The Effectiveness of Different Mechanisms for Integrating Marketing and R&D

The integration of marketing and R&D is a major concern for companies that want to improve their new product performance (NPP). In order to integrate, companies are using mechanisms such as physical proximity, cross-functional teams, and job rotation. This study examines the relative effectiveness of these mechanisms by developing a model that distinguishes between indirect effects of mechanisms on NPP (i.e., through a higher level of integration) and direct effects. The model is tested with data collected from 148 pharmaceutical companies. By simultaneously studying a broad range of integrating mechanisms, we found that housing marketing and R&D closer to each other and using an influential cross-functional phase review board are highly effective mechanisms to increase integration. Using information and communication technology (ICT) more intensively, having equal remuneration and career opportunities for marketing and R&D and using more cross functional teams are also effective in producing more integration, although to a somewhat lesser extent. The effectiveness of personnel movement and informal social group events is rather low. Interestingly, ICT appears to be a very effective tool for enhancing NPP. ICT not only fosters integration, but in addition it has an independent direct positive effect on NPP, possibly through knowledge creation within marketing and R&D. We also found a direct effect on NPP of another mechanism: cross functional phase review boards. However, for this mechanism the direct effect is negative. So, notwithstanding its strong positive effect on integration, a price is paid in terms of NPP. This may be related to the amount of formalization and complexity accompanying this mechanism.