the dynamics of multicultural npd teams in virtual environments

The dynamics of multicultural NPD teams in virtualenvironments

Nusa Fain • Miro Kline

Published online: 27 August 2011� Springer Science+Business Media B.V. 2011

Abstract Changes in the business environment, responses of companies to these changes

and the available information and communication technologies (ICT) pose a number of

challenges to present and future product developers, as well as to educational institutions.

An appropriate response to these challenges is to create a solid basis for strategies to

combat stronger competition, since existing educational programs have provided this only

to a small extent. Several European universities provided this basis with the development

of an international design course European Global Product Realization (EGPR). The main

objective of the EGPR course is to provide a stimulating working environment for students,

where they can conquer the design competences needed for their future professional

practice. The main focus is put on multidisciplinary, multinational and multicultural teams,

using virtual technological developments in solving a new product development (NPD)

problem at a global level. This paper studies how the growth of the course internationally

affects the design process carried out. A survey was carried out among the students of the

past four courses and the analysis shows that the cultural background of the students has

significant effect on their perception of the courses’ processes. This is a novel challenge

that the developers of the course need to face in order to provide the highest level of

knowledge possible to the students.

Keywords Project work � Interdisciplinary correlation � Cultural diversity �Creativity � Virtual teams

N. Fain (&)City University London, Northampton Square, London EC1V 0HB, UKe-mail: [email protected]

M. KlineFaculty for Social Sciences, University of Ljubljana, Kardeljeva Ploscad 5, 1000 Ljubljana, Sloveniae-mail: [email protected]

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Int J Technol Des Educ (2013) 23:273–288DOI 10.1007/s10798-011-9178-0

Introduction

New product development (NPD) is considered to be a critical activity of a firm (Badri-

narayanan and Arnett 2008), because if it is effective, it can mean a great competitive

advantage and consequently represents the key to firms’ survival and growth. Contem-

porary organizations, faced with global competition and external environmental turbu-

lence, require highly creative NPD teams to survive. Often it is very difficult to provide the

necessary abilities for a new market or a product from inside the firm on time (Jimenez-

Jimenez and Sanz-Valle 2005). To achieve the creativity in such environments the firms

therefore need to search outside the firm and use external resources of recruitment in order

to achieve effective NPD. They are connecting and cooperating with other functions and

institutions beyond the boundaries of the organization, industry and even state. This trend,

combined with geographic dispersion, technology development and increased growth of

teamwork in organizations resulted in formations of virtual teams of people who work

interdependently across space, time and organizational boundaries on solving NPD prob-

lems (Nemiro 2002; Gaudes et al. 2007; Verburg and Bosch-Sijtsema 2007). Such teams

are presumed to be more creative, because they are not bound by the local resources,

organizational boundaries and climate. They are increasingly becoming crucial compo-

nents of a firm’s overall marketing strategy (Sarin and McDermott 2003).

With the development of such teams the question of their effectiveness and creativity in

NPD is therefore raised. There has been extensive research done on different performance

and attitude variables associated with the work and effectiveness of face-to-face teams in

comparison to the virtual teams (i.e. Warkentin et al. 1997; Staples and Webster 2007).

Several studies also considered the role of creativity in (traditional) NPD teams (Amabile

1997; McAdam and McClelland 2002; Im and Workman 2004; Martins and Terblanche

2003), since it is considered to be one of the key factors influencing NPD effectiveness.

Although authors (Amabile 1997; McAdam and McClelland 2002; Im and Workman 2004;

Martins and Terblanche 2003) found creativity to be a preliminary condition for innova-

tion, literature on creativity within virtual NPD teams and its effect on the final NPD result

is rare. There are only a few studies from real business environments on this topic (i.e.

Nemiro 2002: Leenders et al. 2003). A need for further research in the field of effectiveness

of creative NPD in virtual teams therefore exists. Furthermore, the view of creativity

within NPD is often promulgated which claims to be definitive and universal whereas in

fact it is localized, particular and culturally specific (Westwood and Low 2003). Models of

creativity are often developed on the basis of observations in one culture and may not be

applicable in another (Nonaka and Takeuchi 1995). As Hoffman (1999) points out, there is

a comparatively small body of research that has examined innovation across cultures. An

in-depth literature study within this field has been performed by the authors, but studies

examining cultural differences of NPD processes within innovation were not found. There

is therefore a need to further study this phenomena and the presented paper is a response to

this need.

