Jurnal Teknologi New Product Development in Malaysia : Does Organizational Background Really Matter ?

New Product Development (NPD) is vital in assisting Research and Development (R&D) based organizations to adapt to the changes in markets and technology for competitive advantage. Ensuring the success of new products and optimization of new product performance is critical and essential for Research and Development based organizations. Hence, this study is carried out to explore does organizational background in term of company’s ownership (i.e. local or multinational companies) and operational scales (i.e. number of Research and Development staffs) affect NPD performance of Research and Development companies in Malaysia. In line with this, 8 New Product Development performance attributes were identified from literature review. These attributes were subsequently formulated into a survey questionnaire and responded by 186 respondents. Thereafter, the effect of organizational ownership and operational scale toward NPD performance are examined separately via Independent Sample t-test and Analysis of Variance (ANOVA). Finding from the study revealed that the level of NPD performance in multinational R&D companies is higher than local R&D companies. Findings from this research also implied that NPD performance can be further improved by increasing number of R&D staffs.


1.0 INTRODUCTION
Intense competition in the global business market forced organizations to regularly review and re-examine their strategies (such as innovation, operation and marketing strategy) to attain competitive advantage [1].In the case of research and development (R&D) based companies, competitive advantage can be obtained by creating and developing new technology-based and innovative products.All R&D based companies are currently facing the challenges of innovation.Whereby, their survival and growth mainly depends upon the capacity they possess to renew the product innovation system; the effectiveness of the innovation process; and the ways in which they create and deliver the offering [2].
In many industries, patenting is a tool commonly used to protect one's own technological position and attack the technological positions of competitors or other companies [3].Patents filed by a company is a major constituent of the company's valuable assets, creates barriers for competitors to enter the segment and improves competitive insulation, making "winning over" the firms customers difficult for competitors [4].Patenting is also used as an innovation measurement tool to identify a corporation's innovation levels [5].However, when this is applied in the context of Malaysian companies, there is growing concern that innovation level, or the R&D and New Product Development (NPD) activities in Malaysian companies are less efficient as compared to foreign companies.
Statistics from the Trademark and Patent Office of Malaysia revealed that there was an increase in the number of patent applications in Malaysia from 1,887 in 1989 to 5,402 in 2008; however, foreign companies still own more patentable and patented technologies than Malaysian companies [6].From 1986 to October 2009, patent applications by the Malaysian companies have been restricted to an average of 7% (Intellectual Property Corporation of Malaysia Patent Statistic 1986-2009) of the total patent applications received by the Intellectual Property Corporation of Malaysia (MyIPO).Moreover, patents awarded to Malaysian companies during the same time period made up only 4% (Intellectual Property Corporation of Malaysia Patent Statistic 1986-2009) of total patents released by MyIPO [6].
In addition, based on the 2009 Malaysia Productivity and Investment Climate Survey, the innovation and technological capabilities in Malaysia were reported to be lower compared with the survey done in 2002 [7].According to the survey, R&D staffs employed by manufacturing companies had reduced from 18 percent in 2002 to 12 percent in 2009.Meantime, number of hired R&D staff in services sector also dropped from 9 percent in 2002 to 5 percent in 2009.
Hence, this study is carried out to explore does organizational background in term of company's ownership (i.e.local or multinational company) and operational scales (i.e.number of R&D staff) affect NPD performance of R&D companies in Malaysia?As such, two research questions are developed for this study: RQ1: What is the perceived level of NPD performance within R&D companies in Malaysia?RQ2: Are there any differences in NPD performance within R&D companies in Malaysia base on organizational background in term of company ownership and operational scale?
2.0 LITERATURE REVIEW

Overview of NPD Performance
As product innovation is significant in assisting R&D based organizations to adapt to the changes in markets and technology for competitive advantage, ensuring the success of new products and optimization of new product performance is critical and essential for R&D based organizations [8][9].However, one of the key issues faced by R&D organizations is the assessment of innovation achievement, and evaluation of R&D effectiveness or NPD performance as a whole.Part of the challenge is to determine and award NPD performance fairly and equitably.R&D Researchers and Managers often argue that one of main challenge in NPD management is the measurement and management of NPD performance [9].

Definition of NPD Performance
NPD performance or product innovation performance is the market reward for new products in terms of the products' contributions to sales and profits [10].Based on a definition from Product Management and Development Association (PMDA), NPD performance indicators are the evaluation criteria for new product performance in the market.Prior research has shown that NPD performance measurement or indicator can effectively distinguish best practice R&D firms from average R&D industry [11][12].Amass finding from previous researchers, this study extracted eight modes of assessment measures as NPD performance attributes [10][11][12][13][14].The NPD performance measures employed in this research comprise of the broader aspect of measurement, which includes assessment of product achievement via performance target and quality specification; measurement of organization performance in terms of financial aspects (cost reduction, organization financial gain) and effectiveness of project management (Time-to-market, Number of new product introduced per year), R&D innovation capability (patent discloser) as well as measurement of customer satisfaction.The eight NPD performance measures are summarized in Table 1.

