Risk management and strategy alignment: influence on new product development performance

• DOI: 10.1080/09537325.2021.2011192
• Publication Date: 2021-12-07T17:04:11Z
• Authors: Darja Peljhan; Mojca Marc
• Keywords: 05 social sciences; podjetništvo; new product development; entrepreneurship; strategija; enterprise risk management; strategic type; ERM; NPD performance; 0502 economics and business; strategy; NPD; management; info:eu-repo/classification/udc/658

Drawing on the contingency view of strategic alignment and existing risk management paradigms, a cross-sectional study was conducted to investigate how strategic product-market orientation moderates the impact of risk management system (RMS) on new product development (NPD) performance. A regression model from a sample of 95 companies shows that companies supported by RMS have higher NPD performance than companies without RMS. However, this effect is not stronger for prospectors, i.e. companies most influenced by NPD. Contrary to well established belief in the risk management literature and practice, we find that a state-of-the-art enterprise risk management (ERM) can help prospectors achieve higher NPD performance only up to a point. In fact, prospectors benefit most from relatively less developed (ERM) systems, suggesting that overly extensive control procedures may hinder successful new product development. Based on empirical evidence, the study offers new insights into the interplay between strategy, risk management and NPD performance. From a practical perspective, our findings can serve as a guide to help organisations align their RMS to better support their strategic direction. Such guidance is currently lacking in the academic and professional literature.