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Innovation Strategy and Sanctioned Conflict:

A New Edge in Innovation?

Barbara Dyer and X. Michael Song

Teamwork and harmony are worthy objectives, but a healthy dose of conflict also
plays an important role in fostering innovation. In their pursuit of teamwork and
harmony, companies run the risk of suppressing the creative tension that brings
vitality to new-product development (NPD) efforts. Furthermore, a firm’s choice
of innovation strategy may have a significant effect on the organization’s capa-
bility for managing conflict.
Using results from a survey of 290 marketing and R&D managers from U.S.
firms in the electronics industries, Barbara Dyer and X. Michael Song explore the
link between strategy and conflict, and the effect this link has on NPD success.
Their study examines the following issues: the influence of business strategy on
specific conflict-handling behaviors; the relationship between those conflict-
handling behaviors and positive conflict outcomes; and the relationship between
constructive conflict and new-product success. The study classifies firms predom-
inantly pursuing a more aggressive NPD strategy as prospectors and less ag-
gressive firms as defenders. Three conflict-handling mechanisms are identified:
integrating behaviors, forcing behaviors, and avoiding behaviors.
Compared to the prospector firms, the defender firms in this study perceived
significantly higher levels of conflict in their organizations. In handling conflict,
the prospector firms perceived a higher level of integrative behavior than the
defender firms. The defenders perceived higher levels of forcing and avoiding
conflict behaviors. The study identifies a strong, positive relationship between
integrative behaviors and constructive conflict. Positive relationships are also
identified between constructive conflict and the success of cross-functional rela-
tionships, as well as between constructive conflict and NPD business success.
For the firms in this study, the results indicate that strategy is associated with
the conflict-handling mechanisms the firm uses. For example, the results suggest
that an NPD manager in a prospector firm will encounter high use of integrative
behaviors, a high number of complex conflicts, a relatively low level of perceived
conflict, a high level of formalization, and frequent exchanges of written and
verbal communication among the firm’s personnel. The results suggest that
managers may help to create an environment conducive to NPD success by
assessing their firms’ strategies, emphasizing integrative conflict-handling be-
haviors, and employing formalization of organizational procedures. © 1998
Elsevier Science Inc.

