Business Strategy and the EnvironmentBus. Strat. Env. 14, 272–285 (2005)Published online in Wiley InterScience (www.inters...
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Bridging Environmental Issues with New Product Development                                                     275the envi...
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Bridging Environmental Issues with New Product Development                                                  281Management ...
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Bridging Environmental Issues with New Product Development                                                 285BiographyLuc...
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Berchicci, L., & Bodewes, W. 2005. Bridging environmental issues with new product development. Business Strategy and the Environment, 14(5): 272.


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Studies dealing with environmental issues in product development have made sig- nificant progress explaining how firms can develop greener products that succeed on the market. Intriguingly, although a large number of tools and methods have been developed that supposedly help firms develop greener products, it is less common to draw on established theories on product innovation. This may explain why firms that have tried to develop more sustainable products have had mixed experiences. Environmental new product development (ENPD) and new product development (NPD) literature is reviewed to develop a model that helps explain the complexity of greening and the challenges product development teams face in their attempts to incorporate environmental issues into product development. This paper emphasizes that scholars need to incorporate environmental issues into established theories on NPD. Adapting existing theoretical models may help practitioners in their struggle to integrate the E into NPD. Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment.

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Berchicci, L., & Bodewes, W. 2005. Bridging environmental issues with new product development. Business Strategy and the Environment, 14(5): 272.

  1. 1. Business Strategy and the EnvironmentBus. Strat. Env. 14, 272–285 (2005)Published online in Wiley InterScience ( DOI: 10.1002/bse.488 Bridging Environmental Issues with New Product Development Luca Berchicci1* and Wynand Bodewes2 1 Design for Sustainability Program, Industrial Design Engineering, Delft University of Technology, The Netherlands 2 RSM Erasmus University, Rotterdam, The Netherlands ABSTRACT Studies dealing with environmental issues in product development have made sig- nificant progress explaining how firms can develop greener products that succeed on the market. Intriguingly, although a large number of tools and methods have been developed that supposedly help firms develop greener products, it is less common to draw on established theories on product innovation. This may explain why firms that have tried to develop more sustainable products have had mixed experiences. Environmental new product development (ENPD) and new product development (NPD) literature is reviewed to develop a model that helps explain the complexity of greening and the challenges product development teams face in their attempts to incorporate environmental issues into product development. This paper emphasizes that scholars need to incorporate environmental issues into established theories on NPD. Adapting existing theoretical models may help practitioners in their struggle to integrate the E into NPD. Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment.Received 1 June 2004; Revised 6 April 2005; Accepted 17 May 2005Keywords: environmental innovation; environmental performance; environmental attributes; new products; new product devel-opment; management support; escalation of commitments; interpretationIntroductionT HE ABILITY TO COMMERCIALIZE PRODUCTS SUCCESSFULLY IS CRUCIAL FOR FIRMS THAT WANT TO compete in the marketplace (Griffin and Page, 1996). Despite an enormous amount of research on the factors determining successful NPD, many new products prove unsuccessful in the market. Nevertheless, the very attempt of NPD research to understand what makes products fail or succeedallows us to explore the critical role of product advantage (features, price, durability etc.) in market accep-tance and commercial success. Like many other new products, environmentally friendly products also* Correspondence to: Luca Berchicci, Design for Sustainability Program, Industrial Design Engineering, Delft University of Technology,Landberghstraat 15, 2628 CE Delft, The Netherlands. E-mail: © 2005 John Wiley & Sons, Ltd and ERP Environment