We approach and study the question of cultural differences within creative NPD pro-

cesses on an example of an academic virtual enterprise, where knowledge is built and

exchanged by communication and collaboration of the various participants in virtual teams

via various forms of interaction and inquiry, using mainly IT technology. We present our

findings on an example of a design course called European Global Product Realization

(EGPR) that applied an academic virtual enterprise in a practical, global, multicultural,

multinational and multidisciplinary (multi-x) design environment in order to enable stu-

dents to gain practical experience in virtual product design.

274 N. Fain, M. Kline

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The choice to study a virtual NPD team in an educational environment came from

several influencing factors, i.e. the notion that design education should enable students to

get the necessary competences that allow them, when they become professional designers,

to face the challenges yielded by the new trends in current real-world NPD problems

(Horvath et al. 2004). We argue that EGPR is an example of good business and educational

practice in emerging NPD environment. And finally, the teams active in EGPR are formed

out of students from several European countries, thus representing a combination of dif-

ferent cultural backgrounds, giving an interesting example to study.

The presented paper is based on a study of creativity within virtual teams, presented in

the work of Nemiro (2002, 2004). To provide argumentation for the studied model, we

carried out a sample survey among the student teams participating in EGPR in 2007, 2008,

2009 and 2010. It has been constructed according to Nemiros’ (2004) guidelines to present

a comparable sample to her findings and modified according to the findings of the pilot

study (for details see Fain et al. 2008). The main focus of our study is to test the cultural

aspects on virtual teams formed in design courses.

The rest of the paper is structured into four sections. First, we give an outline of the

conceptual framework of creative NPD within virtual teams and we postulate the

hypotheses. We give detailed descriptions on how and why virtual teams are presumed to

foster NPD effectiveness and what the roles of creativity and the structured design process

in achieving the desired effectiveness level of NPD are. We present the cultural back-

grounds relevant for the execution of our study. In the next section, the research method is

presented along with an outline of the EGPR course. Results follow in Section ‘‘Results’’.

Discussion and conclusions are outlined in the last two sections.

Conceptual framework and hypotheses

The conceptual framework, presented in this paper is based on the presumption that virtual

teams allow companies to tap into the best talent to create the highest quality and fastest

response to customer needs (Nemiro 2004). They can leverage their expertise by putting

people together without relocating them. Such structures are presumed to influence the

levels of NPD effectiveness and team creativity as they offer openness, flexibility and

diversity.

In today’s business environment managers strive towards greater NPD effectiveness to

ensure customer satisfaction and consequently success for their organization. With

implementing virtual teams into the NPD they get a greater spectrum of expertise, since

they can involve experts beyond the boundaries of their organizations and even geo-

graphical area and consequently the NPD effectiveness level can be influenced. With

organizing and distributing human resources in a virtual form all team members are able to

contribute their abilities as much as possible, and the organization can acquire, develop and

deploy knowledge as a resource in a dynamic way and can consequently influence its

overall capabilities to achieve superior performance (Tseng and Abdalla 2006).

The advantages of forming virtual teams include independence from time and space

constraints, reduced opportunity costs, greater flexibility in meeting market demands, and

better integration of knowledge from members in remote locations (Badrinarayanan and

Arnett 2008). Such teams are consequently presumed to be more creative, because they are

not bound by the local resources, organizational boundaries and climate. They are

becoming crucial components of a firm’s overall marketing strategy (Sarin and McDermott

2003). As such, they are also presumed to modify the design process within NPD, all for

The dynamics of multicultural NPD teams 275

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the purpose of raising NPD effectiveness. On the other hand, they are formed out of

members that usually come from different cultural backgrounds, either organizationally or

nationally. In almost all cultures creativity and innovation are viewed positively, but there

is variability as to its relative importance, role and function and the domain of relevance

(Westwood and Low 2003), i.e. western concern has increasingly been with the tangible

outcomes of the NPD process and with assessing creativity in those terms, whereby far

eastern cultures are more concerned with the role of creativity providing personal fulfil-

ment and enlightenment or the connection to the inner realm of reality (Lubart 1999;

Westwood and Low 2003). With this notion in mind, we put forward our hypotheses.