J PROD INNOV MANAG 1998;15:505–519

© 1998 Elsevier Science Inc. All rights reserved. 0737-6782/98/$19.00
655 Avenue of the Americas, New York, NY 10010 PII S0737-6782(98)00032-0
506 J PROD INNOV MANAG
1998;15:505–519
Introduction
R
ichard Pascale [38], p. 263] has observed that,
“Creativity and adaptation are born of tension,
passion, and conflict”—a fact well illustrated
by the new product development (NPD) process,
where new ideas, new products, and new processes
depend on organization members challenging the sta-
tus quo. Thus, it is hardly surprising that few processes
Address correspondence to X. Michael Song, Department of Marketing
and Supply Chain Management, The Eli Broad Graduate School of Man-
agement, Michigan State University, N334 North Business Complex, East
Lansing, MI 48824-1112.
BIOGRAPHICAL SKETCHES
Barbara Dyer is Assistant Professor of Marketing, Scott Fetzer
Faculty Fellow, and Director of The Sales Centre at Ohio Univer-
sity. She earned her Ph.D. in Marketing and Strategic Management
at the University of Tennessee and her B.S. and M.S. with honors
from the University of North Carolina at Greensboro. Her business
background includes over a decade of retail management and
buying for companies such as Allied Corporation and Crown Cor-
poration. Dr. Dyer’s research interests include relationship issues in
new product development, especially in the international arena, and
in professional sales. Her articles appear in the Journal of Product
Innovation Management, IEEE Transactions on Engineering Man-
agement, the Journal of International Business Studies, Research-
Technology Management, and various conference proceedings, in-
cluding the American Marketing Association, the Academy of
Marketing Science, and the International Trade and Finance Asso-
ciation. She also teaches in the Ohio University MBA Without
Boundaries.
X. Michael Song is Associate Professor of Marketing and Product
Innovation in the Eli Broad Graduate School of Management,
Michigan State University. He received an MS from Cornell Uni-
versity, an MBA and Ph.D. in Business Administration from the
Darden School at University of Virginia.
Dr. Song received three Best Paper Awards from the Product
Development and Management Association. He was a winner in the
1992 Marketing Science Institute Research Competition on En-
hancing New Product Development Process. His primary research
interests include global new product management and joint venture
management. His current research projects include a nine-country
comparative study of best practices in managing cross-functional
development teams and improving the new product development
process. Based on a data set consisting of over 3,000 new products
recently developed and commercialized by major corporations from
nine countries, he has developed several global “benchmark mod-
els” of new product development management. His research articles
have appeared in the Journal of Product Innovation Management,
the Journal of Marketing Research, Marketing Science, the Journal
of Marketing, the Journal of International Business Studies, the
Journal of the Academy of Marketing Science, Industrial Marketing
Management, the Journal of International Marketing, IEEE Trans-
actions on Engineering Management, and Research-Technology
Management.
B. DYER AND X.M. SONG
in the firm take as much of managers’ time or have as
profound an effect on the NPD process as conflict
[18,47,48]. As Takeo Fujisawa, one of the founders of
Honda, has noted, “...you never want too much har-
mony. One must cultivate a taste for finding harmony
within discord, or you will drift away from the forces
that keep a company alive” [38, p. 256]. Or, as Soud-
er’s “too-good friends” clearly demonstrates, too
much harmony inhibits challenges among team mem-
bers and results in overlooked information and obser-
vations vital to successful innovation [49].
What may come as a surprise, however, is that the
firm’s choice of strategy may have a profound influ-
ence on its ability to handle discord and disagreement
effectively. As Mitchell and Hustad [34, p. 143] state,
“New product decisions are often highly strategic.”
Today, the competitive nature of the marketplace
makes innovation even more important strategically,
as businesses increasingly turn to NPD for their sur-
vival amid rapid market changes. It is important to
note that strategic decisions inherently involve a pro-
cess of negotiation, because they suggest the consid-
eration of change in response to environmental shifts
[22, p. 59]. Put simply, just as innovation links to
conflict, strategy and strategic decision-making also
link to conflict.
Today’s business environment further emphasizes
the strategy/conflict relationship. The old corporate
hierarchical structure has given way in many instances
to project teams, task forces, and other work groups
[27]. Specifically in the new product environment,
Pinto and Pinto [40, p. 200] state, “...organizations are
turning to project management and relying to a greater
degree on project teams for the development and im-
plementation of new products and programs.” Signif-
icantly, recent research has shown that the effective-
ness of teams depends on how well they manage
conflict [2]. Mensch and Ramanujam [32, p. 22] con-
cur, stating that it is “...imperative that we understand
conditions under which team processes exert a favor-
able influence on innovation outcomes, and conditions
under which they lead to conflict,” because teams are
central to successful innovation.
Many companies today are reconsidering a histori-
cally negative view of conflict and sanctioning conflict
to invigorate, change, and gain a competitive advan-
tage in innovation [38]. Honda Motor Corporation
exemplifies a company that has proactively and suc-
cessfully sanctioned conflict, developing and using
waigaya, a contention management system [38] (Ex-
hibit 1). For example, in the 1980s, waigaya led to the
INNOVATION STRATEGY AND SANCTIONED CONFLICT
development of the Honda City automobile, a huge hit
in the Japanese domestic market. Among the first
disagreements the project team faced was top manage-
ment’s objection to initial design ideas because they
were too ordinary [38]. However, Honda’s contention
management system, through skillful management of
diverse opinions, led to a very successful new product.
Where disagreement is not well managed, however,
the results can be devastating for the NPD process. In
NPD, research and development (R&D) and market-
ing historically have experienced significant disagree-
ments [21,47– 49]. For example, marketing can create
conflict by pushing R&D for quick product changes to
support short-term marketing decisions such as pric-
ing, distribution, or advertising. R&D, on the other
hand, can create conflict by pushing for technological
product improvements that market research has indi-
cated may not be important to customers. Either can
generate conflict by speaking jargon that can’t be
understood by the other. Souder [48] found that, due to
differences in such things as jargon, time sense, mo-
tives, goals, allegiances, and senses of responsibility,
almost 60% of the new product projects he studied
experienced significant interface conflict. Where a se-
vere disharmony state prevailed, 68% of the new prod-
uct projects failed, compared to 23% under a mild
Exhibit 1: Honda’s Contention Management
System
Definition:
● Waigaya, a set of conflict management skills and proto-
cols at Honda, provides a forum that supports the creative
expression of employee ideas without regard for rank.
Protocol:
● Waigaya sessions can be requested by either seniors or
subordinates. Within these sessions employees question,
challenge, and disagree directly with superiors, co-work-
ers, or subordinates. The company encourages active
listening, rationale support for arguments, and polite be-
havior during the disagreement process. A facilitator is
often present to help shape thoughts and feelings into
constructive suggestions.
Outcomes:
● Ideas coming of these sessions are melded by manage-
ment into a single plan of action. This provides Honda
with a learning system “that is rare even by Japanese
standards”[38].
J PROD INNOV MANAG 507
1998;15:505–519
disharmony state and only 13% under a state of har-
mony [48].
Research offers a number of possible benefits for
academic and managerial understanding of the strate-
gy/conflict relationship. First, most firms want and
need guidance to improve their NPD because of ex-
treme competitive pressures [9,23]. Also, previous re-
search on general disharmony in NPD offers managers
little help with the specific behaviors and mechanisms
needed to manage conflict. Because conflict manage-
ment is a controllable managerial variable (possible to
teach and learn), organizational learning resulting
from sanctioned conflict may represent a possible
sustainable competitive advantage [44]. Furthermore,
research on the strategy/conflict link in NPD helps to
fill a gap, because research about implementation and
control of the marketing function is still limited [24].
Finally, and most importantly for managers, the data
from such research may help to improve new product
performance.
The purpose of this study is to pursue much needed
research about the relationship of strategy and conflict
within the NPD process. To do so, we conducted a
survey of 290 R&D and marketing managers in the
electronic industries in the U.S. We addressed the
following issues: (1) the influence of business strategy
on specific conflict handling behaviors; (2) the rela-
tionship of those conflict handling behaviors to posi-
tive conflict outcomes, that is, constructive conflict;
and (3) the relationship of constructive conflict to new
product success. The results indicate that both NPD
researchers and managers can benefit by better under-
standing the relationship between strategy and conflict
behaviors in the NPD process.
Brief Literature Overview
Conflict research began with studies on the general
theories of organizational conflict, the general process
of conflict episodes, and the general behavioral ap-
proaches to conflict [10,41,50] (See references [29]
and [53] for recent in-depth reviews of the conflict
literature). More recently, researchers have focused on
how organizations handle conflict and how they can
improve their conflict management skills [35,51].
Across all research topics, the sum total of conflict
research is huge, notwithstanding a relatively narrow
range of topics and disciplinary areas, that is, business,
economics, psychology, and sociology [29]. However,
despite substantial research and widespread accep-
508 J PROD INNOV MANAG
1998;15:505–519
tance of its importance, organizational conflict re-
mains poorly understood [16].
Relatively few studies have explored the relation-
ship of strategy and conflict, and those studies have
covered a wide variety of contexts [1,15,16,33,44].
Amason [1] approached the paradox of conflict in top
management team strategic decision-making, where
conflict can improve the quality of decisions but at the
same time hurt group consensus and acceptance. Dyer
and Song [15] compared conflict behaviors of Japa-
nese and U.S. firms following different strategic ap-
proaches. Eisenhardt and Zbaracki [16] explored how
conflict affects general strategic decision-making,
while Miles and Snow’s [33] multiple industry/multi-
ple company studies looked at the conflict behaviors
associated with particular strategic types. Ruekert and
Walker [44, p. 234] focused on implementation issues,
stating that variations in the nature of interactions
between R&D and marketing based on strategic posi-
tion “may have important implications for the effec-
tive implementation of those strategies.”
More research is needed, however, on the issue of
the strategy/conflict relationship in general. It is espe-
cially needed within the context of NPD, because
conflict plays such a critical role in strategic decision-
making and the innovation process. While each of the
above studies has addressed an important aspect of
strategy and conflict, only Dyer and Song [15] and
Ruekert and Walker [44] have done their research in
the context of the NPD process.
Hypotheses Development
Strategy and Conflict
This study looks at the relationship between innova-
tion strategy, defined as the new product and market
development plans of the firm, and task conflict, de-
fined as non-personal disagreements over work goals,
objectives, and methods. In order to study this rela-
tionship, we chose the Miles and Snow typology to
assess strategic position, because it classifies firm
strategy based on the firm’s approach to innovation
and adaptation to market changes. Furthermore, Miles
and Snow [33] also observed that firms pursuing dif-
