored Infomati㎝

Docllments and

Repo竹s

Comput6f Simulati011

 (CAE Tools〕

‡p<.lO州P〈一05

 Product   Cost

P6『fo『nlance

O.17

D6velopmellt

   Cost

Pe㎡0m副皿㏄

   0.50榊

Adher㎝㏄ Mamfactu祀一to Schedule     bility

O.35‡

0.17      -O.09       0.03

O.14      -0.17      -O.08

O.33      -O.08      -0.04

O.22      -O,06      -0.08

0,09        0,03        0.27

0,31        0,13        0.47^}

榊ホpく.01

Technical   T㏄hnica1

Novelty Perfom副n㏄

O,08        0,32      -O.01

0,16       0.60‡‡‡    0.18

一〇.26        0,22        0.一0

O.09        0.18      -O.07

0,08        0.44北‡    一〇.09

0.37}      0.24      -0,16

O.48‡‡     O.20        0.33

TABLE12. C0R㎜;LATI0Ns BETwEEN ExPLANATORY VAR1A肌Es AND INDIcATORs          FOR∫ツ∫犯㎜ρθψr〃一0”C2f〃!ρ70ソθ〃!ε〃’

E叩eH㎝ce・B副sed Retention

X-Gcner舳onalCommunication

Lo㎎一Tem Plan㎡㎎

Groups

Super-PmjectMamgers

Stalld肛ds&ComputerSto肥d Infom田ti㎝

D㏄um6皿ts and

Repo廿s

Computer Simulatio11

 (CAE Too]s)

 Prod1ユct

   Cost

Pe他m田nce

O.56ヰ榊

Developm6皿t   Cost

Perfommce    0.48榊

Adher㎝㏄ Manufoctura-to Schedule     bility

0.37オ

O.54#‡ヰ    O.08ホ      O.19

O.09        0.OO      -O.52‡北

O,07      -0.21      -O.01

一〇.04        0.05      -0.17

一0,06        0,09        0,08

O.26        0.32      -O.11

TechIlical   Teclmic刎

Novelty Perfoma皿ce

0,25       0.OO       O,39ヰ

O.28        0,28        0.52^^‡

一〇.30        0.44‡非     0.12

一〇.12        0.OO      -O.08

一〇.17        0.09ホ      O,24

O,02        0,31        0,06

O.29        0.39北      0.11

‡p<.10榊p<.05舳p〈.Ol

f。。ml。・・lp・・f・・m・…t・i・di・・t・p・・f・m・・…h・…t・・i・ti・・d・d・・df・・mi・t・…ti・・s

among individual engineering domains.    R。。。lt.h。。。i.di。。t.th・tb・th・・p・h・…一b…d・・t㎝tio… p・bi1ity・・d・・…一

9。・。・・ti…1・・mm・i…i㎝…畑ti・・1y・・1・t・dt・・・・…lp・・f・m・・・・…i・b1…tth・

P・句・・tl…1.Sp・・i丘・・lly,・・p・・i・…一b…d・・t・・ti・・w・・p・・iti・・1y・・…i・t・dwithtwo

P。・f・m・・・・…i・f・・ti㎝…i・bl・・一・dh・・・…t…h・d・1・(・=・41・P<・05)・・dm・t・hto

。。。t.m。。・。・d・(・一.47,P<.05)一,・・dth…p・・f・m・…imp・…m・・t…i・b1・・一

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38 HITOTSUEASHI JOURNAL OF COMMERCE AND MANAGEMENT [october

adherence to schedule (r = .44, p < .05), development cost performance (r = .36, p < . 1),

and technical performance (r = .47, p < .05). This suggests that retention of experience

affects broad performance dimensions ranging from development process efficiency and

customer satisfaction to technical performance at the project level.

Cross-generational communication was positively related to performance satisfaction in

technical novelty (r = .47, p < .05) and in match to customer needs (r = .47, p < .05), and

technical performance improvement (r = ,56, p < .Ol). This implies that cross-functional

communication with the previous project members may be an important source both for technological and market knowledge. However, cross-generational communication has no association with any efficiency-related performance.

Tables I I and 1 2 also show several positive correlations between experience-based

retention and cross-generational communication and system performance indicators. In partic-

ular, we found that they have broader relationships with improvement of system performance.

