Structural model

Novelty and complexity of the innovation project was expected to be negatively related to the adequateness of upstream functional capabilities for the project, because unexpected changes and developments may require different capabilities, resources and skills than possessed by the research and development of the company. However, this hypothesis is rejected, as no significant relationship was found here (see Figure 2.3). Also the hypothesis that novelty and complexity of the innovation project would negatively affect innovation process quality is rejected (see Figure 2.3). The data does not confirm that highly novel, technologically complex and intensive projects cause delays and require adaptations in the project budget, planning or specifications of the innovation.

The hypotheses that the newness of the innovation project to the company would have a negative effect on the adequateness of upstream and downstream functional capabilities are confirmed by the significantly negative relationships (see Figure 2.3). While innovation novelty seems not to be related to adequateness of firm capabilities, newness of the innovation project to the company does seem to create challenges for the company capabilities and resources. The significantly lower adequateness of the upstream and downstream functional capabilities in the case of high project newness indicates that a company needs a higher level of flexibility and adaptation when it engages in a completely new innovation. In contrast to the expectation that project newness would create obstructions to the planning, budget or specifications of the innovation project, no significant relationship was found between project newness and innovation process quality.

As expected, a significantly positive relationship is found between novelty and complexity of the innovation project and integrative communication capabilities (see Figure 2.3). A high level of novelty and complexity of the project stimulates the team members involved in the project to exchange more information to increase the understanding of the problems in the project, clarify the performance requirements and execute the project in an effective and efficient way. While taking this finding into account, it is remarkable that no significant relationship was found between integrative communication capabilities and innovation process quality. If communication capabilities are higher in case of high novelty and complexity, it would be expected that these advanced communication capabilities have a positive effect on execution of the project within budget and according to planning and specifications. However, this does not seem to be the case. The integrative communication capabilities do not turn out to contribute to a higher process quality. The integrative communication capabilities do contribute to a higher level of adequateness of upstream and downstream functional capabilities (see Figure 2.3). This indicates the importance of communication in order to understand how the different capabilities can be used and combined to solve problems and generate the necessary and inventive solutions. When integrative communication capabilities are at work, upstream and downstream functional capabilities are evaluated as more adequate for the innovation

rather than downstream functional capabilities indicates that intensive communication can contribute significantly to the understanding about the problem-solving at the technology side. Communication among the researchers and developers of the innovation is important for resolving problems related to the development of the product. Missing market knowledge is more difficult to compensate by more intensive communication. The adequateness of these functional capabilities is perhaps more easily upgraded by additional employees with more or better skills in sales and advertising.

As expected, novelty and complexity of the innovation has a positive relationship to product potential (see Figure 2.3). Novel and complex innovations lead to more unique, superior and qualitative products. In contrast to the expectation that upstream and downstream functional capabilities would be positively related to product potential, as adequate functional capabilities can increase the quality and superiority of the product, it is mainly the communication capabilities which increase understanding and problem solving, and with this the superiority and quality of the innovation. Only a positively significant relationship was found between the integrative communication capabilities and product potential (see Figure 2.3). It may be concluded that due to its important role in the effective combination of upstream and downstream functional capabilities, integrative communication capabilities constitute a strong determinant of product potential.

Also as expected, a significantly positive relationship is found between product potential and market potential (see Figure 2.3). Products which offer unique features or higher quality to the customer have a higher potential in the market to be used and bought by customers. For this kind of product a growing market and applicability in additional products, multiple styles and price ranges can be expected. As expected, products with high level of usability by customers and multiple application possibilities are more inclined to benefit end-users, generate profit and spin-offs for the company. This is reflected by the significantly positive relationship between market and project potential (see Figure 2.3). The expectation that especially downstream functional capabilities would play an important role in the raising of the market potential of the innovation is not confirmed. Apparently, the marketing and sales skills and efforts cannot raise the market potential of innovation to the extent that the innovation novelty and product potential can.

Strong market competition, in terms of the presence of one strong or many competitors and frequent new product introductions was expected to have a negative effect on innovation market potential. However, the results show a positive relationship between market competition and market potential (see Figure 2.3). It turns out that strong market competition stimulates innovators to find gaps in the market and create products for which there is a great need among the customers, or products which have high applicability to additional products, multiple styles and price ranges so as to be able to provide diversification to the customer. Higher competition in the market stimulates companies to be more innovative in their effort to raise the market potential of their innovation.

The expectation that innovation process quality has a positive effect on the project potential is confirmed (see Figure 2.3). When the project is executed within budget and according to the schedule and specifications, there is a greater expectation that the innovation will benefit end-users and generate spin-off and profits for the firm. As expected, a significantly positive relationship is found between market potential and innovation process quality (see Figure 2.3). This indicates that in projects with high market potential and the prospect of high value generation for the company, emphasis is placed on a rapid and effective process of development in order to reduce the time-to-market and introduce the product to the market before competitors. However, innovation process quality does not seem to have a significant effect on the performance of the innovation after market introduction. Project potential does have a positive effect on innovation performance (see Figure 2.3), indicating that the positive expectation of the team members about the potential of the project often proves to be correct. An overview of all hypotheses can be found in Table 2.3.