ferent innovation strategies used different conflict han-
dling methods, possibly because of the different per-
sonnel selection criteria used, the different market
environments faced, the different functional goals pur-
sued, the different skills and abilities needed, or the
different structures used by each strategy. Their typol-
B. DYER AND X.M. SONG
ogy has been successfully used in previous cross-
functional interface studies [31,33,44,46].
The Miles and Snow [33] typology classifies firms
into one of four strategic types: (1) prospectors, that
move quickly to seize opportunities in the market
place through new products, new markets, and new
technologies; (2) defenders, that find and keep secure
niches in a stable product or service area, not looking
beyond their current product domain; (3) analyzers,
that mix an aggressive new product and domain ap-
proach in one business with a stable approach in a
second business; and (4) reactors, that lack a true
strategic perspective and allow themselves to be buf-
feted by environmental elements. In sum, Miles and
Snow [33] depicted two “polar” strategic types, pros-
pectors that choose aggressive market development
and defenders that pursue non-aggressive market de-
velopment. In this study, reactors, because they are
a-strategic, that is, reactive instead of proactive, and
fail to link to a proactive strategy, have been dropped
from further discussion and data analyses. Also, for
purposes of clarity we present the hypotheses in terms
of the polar strategic positions.
Miles and Snow’s [33] descriptions suggest that
prospectors should have higher levels of conflict than
defenders, due to environmental complexity and struc-
tural differences. On the other hand, based on research
of the social perception of conflict approaches, the
described hierarchical structure of defender firms
could be perceived as conducive to high levels of
conflict [5,52]. The limited research done on this ques-
tion has had mixed results. For example, Ruekert and
Walker [44] using an American sample predicted and
found prospectors to have higher levels of conflict.
Dyer and Song [14], using a Japanese sample, found
defenders to have higher conflict levels. Thus, we
hypothesize that:
H1: The perceived level of conflict between R&D
and marketing will be greater in defender
firms than in prospector firms.
Strategy and Conflict Handling Mechanisms
Research has identified two major approaches to con-
flict handling, behavioral and structural [43]. The most
recognized and respected behavioral measures of con-
flict handling are based on the tradeoff managers make
between self-interest and interest in others [10,42,52].
This study defines the three fundamental approaches
to handling conflict (integrating, avoiding, and forcing
behaviors) in the following fashion: (1) integrating
INNOVATION STRATEGY AND SANCTIONED CONFLICT
behavior reflects a significant interest in considering
the needs of the other party; (2) forcing behavior
reflects low interest in others and high interest in self
(one party maximizes his own concern at the expense
of the other party); and (3) avoiding behavior reflects
low interest in self as well as others (both parties in-
volved in the conflict fail to address anyone’s concerns).
Miles and Snow [33] in their studies found that,
during conflict, prospectors engage in high levels of
interaction in response to frequent cross-functional
contact in multiple, complex situations, that is, they
use an integrative approach. Defenders interact infre-
quently and on a routinized basis, seeking timely and
simple conflict resolution, that is, they use a non-
integrative approach. Prospector emphasis on multiple
functional areas, cooperative behavior, and high levels
of interaction is indicative of a high level of interest in
others, as well as in self, or an integrating conflict
handling behavior approach. Defender emphasis on
minimal interaction, reduced time investment, in-
creased efficiency, and hierarchy is indicative of high
interest in self, or a forcing or avoiding conflict han-
dling behavior approach. Therefore, we predict that:
H2: In conflict situations between R&D and mar-
keting, prospector firms will use integrating
conflict handling behaviors more than de-
fender firms.
H3: In conflict situations between R&D and mar-
keting, defender firms will use forcing and
avoiding conflict handling behaviors more
than prospector firms.
Organizations use two structural methods to reduce the
chance of conflict and to facilitate resolution: formal-
ization and centralization [30,44,45]. This study de-
fines formalization as the codification of organiza-
tional procedures, that is, the written policies,
procedures, standards, and processes of the firm. For-
malization reduces complexity, uncertainty, and role
ambiguity, thereby reducing conflict. The study de-
fines centralization as hierarchical authority, or
whether decisions must be approved by superiors be-
fore being carried out. Centralization simplifies and
speeds conflict handling by providing a known process
for conflict resolution. It also acts to suppress conflict
through the exercise of authority. Miles and Snow [33]
clearly state that defenders have high levels of formal-
ization and centralization, while prospectors have low
levels of formalization and decentralized structures.
However, the support for Hypothesis 2 suggests that
formalization may be more needed, and therefore seen
more, in prospector firms because of their complex
J PROD INNOV MANAG 509
1998;15:505–519
nature and high interaction across functional bound-
aries. Given this and the fact that previous empirical
work has not entirely supported Miles and Snow’s [33]
claims about formalization and centralization of the
strategic types [14,44], we expect that:
H4: In conflict situations between R&D and mar-
keting, prospector firms will rely on formal-
ization more than defender firms.
H5: In conflict situations between R&D and mar-
keting, prospector firms will rely on central-
ization more than defender firms.
If managers are to handle conflict situations skillfully,
they need to understand the relationships among con-
flict handling methods, constructive conflict out-
comes, and performance. In this study, constructive
conflict is defined as personnel working harder, feel-
ing energized by the conflict exchange, and seeing
positive change. Performance is defined in two ways,
as both the quality of cross-functional relationships
and business performance, that is, overall marketplace
performance and new product program success.
Thomas and Kilmann [52] found that conflict behavior
styles have a distinct social desirability ranking. The
ranking in descending order is integrating, forcing, and
avoiding. Based on this ranking, people in organiza-
tions respond more favorably to cooperative conflict
behavior (other-oriented) than non-cooperative (or
self-oriented) conflict behavior. In examining interde-
partmental conflict, Lawrence and Lorsch [28] and
Burke [11] found that the more collaborative styles of
conflict behavior produced positive, functional results.
Also, Barker et al [5] found that positive outcomes of
conflict correlate with new product project success. It
should be noted that these positive outcomes are not to
be mistaken for the “too-good friends” situation in
which surface harmony glosses over and suppresses
disagreement, effectively forestalling true conflict res-
olution [49]. This suggests that:
H6: In conflict situations between R&D and mar-
keting, a positive relationship will be found
between integrating conflict handling behav-
iors and constructive conflict.
H7: In conflict situations between R&D and mar-
keting, a negative relationship will be found
between forcing and avoiding conflict han-
dling behaviors and constructive conflict.
H8: In conflict situations between R&D and mar-
keting, a positive relationship will be found
between constructive conflict and NPD suc-
cess.
510 J PROD INNOV MANAG
1998;15:505–519
Methodology
Research Instrument Development
We developed our measurement scales using a four-
phase iterative procedure [17]. First, scales designed to
measure the constructs of interest were drawn from the
literature, and an initial research instrument was de-
veloped using standard psychometric techniques [36].
Second, we conducted 16 group interviews in nine
companies to identified unique subsets of measures
that possessed “different shades of meaning” to infor-
mants [17]. Third, we submitted a list of constructs
and corresponding measurement items to a panel of
academic experts for evaluation of clarity, specificity,
and representativeness, requesting appropriate addi-
tional measures.
Fourth, based on the first three phases, we prepared
a new draft of the questionnaire and pretested it with
five Ph.D. students in a measurement and research
doctoral seminar from a well-regarded U.S. business
school. Based on feedback from these interviews, the
instrument was modified and professionally drafted.
To further test the questionnaire, we administered the
questionnaire to 26 employees and conducted focus
group interviews using a semi-structured format in
four companies. We also pretested the final question-
naire with 82 marketing, R&D, and engineering per-
sonnel from two major chemical companies and a
computer company.
We conducted exploratory factor analysis to analyze
the pretest data and computed coefficient alpha to
assess the reliability. The results indicated that all
scales exceeded .70 (the minimum level recommended
by Nunnally), except the avoiding and forcing conflict
behaviors scales. Consequently, six additional items of
“equal kind and quality” were added to these scales
[26]. The final version of the questionnaire reflected
the necessary modifications suggested by the analyses.
Appendix A contains the details of the measures. Most
measures used a seven-point Likert-type agree– dis-
agree rating scale, where 1 is “strongly disagree” and
7 is “strongly agree.”
Sample Design and Response Rate
Our sampling frame included member firms listed in
the Electronic Industries Association’s 1994 Trade
Directory and Membership List. Random selection
from this list resulted in 800 firms in the U.S. that
B. DYER AND X.M. SONG
satisfied the study’s desired criteria: (1) firms produc-
ing physical products; and (2) firms with departmen-
talization of the marketing and R&D functions. Be-
cause information was incomplete in the trade
association listing for 631 of these firms, pre-survey
calls were made to these companies to verify address,
location of manufacturing, existence of both a market-
ing and R&D department, and/or the name of the
marketing director as the contact person for the study.
Adjusted for company mortality, personnel attrition,
incorrect or unusable addresses, and subsequent fail-
ure to meet the study criteria, the final sample frame
included personnel from 727 eligible member compa-
nies of the Electronic Industries Association (EIA).
In administering the mail survey, we followed the
Total Design Method recommended by Dillman [13].
The questionnaires were sent to both R&D and mar-
keting managers in the 727 firms. After the initial
mailing and three follow-ups, 176 companies returned
a single survey, 52 companies returned both surveys,
and one company returned a single survey without
functional area identification. Totally, 290 usable re-
sponses were received from 229 companies, resulting
in a 31% response rate at the company level. To test
for possible non-response bias, a multivariate analysis
of variance analysis (MANOVA) of the first- and
second-wave respondents was performed on all vari-
ables used in this study [3]. No significant differences
were found at a 5 .05 for all variables, suggesting that
non-response biases did not pose a major problem for
subsequent analyses.
Measures
Innovation strategy was measured using an 11-item
scale adapted from Conant et al’s [12] Miles and Snow
typology scale. The study classifies firms predomi-
nantly pursuing a more aggressive NPD strategy as
prospectors and those firms predominantly pursuing a
less aggressive NPD strategy as defenders. A 12-item
scale was used to measure conflict levels consisting of
five items from the market orientation study by Jawor-
ski and Kohli [23], five items from the business strat-
egy study by Ruekert and Walker [44], and two new
items suggested by pre-test focus group interviews.
All of the items used to measure conflict behavior
came from scales developed by Rahim [42]. The five-
item formalization scale and the five-item centraliza-
tion scale used in this research come from a study by
Hage and Aiken [20] and have been used by many
cross-functional interface studies, for example, Gupta
INNOVATION STRATEGY AND SANCTIONED CONFLICT J PROD INNOV MANAG 511
1998;15:505–519

