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Considering Risk in Product Development

David G. Hoopes
Risk Management
Vol. 3, No. 2 (2001), pp. 7-15
Stable URL: http://www.jstor.org/stable/3867900
Page Count: 9
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Considering Risk in Product Development
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Abstract

Managers and scholars emphasize the importance of product development capabilities to a firm's performance. Research on product development emphasizes the importance of interdepartmental integration in the form of project management and task teams. Use of these integrating mechanisms leads to increased shared knowledge across departments. Yet there are risks and costs in devoting time and resources to inter-departmental integration, which comes at the cost of departmental specialization. Functional departments like marketing or product engineering presumably exist so that members can specialize in a specific domain of knowledge. Thus, insufficient shared knowledge of other groups' technical constraints can lead to costly problems. However, an over-reliance on integrating mechanisms to share knowledge can prevent departments from completing their own tasks. This paper details the implicit risks in devoting too little or too much time to cross-departmental integration. It is believed that understanding the risks and opportunity costs of using integrating mechanisms will aid in their application.

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