Firstly, we postulate our zero hypotheses (H0), related to the cultural aspects of creative

NPD in virtual teams. To test this hypothesis, we further derive hypotheses related to

creative NPD in virtual teams. These hypotheses are derived from the proposed framework

(Nemiro 2002, 2004) and are the result of an in-depth literature review within the fields of

NPD in virtual environments (H1, H2 and H3), team creativity (H4, H5) and design

processes (H6).

Cultural aspects of creative NPD

The purpose of the presented paper is to test if the conceptual framework is valid within

different cultural backgrounds. Culture has several definitions, some contradictory, but in

general it is presumed to be a collective phenomenon, because it is at least partly shared

with people who live or have lived within the same social environment. As almost

everyone belongs to a number of different groups and categories of people at the same

time, people unavoidably carry several layers of values, perceptions and beliefs within

themselves, corresponding to different levels of culture, i.e. according to one’s country or

social class level. In order to be able to measure different aspects of culture, several studies

have been carried out, determining cultural dimensions. One of the most widely used and

cited is Hofstede’s study (1991, 2001) of cultural dimensions. He has conducted empirical

research within the field and was able to determine four dimensions of national culture:

power distance, uncertainty avoidance, collectivism vs. individualism and masculinity vs.

femininity. These dimensions define a specific culture and consequently affect the per-

formance level of teams. Especially power distance and uncertainty avoidance affect

people’s thinking about organizations and working within them. Who has the power to

decide what is influenced by cultural norms of power distance, whereby cultural norms

about uncertainty avoidance influence the rules and define the procedures that will be

followed to attain desired ends (Hofstede 1991). The remaining two dimensions, indi-

vidualism and masculinity affect our thinking about people in organizations rather than

about organizations themselves. The way to solve organizational problems within different

national cultures should therefore be influenced by the levels of uncertainty avoidance and

power distance of a specific culture (Hofstede 1991).

For the purposes of our study these two dimensions of national cultures are therefore the

most relevant, due to the fact that virtual teams are formed as a type of temporary orga-

nizations, functioning under specific rules in order to perform a task/solve a specific

problem. Hofstede (2001) defines several clusters of national cultures according to their

index scores within these two dimensions. The national cultures studied within our case fall

into two of these clusters: ‘‘village market’’ and ‘‘pyramid of the people’’. These two

clusters differ according to the studied dimensions, i.e. ‘‘pyramid of people’’ type of

national cultures are strongly oriented towards collectivism and have high power distance

and uncertainty avoidance levels within their culture (Hofstede, 2001). These characteristics


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put them opposite to the ‘‘village market’’ type of national culture where the orientation is

individualist and the levels of power distance and uncertainty avoidance are low. Where on

the continuum the national cultures represented within EGPR can be found is shown in

Fig. 1.

Within our study, we define cultural diversity as heterogeneity of national cultures of

team members. Studies that have been done in the past on effects of cultural diversity

within face-to-face teams have found mixed effects, however the ones done on hetero-

geneous teams concluded that diversity increased effectiveness due to the wider range of

perspectives, more and better ideas and less ‘‘groupthink’’ (Shachaf 2008). We will test,

how the perception of effectiveness and working in virtual teams varies within different

national cultures. Due to the presented cultural differences, we therefore presume:

H0 The perception of effects of working in virtual teams on NPD effectiveness differs

between types of national cultures.

To test this hypothesis regarding the effect of cultural diversity within the virtual teams,

we followed Hofstede’s (2001) example and separated the data gathered with the ques-

tionnaire survey into two clusters with regard to the University origin—‘‘village market’’

(Great Britain, Switzerland and the Netherlands) and ‘‘pyramid of people’’ (Hungary,

Slovenia and Croatia). On these two types of national cultures we tested the presumptions

presented bellow.