et al [19] and Song and Parry [46]. Constructive con-
flict was measured by a five-item scale developed by
Barker et al [5]. Quality of cross-functional relation-
ships was measured with a six-item scale adapted from
organizational measurement scales developed by
Barker et al [5]. The business performance scale mea-
sured the overall marketplace performance and new
product program success, using a ten-item scale de-
veloped from the pre-test interviews and a review of
the PIMS studies [46] (see Table 1 for a sample of
measurement items or Appendices A and B for the
complete scale items used in the study).
Analysis and Results
Measurement Validation
We conducted a series of statistical analyses to vali-
date the measurement model. First, we performed ex-
ploratory factor analysis to assess the construct valid-
ity of the scales used in the study [26]. The results
validated all scales, but suggested that a single scale
for integrative conflict behaviors was superior to using
a separate scale for each of the different levels of
integrative behaviors. Furthermore, this supported the
study focus of contrasting the three conceptually dis-
tinct conflict behaviors, integrative, forcing, and
avoiding. Thus, a 13-item scale measuring integrating
conflict handling behavior was developed and used to
test those hypotheses addressing integrative conflict
handling behaviors.
Second, we conducted confirmatory factor analyses
(CFA) through LISREL to assure unidimensionality,
convergent validity, and discriminant validity using
the covariance matrix of the remaining items as input
[25]. The overall fit of the measurement models is
excellent, with the normed fit index (NFI), non-
normed fit index (NNFI), and comparative fit indices
(CFI) [7,8] for the model exceeding the critical level
(.90) cited by Bearden et al [6]. In addition, all items
had a significant loading to their respective constructs
and all loadings were significant (p , .05), demon-
strating that the scales for the constructs have conver-
gent validity. Examination of the Phi matrix further
indicates that the correlation between constructs is
significantly different from one, establishing discrimi-
nant validity.
Third, we classified the responses into the dominant
strategic type (prospectors or defenders) using SAS’s
FASTCLUS procedure. As an additional check, a

