Date of this Version

5-2011

Document Type

Working Paper

Publication Details

Kale, S. H. (2011). The role of culture on new product development decisions

Working Paper Series; No. 47, May 2011.

Copyright © Sudhir H. Kale and The Globalisation and Development Centre, Bond University, 2011.

Abstract

This study investigates the effect of culture on the evaluation of new products. We contrast decision-making outcomes between East Asians and Westerners. East Asians tend to view the future as dynamic, nonlinear, and changeable and do not emphasize immediate gain and loss. In contrast, Westerners believe that the future is static, linear, and predictable and pay more attention to the past and present. We hypothesize that given a poor performance forecast, East Asians are more likely than their Western counterparts to continue a new product whereas Westerners are more likely to halt development. However, providing future market demand information moderates the cultural biases in new product development (NPD) decisions. Participants are more likely to continue a new product when informed that the future market demand would be good and tend to stop a new product when informed that the future market demand would be bad.