Fig. 1 Positions of the studied countries within the power distance/uncertainty avoidance matrix (adaptedfrom Hofstede 2001)


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Virtual teams and creative NPD

Virtual teams are rapidly growing as a vehicle to pull together the key human resources

across the globe to respond and overcome the pressures and demands of our competitive

global market place (Nemiro 2004). They are defined as groups of individuals collabo-

rating in the execution of a specific project while geographically dispersed, possibly

beyond the boundaries of their parent organization (Leenders et al. 2003; Nemiro 2004;

Verburg and Bosch-Sijtsema 2007). Communication and activities are carried out through

IT technology—email, telephone, videoconferencing, etc. (Nemiro 2002). These teams are

deemed to have the capability to solve the most complex problems due to the diversity in

skills and competences of their members (Prasad and Akhilesh 2002).

Literature on NPD teams specifies that creativity, innovativeness and speed are

important indicators of NPD effectiveness (Badrinarayanan and Arnett, 2008). In the

context of virtual NPD teams decision quality and decision speed are the ones promoting

faster learning and competence development, the incorporation of more advanced product

ideas, faster decisions due to better problem solving and high quality solutions that lead to

superior product quality (Atuahene-Gima 2003). Also, studies have shown that virtual

teams can be more productive and effective than teams that always meet face-to-face

(Prewitt 2004). Combining the presented knowledge and the conceptual framework, our

first hypothesis therefore presumes:

H1 Working in virtual teams has a direct positive effect on NPD effectiveness.

Such teams can work faster, smarter, more creatively and more flexibly (Majchrzak

et al. 2004). Since creativity requires loose settings, free spirits and a lack of strict

boundaries (Leenders et al. 2007), such teams should foster creativity. And since in

business organizations today creativity and innovation are less often the product of indi-

vidual genius and more often the outcome of processes in teams (Leenders et al. 2007),

virtual team structures may actually lead to higher levels of team creativity. They open up

possibilities for greater innovation because of more diverse participation and stimulate

product and process creativity (Prasad and Akhilesh 2002). This would be the result of

more openness, flexibility, diversity, and access to information in comparison to traditional

teams (Nemiro 2004). We therefore hypothesize:

H2 Working in virtual teams has a positive effect on creativity in NPD.

Furthermore, organizations involved in NPD have to adopt flexible, dispersed methods

of working to meet the numerous and varied demands of the global marketplace (Tseng

and Abdalla 2006). Thus, virtual teams come together to perform a specific NPD task. As

they are located in separate geographic areas, they heavily depend on IT technology to

gather information and get feedback (Staples and Webster 2007). Their NPD project

meetings are therefore carefully structured and planned in order to ensure highest effec-

tiveness possible in this time. This also means that the design process is carefully planned

and executed more formally then in face-to-face teams. With this notion, we hypothesize:

H3 Working in virtual teams has a positive effect on the design process.

Creativity in NPD

Creativity is exhibited when a product is generated that is novel and useful with respect to

the firm (Amabile 1997). A creative output must be relevant, effective, appropriate, and


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offer a genuine solution to a particular problem or presented task (Nemiro 2004). Creativity

does not happen inside people’s heads, but in interaction. Therefore in NPD, team crea-

tivity requires teams to combine and integrate input from multiple team members (Le-

enders et al. 2003). They also need to perceive creativity as vital for NPD in order to enable

its positive effects. Creativity plays a decisive role in the process of idea generation, which

represents input into the NPD process (Duhovnik 2003; Duhovnik and Balic 2004; Du-

hovnik and Horvath 2005). The design process is defined as an innovative process,

whereby the inputs into the process are creative ideas and the final result is a definition of

the final product.

Each phase of the design process requires specific knowledge and skills to assure a

successful transition to the next phase, whereby creativity is essential to start it. It provides

a critical point for a firm’s performance in a complex and changing environment (Basadur

and Hausdorf 1996). In NPD creative performance is of preeminent importance (Leenders

et al. 2007). We therefore hypothesize:

H4 Creativity has a positive effect on the design process within the virtual environment.

The recognition and definition of the problem is an activity guided by an individual or

group within a firm intending to identify a new business opportunity (Benedicic et al.

2006). The key activity in this process is idea generation, in which creativity plays a crucial

role. As the NPD project progresses from the early conceptualization phase to the final

commercialization phase, the design methods can become more systematic, which can lead

to reduced creativity needs (Leenders et al. 2007). With regard to this notion we sub-

hypothesize that the idea generation phase of the design process is the one most influenced

by creativity.