Table 1. Sample of Measurement Itemsa

Construct Items
Conflict level When R&D and Marketing work together . . .
there is little or no interdepartmental conflict.
People conflict on how to proceed on tasks.
Integrating behavior When Conflicts Arise Between R&D and Marketing, Generally We . . .
try to bring all issues into the open in order to resolve them in the best way.
Encourage others to express their feelings and views fully.
Avoiding behavior When Conflicts Arise Between R&D and Marketing, Generally We . . .
believe it is better to keep feelings to ourselves rather than create hard feelings.
Try to smooth over conflicts by trying to ignore them.
Forcing behavior When Conflicts Arise Between R&D and Marketing, Generally We . . .
tenaciously argue the merit of initial positions when disagreements occur.
Want the other to make concessions, but don’t want to make concessions ourselves.
Formalization Written procedures and guidelines are available for most work situations.
Formal communication channels have been established.
Centralization There is little action taken here until a supervisor approves a decision.
Even small matters have to be referred to someone higher up for a final answer.
Constructive conflict When Conflicts Arise Between R&D and Marketing, Generally We . . .
know each other better because of the way conflicts are handled.
Are more sensitive to one another because of the way that conflicts are handled.
Cross-functional In general . . .
relationship quality all things considered, we feel highly pleased with the way in which we work together
on a new product development.
We have a high degree of trust in each other.
Business performance Compared to our major competitiors, our overall new product program is far more successful.
Our overall performance of our new product program has met our objectives.
a
Responses were on a seven-point Likert-type agree–disagree rating scale, where 1 5 “strongly disagree” and 7 5 “strongly agree.”
512 J PROD INNOV MANAG
1998;15:505–519
MANOVA analysis was performed using all 11 strat-
egy measures to confirm the appropriateness of the
classification.
Fourth, we computed construct reliability using co-
efficient alpha. The results indicated that the coeffi-
cient alphas for the study’s constructs ranged from .77
to .94, exceeding the .70 level considered acceptable
for studies of this nature [36,39]. Examination of the
patterns of item-to-item correlations and item-to-total
correlations indicated that there were no deviations
from the internal consistency and external consistency
criteria.
Hypothesis Testing
Following McKee et al [31] and Song and Dyer [45],
this study tests hypotheses H1 through H5 using
MANOVA and Duncan’s multiple range test. The
Duncan method, one of the oldest multiple-stage tests
in current use, controls for the Type I comparisonwise
error rate and provides greater power than Tukey’s. Hy-
potheses were accepted or rejected at significance level a
5 .05 for both the F-tests and Duncan tests. Wilks’
Lambda, Pillai’s Trace, and Hotelling-Lawley’s Trace
also were used to test the relationship between strategic
types and the variables of interest. Hypotheses 6, 7, and
8 predicted simple associations between two interval,
continuous, and linear variables and were tested using
Pearson product-moment correlation.
Results
Tables 2 and 3 present the mean responses of pros-
pector and defender firms, the associated F-statistics,
Table 2. Hypothesis Testing Results: H1–H5 Conflict Level and Conflict Handling Mechanisms
Hypothesis Construct
H1: Ds will have a higher perceived level of
conflict than Ps. Conflict level
H2: Ps will use integrating conflict handling
behaviors more than Ds. Integrating behavior
H3: Ds will use forcing conflict behaviors more
than Ps (a). Forcing behavior
H3: Ds will use avoiding conflict behaviors
more than Ps (b). Avoiding behavior
H4: Ps will rely on formalization more than Ds. Formalization
H5: Ps will rely on centralization more than Ds. Centralization
a
Significant at a level of .01.
b
Means of behavioral mechanisms.
c
Means of structural mechanisms.
B. DYER AND X.M. SONG
and the results of the Duncan multiple range test for all
hypotheses. The data support all of the predictions of
the study, with the exception of Hypothesis 5, which
predicted that prospector firms would rely on central-
ization more than defender firms.
Conflict level. Defender firms were found to per-
ceive significantly higher levels of conflict in their
organizations than prospector firms (p , .01; 4.21 for
Ds and 3.62 for Ps). This finding contradicts both the
findings of Miles and Snow [33] and Ruekert and
Walker [44]. One explanation might be that behavior
during conflict episodes affects perceptions of conflict
more than the number of conflict episodes experi-
enced. If this is the case, it might be good news for the
firm, because controlling the number of conflict situ-
ations may be far less doable than controlling the ways
that firm members behave once disagreements arise.
An alternative explanation might be that, in defender
firms, which focus more on technology according to
Miles and Snow [33], R&D has more influence in the
organization than marketing, leading to conflict based
on power struggles between the two areas. Further
research is needed to clarify the relationship explored
by this research question.
Behavioral conflict handling. As predicted in Hy-
potheses 2 and 3, prospector firms perceived a higher
level of integrative behavior in conflict handling than
defender firms (p , .01, 5.29 for Ps and 4.69 for Ds),
and defender firms perceived higher levels of forc-
ing and avoiding conflict behavior than prospector
firms (p , .01, 3.93 for Ds and 3.46 for Ps; 3.46 for
Ds and 3.03 for Ps). These findings support previous
research in other conflict contexts. It is difficult to
Mean Value by Strategy Type
ANOVA
Prospectors (P) Defenders (D) F-Statistic
3.62 4.21 25.21a
5.29b 4.69b 32.62a
3.46b 3.93b 18.02a
3.03b 3.46b 12.90a
4.41c 3.89c 11.83a
c
2.47 3.01c 24.88a
INNOVATION STRATEGY AND SANCTIONED CONFLICT J PROD INNOV MANAG 513
1998;15:505–519

Table 3. Hypothesis Testing Results: H6 –H8 Conflict Handling Mechanisms, Constructive Conflict, and NPD
Success

Hypothesis Construct Correlation Probability

H6: A positive association will be found between integrating Integrating/constructive
conflict handling behaviors and constructive conflict. conflict .54 .0001
H7: A negative association will be found between forcing Forcing/constructive conflict 2.35 .0001
conflict behaviors and constructive conflict.
H7: A negative association will be found between avoiding Avoiding/constructive 2.28 .0001
conflict behaviors and constructive conflict. conflict
H8: A positive association will be found between Constructive/cross-functional .53 .0001
constructive conflict and new product development success
success.
H8: A positive association wil be found between Constructive conflict/market .26 .0001
constructive conflict and new product development success
success.

