Team intuition as a continuum construct and new product creativity: The role of environmental turbulence, team experience, and stress

Research Policy 40 (2011) 276–286

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Team intuition as a continuum construct and new product creativity: The role of environmental turbulence, team experience, and stress Mumin Dayan a,∗ , C. Anthony Di Benedetto b,c a b c

College of Business & Economics, United Arab Emirates University, Al Ain, United Arab Emirates Fox School of Business, Temple University, Philadelphia, PA, USA Technische Universiteit Eindhoven, Eindhoven, The Netherlands

a r t i c l e

i n f o

Article history: Received 24 September 2009 Received in revised form 13 August 2010 Accepted 4 October 2010 Available online 2 November 2010 Keywords: Intuition New product creativity Experience Stress New product innovation

a b s t r a c t Although past research has reported the benefits of intuition in new product decision-making (i.e., higher quality product; enhanced customer satisfaction), intuition has largely been studied as an individual phenomenon and little work has examined the role of intuition on new product development (NPD) project teams. Furthermore, in a turbulent environment, NPD project teams may rely more on intuitive judgments, and other factors such as experience and stress may also influence the relationship between team intuition and team decision making. Drawing from the organizational design literature on creativity in decision making, this study builds a conceptual model of NPD team intuition and its effect on the team’s ability to generate creative new products. We then derive hypotheses regarding team intuition, stress, environmental turbulence, and new product creativity, and test the hypotheses using data from a sample of 155 firms operating in Ankara and Istanbul, Turkey. We specifically test whether an inverted-U relationship exists between team intuition and new product creativity (that is, a balance of both intuitive and rational judgments is preferred), and whether this relationship is moderated by team experience and stress. Moreover, direct impact of turbulent conditions (i.e. market and technical turbulence) on intuition was also examined. The results of our empirical study with a sample of 310 new product/project developers and 155 project managers showed a positive and linear relation between turbulent conditions (both market and technical) and team intuition and an inverted U-shaped team intuition–new product creativity relation for teams with high experience and low stress. Finally, theoretical implications for future research and managerial implications for practitioners are discussed in the conclusion section. © 2010 Elsevier B.V. All rights reserved.

1. Introduction Intuition has become a popular research topic in the strategic management (Khatri and Ng, 2000; Elbanna and Child, 2007; Dane and Pratt, 2007), human resource management (Andersen, 2000; Hodgkinson and Sadler-Smith, 2003), marketing management (Wierenga, 2006), and project management literature (Leybourne and Sadler-Smith, 2006). Specifically, this literature suggests that many managers or employees embrace intuition as an effective approach in response to situations in a turbulent environment where decisions need to be made quickly or unexpectedly (Sonenshein, 2007), there may not be predetermined guidelines or rules to be followed (Burke and Miller, 1999), and explicit cues are not readily available to make cognitive judgments (Hitt et al., 1998). Researchers have reported various benefits of intu-

∗ Corresponding author. Tel.: +971 3 713 3494; fax: +971 3 762 4384. E-mail addresses: [email protected] (M. Dayan), [email protected] (C.A. Di Benedetto). 0048-7333/$ – see front matter © 2010 Elsevier B.V. All rights reserved. doi:10.1016/j.respol.2010.10.002

ition in decision-making. These are: to accelerate decision-making, to improve decision-making outcomes such as a higher quality product and enhanced customer satisfaction, and to solve creative and/or less structured problems such as new product planning (e.g., Glaser, 1995). Even though many of these studies on intuition reported that intuitive judgment is a common practice among managers in a new product development (NPD) planning (Glaser, 1995; Shapiro and Spence, 1997; Burke and Miller, 1999); no empirical investigation yet exists on intuition in NPD project teams, despite the fact that they are commonly used in NPD projects. It is estimated that about 75% of NPD projects are team projects (Griffin, 1997). In a NPD project team, intuition is not only an individual but also a collective phenomenon (i.e., decisions in the NPD process are often made by team members collectively). While one of the basic assumptions about group decisionmaking is that they make cognitive judgments (Akgun et al., 2008), NPD teams may rely on their intuitive judgments because NPD projects involve high levels of task-related job complexity, as well as process and environmental uncertainty. Engaged in vari-