  2. 2. Bridging Environmental Issues with New Product Development 273often fail. The effort to make better products in environmental terms does not always translate into a com-mercial or viable business case (Hall and Clark, 2003). The question is whether environmental productsfail for the same reasons that ‘regular’ products do. Given the multidimensional character of environmental issues, previous research has drawn on exist-ing theoretical frameworks to examine the relationship between the natural environment and organi-zations at various levels of analysis (Starik and Rands, 1995). At the organizational level, many studieshave addressed environmental issues in relation to the strategic management and capabilities of firms.Many authors have adopted the resource-based view (RBV) because it defines competitive advantageas the outcome of organizational capabilities that result from a proactive environmental strategy (e.g.Aragon-Correa and Sharma, 2003; Hart, 1995). Other studies provide in-depth investigations as to whyfirms respond to environmental issues, adopting institutional theories to explain how organizationsbecome more aligned with the institutional environment with its environmental regulations, mimicryand normative pressure (e.g. Bansal and Roth, 2000; King and Lenox, 2000). Others have investigatedthe individual and contextual factors that influence the decision on whether or not to embrace envi-ronmental issues, adopting theories of planned behavior (e.g. Cordano and Frieze, 2000). Another group of studies focuses on the integration of environmental issues into products and ser-vices (e.g. Brezet and Hemel, 1997; Charter and Tischner, 2001; Graedel et al., 1995), adding signifi-cantly to our knowledge as to how firms can meet the environmental challenge of developing new greenproducts. However, these research efforts appear to have few explicit links to mainstream new productdevelopment literature (Baumann et al., 2002). This paper demonstrates how existing theoretical models may help address questions raised withinthe environmental field, such as product performance, in response to the strong demand by some schol-ars to integrate and link existing theories to the greening process (Starik and Marcus, 2000). We presenta model that explains the risks and challenges that emerge when one attempts to incorporate environ-mental issues into NPD. Rather than developing a new theory for ENPD, we build on existing NPDtheories. In the first section we review ENPD literature, and in the second section we explore how ENPDrelates to existing NPD literature. The existing NPD literature is closely linked to organizationalinnovation literature (Fiol, 1996) in that they both examine how organizational factors affect theeffectiveness of developing and introducing innovations. Finally, we explore the challenges related toenvironmental conscious products and services from an innovation-oriented perspective. We argue thatfuture ENPD research will benefit from treating environmental concerns and demands as a design andbusiness problem (Reinhardt, 2000). Further integration of the E into NPD should help companiesrespond to environmental challenges. Understanding these challenges may help us find a matchbetween environmental issues and market demand.Product Development and the Natural EnvironmentIn the last decade, a growing interest in the natural environment has been one of the drivers behind theredesigning of existing products and the creation of new ones, making them more energy efficient orless material intensive (Shrivastava, 1995). The challenge facing industry, practitioners and scholars sup-ported by policy agendas has been how to incorporate environmental issues into product development,aligning the natural environment with regulations and market requirements. ENPD,1 which aims atreducing the environmental burden through product design and innovation, is emerging as a system-1 ENPD is a general term, which encompasses a range of issues, from the redesigning of existing products to the creation of new products andservices driven by environmental concerns.Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 14, 272–285 (2005)
  3. 3. 274 L. Berchicci and W. Bodewesatic innovative approach to environmental problems (Chen, 2001) and has been proposed to representstrategic options for value creation (Shrivastava, 1995).ENPD as Research AgendaVarious schools of research have contributed to a better understanding of environmental new productdevelopment. One of them uses success stories to demonstrate that aligning environmental issues withnew product development can improve market performance (see, e.g., Charter and Tischner, 2001).Several companies, such as Xerox, Electrolux, BMW and 3M, have been heralded as ENPD pioneers,and are said to have benefited from the approach (Baumann et al., 2002). Another school offers nor-mative guidelines, manuals, tools and advice to engineers and managers to help them integrate envi-ronmental concerns into the NPD process (see, e.g., Brezet and Hemel, 1997; Burall and Design Council,1996; Mackenzie, 1997). The aim of these tools is to identify the environmental and cost-related impli-cations of alternative materials or process decisions (see, e.g., Huisman et al., 2003), and help firmsdevelop greener products. Third, a number of studies was carried out to examine and identify factorsthat promote the adoption of ENPD (e.g. Johansson, 2002). The role of the environmental coordinator(Pujari and Wright, 1996), the integration of environmental professionals (Ehrenfeld and Lenox, 1997),the involvement of customers (Pujari and Wright, 1996) and suppliers (Pujari et al., 2003), and topmanagement support (Ehrenfeld and Lenox, 1997; Pujari et al., 2003) are considered crucial factors.Empirical studies have investigated in what ways firms have tried to engage in ENPD (e.g. Gutowski etal., 2005; Lenox et al., 2000). Although these studies have increased our understanding of ENPD andcontributed to the development of a systematic approach to dealing with environmental issues in productdevelopment, all but a few fail to draw on existing