compare these findings, however, to those of the
Ruekert and Walker [44] study because their Proposi-
tion 4 linked avoidance and integrative behaviors.
Because these constructs differ diametrically, as
shown by Rahim [42] and by factor analysis in this
study, the results of Ruekert and Walker’s Proposition
4 are uninterpretable. This study, then, provides a new
data point.
Structural conflict handling. The results on struc-
tural forms of conflict management were mixed.
While Hypothesis 4 is supported, the data did not
support Hypothesis 5. Prospector firms do perceive
higher use of formalized organization structure than
defender firms (p , .01, 4.41 for Ps and 3.89 for Ds).
However, counter to the stated hypothesis, defenders
exhibit a higher level of centralization than prospec-
tors (p , .01, 3.01 for Ds and 2.47 for Ps). The
Ruekert and Walker [44] study predicted higher for-
malization in defenders, but found the differences be-
tween strategic types practically nil, with the results
not significant. Song and Dyer’s [45] results on for-
malization, based on a Japanese sample, support the
results found in this study.
When Ruekert and Walker [44] proposed that de-
fenders would use centralization more than prospec-
tors as a conflict handling mechanism, their finding
was statistically significant, but with the means re-
versed—that is, prospectors used centralization more
than defenders. Dyer and Song [14] found the same,
concluding that the higher complexity of prospector
NPD demands multiple methods of conflict manage-
ment. Thus, given the extant findings on this construct
in the NPD conflict literature, the results for Hypoth-
esis 5 are surprising. Certainly, it appears that the use
of centralization as a conflict handling mechanism
varies with context beyond the difference of strategic
type. The finding may be unique to the electronic
industries, for example, heavily impacted by an indus-
try characteristic such as environmental volatility.
This can only be settled by further research.
Performance. The data support all of the outcome
hypotheses (H6, H7, and H8). Integrating behaviors
were found to have a strong, positive correlation with
constructive conflict (p , .01, .54), substantiating
Ruekert and Walker’s [44] results. Forcing was found
to have a negative correlation with constructive con-
flict (p , .01, 2.35), and avoiding was found to have
a negative correlation with constructive conflict (p ,
.01, 2.28). Constructive conflict was found to have a
strong, positive correlation with cross-functional rela-
tionship success (p , .01, .53). Constructive conflict
was also found to have a positive correlation with
NPD business success (p , .01, .26). The data show
that the association of conflict handling behaviors with
constructive conflict within firms is strong. In the
interest of comparison to prior studies, we have pro-
vided the means by strategic type for the business
performance variable in Table 4. As will be noted, the
means of the prospectors are higher than the means of
the defenders.
Table 4. Business Performance Results by Strategic
Type
Performance Variable Prospector (m) Defender (m)
Quality of cross-functional
relationships 5.12 4.15a
Business performance 4.78 3.97a
a
Prospector and defender means significantly different at a 5 .05.
514 J PROD INNOV MANAG
1998;15:505–519
Discussion
Implications
Although managers today understand that the firm’s
strategy molds an NPD approach, few consider that
strategy may also mold a conflict handling climate that
affects new product success. Two decades ago, Souder
[47– 49] began a series of important studies dealing
with the effect of general conflict, or disharmony, on
the NPD process. A decade ago, Ruekert and Walker
[44] investigated the relationship between strategy and
specific conflict mechanisms in the NPD process using
three divisions of a single Fortune 500 company.
Ruekert and Walker [44] predicated their hypotheses
upon the strategic descriptions developed by Miles and
Snow [33]. Since that time, little has been done in the
NPD area to verify or challenge earlier findings, de-
spite the importance of the strategy/conflict link to
successful innovation [5,18]. This study provides im-
portant data that represents 290 new product managers
across the U.S. electronics industries and ties the strat-
egy/conflict relationship to new product performance.
Our results suggest that strategy is associated with
the conflict handling mechanisms used by the firm,
providing an opportunity for managers to generate a
baseline for understanding those mechanisms. As in-
dicated by our findings and in some instances on Miles
and Snow’s [33], an NPD manager in a prospector
firm, for example, will likely find a baseline that
includes high use of integrative conflict handling be-
haviors, a relatively high number of complex conflicts,
a relatively low level of perceived conflict, high for-
malization, and personnel that exchange verbal and
written communication frequently. This suggests that
managers in prospector firms should go with their
firms’ strengths in integrative behaviors and in formal-
ization, because these are strongly associated with
constructive outcomes and, therefore, with new prod-
uct success. However, because formalization may not
be a mandated part of organization structure for these
firms [33], new product managers may want to make
special efforts to ensure effective formalized rules and
communications within the NPD process. Also, al-
though prospector firms frequently interact, managers
still must work to assure the quality of those interac-
tions. While a prospector strategy appears to encour-
age good conflict management habits, prospector
firms must never forget that they also have greater
need and greater risk. Without open forums for differ-
B. DYER AND X.M. SONG
ent thoughts and ways of doing things, the creative
process in these firms may suffer irrevocable damage.
An NPD manager in a defender firm, on the other
hand, based on Miles and Snow [33] and this study,
will likely find a baseline including high use of forcing
and avoiding conflict handling behaviors, a relatively
low number of conflicts, a relatively high level of
perceived conflict, high centralization, and less fre-
quent cross-functional interaction involving verbal
communication and written communication. On the
positive side, these less aggressive new product devel-
opers need fewer conflict handling mechanisms and
have efficient mechanisms built into their firm struc-
ture [33]. On the negative side, based on our results,
centralization, forcing, and avoiding have negative
associations with constructive conflict. Because con-
structive conflict has a positive association with per-
formance, although forcing and avoiding may be ap-
propriate behaviors in other decision areas of the firm,
these behaviors may not be appropriate in all instances
in the inherently cross-functional atmosphere of NPD.
Managers raised in the school of scientific manage-
ment may never have considered that “forcing
through” solutions can lead to negative results in terms
of conflict handling and new product success. They
often see their actions as “getting things done.” Yet,
the use of force (which is frequently sanctioned) may
have a very negative impact on new product success.
Another concern for some firms may be the desire
to change their innovation strategy from defender to
prospector. Miles and Snow [33] suggest that either
strategy can be successful if the firm remains consis-
tent in carrying out the correct engineering and admin-
istrative support. While both prospectors and defend-
ers may be successful, our results show that
prospectors perceive higher levels of both the quality
of cross-functional relationships and new product suc-
cess. Furthermore, our results indicate that strategy
changes would likely be associated with changes in the
ways firms handle their disagreements. Our under-
standing of empirical findings in this area of research,
however, depends on some basic underlying assump-
tions. Miles and Snow [33] conceptualize innovation
strategy from a quantitative perspective, that is, num-
bers of new product projects and numbers of markets.
The conflict handling approaches described in the
typology support those goals. The relationships among
innovation strategy, conflict handling, and the quality
of new product efforts and outcomes needs to be more
fully explored. If the relationships differ based on
changed assumptions, then managers might have to
INNOVATION STRATEGY AND SANCTIONED CONFLICT
make tradeoffs in their conflict handling methods,
depending on whether the amount or the quality of
innovation matter more to the firm.
Finally, this study suggests that a constructive con-
flict goal provides a necessary frame of reference to
help managers move away from a negative view of
conflict. Managers may need to promote a planned
sanctioning of certain types of conflict and of certain
conflict handling mechanisms to promote positive out-
comes for cross-functional relationships and NPD suc-
cess. In a business world buffeted by uncontrollable,
changing conditions, conflict management represents
a controllable factor that should be viewed as a pro-
active tool. Thus, managers using appropriate conflict
handling approaches may gain constructive conflict
outcomes resulting in improved new product success
and an important edge in innovation [38].
Limitations
The limitations of our research should be weighed
when interpreting its results. The study does not pre-
tend to address all of the pertinent questions about the
influence of innovation strategy on conflict manage-
ment issues. It focuses only on the question of strate-
gy’s association with the firm’s behavioral and struc-
tural conflict handling mechanisms and their
relationship with performance. Also, the respondents
in this study are corporate managers. It is important to
note that leaders of functional areas tend to exhibit role
behavior reflecting the position of their groups and
should give an accurate group perspective in this type
of research [4]. Nonetheless, caution is advised in
interpreting results and care should be taken in gener-
alizing these results to other employees. As Olson et al
[37] point out, the use of subjective measures of per-
formance raises the possibility of common method
bias. Our study reduced this risk by obtaining re-
sponses from highly qualified personnel who routinely
deal with precise quantitative data on their firms’
general and new product performance. Future re-
searchers, however, may wish to include objective
measures of firm performance. Finally, the analyses
used in this study are correlational and cannot verify
causal relationships.
Future Research
There are many future research possibilities. An im-
portant next step would be to explore the mechanisms
through which prospector/defender strategies might
J PROD INNOV MANAG 515
1998;15:505–519
influence the handling of conflict within firms. Future
researchers might want to pursue the points on which
Ruekert and Walker’s [44] study and this one diverge.
There is more to learn, also, about the factors leading
to constructive conflict, the causes of conflict situa-
tions, the issue of conflict history, the consistency of
conflict handling approaches, and the cognitive frames
brought to conflict situations. Fine research could be
done in the area of conflict and speed to market. A key
goal for conflict researchers might also be the devel-
opment of an empirically valid instrument to measure
the constructive conflict climate of the NPD process.
Such an instrument could establish a quick and accu-
rate baseline, as well as appropriate goals, for organi-
zations desiring to implement sanctioned conflict
training to improve their NPD process. Research on
market orientation has briefly touched on the issue of
conflict, indicating a need in that area to expand our
understanding of the relationship among market ori-
entation, conflict, and performance. Finally, as busi-
ness goes global, researchers will need to explore
cross-cultural conflict issues to help firms maximize
their innovation efforts in the increasingly diverse and,
consequently, highly conflictful work environment of
the future.
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Appendix A. Measurement Items and Measurement Validation Using LISREL