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ous activities in such a complex and turbulent environment, NPD project teams may need to make intuitive judgments during the NPD process, such as choosing a new product idea among many others. Besides turbulent conditions, other factors may lead employees at work to use and rely on their intuitive judgments in making decisions related to innovation; these include experience or knowledge, and stress. Specifically, the literature suggests that intuition may unconsciously integrate experience and knowledge of employees into responsive and productive decision-making and, ultimately, into innovative solutions, particularly under rapidly changing, turbulent environmental decisions (Glaser, 1995). The design literature provides guidance on creativity in decision making (e.g., Schön, 1983, 1987), focusing particularly on the need for balance between divergent and convergent processes in order to arrive at the best possible solution or decision. This literature has not been widely applied to the NPD project team context, yet would seem to be relevant in understanding how NPD project teams can make creative decisions in challenging conditions. Walck (1996), for instance, reviewing the body of research on managerial decision-making, argued that intuition appears to be positively associated with creativity, and intuitive decision-making is especially effective in turbulent conditions. Furthermore, Hallowell (2005) argues that in the current business climate, organizations are beginning to experience lower effectiveness of both cognitive and intuitive judgments made by employees and lack of creativity due to the chronic stresses of intense workload pressures in turbulent conditions. This literature suggests that even experienced team members use intuition in turbulent conditions, and that stress may adversely affect the impact of intuitive, creative decisions on organizational outcomes. However, the interrelationships between turbulent conditions, experience, stress and creativity in decision making by NPD project teams have not been investigated. For example, Khatri and Ng (2000) surveyed senior managers of companies representing computer, banking, and utility industries in the U.S. and found that intuitive judgments were positively associated with organizational performance in an unstable environment, but negatively in a stable environment; however, they did not investigate the role of experience and stress in the relationship between intuitive judgment and creativity. In sum, the extant literature does not yet adequately investigate the intuitive judgments made by NPD project teams, how these may be affected by the often turbulent and stressful environments in which they work, and how the team’s creativity may be affected. It is also possible that a more experienced NPD team may be able to handle these challenges better, but this is also unresolved in the extant literature. Given that so much NPD is team-based, it is an important research issue to improve our understanding of the decision-making process of NPD project teams, and in particular how the team’s intuitive judgments and its creativity influence its ability to bring products to market effectively. Our research objective is twofold. First, we examine the relationships between turbulent conditions and intuitive judgments, and intuitive judgments and creativity in product innovation, so as to better understand the effectiveness of decision-making process of NPD project teams. Second, we investigate the moderating effects of NPD project team experience and stress on the relationship between intuitive judgments and creativity is moderated by NPD team experience and stress. Based on the conceptual framework we develop in the next section, we build a conceptual model of NPD team intuition and its impact on the team’s creativity in new product decision making, and derive a set of hypotheses regarding team intuition, experience, stress, environmental turbulence, and new product creativity. We test our hypotheses using a sample of 155 firms operating in Ankara and Istanbul, Turkey. We present our analytical results, and discuss theoretical implications and further research.