3.0 RESEARCH METHODOLOGY
This study used quantitative research approach.The questionnaire is developed to grade NPD performance based on the eight NPD performance indicators derived from literature review (refer to Table 1).To save time for the respondent, the questionnaire is design in a table format, and the selection of answers involves circling the standard rating that is provided.Respondents were asked to rate the perceived level of NPD performance based on the five point scale ranging from (1) very low to (5) very high via questionnaire.Scale reliability using Cronbach's Alpha was generated to assess the consistency of homogeneity among items.Subsequently, Descriptive statistic was used in respond to RQ1, while the effect of organizational ownership and operational scale are examined separately via Independent Sample t-test and Analysis of Variance (ANOVA).4.0 DATA ANALYSIS The sample frame consists of 384 randomly selected individual from R&D staff in R&D companies within Malaysia.Return survey questionnaires were verify via data screening process to ensure data in the questionnaires are all in place, and accounted for.As the result, the total useable respondents is 186, this made up a useable response rate of 48.4%.

Reliability Test
Reliability coefficients were calculated.For purpose of this study, a reliability coefficient above .60will be used to gauge statistical reliability [15].Cronbach Alpha reliability values for NPD Performance attributes are found to be above 0.7147.This implies that the data are statistically significant (i.e > 0.6) to proceed for further analysis.The mean NPD performances among the eight NPD performance attributes are compared using paired t-test (refer to Figure 1).Paired t-Test result of Figure 1 revealed that the mean performance for the top two attributes, Met Performance Specification (MeetPerformance) and Time to Market (T2M) are significantly higher than the other attributes.This result suggests that R&D companies in Malaysia rated their performance in meeting performance specification and time to market above all other performance measures.

NPD Performance Level
Result from paired t-test also suggested that that NPD performance measures "Number of new products introduced to market per year" (Patent) and "Number of patent application" (NoOfProduct) are significant lower than the rest of NPD performance attributes.The finding demonstrates that R&D companies in Malaysia perceived their performance in term of number of new products introduction and patent application are poorer than the rest of NPD performance measures.

Independent Sample t-test
Independent samples t-Test is applied to assess the differences in NPD Performances based on companies' background in term of companies' ownerships, i.e. local or multinational R&D based companies within Malaysia.Null hypothesis in this regard formulated was "there is no difference in NPD performance level between local companies and multinational companies based in Malaysia".The null hypothesis would be rejected if the p-values was found to be lower than 0.05.For this study, p-value that is less than 0.05 will be highlighted From Figure 2, significant level for Levene Test (F-value) is 0.878, which is higher than 0.05, hence, null hypothesis that the variances of the two populations are equal, is fail to reject.Therefore independent samples t-test result will be based on assumption that variances are equal between NPD performance of local and oversea companies, or equal variance method is used.

Figure 2 Independent samples t-test
From column "Equal variances assumed" of Figure 2, the significance level for a two-tailed test is 0.000, which is less than 0.05 suggested that the hypothesis is rejected.Therefore, field data reveals that there is significance different in level of NPD performance between Malaysian owned corporations versus multinational companies based in Malaysia.From Figure 3, the average NPD performance in multinational R&D companies within Malaysia is rated at 3.58, while the average NPD performance of local owned R&D based companies is 0.53 lower at the average of 3.05.The ANOVA results via SPSS are presented in Table 3.Based on Table 3, as the significance level corresponding to the compared mean in the analysis is observed to be 0.000, which is less than 0.05, therefore, the hypothesis is rejected.The analysis result, hence, suggested that there is significance difference in NPD Performance based on company's R&D scale in term of number of R&D staff.
The mean NPD Performance rating for each sub-group is shown in Figure 4.It is remarkable to observe that NPD Performance for companies with 80 R&D Staffs or more is the highest with the mean of 3.5846.While companies supported by less than 10 R&D staff scored the lowest NPD Performance level with the mean of 3.2923.