theoretical frameworks in NPD and organizationalinnovation literature (as suggested by Baumann et al., 2002; Pujari et al., 2003). Scholars have appar-ently elected not to build on existing knowledge and resources from contiguous research fields (as sug-gested by Lenox and Ehrenfeld, 1997). Academics have also explored how the development of new product service systems (PSSs) can realizea better alignment between what is commercially feasible and what is environmentally sound (Mont,2002; Senge and Carstedt, 2001). The PSS approach calls for the adoption of radical undertakings andfundamental innovation (Hart and Milstein, 1999). This is in line with the assumption that to realize aconsistent reduction of the level of environmental degradation improvements of eco-efficiency by a factorof 10 or 20 are required over the next 50 years (see, e.g., Weiszäcker et al., 1997). The achievement ofsuch leaps may indeed require an approach that is different from ‘traditional’ ENPD. This perspectivesuggests and assumes that radical innovations lead to a better environmental outcome. An example ofsuch innovative thinking is Xerox’s decision to stop selling copiers and to sell copies instead. This stepenabled them to use reconditioned and used parts in the production of new copiers, reducing the envi-ronmental impact of these products and saving on the costs of materials. Greening or ENPD itself is not a well defined concept (Chen, 2001) and the extent to which envi-ronmental concerns should be acknowledged in the development of new products is perceived differ-ently by different stakeholders (Kleiner, 1991). There is, for instance an ongoing debate regarding whatit is that constitutes a green or environmentally friendly product. The ill defined concept of greeningmanifests itself also from a market perspective. Many scholars and practitioners seem to assume thatconsumers are willing to pay a premium for green products when they indicate that they care for thenatural environment or look for environmentally friendly products or brands (Ottman, 1998). Unfortu-nately, people’s attitudes towards the environment may not always materialize in their purchasing behav-ior (Simon, 1992). In 2000, Shell, for example, introduced Pura, a more environmentally friendly fuelthat contained fewer pollutants. Although Shell assumed that its customers would pay a premium forCopyright © 2005 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 14, 272–285 (2005)
  4. 4. Bridging Environmental Issues with New Product Development 275the environmental aspect of the new fuel, Pura proved to be a failure. When Shell subsequently intro-duced a new fuel, with even fewer pollutants than Pura, and marketed it as a fuel that would increaseengine performance, not even mentioning its environmental advantages, they managed to turn it intoa commercial success (Op Het Veld, 2005). Despite these heterogeneous interpretations, in this paper greening is defined as the (explicit) attemptto reduce and minimize the environmental impact of the development, manufacturing, use and disposalof products and services.ENPD as a PracticeThe attempts by firms to organize and manage ENPD as a new activity with no apparent links to exist-ing new product development may explain why they have had mixed experiences. For example, afterstudying 10 firms that are considered proactive when it comes to integrating environmental issues intheir business activities, Handfield et al. (2001) found gaps between the advocates of DfE tools (envi-ronmental managers) and the people that use them (product developers) in terms of the expectations,perceptions and orientations regarding ENPD practices and tools. According to Gloria et al. (1995), someof the barriers regarding the use of ENPD tools are intrinsically related to poor data quality and avail-ability, and high implementation costs, due to the complexity of environmental issues. Moreover, manycompanies mentioned in ENPD literature as examples of corporate environmentalism have used thetools sparingly, and in addition to regular product development procedures and instruments, with mar-ginal effects on the overall reduction of the environmental impact (Baumann et al., 2002). Similarly,though environmental targets are added to the fundamental product requirements, they are often con-sidered less important than cost-related or time-to-market criteria (Handfield et al., 2001). Moreover, due to a lack of a uniform definition as to what constitutes an environmental or greenproduct, the assumption that ENPD methods provide a competitive advantage, supporting the win–winlogic of being ‘green and competitive’ (Hart and Ahuja, 1996; Porter and Van der Linde, 1995) hasnot yet been widely accepted, even by those firms that seem to lead the ENPD pack. For example,Ehrenfeld found that successful firms did not have to rely heavily on tools (Ehrenfeld and Lenox, 1997).ENPD: a First Synthesis of Theory and PracticeThe picture that emerges from ENPD literature is a rather hazy one: (1) there are few links betweenexisting product development and innovation theories and practices; (2) the concept of greening is notclearly defined and (3) it is unclear how and to what extent incorporating the E in NPD affects the successof new products. It would seem that the implications of ENPD with regard to product development andmarket performance are not well understood. In the next section, we draw on organizational innovationand NPD literature (e.g. Cooper and Kleinschmidt, 1987) to explore the antecedents of successful productdevelopment.New Product Development and InnovationProduct development is vitally important to firms competing in new and existing markets (Calantoneet al., 1995). Product development is critical not only as a potential source of competitive advantage; italso allows firms to diversify, adapt and reinvent themselves in a fast-changing market (Brown andEisenhardt, 1995). NPD has to do with the transformation of market opportunities into products (and/orservices) that meet the needs of consumers and other stakeholders (Krishnan and Ulrich, 2001). NPDCopyright © 2005 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 14, 272–285 (2005)
