Exploring the dual effect of effectuation on new product development speed and quality

Existing research provides mixed insights concerning the impact of effectuation on new product advantages. We address these contradictions by highlighting the dual nature of the relationship between effectuation and new product advantages. By arguing that effectuation differentially affects two types of new product advantages, namely new product development (NPD) speed and new product quality (NPQ), we hypothesize that effectuation is positively related to NPD speed but has an inverted U-shaped relationship with NPQ. Moreover, we reveal that competitive intensity strengthens the relationship between effectuation and these two types of new product advantages. Using a questionnaire survey of 180 sample firms in China, we test and find strong support for our hypotheses. This study highlights trade-offs in new product advantages associated with effectuation and provides important theoretical and managerial implications.