Specifically, the experience-based retention variable was positively associated with improve-

ment of product cost performance (r = .56, p < .Ol), development cost performance (r =

.48, p < .05), adherence to schedule (r = .37, p < , l), and technical performance (r = .39,

p < . 1); cross-generational communication was associated with improvement of product cost

performance (r = .54, p < .O1), development cost performance (r = .38, p < .1), and technical performance (r = .52, p < .O1). These results are consistent with our expectation

that the retention of integrative knowledge has a particular contribution to improvement of

system performance derived from complex interactions among different functional domains.

Compared to the impact of individual-based retention capabilities, the impact of archival-

based retention on product development perfonnance seems to be limited. For example, results

here show that the reference to documents and reports has no significant association with any

performance indicator, except for its modest relationship with the system performance indicator on manufacturability. This suggests that, while retention of articulated knowledge

has a significant impact on local performance, it may not be related to system performance at

the project level.

The impact of knowledge retention through standardized information, such as technical

standards and CAD/CAE for design and parts reuse, seemed to be limited as well. It was only

positively associated with both performance satisfaction and performance improvement in

technical novelty (r = .43, p < .05), and moderately related to satisfaction in manufactura-

bility (r = .35, p < . 1). A positive association with manufacturability may reflect recent

significant efforts that Japanese automobile producers have made to formalize knowledge

about manufacturable designs, In addition, since reuse of existing parts designs generally

increased the reliability of component systems, it may lead to fewer problems in manufactur-

ing. The result may also imply that knowledge about a design-manufacturing interface might

be more articulable than we expected. On the other hand, the positive relationship between

knowledge retention through standardized information and performance on technical novelty

seems to suggest that efficient design reuse for mature parts of the product design enabled

projects to focus on new technical solutions in less mature partsl2

The use of computer simulation was positively associated with several overall perform-

12 Most of our sample projects, which came after the Bubble economy period, built from a realization of the

wasteful development styles of this period of opulence. Eighteen out of the 22 sample projects introduced new

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1996] KNOWu…DGl…R1…TENTION AND柵W mODuCT D嗜VI…LOPM酬T PI…RFORMANCE39

TA肌E13. SUMMARY REsULTs0F T肥C0RRELATI0N ANALYsEs F0R OvEMLL    AND SYsTEM P1…RF0RMANcE SATIsFAcTI0N AND SALEs AcHIEvEM酬丁

Experience-B ased Retention X-Genetional Communication Long-Team Planning Group Standards & Computer-Ttored Information Documents and Reports Com puter simulation (CAE Too]s)

Overall System Overall System Overall System Overall System Overall System Overall System

Product Cost

Development Cost

** * (-)

Schedule ** *

* **

Manufactura-bility

*

* ** **

Tech. Novelty

** *** ** ** Tech_ Performance

*** Match to Customer

** ** Sales Achievement

‡p〈.1, ”p<.05, ‡舳p<.01

TABLE14. SUMMARY REsULTs0F THE C0RRELATl0N ANALYsEs F0R OvEMLL     AND SYsTEM PERF0RMANcE1MPR0vEMENT

Experience-Based Retention X-Genetional Communication Long-Team Planning Group Standards & Computer-Ttored Information Documents and Reports Com puter simulation (CAE Tools)

Overall System Overal] System Overall System Overall System Overall System Overall System

Product Cost *** *** Development Cost

* ** *

* (-) * * (-) *

Schedule ** *

Manufactura-bility

Tech. Novelty *

*

Tech. Perforrnance

** * ** ***

Match to Customer *

㍉〈.1,‡‡pく.05, 榊㍉<.Ol

products舳er1993,which implies that most sample pmj㏄ts teIlded to b600st comcio皿s.If th6se cost comci011s

proj㏄ts had to add i-mo柵tive f㎝turos to th6ir pmdmcts,th6y pmb田bly would llavo to com膵n鯛t6for th6

舶sooiated additio皿d oost by rel1sing o■isting d6sig珂s for othor p耐s.The田bove res皿1t may iIldicate this6脆ct一

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40 HITOTSUBASHI JOURNAL OF COMMERCE AND MANAGEMENT [October

ance indicators, especially those for technical-related performance. For example, it was related

to perfonnance satisfaction in manufacturability (r = .50, p < .05) and technical perform-

ance (r = .60, p < .O1). Engineers we interviewed also pointed out that use of CAE simulation has a particular contribution to technical performance and product reliability or

quality, not to development efficiency.