As creativity is seen as one of the factors influencing the design process and its output,

we consequently hypothesize:

H5 Creativity within virtual environments has a positive effect on NPD effectiveness

level.

The phases of the design process

The design process is usually viewed as a logical, patterned sequence of steps or stages

through which an individual or a team moves, to define, clarify, and work out a problem

and then produce a solution to that problem (Nemiro 2004). The essence of the design

process is to represent the idea of a new function in the environment down to the smallest

detail and build a product that satisfies this function in the end (Duhovnik and Tavcar

2000). This process is similar in face-to-face and virtual NPD teams; however Nemiro

(2004) has found some intriguing differences (i.e. in virtual teams there is more of a push

to get to development quickly). As this study is done on an example of virtual teams, we

follow her definition of the design process. She (Nemiro 2002, 2004) argues that virtual

teams follow a path of four stages in the quest toward the production of creative results:

idea generation, development, finalization and closure, and evaluation. The idea generation

phase starts when an unmet need or an unsolved question is recognized and pursued by a

team (Nemiro 2004). After the starting efforts are drafted, presented and disseminated, an

integrative stage of development follows. The team works to develop a product, project or

service that meets the proposed needs. Once ideas are developed into workable outcomes,

the creative products are finalized and implemented (Nemiro 2004). After implementation

the evaluation phase concludes the design process. The team assesses the strengths and


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weaknesses of the completed project. It is crucial to realize that these stages may not be

mutually exclusive and the activities can overlap and reoccur in another stage. However,

the establishment of procedures and forums for team members to clarify their goals, get

feedback from one another and ensure accountability has an important role in final NPD

success (Nemiro 2004). On the basis of this notion, we hypothesize:

H6 A structured design process in virtual environments has a positive effect on NPD

effectiveness level.

To summarize the logic and causal relationships behind the proposed hypotheses: the

main presumption is that in practice, NPD effectiveness needs to be enhanced in order to

ensure firm’s survival in the competitive market place. New technologies enable this, by

enabling the formation of virtual teams that can work ‘‘outside the box’’ of the formal

organization and therefore give more creative results. Consequently, the higher creativity

gained through working in virtual environments can enhance the NPD result. Finally, both

virtual team environment and creativity change the design process being performed,

giving effect on the NPD effectiveness also indirectly through the more effective design

process.

Methodology

Data collection

To test our hypotheses we collected data from students that participated in the EGPR

course in 2007, 2008, 2009 and 2010. 81 participants out of 156 responded to the ques-

tionnaire, giving the effective response rate of 51, 9%.

Measures

The questionnaire consists of items that assess the design phases, creativity in the virtual

teams and the overall NPD effectiveness. All the items are taken from well-established and

validated scales (Nemiro 2004). The questionnaire has been modified according to findings

of Fain et al. (2008). The pilot study has namely shown that several items used in the

original questionnaire have not contributed significantly to the composite score of the

latent variables and have therefore been left out. A repeated analysis of the previous

research (Fain et al. 2008) with fewer items has produced similar results, thus confirming

the argument presented. A shorter questionnaire has also proven to be more user friendly

and has produced a higher response rate.

With regard to this, the students assessed the level of virtuality of the team by assessing

the degree to which the task of the project was accomplished by virtual team design.

To evaluate the design process employed during the EGPR course, the students were

asked to indicate the mechanisms employed during the phases undertaken in the course.

Since previous research has shown, that the separate phases are highly correlated, meaning

the students perceive them as being in flux during their design process, we measured only

the design process as a whole. The students so assessed whether there was (1) a disciplined

procedure in place to scan the environment for unmet needs, (2) a forum that team

members could use to share the ideas they found intriguing, (3) a not judgmental evalu-

ation possible for the ideas presented, (4) a possibility of presenting the ideas to other team

members and (5) a disciplined procedure for using specific criteria to evaluate alternative


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solutions, (6) adequate time set aside to make last minute adjustments and revisions before

implementation, (7) a system in place for gaining agreement from individuals outside the

team who might be affected by the proposed action and (8) an appropriate timeframe to

reach closure on a particular creative effort. The students also assessed (9) the use of

feedback after evaluation and (10) to what degree the project was parceled out to indi-

vidual team members.