NPD Performance
The perceived NPD performance in this study was assessed using eight NPD performance's attributes.The ranking orders of NPD performance level for the eight attributes are as follow, Met Performance Specification, Time to market, Customer satisfaction, Cost and Performance improvement, Met Quality Specification, Organization gains, Number of new products introduced to market per year and Patent disclosure.
The mean performance of 3.39 (refer Table 2) across all the eight NPD performance attributes reveals that the NPD performance within R&D based companies in Malaysia is above average.NPD Performance attribute "Met Performance specification" scores the highest mean of 4.28 which suggest that the achievement of product performance specification has been well managed by R&D based companies in Malaysia.However, finding from the research also reveals that NPD performance related to patent disclosure and number of new product launched per year are relatively low at the level of 1.94.This finding is in line with the statistics extracted from 2008 Malaysian Science and Technology Indicates (MSTI) Report released by Ministry of Science, Technology and Innovation (MOSTIC) [6].Base on MSTI report, for the period of 2005 to October 2007, a total of 13,266 patents issued by MyIPO, of the total, applications from Malaysia only accounted for 3.3% of total patents granted.Global Comparisons on patterns applied and granted by United States Patent and Trade Mark Office (USPTO) 2008 also reveals that the innovative activities and R&D works by Malaysian is still insufficient.

NPD Performance versus Company Background
Independent sample t-Test conducted in this study with 5% significance level as criterion revealed that there is significant difference in NPD performance between multinational and local organizations.Multinational organizations tend to perceive a higher performance.The findings from this research are consistent with the survey result of 2009 Malaysia Productivity and Investment Climate Survey Report (PICS-II) [7].The PICS-II survey reported firm characteristics are often a good predictor of firm performance.The survey suggested large, foreign-owned, exporting firms that engaging in R&D activities tend to have higher labor productivity and total factor productivity than others.
Within the content of the PICS-II survey, the presences of foreign firms have beneficial effects on the performance of domestic firms.The pattern is consistent with the experience of other countries.

NPD Performance versus R&D Scale
To address the second part of RQ 2, one-way Analysis of variance (ANOVA) was conducted to test differences of NPD performance mean base on R&D scale in term of number of R&D staff as sub group.The mean NPD Performance rating for each sub-group is shown in Figure 4.It is interesting to observe that NPD Performance for companies with 80 R&D Staffs or more is the highest at a mean value of 3.5846.While companies supported by less than 10 R&D staff scored the lowest NPD Performance level with a mean of 3.2923.A notable trend spotted in Figure 4 where companies with bigger scale of R&D staff tend to achieve a higher NPD Performance.
The finding is in agreement with study done by Zhang, Anthony, and Scott who found that increased resource allocation shows a positive relationship to product innovation performance, in particular for moderately innovative products [8].A common problem faced by R&D companies is allocation of resources between innovation initiatives in a portfolio [16].According to Zhang, Anthony, and Scott, the more resources a R&D organization committed towards highly innovative and moderately innovative product development, the more likely it is to use all the knowledge available to it intensively [10].In turn, this improves the perceived market success of its new products.

6.0 CONCLUSION AND RECOMMENDATION
The research revealed that the level of NPD performance in multinational R&D intensive companies is higher than local R&D intensive companies.The Malaysia's National Innovation Model emphasize on a shift of Malaysian economy from a resource-led economy to an innovation-led economy [17].However, Foreign direct investment (FDI) by multinational corporations (MNCs) international joint ventures (IJVs) has played a significant role in enabling the country to not only acquire capital, but also the technologies in order to enhance its competitive performance [17].
Hence, the finding from this research implies that national innovation policy should place a pronounced effort upon improving NPD performance among local R&D based companies.For instance, as highlighted in Economy Transformation Program, efforts should be made to provide local companies a better access to research and technologies, improve research infrastructure and provide financial support.All these are the crucial factors which can help raise the level of NPD awareness and NPD performance for local R&D intensive companies.
Findings from this research also imply that NPD performance can be improved by increasing number of R&D staffs.The implication from management perspective is that the management can influence the performance of NPD by optimizing resource allocation across NPD project teams.Eric, Orville and Robert suggested a flexible; project-by-project contingency resource allocation approach which is likely to produce better outcomes on a variety of performance dimensions than adopting a one-size-fitsall approach to organize and manage product development efforts [18].
Although the study covered a wide range of private sector organizations from a variety of sectors, however, the study is limited to a single nationwide sample, which is Malaysia.Generalizing the research results to international contexts and alternate setting may not be applicable.Therefore, future research could be done at other countries with the steps and processes modeled from this study; this would contribute to the knowledge of NPD via determination of how the research output differs between countries.

Figure 1
Figure 1 Paired samples t-test

Figure 4
Figure 4 NPD performance bases on operational scale

Table 1
NPD performance measurements

Table 2
"Patent disclosure" is rated as the lowest performance attribute at performance level of 1.94.The rest of NPD performance attributes are suggested by respondents attained performance range of 2.95 to 3.79.

Table 2
Perceived NPD performance level

Table 3
Analysis of variance (ANOVA)