However, data suggest that the use of computer simulation only has a moderate relation-

ship with improvement in development cost performance (r = 0.37, p < . 1). In addition,

despite its significant relationship with overall technical performance satisfaction, Table 12

shows that the use of computer simulation is not significantly related to a system performance

indicator on technical performance. This implies that the use of computer simulation tends to

affect local technical performance more than system performance.

The involvement of long-term planning groups was negatively related to some perform-

ance indicators. Especially, this had a significant negative impact on performance improve-

ment in adherence to schedule (r = -.55, p < .O1). This may simply indicate that long-term

planning groups do not work properly from a project member's point of view. Since the long-term planning groups play critical role in coordination among different projects as well as

across generations, the strong involvement of these groups may indicate that projects needed

to adjust development activities with other related projects, which might cause problems in

adherence to the schedule (Nobeoka and Cusumano, 1994; Nobeoka, 1993, 1995).

The result may also indicate a potential confiict between the autonomy of individual

projects and inter-project coordination by the long-term planning groups (Clark, Fujimoto,

and Aoshima, 1991). The long-term planning groups usually impose several constraints on

individual project activities. For example, in our sample of projects, their involvement had a

strong negative correlation with the new parts ratio (r = -.67, p < .Ol), implying that it

prevented engineers from designing new parts from scratch. As a result, they may have tended

to ascribe low project performance to the long-term planing groups.

Tables 13 and 14 below highlight differences among factors affecting overall performance

and those affecting only system performance. These tables show clearly that experience-based

retention and cross-generational communication, in particular, have positive associations with

indicators for improvement of system performance. On the other hand, archival-based retention and computer simulation tended not to be associated with those indicators.

The tables also seem to indicate that experience-based retention and cross-generational

communication are related more to system performance than overall performance indicators,

although this difference for performance satisfaction indicators is not as clear as for perform-

ance improvement indicators.

Regression Analyses

To further examine the results from the above correlation analyses, we fitted the

regression models including selected control variables and indicators for archival-based and

individual-based knowledge retention capabilities. We excluded other explanatory variables

because of the small sample size. Appendix 3 and 4 shows results of regression analyses.13

13 For each performance indicator, Model I includes only control variables. We selected these control variables

by considering both conceptual reasoning and resu]ts of correlation analyses with performance indicators. Au the Model 2s include controi variab]es and indicators for the standard-based retention capability, the use of documents

and reports, and the use of computer simulatron. Model 3s include controt variables and individuat-based retention

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1996] ICNOWLEDGE Rl3TENTION AND NEW PRODUCT DEVELOPMENT PERFORMANCE 41

TABLE 15. A SUMMARY TABLE FOR THE RESULTS OF REGRESSION ANALYSES FOR RELATIONSHIPS BETWEEN KNOWLEDGE RETENTION CAPABILITIES

AND performance satisfaction

Standard-based retention Computer simulation Experience-based retention X-generational communication

Product cost performance

Development cost performance *

Adherence to schedule

*** Manufacturability

Technical novelty * **

Technical perf ormance

*** Match to customer needs

** *

Achievement of sales target

*p<.1, **p<.05, ***p<.O1

Results from Models 4s in Appendix 3 for the standard-based retention and computer simulation.

Results from Models 5s in Appendix 3 for the experience-based retention; Model 6s for the crossgenerational

communication

TABLE 16. A SUMMARY TABLE FOR THE RESULTS OF REGRESSION ANALYSES FOR RELATIONSHIPS BETWEEN KNOWLEDGE RETENTION CAPABILITIES

AND performance improvement Standard-based retention Com puter srmulation Experience-based retention X-generational communication

Product cost performance

Development cost performance

* **

Adherence to schedule

**

Manufacturability *

Teehnical novelty

Technical performance

** *** Match to customer needs

*p<.1, **p<.05, ***p<.Ol Results from Mode]s 4s in Appendix 4 for the standard-based retention and computer simulation.