To evaluate the level of creativity the students were asked (1) how often they utilized

specific creative techniques for stimulating creativity and (2) how effective the overall

creative process was.

Finally, to assess the effectiveness of NPD creativity within the EGPR teams, the

students were asked to rate how effective their teams design phases were overall. They

evaluated (1) the effectiveness of the idea generation phase, (2) the effectiveness of

development phase and (3) the effectiveness of the finalization phase. Although Nemiro

(2002, 2004) established there are four phases within the design process, the final evalu-

ation phase was not included in the survey, as the students’ work concluded before the

actual production of the product and they therefore could not determine the effectiveness of

the evaluation phase.

All the items were measured on 7-point Likert type of scales. Each mechanism was

given a composite score created by averaging the scores of the items.

To be able to test the hypotheses among different cultural groups, the students were also

asked to state their origin University. With regard to the cultural indexes (Hofstede 2001)

of the country of origin, two clusters of national culture types were formed for the analysis

(as shown in Fig. 1)—‘‘village market’’ (The Netherlands, United Kingdom and Swit-

zerland) and ‘‘pyramid of people’’ (Slovenia, Croatia and Hungary).

Table 1 presents summary statistics for each construct for both studied types of national

cultures. Interestingly, the means are to some degree higher for all constructs within the

‘‘pyramid of people’’ type of national culture. The students from this national culture type

cluster therefore perceive the NPD process in virtual teams as being more creative and

effective as students from the ‘‘village market’’ national culture type.

Table 1 Summary statistics for constructs of national culture types—‘‘pyramid of people’’ and ‘‘villagemarket’’

Mean Standard deviation Minimum Maximum

Construct—‘‘pyramid of people’’

Virtual teams 4.79 1.24 1.00 7000

Creativity 5.65 1.06 3.00 7.00

Design process 5.07 0.78 2.88 6.67

Perceived NPD effectiveness 5.27 1.23 2.00 7.00

Construct—‘‘village market’’

Virtual teams 4.54 1.61 1.00 7.00

Creativity 4.54 1.29 2.00 7.00

Design process 4.55 1.20 1.87 6.37

Perceived NPD effectiveness 4.76 1.13 2.67 7.00


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Results

To validate our hypotheses we utilized the structural equation modelling (SEM) for data

analysis. We used the partial least squares (PLS) technique of SEM that utilizes a variance-

based approach for estimation. We used SmartPLS 2.0 (Ringle et al. 2005) for performing

the analysis. Unlike covariance based packages, i.e. LISREL that employ v2 statistics, PLS

uses R2 statistics and does not place strict demands on sample size and data normality

(Ifinedo et al. 2010). Two assessments are supported by PLS: (1) the measurement model

assessment, where item reliability, convergent and discriminant validities of the mea-

surement scales are examined and (2) the structural model assessment, where information

related to item loadings and the strength of the paths in models is presented. The path

significance levels using t-values are estimated by the bootstrap method.

We have conducted two separate PLS analyses for both studied types of national cul-

tures. The differences between the gained results will confirm/reject the postulated

hypotheses.

Assessment of the measurement models

Internal consistency is demonstrated when the reliability of each measure in a scale is

above 0.7. As shown in Table 2 we assessed internal consistency by measuring composite

reliability. Some researchers have namely suggested that composite reliability is similar to

Cronbach alpha and can be interpreted in the same way (Ifinedo et al. 2010). All of the

measured constructs have the composite reliability exceeding the recommended 0.7 indi-

cating adequate internal consistency. The composite reliability of the construct virtual

teams is 1.0 as this construct was measured by only 1 item. For ‘‘pyramid of people’’ type

of national culture the composite reliability for creativity is also 1.0 as some items mea-

suring creativity were taken out of the analysis, as the factor analysis showed they had

loadings that did not exceed 0.6.

