It is generally acknowledged that a company's product strategy,the nature of that strategy and the extent to which it is clearlycommunicated within the company, have a marked effect on businessperformance. The paper reports on the results of a study of 88 UK SMEsrecently undertaken by the DERC. The research was aimed at determiningthe relationship between a company's performance in terms of the successof its new product development (NPD) activity and the extent to whichsuch activity is governed by a predefined product strategy. The findingsshow that over 90% of the companies considered that innovation was animportant element of the company's strategy. However, nearly 50% of thecompanies failed to show any evidence of a documented product strategyto underpin the processes of innovation. This work has allowed possibledrivers for innovation to be examined in the context of small companyoperations. The research also identifies some issues not alwaysassociated with the innovation and product development processes whichnonetheless can have a profound effect on the success, or otherwise, ofthis activity
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