Sources of Market Information, Its Quality and New Product Financial Performance

Abstract

While we observe a growing interest in the role of market information in new product development (NPD), existing research has still largely ignored quality of market information that is a crucial issue in the era of the information society. What does affect quality of market information in new product development projects and how does this quality influence new product financial performance? In this paper we address these questions and hypothesize that sources of information (e.g. customers, competitors) influence the quality of market information and this quality affects new product financial performance through market predictability as a mediator. We test these hypotheses using data about 287 new product projects of medium-high and high technology firms from Poland. Our findings indicate that the key sources that influence market information quality are customers and competitors. More intensive collection of market information from these two sources, and especially from customers, will result in a higher quality of this information. Surprisingly, gathering market information from other market entities (e.g. suppliers, distributors) has no effect on market information quality. We also find that an important consequence of high quality market information available in NPD is high new product financial performance. Additionally, market information quality positively influences market predictability that in turn has a positive impact on the new product performance. Our results support a partial mediation effect of market predictability between the quality of market information and NPD financial performance. Based on these findings, the author discusses theoretical and managerial implications of this work and proposes paths for future research.

DOI: http://dx.doi.org/10.5755/j01.ee.29.1.13405