  5. 5. 276 L. Berchicci and W. Bodewessuccess is generally conceived as a multidimensional construct (e.g. Griffin and Page, 1996). It can beviewed in market-oriented terms, such as customer satisfaction and market share, or in strategic terms,such as the extent to which the new product allows a firm to enter a new market. An attempt to cate-gorize existing literature is based on the identification of determinants. More specifically, determinantsof success and failure used to predict market success are divided into two fundamental groups: (1) projectlevel determinants, based on examining the specific compatibility of process activities, product charac-teristics and market opportunities during the project, and (2) determinants at the organizational level,examining the compatibility of company practices and firm characteristics that may be important to thesuccess of the project but are not apparent at project level.Project Level Determinants of NPD SuccessAt project level, the research focus is on factors that influence the performance and outcome of theproject. Here, project performance is related to the financial success of a product development project.This school of research has investigated why some new products succeed and why others fail. One ofthe claims is that a project that is carefully planned and executed, and has strong management support,has a greater chance of becoming a success (Brown and Eisenhardt, 1995). Montoya-Weiss and Calan-tone (1994) present a meta-analysis of published empirical research on the antecedents of new productperformance. Their analysis suggests that 18 factors divided into four categories represent the sub-stantive determinants of new product performance (see Table 1). These factors have proven helpful inscreening NPD proposals, for example in project selection and NPD budgeting decisions (Cooper andKleinschmidt, 1995a). Product advantage – referring to the customer’s perception of a product’s supe-riority with respect to specific attributes compared to competing products – is widely considered themost important predictor of new product success. Also, a good match between the resource require-ments of the project and the firm’s resources and skills – related to marketing (promotion, market Strategic factors • Product advantage • Technological synergy • Marketing synergy • Company resources • Strategy of product Development process factors • Proficiency of technical activities • Proficiency of marketing activities • Proficiency of up-front (homework) activities • Protocol (product definition) • Speed to market • Financial/business analysis Market environment factors • Market potential/size • Market competitiveness • External environment Organizational factors • Internal/external relations • Organizational factorsTable 1. Factors leading to the success of new product (Montoya-Weiss and Calantone, 1994)Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 14, 272–285 (2005)
  6. 6. Bridging Environmental Issues with New Product Development 277 Success factors for new productsHow the firm organizes its activities with regard to Cross-functional team new products A strong and responsible project leader NPD team and team leader commitment Management involvement and commitment Intensive communicationCulture Allow the emergence of intrapreneurs and risk taking attitude Product championsStrategy Clear goal and strategic focus in NPD program Market information and NPD program User involvementTable 2. Organizational aspects influencing product performanceresearch and customer service) and technological activities (R&D and engineering) – increases thechance of success.Organization Level Determinants of NPD SuccessAt the organizational level, success has been defined in terms of financial performance, but also in termsof how efficient the development process (e.g. development time) or how effective the product concept(i.e. technical superiority) is (Brown and Eisenhardt, 1995). The project level determinants that havebeen used to explain NPD success include aspects such as the way the firms organize their activities, aswell as their strategy and culture (Cooper and Kleinschmidt, 1995a, 1995b). Table 2 presents the mainorganizational factors influencing product performance, based on the work of Cooper and Kleinschmidt(1995a) and Ernst (2002).Newness as a Determinant of NPD SuccessThe extent to which the above-mentioned factors will actually lead to successful NPD projects is sup-posedly influenced by the nature and degree to which a new product is innovative (Balachandra andFriar, 1997). Newness refers to the development, production and use of a new product and it requiresfirms to learn and