Results from Models 5s in Appendix 4 for the experience-based retention; Model 6s for the crossgenerational

communication

capability indicators. Model 4s include all these explanatory variables except for the use of documents and reports

which showed no significant relationship with any performance indicator in Model 2s. Model 5s and 6s exclude either the experience-based capability or the cross-generational communication indicator to avoid multi-collinearity,

which seemed to be caused by a high correlation between these two indicators (r = 0.51, p < .O1).

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HITOTSUBASHI JOURNAL OF COMMERCE AND MANAGEMENT

Tables 1 5 and 1 6 below summarize the results shown in Appendix 3 and 4. Results for the

standard-based retention and the use of computer simulation come from Model 4s. Results for

the experience-based retention and cross-generational communication are obtained from

Model 5s and 6s, respectively, to eliminate problems of multi-collinearity.

These results generally supported the results of the correlation analyses, and indicated

even stronger relationships between experience-based retention and overall performance indicators. Especially, an experience-based retention variable was significantly associated with

development process efficiency. For example, the full regression models show that experience-

based retention is related to performance satisfaction both on development cost and on

adherence to schedule, at the I % significance level. It was also related to performance

improvement in development cost and in adherence to schedule at the 5% Ievel.

The finding that experience-based retention capability tends to be positively associated

with development process performance may indicate that critical experiences retained from the

past development activities is related to knowhow or knowledge to effectively manage the

development process by the mutual adjustment of working relationships.

In contrast, the cross-generational communication variable was specifically related to

technical- and market-related performance indicators, such as satisfaction on technical novelty

and improvement in technical performance, and satisfaction on the match to customer needs,

but not to efficiency-related performance indicators,14 Similar to results of the correlation

analyses, this result indicates that cross-functional communication with the previous project

members is an effective way to acquire technological and market knowledge.

The results are also consistent with the correlation results for retention capabilities

indicated by archives, standards and computerized systems. For example, the standard-based

retention variable had only a moderate relationship with satisfaction in technical novelty, as

indicated in Model 4 (p < . 1). The use of computer simulation was strongly related only to

satisfaction in technical performance (at the I % Ievel). It had moderate relationships with

improvement in development cost performance and in manufacturability (at the 10% Ievel).

In summary, the above correlation and regression analyses seem to support our hypothe-

ses, at least, for some performance dimensions. Contrary to the results in the previous section

regarding local performance, the above analyses generally indicate that individual-based

knowledge retention capabilities are required to improve product development perforrnance at

the project level. Particularly, we find that their impact is stronger, or broader, on system and

improvement performance rather than on static and local performance. On the other hand, we

found that archival-mechanisms for knowledge retention tended not to have a substantial

influence on product development performance at the project level.

Moderating Effects by Task Characteristics on Relationships Between Project Performance and

Individual-Based Retention Capability

Hypothesis 3 suggests that task newness may have moderating effect on the relationship

between experience-based retention capability and product development performance. To examine this possibility, we fitted regression models including interaction terms between

~' h fact, Model 4s show that cross-generational communication was negatively associated with satisfaction in

devetopment cost performance. However, this negative rdationship is probably due to multi-collinearity since results in Model 6s no longer showed significant negative relationship between cross-generational conununication

and satisfaction in development cost performance, though the sign was negative.

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1996]      KN0wu弧GE㎜…TENTl0N AND NEw PR0DUcT DEvEL0PMl…NT PERF0RM^NcE       43

illdividua1-based retention capability indicators and either technica1or m虹ket llewness in-

volved in1lew product development,

    New platform mtios we正e used to indicate tec1mical newness invo1ved in the proj㏄t tasks.

Market newness was iden舳ed by consideri㎎pmject mamgers’self-eva1uations,bmnd mme

cllanges,and market class changes,as described il1Appendix5.

    Appendix6shows resu1ts ofregression analyses that examine t1le moderating e脆cts eitl1er

of tecl1nical or market newness on performance satisfaction,while Appendix7s1lows results

fortheirmodemtinge価ects㎝perfomance improvement.All the Model lsinclude㎞teraction

te㎜s for the expehence-based正etention variab1es,while Mode12s include those for the

cross-9enerational communication vahable.