For adequate discriminant validity it has been recommended that the following three

conditions be met: (1) the square root of AVE of all constructs should be larger than all

other cross-correlations; (2) all AVE should have values above 0.5; and (3) the principal

component factor analysis should have item loadings greater than 0.6 on their respective

Table 2 Measure validation of the two national culture types

Note: (1) the bold fonts in the leading diagonals are square roots of AVE; (2) off-diagonal elements arecorrelations among constructs; (3) ‘‘Pyramid of people’’ sample correlations are above the diagonal; the‘‘village market’’ sample correlations are bellow the diagonal


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constructs, and no item should load highly on any other construct (Fornell and Larcker

1981).

Convergent validity is adequate if each of the constructs in the model has an average

variance expected (AVE) of at least 0.5 (Fornell and Larcker 1981). AVE measures the

percentage of the overall variance for indicators represented in a latent construct through

the ratio of the sum of the captured variance and the measurement error (Hair et al. 1998).

It is further recommended that the factor loadings of all items should be above 0.6 for

convergent validity to be demonstrated. The factor loadings are presented in the Appendix;

all the items that have values lower than the recommended value of 0.6 are marked and

have been excluded from further analysis.

The results in Table 2 indicate that all correlations between constructs were lower than

the squared root of AVE (the principal diagonal element) and all AVEs were above the 0.5

threshold. The SmartPLS confirmatory analysis also showed that all items included in the

analysis loaded on the construct for which they were designed to measure. Thus, the

discriminant validity of the scales used for this study is adequate.

Assessment of the structural model

SmartPLS 2.0 provided the squared multiple correlations (R2) for each construct in the

model and path coefficients (b) with other constructs also given. The R2 indicates the

percentage of a construct’s variance in the model, while path coefficients indicate the

strength of relationships between constructs (Chin et al. 1996; Ringle et al. 2005). The

results of the PLS analysis are shown in Fig. 2 for both ‘‘village market’’ (bold) and

‘‘pyramid of people’’ (italics).

When comparing the results for ‘‘village market’’ with the original framework (Nemiro

2002, 2004; Fain et al. 2008), it can be seen, that most of the original hypotheses were

supported. Surprisingly, working in virtual teams has proven to have a significant negative

effect on the perceived NPD effectiveness (b = -0,134; t = 2,206). Contrary to the model

prediction, hypothesis two (H2) was not supported. Working in virtual teams was found not

to have a significant effect on creativity (b = 0,211; t = 1,680). It did however have a

moderate positive effect on the structured design process (b = 0,128; t = 1,835), thus

confirming the third hypothesis (H3) of the original model. Creativity was found to have a

positive effect on the structured design process (b = 0,697; t = 14,270) and also directly

on the perceived NPD effectiveness (b = 0,364; t = 3,792), thus confirming the fourth

(H4) and fifth hypothesis (H5) of the original model. The structured design process has also

proven to have a significant effect on the perceived NPD effectiveness (b = 0,439;

t = 6,050), giving confirmation to the final hypothesis (H6).

Contrary to the testing of hypotheses for ‘‘village market’’ type of national culture, the

results for ‘‘pyramid of people’’ type of national culture have not supported the original

model. Only the fifth hypothesis (H5) was supported, as creativity has proven to have a

direct positive effect on the perceived NPD effectiveness (b = 0,579; t = 6,049). Contrary

to the prediction of the original model, hypotheses one (H1), two, (H2), three (H3), four

(H4) and six (H6) were not supported.

Working in virtual teams was found not to have a significant effect either on creativity

(b = -0,072; t = 0,380), nor the structured design process (b = -0,026; t = 0,165) and

also not on the perceived effectiveness of the NPD process (b = 0,115; t = 0,942).

Similarly, creativity was found not to have an effect on the structured design process

(b = 0,027; t = 0,223). The structured design process has also proven not to have an

effect on the perceived NPD effectiveness (b = -0,148; t = 0,841).


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These summaries are depicted graphically in Fig. 2. Viewing the results in this way, we

capture a description of the patterns in the NPD process that are perceived as leading to

successful programs. From Fig. 3 we see, that for ‘‘pyramid of people’’ type of national

culture creativity is the only relevant construct leading to effective NPD, whereby in

‘‘village market’’ type of national culture, structured design process has also been found to

be relevant.