Item Construct Loadings T-Test Source

Conflict Level: (Reliability 5 .87)
When R&D and Marketing Work Together . . .
There is little or no interdepartmental conflict.* .87 9.82 [23]
The objectives pursued by the marketing department are incompatible with
those of the R&D department. .67 8.79 [23]
We get along well with each other.* .39 4.49 [23]
People in one department generally dislike interacting with those from the
other department. .32 3.54 [23]
Employees from the two departments feel that the goals of their respective
departments are in harmony with each other.* .86 9.66 [23]
People conflict on how to proceed on tasks. .84 11.69 [44]
People differ on basic goals the two areas should pursue. .67 7.63 [44]
People differ on the best way to accomplish new product goals. .59 7.51 [44]
Employees agree on which tasks are urgent.* .63 7.70 [44]
People conflict over how they should carry out their work. .74 7.86 [44]
Employees from the two departments share the same values.* .92 11.21 Focus group
People in the two areas rate the importance of decisions in the same way.* .52 6.20 Focus group
Integrating Behavior: (Reliability 5 .91)
When Conflicts Arise Between R&D and Marketing, Generally We . . .
Try to bring all issues into the open in order to resolve them in the best way. .72 8.84 [42]
Encourage others to express their feelings and views fully. .64 8.35 [42]
Try to investigate an issue in order to find a solution agreeable to us both. .43 6.02 [42]
Work hard to thoroughly, jointly learn about the issues. .60 7.84 [42]
Exchange complete and accurate information in order to help solve problems. .57 7.69 [42]
Openly share concerns and issues. .58 8.65 [42]
Stress the importance of “give and take.” .71 8.69 [42]
Look for middle ground to resolve disagreements. .63 9.15 [42]
Negotiate to achieve goals. .54 8.42 [42]
Arrive at compromises that both areas can accept. .70 11.13 [42]
Propose compromises in order to end deadlocks. .52 8.43 [42]
Go the “extra mile” to get along with each other. .55 7.86 [42]
Try to meet each others’ schedules whenever we can. .30 3.87 [42]
Avoiding Behavior: (Reliability 5 .84)
When Conflicts Arise Between R&D and Marketing, Generally We . . .
Try to keep differences of opinion quiet. .66 7.87 [42]
Avoid openly discussing disputed issues. .78 9.36 [42]
Try not to get mixed up in conflict. .49 5.47 [42]
Believe it is better to keep feelings to ourselves rather than create hard
feelings. .79 8.73 [42]
Try to smooth over conflicts by trying to ignore them. .78 9.74 [42]
Look for ways to bypass unpleasant exchanges. .60 6.86 [42]
Avoid being put “on the spot” by keeping conflict to ourselves. .62 8.50 [42]
Try to stay away from disagreements. .60 7.59 [42]
Forcing Behavior: (Reliability 5 .81)
When Conflicts Arise Between R&D and Marketing, Generally We . . .
Try to put a single area’s needs first. .60 6.30 [42]
Stick to initial positions to get each other to compromise. .74 9.08 [42]
Tenaciously argue the merit of initial positions when disagreements occur. .80 9.14 [42]
Want the other to make concessions, but don’t want to make concessions
ourselves. .87 11.07 [42]
Look for faults in each other’s initial positions. .27 3.07 [42]
Treat issues in conflict as a win–lose contest. .63 8.04 [42]
Enjoy winning an argument. .18 1.96 [42]
Overstate our needs and positions in order to get our way. .39 4.59 [42]
Are firm in purusing one side of an issue. .29 3.99 [42]
518 J PROD INNOV MANAG B. DYER AND X.M. SONG
1998;15:505–519