    Hypothesis3implies that we sllould expect negative signs on the regression coe冊cients for

intemcti㎝te㎜s.Indeed,wefo㎜dsign冊cantneg囲tivecoe冊cientsfortheintemcti㎝terms

TA肌E17. EF冊cTs0F INTEMcTI0Ns BETw朋N THE INDIvmUAL・BAsED RETENTI0N             AND THE TAsK CHARAcTERIsTIcs0Nμψr伽σ〃cε∫α1ψα10π

Experience-based retention X X-generational communication X

Market newness Technical newness Market newness Technical newness

Product cost performance

Development cost performance * * (-) * * (-)

Adherence to schedule

Manuf acturability * (-)

Technical novelty

Technical performance * * * (-)

Match to customer needs

Achievement of sales target * (-) * * * (-)

ヰp<.1,榊p〈.05,榊‡p<、O1

Astemks血em that mtemctlo皿s between ret611tlon mechanlsms and t田sk newmss havc slgm血c田mt

mgatiw imp田cts㎝porfom田n㏄indic担t㎝。

TA肌E18. EF冊cTs0F INTEMcT10Ns BETw朋N T朋IND1vIDUAL-BAsED Rヱ丁酬丁10N           AND THE TAsK CHARAcTERIsT1cs0N1,εψ7㎜o”c2ゴ㎜ρ1oソ色㎜ε〃’・

Experience-based retention X X-generational communication X

Market newness Teehnical newness Market newness Technical newness

Product cost performance * (-)

Development cost performance

Adherence to schedule

Manufacturability

Technical noveity

Technical performance

Match to customer needs

‡p〈.1,榊p〈.05,‡舳P<一01

Ast6risks mean tllat intemctio瓜betwee11祀tentio皿m㏄hanisms and task mw116ss h州e siglliiicmt

negativ6impa眺on perfomallc6i皿dicato凧

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44 HITOTSUBASHI JOURNAL OF COMMERCE AND MANAOEMENT [October

in the regression models. This implies that projects tends to benefit from retention of prior

experience bases when they develop new products based on existing platform designs toward

familiar customers. Especially, the results seem to suggest that market newness is more likely

to moderate relationships between individual-based retention capabilities and product develop-

ment performance than technical newness. Tables 17 and 18 below summarize the results.

As these tables show, we found expected moderating effects by market newness on relationships between experience-based retention and satisfaction in development cost per-

formance (p < .05) and sales achievement (p < .1). This implies that, when projects developed new models targeted to new customer bases, retention of prior individual experi-

ences may negatively affect development efficiency and market performance

We also found that a similar expected moderating effect by market newness on relation-

ships between cross-generational communication and satisfaction in development cost per-

formance (p < .05), in manufacturability (p < . 1), achievement of sales target (p < .O1),

and improvement of product cost performance (p < . I ) . These results suggest that retention

of prior knowledge through face-to-face communication may not be appropriate for projects

developing new products with different target markets from the previous models.

Our variable indicating communication with the previous project members also partially

captures transfer of previous members (as we already explained, the more members are transferred from the previous projects, the more current intra-project communication overlaps

communication with the previous project members). Therefore, these results may generally

indicate that, while retention of embedded knowledge may be particularly important in the

case where there is continuity of customer needs, it creates some problems in adapting to new

market conditions.

On the other hand, technical newness had a significant moderating effect on the relation-

ship between technical performance and cross-generational communication variables (p <

.O1). This suggests that, when projects developed new platform designs, communication with

the previous generations of project members negatively affected technical performance. However, technical newness had no other significant moderating effect.15

These results may indicate that knowledge about linkages to the customer base is more

context-specific than technical integrative knowledge, as some researchers have pointed out (e.

g., Christensen and Rosenbloom, 1995; von Hippel, 1994), and thus tend to become obsolete

when there is a significant change in the customer base. On the other hand, existing technical

knowledge might be more widely applicable in different settings, implying that prior knowledge 16 may be useful even in developing novel technological concepts (Iansiti, 1995b).

