The Effects of New Product Development Proficiency on Product Advantage and Tourism Business Performance

Abstract

This survey study examines whether tourism businesses that have developed systematic processes and procedures for new product development (i.e., firms that have new product development [NPD] proficiencies) perform better than those that do not. The study outlines the concept of NPD proficiency, which is conceptualized as a second-order reflective construct, whose first-order facets include opportunity analysis, technical development, product testing, and product commercialization. A model is developed in which product advantage is hypothesized to be a key mediating variable between NPD proficiency and three important indicators of tourism business performance—price premium, capacity utilization, and profitability. The model is tested using data collected from the Norwegian hotel industry. The findings provide support for the view that NPD proficiency influences positively product advantage, which, in turn, both directly and indirectly influences tourism business performance.