* Significant at 5% Italics = pyramid of people ** Significant at 1%

Fig. 2 Summary of the path model analysis for two clusters of national cultures

+ +

+

-

»Village market« »Pyramid of people«

+

Fig. 3 A comparison of significant paths towards effective NPD for the two studied clusters of nationalcultures


123

Table 3 summarizes the testing of hypotheses. Testing the framework within different

types of national cultures has proven to give very different results, thus giving support to

our H0—the perception of effects of working in virtual teams on NPD effectiveness differs

between national cultures.

Discussion and conclusions

NPD is considered to be a critical activity for successful companies, because if it is

effective, it brings competitive advantages to the company and enables their survival and

growth. As global competition has grown, the need for creativity, expertise and information

has expanded beyond the boundaries of individual organizations and the creation of virtual

teams has developed as a response to the need for changes in design practice. Although it

has been widely recognized that creativity is crucial for effective NPD and that virtual teams

are a novel way of reaching the needed creativity levels, research within the field is rare. As

one of the main characteristics of virtual teams is that their members are from different

cultural backgrounds, an important question of cultural influences on effective NPD is

raised and has to our knowledge not been answered in empirical research so far.

In order to address this question, presented research was done with the aim to test if

creative NPD functions differently within virtual environments that comprise out of dif-

ferent cultural backgrounds. Since the research was done on a design course, the results

show the perception of students with regard to the model put forward by Nemiro (2002,

2004) and their own cultural background. The results show that two distinct perceptions

about NPD effectiveness have formed within the two national culture types. We find the

explanation for this within the cultural characteristics of the studied national culture types.

Table 3 Summary of hypotheses testing in village market and pyramid of people type of national cultures

Hypotheses Perceived NDP effectiveness in virtual designteams

Village marketgroup

Pyramid ofpeople group

H1: Working in a virtual environment has adirect positive effect on NDP effectiveness

Contradictory Not supported

H2: Working in a virtual environment has apositive effect on creativity in NDP

Not supported Not supported

H3: Working in a virtual environment has apositive effect on the design process

Not supported Not supported

H4: Creativity has a positive on the designprocess within the virtual environment

Supported Not supported

H5: Creativity within virtual environmentshas a positive effect on NDP effectivenesslevel

Supported Supported

H6: A structured design process in virtualenvironments has apositive effect on NDPeffectiveness level

Supported Not supported

H0: The perception of effects of working invirtual teams on NDP effectiveness differsbetween cultures

Supported


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The students coming from the ‘‘pyramid of people’’ national culture have been raised

within the environment where strict rules need to be followed and procedures, such as the

design process, are strictly formalized and structured, whereby the students from ‘‘village

market’’ national culture type were not faced with such strict rules and procedures. The

students from the ‘‘pyramid of people’’ national culture type therefore do not perceive the

structure of the process and organization of the team as relevant for NPD effectiveness, as

these are part of their culture and they attribute all influence to creativity. On the other

hand, the students from the ‘‘village market’’ national culture type perceive all, the softer

aspects of NPD, such as creativity as important as following a certain structure. The two

national culture types therefore differ in their perception of what are the relevant factors for

NPD effectiveness.

These results show that special care needs to be placed on the cultural aspects of team

forming, as different perceptions of team members can have a relevant effect on the

outcome of the NPD process. We therefore propose that Nemiro’s model is upgraded with

the cultural dimensions, however further research is needed in order to define the novel

model framework.

The presented study has some limitations that should be considered in future research.

First of all, the research was done within educational environments, on a relatively small

sample and the types of cultures were determined by taking into account only two of the

relevant cultural dimensions. As there are several clusters of national cultures the presented

study should be repeated with their consideration. Also, the presented results are actually

perceptions that the students have on their work, which calls for caution when applying the

studied concepts to other contexts. Finally, the study defined the NPD process up to the

prototype development, therefore terminating before the actual market introduction where

the actual NPD effectiveness could be measured with validated measures. This calls for

repetition of the study within other NPD environments. We however believe that the

presented research combined good business practice with educational practice, therefore

giving valid results.

We can therefore conclude that although virtual teams are developing as the optimal

way to work in the 21st century in order to assist organizations in meeting the challenges of

developing new products for the global market, special care needs to be placed on the

cultural aspects relevant for NPD within such teams. Teaching the students such practice

can be efficient and beneficiary for their future design work.

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