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Abstract In this paper, we develop a theory of efficiency and performance tradeoffs for new product development (NPD) projects. Data from 137 completed NPD projects are analyzed for evidence pointing to tradeoffs in performance patterns manifested in the data. In addition, we investigate hypothesized relationships between certain NPD practices and a holistic, efficiency based measure of NPD performance. We demonstrate a new approach to the operationalization of holistic new product development (NPD) project performance, employing a sequential data envelopment analysis (DEA) methodology that simultaneously incorporates multiple factors including new product development cost, product cost, product quality, and project lead time. The results of the data analysis support our hypothesis that tradeoffs among NPD performance outcomes are manifested more strongly in highly efficient projects when compared to inefficient projects. The presence of three distinct subgroups in highly efficient projects is suggestive of several modes of efficiency which appear to achieve equally effective market success. The absence of such patterns in less efficient projects supports a theory of performance frontiers that may impose the need for tradeoffs more strongly as NPD projects achieve higher levels of efficiency. The findings also point to the importance of project management experience, balanced management commitment, and cross‐functional integration in achieving high levels of NPD project efficiency. We discuss the implications of the findings for practice and for future research.
Swink et al. (Tue,) studied this question.