Success in new product development (NPD) is seen as key to a company’s ability to gain competitive advantage and the profitability that follows. But too often, NPD performance is measured in business/market terms, and its potential for knowledge creation, while widely acknowledged, is not weighed properly in the scales.

The authors urge the need to understand the mechanics of the trade-off between exploitation and exploration projects, maintaining that any company seeking to cover both its short and long-term positions should aim to keep the two in balance. Through an empirical examination of data from 60 NPD projects mounted by ten of the largest Korean mobile phone companies, they show how superior knowledge performance in NPD produces superior performance in both business and knowledge dimensions in future projects.

Among their recommendations for managers, the authors counsel against giving low priority to the technically challenging ‘trade-off’ projects, whose negative affect on business performance is countered by positive yields in knowledge performance terms.
 
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