15 In fact, close examination in the scatter plot indicates that the observed strong moderating effect by technica]

newness for technical performance was, in fact, strongly influenced by one data point as a outlier. 16 Although we found that technical newness tended not to moderate the impact of experience-based retention

on performance, it may not be appropriate to conclude that retention of experience bases is always important

regardless of technical discontinuity. This is beeause, first, our technical newness indicator merely shows the

newness of the platform design, not of fundamental technological approaches, and, second, because automobile technology is generally "mature". This implies that what is new in this industry may not be sufficiently new to

indicate the degree of technological change that might occur in newer mdustries.

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1996] KNOWLEDGE RETENTION AND NEW PRODUCT DEVELOPMENT PERFORMANCE 45

6. Implications and Conclusions

6-1. Importance of Explicit Management of Knowledge Retention

While existing literature on management of new product development has identified

coordination and communication across specialized activity areas as critical to development

speed, productivity, and product quality, our findings suggest that such coordination and

communication alone may not be enough to achieve project-level integration for high product

development performance. We showed that the success of projects also hinges upon their

ability to learn from past integrative experiences. These findings imply that instantaneous

structural solutions such as cross-functional teams and heavy-weight project structures may

not be the only answer to improve development performance. Projects may be able to execute

their integration activities most effectively when they deeply understand potential interactions

across different knowledge domains through past development experiences.

However, our results also implied that knowledge retention may not always be desirable.

Especially, we found that prior experience bases seem to prevent projects from successfully

introducing products for new markets or unfamiliar customers. This suggests that managers

have to explicitly manage knowledge flows from previous projects in accordance with the

specific objectives for each new product development project. For example, when projects are

trying to introduce a new product line for new customer groups, companies may want to

isolate those projects organizationally from other projects. In such a case, it might also be

appropriate to form projects with members who do not have too much experience in

developing a particular product line.

6-2. Different retention mechanisms for performance improvement

Our results showed that, while improving local performance may require capabilities to

retain knowledge in articulated forms, such as documentation and computerized CAD files,

improving system performance at the project level may call for the transfer of individual

experience bases. This implies that archival-based and individual-based mechanisms for

knowledge retention are not necessarily substitutes, but, rather, they are complementary.

Companies may greatly benefit from formalization of knowledge within well-established

engineering domains. Especially, we believe that advanced computer-aided design systems will

increasingly capture design know-how once embedded in experts and craftsmen in these

specialized domains. However, as long as a new product is the outcome of complex interac-

tions among different knowledge domains, retention of individual experiences may remain

important. Besides, once knowledge is fully articulated and standardized, it becomes relatively

easy to transfer it across companies, which decreases its competitive value. Therefore, the

increasing articulation and standardization of automobile design knowledge do not necessarily

devalue individual experience bases, but rather, they may increase their value if they have

integrative charaeteristics.

Although both archival-based and individual-based knowledge retention are important,

the relative emphasis between these may differ across industries and different stages of industry

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46 HITOTSUBASHI JOURNAL OF COMMERCE AND MANAGEMENT [october

evolution. First, the nature of product architecture may affect the relative importance. When

a product is completely modularized both in terms of the physical design and the design

process, its overall performance may be influenced mostly by the initial architecture or design

of how the individual components work separately as well as together, rather than on how the

components interact as a system.11 In this case, investment in archival and computerized

mechanisms for knowledge retention may become important. On the other hand, when a product architecture is highly integrated, including complex interdependencies between differ-

ent components, improvement of product performance may require more subtle knowledge of

interactions among individual components. In such a case, the retention of individual

experience bases may play a critical role.

Second, the characteristics of user requirements may also influence the relative im-

portance between archival or computer-based and experience-based retention. When the required product functionality is stable and consists of only a few clear dimensions, knowledge

about user-design interfaces is relatively simple, thus, a project can concentrate only on

technical issues. We conjecture that, in such a circumstance, archival and computerized

mechanisms may be important ways to retain knowledge. On the other hand, some products,

such as an automobile, can satisfy customers in a number of ways, such as in styling, acceleration, space utility, and mileage. An appropriate combination of different performance

dimensions is often very subtle, which even customers may not be able to articulate. In such

a case, knowledge to integrate customer needs with physical designs may have to be kept as

tacit and embedded knowledge by individuals.

