Cross-Functional Teams in New Product Development


The scientific analysis of the cooperation between organizational subsystems is rooted in Lawrence & Lorsch’s (1967, p. 3), theory of integration and differentiation. According to this theory, organizations are effective when they build specialized functional units and integrate them.5


Team Member Intrinsic Motivation Success Factor Team Performance Task Conflict 
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  1. 5.
    An organization is defined as a system of interrelated behaviors of people who are performing a task that has been differentiated into several subsystems, each subsystem performing a portion of the task, and the efforts of each being integrated to achieve effective performance of the entire system.” (Lawrence & Lorsch 1967, p. 3)Google Scholar
  2. 6.
    Additionally, one can distinguish between functional matrix and balanced matrix structures, where the level of authority and responsibility between the project manager and the functional manager vary. For further reading, compare Larson & Gobeli (1987, p. 129) and Ford & Randolph (1992, p. 269).Google Scholar
  3. 7.
    An alternative, but similar definition is given by Holland et al. (2000): “A crossfunctional team is a group of people who apply different skills, with a high degree of interdependence, to ensure the effective delivery of a common organizational objective.” The term cross-functionality is defined as “the degree to which team members differ with respect to their functional background” (Gebert et al. 2006, p. 432). Crossfunctionality includes differences of the member’s knowledge bases and experiential backgrounds. Moreover, it may also be associated with differences concerning deep-seated beliefs, values and attitudes.Google Scholar
  4. 9.
    Consistently, Guzzo & Shea (1992, p. 306) state: “Improvements in group effectiveness can best be obtained by changing the circumstances in which groups work. Thus, organizational reward systems can be changed to recognize team accomplishments, group and organizational goals must be actively managed to ensure that group and organizational goals are aligned, technical and human resource support systems can be adapted to promote the welfare of work groups, and so on. A diagnosis of the contextual factors facilitating or inhibiting group effectiveness should precede implementing changes in order to identify the specific changes to be made to enhance effectiveness”.Google Scholar
  5. 10.
    For instance, Pinto & Pinto (1993) find a stronger direct effect of rules and procedures on the performance of cross-functional new product development teams, and a mediated effect across cross-functional cooperation. Thamain (2003, p. 303) collected data from team staff of 180 R&D projects in 27 companies. His analysis yields that clear organizational objectives, accomplishment and recognition, direction and leadership are positively associated with overall innovative performance, while no significant relationship is found between cross-functional cooperation and overall innovative performance. Hoegl & Parboteeah (2003) find that goal setting in new product development teams has a direct impact on team performance. This effect is not mediated, but moderated by the quality of teamwork.Google Scholar
  6. 11.
    The rationale for the effectiveness of boundary spanning is based on resource dependency theory, which assumes that organizations are not internally self-sufficient with respect to their critical resources (Pfeffer 1982, Pfeffer & Salancik 1978, Stock 2006, p. 589). “They require resources from the environment and, thus, become interdependent with those elements of the environment with which they transact” (Pfeffer 1982, p. 192–193). Resource dependence theory argues that all groups in an organization (to a certain degree) depend on external resources and information, and that groups need to transfer their outputs to external groups. Therefore, the capability to interact and collaborate with external groups will affect group performance. The higher the level of external interdependence, the greater the influence on performance caused by boundary-spanning activities (Cp. Stock 2006).Google Scholar
  7. 12.
    Gladstein (1984) was the first to show that teams act across their boundaries and that group processes do not only consist of internal elements. Consistently, Ancona (1990) and Ancona & Caldwell (1992a, p. 324) find that the performance of a CFT does not solely depend on intra-team factors, but also on interactions with other parts of the organization.Google Scholar
  8. 13.
    Although Trent & Monczka (1994) study deals with cross-functional sourcing teams, it is suggested that their findings may also be transferred to the context of cross-functional product development teams. This is because both team types require quick decision-making and flexibility when looking for alternative saving potentials (sourcing teams) or developing new product concepts (product development teams).Google Scholar
  9. 14.
    Slack is generally considered as resources and effort towards activities that cannot be justified in terms of their immediate contribution to the organizational objectives. Slack resources include excess inputs such as redundant employees, unused capacity, and “unnecessary” capital expenditures. They also include unexploited opportunities to increase outputs (Nohria & Gulati 1996, Grewe 2003).Google Scholar
  10. 15.
    While central budgets are typically characterized by a higher level of slack resources and a relatively less rigid control style, divisional budgets are characterized by the opposite characteristics (Argyres & Silverman 2004, Birkinshaw & Fey 2000, Hoskisson et al. 1993). Budgets are generally defined as financially orientated planning and control mechanisms that underpin the evaluation of organizational and subunit performance (Dunk & Kilgore 2004).Google Scholar
  11. 17.
    Distributive justice relates to the perception of individuals whether they received a fair share of rewards; proportionally to their contribution to the group. Equity theory relates to fairness in social exchanges. Accordingly, individuals compare the ratio of their rewards (outputs) and contributions (inputs) to those of other team members (Sarin & Mahajan 2001, p. 38; Cp. also Adams 1965, Baron & Byrne 1997, Greenberg 1993).Google Scholar
  12. 18.
    Adaptors, i.e. individuals with an adaptive cognitive style, tend to operate within given procedures and paradigms. They do not question their validity. Adaptors value being recognized for their efforts and achievements. Innovators, i.e. individuals with an innovative style, are rather willing to take the risk of violating the agreed upon way of doing things. They propose creative ideas and develop solutions that are different from previous ones. Innovators describe themselves as less depending on extrinsic reinforcements. Employees with an innovative style tend to appreciate complex and challenging activities, whereas those with an adaptive style prefer tasks that are relatively straightforward and routine (Kirton 1994, Baer et al. 2003).Google Scholar
  13. 19.
    Information richness is defined as the ability to change understanding within a time interval (Daft & Lengel 1986, p. 560).Google Scholar
  14. 20.
    Commitment refers to the sense of duty that the team members feel in order to achieve the project’s objectives and to the willingness to do what is required for the project’s success. Ownership goes beyond commitment, in that team members begin to tie their identify to a project’s progress (McDonough 2000).Google Scholar
  15. 21.
    Marino (1982, p. 79) investigates the effects of formalization and decentralization during the stages of affirmative action programs. Troy et al. (2001) investigate the effects of formalization and decentralization when new product ideas were generated within work groups. Damanpour (1991) conducts a meta analysis on the phase specific effects of formalization, centralization, and functional differentiation.Google Scholar

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