to unlearn.2 Newness implies uncertainty and risk (Schmidt and Calantone, 1998)and it affects the complexity of the innovation effort (Ali et al., 1995). For example, carrying out a detailedmarket analysis for radical products may be futile because such a market may not even exist (Balachandraand Friar, 1997) or consumers may find it hard to imagine the benefits of a radical product (Veryzer,1998). The complexity that results from engaging in NPD projects that demand substantial learning andunlearning can have a negative effect on the likelihood that the resulting products will be commerciallysuccessful.Synthesizing Determinants of NPD SuccessReviewing NPD literature suggests that the performance of a new product is influenced by a numberof factors (Ernst, 2002). Thus far, it does not look as if there will be a ‘unifying’ theory that helps us2 Products that are highly innovative are seen as having a high degree of newness, whereas low-level innovative products are located at theopposite end of the scale. One common distinction based on the innovativeness is between radical and incremental innovation.Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 14, 272–285 (2005)
  7. 7. 278 L. Berchicci and W. Bodewes Degree of Newness Process Driver Design Outcome Specifications Environmental Product Product Concerns Project Team Attributes Performance Coordination Management SupportFigure 1. The influence of environmental concerns on product performanceexplain and predict when a new product will prove successful. However, our review does yield someimportant factors that clearly have an impact on a new product’s changes of success (Brown andEisenhardt, 1995; Cooper and Kleinschmidt, 1995a; Dougherty, 1992). Three of these factors appear tobe especially relevant when development teams attempt to incorporate environmental concerns andimplications in their NPD efforts.1. Design specifications. As a set of attributes, successful products are ‘successful’ because they meet market requirements, and provide functionalities that the market values. Hence, the challenge is to understand what the implications are of the incorporation of environmental attributes into products when translating functional requirements into a product specification. The chance and degree of success is reduced when a focus on environmental implications causes the product to misalign with the customer’s preferences.2. Coordination and alignment within multifunctional product development teams. The final product is the result of the effort of various team members, each with their own interpretation. Introducing envi- ronmental attributes into this process may introduce a different set of interpretations. The social dynamics that lead to a collective agreement with regard to the functional specifications will change when new stakeholders become involved.3. Management support for NPD projects. The support for environmental issues in NPD is likely to affect product performance due to the complexity of greening. Moreover, this process may even be more complex when a radical approach is encouraged.In the next section these factors are examined in an attempt to address the influence of environmentalissues on product development success.Aligning Innovation Theory with Environmental ConcernsWhat are the Implications of Environmental Issues with Regard to Innovative Products?We present a model that may explain how environmental concerns affect the success of NPD(Figure 1).Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 14, 272–285 (2005)
  8. 8. Bridging Environmental Issues with New Product Development 279 Environmental concerns are one of the reasons why a firm may engage in NPD. Environmental con-cerns are likely to have an impact when objectives are established, resources mobilized and performance(success) evaluated. If the project involves a level of innovation with which a firm has not had previousexperience, this is likely to influence the innovation process as well, as it increases the level of uncer-tainty. The outcome is a bundle of product attributes that according to the literature determines the per-formance of a product.Design Specifications: Trading Off Environmental AttributesProduct development is a complex process involving a number of decisions that have to do with thekinds of attribute products should incorporate. Manufacturers and designers attempt to develop prod-ucts whose unique attributes create value for customers. A successful product contains a set of attrib-utes that are by definition balanced. From a design perspective, there are two discrete approaches todealing with these attributes. First, the common linear model divides the design process into two dis-tinctive phases: problem definition and problem solution. The former is an analytic sequence in whichthe designer determinates all the elements of a problem and specifies what is needed to solve theproblem successfully. The latter is a synthetic sequence in which the requirements are combined andbalanced against each other (Buchanan, 1992). In this case a set of criteria is established regarding thetechnical and process-related specifications, target costs and time to market, which have to be carefullybalanced. In response to increasing public interest in environmental issues, many companies havestarted designing products with environmental attributes. Environmental attributes are seen as distinctfrom the more traditional