Uncertainty and activity selection in new product development: An experimental study

Uncertainty drives project activity in New Product Development (NPD), and its resolution is crucial to project performance. However, there is a major gap in understanding the causal links between different uncertainty types and the project activities they trigger. Engineering managers lack guidance on how best to respond to different uncertainty types. We close this gap by experimentally contrasting responses to two uncertainty types central to NPD: technical and organizational uncertainty. We describe responses with respect to core engineering project activities: representation, information, and knowledge sharing. We present evidence from an experiment involving 50 professionals and 74 master’s students. The results show that uncertainty type has a significant effect on activity response, and that there is a significant ordering effect within this response. Based on the identification of a new response type, change of situation, our findings show that technical uncertainty drives change of situation and representation activity, while organizational uncertainty drives information and knowledge sharing activities. This provides the basis for three main contributions. First, we identify “change of situation” as a new type of response to uncertainty in NPD. Second, we describe different responses to technical and organisational uncertainty. Third, we characterize an ordering effect in responses to uncertainty.