Appendix A. (continued)

Item Construct Loadings T-Test Source

Formalization: (Reliability 5 .77)
Written procedures and guidelines are available for most work situations. 1.15 10.73 [20]
Formal communication channels have been established. .96 10.34 [20]
Written documents, such as budgets, plans, and schedules, are an integral
part of the job. .83 8.34 [20]
Performance appraisals in our organization are based on written performance
standards. .48 4.32 [20]
Duties, authority, and accountability of personnel are documented in policies,
procedures, or job descriptions. .87 8.58 [20]
Centralization: (Reliability 5 .90)
Any decision I make has to have my boss’ approval. 1.04 12.09 [20]
There is little action taken here until a supervisor approves a decision. 1.14 12.89 [20]
Even small matters have to be referred to someone higher up for a final
answer. 1.15 13.80 [20]
A person who wants to make his own decision would be quickly discouraged
here. .99 12.69 [20]
I have to ask my boss before I do almost anything. 1.05 14.81 [20]
Constructive Conflict: (Reliability 5 .80)
When R&D and Marketing Work Together, Generally We . . .
See constructive changes occur on projects because of conflicts. .62 8.03 [5]
Know each other better because of the way conflicts are handled. .75 10.91 [5]
Are more sensitive to one another because of the way that conflicts are
handled. .86 11.22 [5]
Feel energized and ready to get down to work after a conflict. .66 7.67 [5]
Feel hostile toward each other after a conflict.* .42 5.01 [5]
Quality of Cross-Functional Relationships: (Reliability 5 .94)
In General . . .
We feel very satisfied in our work with each other. .73 10.51 [5]
We feel a strong commitment to working with each other on new product
development. .74 11.56 [5]
We have a high degree of trust in each other. .78 10.84 [5]
The way we work together inspires all of us to better job performance. .72 11.11 [5]
We feel highly committed to joint work with each other on new product
development. .76 11.76 [5]
All things considered, we feel highly pleased with the way in which we
work together on new product development. .99 14.24 [5]
Business Performance: (Reliability5 .85)
Overall, our company is one of the most successful in the industry. 1.21 13.50 [46]
Our overall performance of our new product program has met our objectives. 1.07 13.17 [46]
From an overall profitability standpoint, our new product development
program has been successful. .89 10.49 [46]
Compared to our major competitors, our overall new product program is far
more successful. 1.28 15.35 [46]
Compared to our major competitors, our new product development cycle
time has been relatively less. .76 8.17 [46]
Our product-line breadths are much broader than those of our competitors. .86 8.24 [46]
The overall price of our new products is higher than that of our competitors. .57 7.17 [46]
The timing of our product introduction is good. .69 8.40 [46]
Our company has relatively high market shares. 1.03 10.36 [46]
Our new product development costs generally stay within our budgeted costs. .59 6.48 [46]
Overall Fit Indices:
Normed Fit Index (NFI): .96
Non-Normed Fit Index (NNFI): .99
Comparative Fit Index (CFI): .99
Incremental Fit Index (IFI): .99
Relative Fit Index (RFI): .96
*Item reverse scored.
INNOVATION STRATEGY AND SANCTIONED CONFLICT J PROD INNOV MANAG 519
1998;15:505–519

Appendix B. Strategy Measurement Items

In this section, we are interested in perceptions of firm strategy. The following statements describe how a firm
might strategically approach new product development. To what extent do you disagree or agree with the
following statements in reference to your firm? (Here: 1 5 “strongly disagree” and 7 5 “strongly agree”; and
numbers between 1 and 7 indicate various degrees of agreement or disagreement).

Item Construct Loadings T-Test Source

Strategic Type: (Reliability: .88)
In comparison to our competitors, the products we provide our customers are more innovative
and continually changing. 1.07 13.08 [12]
In contrast to our competitors, my organization has an image in the marketplace as a firm
with a reputation for being innovative and creative. 1.05 12.12 [12]
My firm spends significant amounts of time continuously monitoring the marketplace for
changes and trends. 1.03 10.78 [12]
In comparison to our competitors, the increases or losses in demand which we have
experienced are due most probably to our practice of aggressively entering new markets
with new types of products. .92 9.80 [12]
One of this firm’s key goals relative to its competitors is availability of the people, resources,
and equipment required to develop new products and markets. .89 9.92 [12]
In contrast to our competitors, our managerial employees exhibit competencies (skills) that
are broad, entrepreneurial, diverse, and flexible—enabling change to be created. 1.06 11.83 [12]
The one thing that protects my organization from its competitors is that we are able to
consistently develop new products and new markets. 1.22 15.49 [12]
Our management staff concentrates on developing new products, new markets, and new
market segments more than many of our competitors. 1.30 16.07 [12]
In contrast to many competitors, my organization identifies marketplace trends and
opportunities that can result in product offerings new to the industry or able to reach new
markets. 1.04 12.21 [12]
In comparison to our competitors, the structure of my organization is product or market
oriented. .88 10.64 [12]
Unlike our competitors, our company procedures to evaluate performance are decentralized
and participatory, encouraging many company members to be involved. .63 6.71 [12]
Overall Fit Indices:
Normed Fit Index (NFI): .95
Non-Normed Fit Index (NNFI): .97
Comparative Fit Index (CFI): .97
Incremental Fit Index (IFI): .97
Relative Fit Index (RFI): .94