ones such as price and quality3 (Chen, 2001; Prakash, 2002). As suggestedby Chen (2001, p. 252), ‘typical environmental attributes that are listed on various green consumerguides include recyclability, recycled content, fuel efficiency, toxic content reduction, and emission-related performance’ and others such as efficient packaging. Incorporating both environmental and regular attributes into a single product during the designprocess is expressed in term of the choice of materials, energy efficiency, toxic waste etc. (Chen, 2001).However, the integration of environmental attributes should not conflict with traditional product attrib-utes or functionalities, such as safety and reliability. Moreover, the increased degree of complexity inthe functional specification results in a larger set of possible tradeoffs, where the improvement of oneattribute may only be achieved at the expense of others (Keeney and Raiffa, 1993). For example, althoughelectric cars produce lower levels of pollution, they do so at the expense of speed and duration (DeNeufville et al., 1996). Handfield et al. (2001) have observed that requirements that have immediatelyobservable effects in terms of profitability, customer needs and market share may take precedenceover environmental goals. On the other hand, giving a higher priority to environmental attributes atthe expense of other parameters (such as costumer requirements) could easily undermine productperformance. Market information, for example a solid understanding of consumer preferences, may be of little helpwhen it comes to developing radical innovations (Balachandra and Friar, 1997). In such cases the set ofcriteria for the design process is indeterminate, which means that are no limits to design problems wherethe product is characterized by n requirements (Buchanan, 1992). Such design problems are defined as‘wicked’ because they are ill formulated and ill defined by decision-makers with conflicting values andconfusing information at hand (Rittel and Weber, 1973). Although some specifications may be rational3 As an anonymous reviewer correctly pointed out, environmental attributes do not necessarily have to be separate from traditional attributes,and may, on the contrary, overlap or coexist. Problems may occur when tradeoffs are required and environmental attributes are overempha-sized at the expense of traditional attributes, regardless of consumer preferences or potential technological or financial risks.Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 14, 272–285 (2005)
  9. 9. 280 L. Berchicci and W. Bodewesand based on objective decision-making, others are more subjective. Indeterminate attributes can bejudgemental, subjective or ideological, and as they are difficult to translate in product attributes, such atranslation will be inherently political in nature. When designers try to integrate indeterminate attrib-utes into the design of a product, the additional tradeoffs increase the complexity of a project. Design-ers face a dramatic dilemma: how are they to incorporate environmental attributes into the design whenthey will be perceived differently by various stakeholders? How to incorporate specifications that are ide-ological without increasing the risk of market rejection? This is due to the complexity of greening. The degree of innovativeness can also increase the indeterminacy of attributes, and thus increasethe risks and uncertainties in the design process. Although customer input is usually valuable in thecreation of new products, market information may not be useful for radical product innovations, becauselatent rather than existing needs are being addressed (Veryzer, 1998). Due to the uncertainties of radicaldevelopment, there are many assumptions concerning the benefits of new products. However, theseassumptions need to be tested as soon as possible in the design process, especially with regard to marketrequirements. This would also apply to market requirements that refer to societal concerns as to theenvironmental impact of products. Such environmental requirements may be ill formulated when theyare based on ideology, in which case the level of complexity of the design process increases without therebeing a clear consensus with regard to the environmental goals. This lack of clarity may make productdevelopers more reluctant to address environmental concerns. On the other hand, environmental con-cerns may be the main reason to develop a new product, in which case environmental attributes maybe overemphasized at the expense of market-driven product specifications. Testing assumption duringthe development process may help identify and incorporate important market-driven requirements. Oth-erwise, the product may turn out to have an added value in social, technological and environmentalterms, and respond to social needs and fundamental research priorities, while failing to address marketdemand. Veryzer (1998) found that some aspects thought to be important by a development team some-times are in fact not at all important to consumers.Coordination and Alignment Within Multifunctional ENPD TeamsProduct development is a complex social process involving people from different backgrounds andmanagement positions (Dougherty, 1992). To a large extent, the success of a product depends on theeffective communication and collaboration between the various members of the team (Cooper andKleinschmidt, 1995a; Dougherty, 