Although we assume in this paper that automobile development involves substantial

complexity and uncertainty both in the product architecture and user interface, this may

change in the future. For example, our interviews revealed that automobile design is increas-

ingly being modularized to enable more efficient sharing of components across different

models. This may result in more importance of archival and computerized mechanisms for

knowledge retention. On the other hand, some interviewees mentioned that it had become

increasingly difficult to understand user needs. This may indicate that roles of persons who

manage linkages between user needs and product designs will become more critical than before. In any case, managers may need to consider the required level of integration activities

involved in new product development to appropriately invest in different knowledge retention

facilities.

HITOTSUBASHI UNIVERSITY

17 However, even if the interfaces for each component isolate interactions, the system can be highly integrated

when important performance characteristics arise from the physical properties of multiple components. For exanrple, on a computer, a design of the disk drive is totally modularized. However, if it is slow, then the computer as a system exhibits poor performance.

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19961 KNOWL1…DG喧m…T1…NTlON AND Nl…W PRODUCT DEV肌0PM酬丁冊RFORMANCE 47

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1996] KNOWLEDGE R1…TENT10N AND NEW PRODUCT DEVELOPMENT PERFORMANcE          5一

Appendix1. DEc0MPosITI0N0F OvEMLL PERF0RMANcE

    Tosepamtesystemperfoman㏄fmovera1lpmjectperfomance,indicatorsforovemllperfomance satisfaction and performa1l㏄improvement at t1le entire proj㏄t leve1were

regressed on corresponding local performall㏄and Iocal performallce improvement illdicators.

The results from t1lis are shown below:

REGREssI0N REsULTs BETwEEN OvEMLL PR0個cT PERF0RMANcE                 AND LOcAL PERFORMANCE

Body D6sig皿

Ch困sis Design

Extedor/Intehor D閨igIl

Electm皿ic Comp011ellt Design

E1lgine Desigll

Deve1opmel1t Cost

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一0.21

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PerfOma㏄e  I

 O.59舳

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0.56‡‡‡   O,34}‡    O.20

I=P6rfom㎜㏄Satisfacti㎝トP6rio㎜a㏄6㎞pm6me皿1㌔<.1舳P<.05‡榊p〈.O1

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5319961 KNOWLEDGE RET酬丁10N AM〕M…W PRODUCT DE珊LOPM1…NT冊RFORMANC1≡

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Page 43: Knowledge Retention and New Product Development Hitotsubashi journal of commerce and ... · 2018-11-07 · Hitotsubashi University Repository Title Knowledge Retention and New Product

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Page 44: Knowledge Retention and New Product Development Hitotsubashi journal of commerce and ... · 2018-11-07 · Hitotsubashi University Repository Title Knowledge Retention and New Product

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Page 45: Knowledge Retention and New Product Development Hitotsubashi journal of commerce and ... · 2018-11-07 · Hitotsubashi University Repository Title Knowledge Retention and New Product

56 HITOTSUBASHI JOURNAL OF COMMERCE AND MANAGEMENT [October

Appendix 4: Market Newness

First, project managers were asked to choose the most appropriate descri~tion of their

products from the following three descriptions: "(a) mamly targeted to the exrstmg customer

base;" "(b) targeted both to the existing customer and the new customer base;" and "(c)

mamly targeted to the new customer base " When a proJect manager chose (c), we categorized

his project as "new market"; when he chose (a), we categorized this as an "existing market."

As a result, four projects were categorized as "new market" and five projects as "exrstmg

market " For remammg 1 3 proJects we further classlfied four models as "new market" since

these products were given different brand names from the predecessor models with substantial

price differences. Finally, we classified one product as "new market" since this new model was

clearly positioned in a different market class from the previous model. As a result, seven

projects were classified as "new market," and 1 5 projects as "existing market"

Page 46: Knowledge Retention and New Product Development Hitotsubashi journal of commerce and ... · 2018-11-07 · Hitotsubashi University Repository Title Knowledge Retention and New Product

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Page 47: Knowledge Retention and New Product Development Hitotsubashi journal of commerce and ... · 2018-11-07 · Hitotsubashi University Repository Title Knowledge Retention and New Product

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