The process of product development in small and medium sized manufacturing firms :evidence from the North East of England

Abstract

Manufacturing SMEs are suggested to be of continuing importance to economic growth and are a target for regional development policies which have focused on innovation and learning as a primary route to increased corporate (and consequently regional) competitiveness. Despite this policy focus on SMEs there is a limited understanding of how they undertake product development in practice. Firm-level policies are frequently informed by `best practice' models based on large-firm activities, and which may not therefore, be appropriate to SME contexts. The thesis seeks to understand what the process of product development in manufacturing SMEs is, and specifically, how it is managed, how inputs to the process are sourced, and which constraints might limit SMEs in their product development activity. The thesis is the product of an ESRC CASE studentship with the Regional Technology Centre (RTC North) Ltd as the industrial partner. An initial aim of the research was (in line with the Case sponsor's concerns) to identify `good practice' in product development management. As data collection progressed this initial way of understanding firm-level product development practices (as a process which could be reduced to a series of `good practice' management steps) was found to be inadequate. The structure of the thesis reflects this change in understandings. The findings presented in the thesis are based on five case studies and twenty five interviews (utilising qualitative research methods) undertaken at manufacturing SMEs between November 1999 and February 2002. Whilst particular ways of managing the product development process, which approximated to `good practice' recommendations suggested in the literature, did appear to enable some companies to manage their product development processes in more efficient and effective ways, overall, the degree to which firms were able to implement these recommendations was very much contingent on their individual circumstances and characteristics, relating to, for example, the firm's industrial or market sector, the background and specialisms of the company owner or managing director, particular project-specific characteristics relating to the degree of novelty in the project for the developing firm, and the number of technical staff employed in the firm, loosely in relation to the company's overall number of employees. The research suggests significant variety in the SME population, both overall and specifically in relation to approaches to product development. This therefore poses a difficulty for policymakers in designing or implementing a `standard' policy solution. The research draws on the resource or competence-based perspective in order to better understand the unique position of firms in relation to the product development processes, but additionally understands product development as a political and potentially contested arena within the firm. Differences were apparent between how interviewees suggested the process should be managed (in terms of both `best practice' prescriptions but also in terms of `official' company procedures) and how this was done in practice. Managing product development itself appeared to be a learning process, and this suggests that it can become a key company capability. Non-technical problems arising on development projects which related to political or conflict-based issues were largely ignored by managers, and this approach is reflected in current innovation policy support which at a firm level primarily seeks to address technical problems.