1992). In large firms, differences in interpretation4 prove to be a barrierrather than a lubricant (Dougherty, 1992). Such barriers are thought to explain the poor performanceof some new products. We suggest that Dougherty’s theoretical account of interpretative barriers canalso be used to understand the varying success rates of ENPD. Bringing in agents who are concernedwith environmental issues is likely to make interpersonal communication more difficult. The resultingdifferences in interpretation may explain the relatively modest performance of ‘green’ products. Lenoxand Ehrenfeld (1997) argue that merely improving communication channels is not enough if one wantsto build capabilities for creating environmental products. It is only when one manages to bridge exist-ing knowledge resources with interpretative structures through effective communication that one is ableto create genuinely new environmental products. Another reason why communication between envi-ronmentally conscious agents and product development teams can often be problematic is because it isjust not clear what is meant by green or environmental products.4 How people think and act about innovation.Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 14, 272–285 (2005)
  10. 10. Bridging Environmental Issues with New Product Development 281Management Support for ENPD ProjectsFirms engage in NPD to create value. For most firms NPD is crucial if they are to survive in a highlycompetitive marketplace. Because product innovation is so vital to most companies, it is often companymanagement that controls NPD budgets and chooses which projects are selected. Such managementinvolvement has been found to increase NPD success (Brown and Eisenhardt, 1995). Projects with moreradical characteristics require more resources, will need more time before they can be marketed and aremore likely to be terminated (Green and Welsh, 2003). However, top management may continue tosupport a radical and ambitious project even when it appears to be a failure. Building on escalationtheory, Schmidt and Calantone (1998) explain why managers are reluctant to shut down failing radicalprojects despite information indicating that success is unlikely. Green and Welsh (2003) have proposeda model that explains what factors influence the decision whether or not to terminate a NPD project.They suggest that NPD projects are evaluated on the basis of performance indicators that affect thego/no-go decisions. If a project is seen as less likely to achieve performance goals, management supportis likely to diminish (Green and Welsh, 2003). However, management support is not only dependenton performance evaluations. Escalation of commitment (Schmidt and Calantone, 1998) and psycho-logical rewards (Gimeno et al., 1997) can reduce performance thresholds (Green and Welsh, 2003) andresult in continued management support. In situations where there are similar performance indicators environmental concerns mayinfluence the go/no-go decision in different ways. Firstly, a radical project with a high potentialenvironmental gain may be supported enthusiastically by management and co-workers who care aboutenvironmental issues, as a result of which the threshold of the product or project performanceindicators may be lowered. This would result in a higher level of management support, regardlessof how well the project actually performs. Similarly, radical and environmentally driven projectsmay also be supported by management because of regulatory or social pressure and prestige or corpo-rate image-related considerations. As a result, management may support an environmentally drivenproject that is doomed to fail. This is in line with Abrahamson’s model that explains engagement ininnovation on the basis of isomorphic forces, especially when there is a high level of uncertainty con-cerning the value of the innovation (Abrahamson, 1991). Engagement in ENPD may represent suchinnovation. On the other hand, a project with a high level of environmental concern may receive limited man-agement support when catering to environmental concerns is perceived to be too alien to the company.Perhaps even when there is project team support, management may be reluctant to undertake a project.This reluctance may then take the form of an escalated performance threshold. As a result, manage-ment support may dwindle irrespective of how well a project is actually doing.Discussion and ImplicationsIn ‘organization and natural environment’ and ENPD literature, most studies focus on the integrationof environmental issues into the organizational practices and on understanding why and how firms canmeet the challenges involved in sustainable development. At the micro level, where one of the mainactivities of firms is to design and develop products and services, the challenging task has been incor-porating environmental issues into product development, aligning the natural environment with regu-lations and market demand. Conceptual and empirical studies have achieved encouraging results andENPD has become a widespread practice within an increasing number of firms. Nevertheless, manypeople still find it hard to understand how acknowledging environmental issues may increase the per-Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 14, 272–285 (2005)
