Entrepreneurial Orientation and New Product Performance: the Moderating Role of Formal Control Systems

An organisation with a strong Entrepreneurial Orientation (EO) is characterised by risk-taking, innovativeness and pro-active behaviour. Prior studies have substantiated the importance of EO in improving organisational performance, particularly in developing new products. This is somewhat at odds, however, with another stream of research that has argued the importance of two formal control mechanisms to effective product development: Stage-Gate system (SGS) and Product Management (PM). This paper examines whether an organisation that adopts an entrepreneurial orientation can still benefit from using formal control mechanisms in their new product development processes. we examine the impact of EO, SGS and PM on both decision-making comprehensiveness (DMC) and new product performance. Results suggest that SGS strengthens the relationship between EO and decision-making comprehensiveness (DMC) while PM weakens such a relationship. However, the implementation of both SGS and PM strengthens the relationship between EO and DMC.