  11. 11. 282 L. Berchicci and W. Bodewesformance of new products. To understand the implications of environmental concerns in product devel-opment we propose to align and combine ENPD and NPD literature. In product development literature, researchers have found many factors that lead to a superior marketperformance of new products. Three factors seem to be of particular importance to the success ofENPD: design specification, project coordination and management support. Using these factors we haveexplained what the implications of incorporating environmental concerns for NPD and market successof new products are. Introducing environmental issues into NPD requires a tradeoff of traditionalproduct evaluation attributes against environmental ones. However, there is a risk of choosing an envi-ronmental attribute that may conflict with market requirements. We argue that it is only by focusing onmarket needs that the tradeoff between these two types of attribute may lead to superior performanceof green products. In the case of radical ENPD projects, product specifications are likely to be indeter-minate. These specifications have to be considered most carefully if one wants to avoid trying to caterto the needs of a non-existent market. Different viewpoints within a NPD team may severely hampercommunication, with disastrous effects on the NPD process (Brown and Eisenhardt, 1995; Dougherty,1992). In line with Lenox and Ehrenfeld (1997), we suggest that involving people in the project teamwho advocate environmentally friendly products renders inter-project communication more complex,which could affect the outcome of a project. According to Hart and Milstein (2003), the complexitiesintroduced by environmental issues and the way they are integrated into a product may be seen as anuisance rather than an opportunity. Management support is crucial to NPD processes (Brown and Eisenhardt, 1995). When the level ofuncertainty in NPD is low, performance evaluation is likely to have an impact on the continuation ofmanagement support. When the level of uncertainty is high and the project is perceived as innovative,escalation of commitment and psychological rewards may result in continued management backing evenwhen a project appears to be heading for failure (Green and Welsh, 2003). We suggest that incorporat-ing environmental issues into NPD increases the level of uncertainty of a project because of theintrinsic complexity of the concept of greening (Chen, 2001) and because of the assumption that theenvironmental challenge may be better addressed in a more radical manner (e.g. Hart and Milstein,2003). Therefore, the environmental imperative may directly influence the support for radical and envi-ronmentally conscious projects, lowering the performance judgment threshold. This means that someprojects have been continued despite their poor performance, which may explain the poor performanceof some green products. Incorporating environmental issues into NPD has a number of important implications. Strongerintegration with NPD literature will help us appreciate the risks and uncertainties involved in trying tointroduce environmental concerns in product development. To advance ENPD theory and practice,explanatory studies seem, at least for the foreseeable future, to be as much needed as normative andprescriptive treaties on ENPD. Furthermore, rather than trying to design new ENPD tools, it may beworthwhile to turn to existing NPD literature to see how environmental concerns, as a subset of marketpreferences, can be translated into product specifications. Integrating ENPD literature with regular NPDliterature would strengthen the legitimacy of the field because it would allow researchers to build on awealth of valuable insights. In addition, the way companies respond to the call to incorporate environ-mental concerns into product development may give NPD scholars an interesting research agenda. Inparticular, radical ENPD projects may allow researchers to study the way NPD teams in general balanceparadoxical ambitions and demands. Practitioners would benefit from a better alignment of the NPD literature with ENPD literature. ENPDtools are often rejected as they fail to consider the complexity of the greening concept and of the NPDcontext in which they are to be embedded (Lenox and Ehrenfeld, 1997). If an organization is to developproducts that address environmental concerns, its management needs a better understanding of bothCopyright © 2005 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 14, 272–285 (2005)
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  14. 14. Bridging Environmental Issues with New Product Development 285BiographyLuca Berchicci is a Ph.D. researcher at Delft University of Technology in the department of Design forSustainability program (DfS). His Ph.D. research focuses on the role of environmental issues in newproduct development. His general research interest is in the area of product innovation processes andsustainability within existing and new organizations. Wynand Bodewes is an Assistant Professor in Entrepreneurship at RSM Erasmus University wherehe co-directs eShip, the Erasmus Centre for Entrepreneurship and New Business Venturing. Hisresearch focuses on the role of organization structure in the growth of entrepreneurial firms. RSMErasmus University offers a unique one-year MScBA in Entrepreneurship. In this program Wynandteaches business development, venture planning, and entrepreneurial start-up and growth.Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 14, 272–285 (2005)