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2. Theory and hypotheses 2.1. Conceptual framework Intuition has been conceptualized in several ways in the extant literature (e.g. Elbanna and Child, 2007; Khatri and Ng, 2000). Despite this diversity of thought, we use a widely accepted theoretical perspective of intuition as our framework for this study. Specifically, this perspective defines and measures intuition as a continuum with cognitive (rational) and intuitive decision making as two ends of the continuum (e.g. Sonenshein, 2007; Hough and Ogilvie, 2005). Mitchell et al. (2005), for instance, used the proximity-to-consciousness mechanism to classify and relate the antecedents and definitions of intuition. They identified four levels of cognition–intuition processes (from closest to consciousness to farthest from consciousness) on the basis of the proximity to consciousness, which is defined as the extent to which information is being deliberately retrieved. According to this classification, as the level increases on the continuum from intuitive decision making process towards cognitive decision making process, the amount of information retrieval also increases. Similarly, Taggart and Valenzi (1990) identified six information processing modes that are arranged on a continuum from most rational to most intuitive; the most rational one requires the most information processing and the most intuitive one requires the least information processing. These studies are consistent with the perspective that cognition and intuition are two ends of a continuum and thus mutually exclusive, rather than orthogonal constructs. A formal definition of intuition, which we will use in this research, is “a nonconscious, holistic processing mode in which judgments are made with no awareness of rules of knowledge used for inference and can feel right despite one’s inability to articulate the reason” (Shapiro and Spence, 1997, p. 64). This definition implies that intuitive decisions are executed rapidly upon the basis of an unconscious reasoning process which may have an affective component such as gut feeling, hunches, and “sixth sense” (Leybourne and Sadler-Smith, 2006). The extant literature has investigated the role of intuition in the strategic decision-making process (Eisenhardt, 1989, 1990; Eisenhardt and Bourgeois, 1988; Elbanna and Child, 2007). Specifically, the relationship that has been widely studied in this literature has been between the use of intuition and decision effectiveness (i.e., the speed of decisions made by executive teams). Some of past research showed that rational and political processes have a greater influence on strategic decision effectiveness than intuition (e.g., Elbanna and Child, 2007) while some others found that intuition plays a significant role in increasing the speed of strategic decisions in a high-velocity environment (Eisenhardt, 1989). Moreover, the generalizability of the findings of these studies is limited because of using a single source (students and general managers). 2.2. Intuition at team level The large body of intuition research mostly defines and measures intuition at the individual level; much less attention has been paid to the role of intuition at the team level. There are only a few studies in which the role of cooperative activities or teamwork in making intuitive judgments has been emphasized. Taggart and Valenzi (1990), in their six-mode human information processing metaphor, paired several dimensions of the rational-intuitive term and found that individuals, who rely on their intuition and feelings in making decisions, are called “person centered” and always collaborate with others in order to make effective intuitive decisions (p. 160). Similarly, Allison and Hayes (1996) argue analysts prefer to focus on detail and hard data available in books or reports,

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while intuitive people are less concerned with details and prefer to interact with people and get their opinions to make intuitive decisions. Moreover, Sadler-Smith and Riding (1999) found that intuitive people have a stronger preference for teamwork (e.g. role play and discussion groups) than did analytics. In sum, these studies revealed that cognitive decision-makers are mostly self-reliant; on the other hand intuitive decision-makers take an action-oriented approach and rely on teamwork. In the NPD literature, to our best knowledge, the only study that has recently investigated the role of intuition in NPD teams is the study of Dayan and Elbanna (forthcoming). In their study, they found that intuitive judgment is frequently used as much as cognitive judgment by NPD teams during NPD process. They also found some significant antecedents (e.g. team empowerment, decision importance) and consequences (e.g. product success, speed-tomarket) of team intuition. However, they did not investigate a complex relationship (e.g. an inverted U-shaped relationship) between team intuition and team performance. In this literature, most of the studies on team decision-making have been conducted on the basis of the draw on rational judgments that is assumed to result in the best solution for problems facing NPD teams (e.g., Lynn et al., 1999; Hoegl and Gemuenden, 2001). These studies have acknowledged abundant cognitive instruments that help NPD teams make effective decisions. Most of these studies on this topic have been related to team intelligence (e.g., Akgun et al., 2008), teamwork quality (e.g., Hoegl and Gemuenden, 2001), and charged behavior (Sethi and Nicholson, 2001) in explaining the cognitive decision-making facets of NPD team decisions. However, these instruments have not been measured as continuum constructs. Moreover, this literature showed inconsistent findings between cognitive decision-making process and creativity. Akgun et al. (2008), for instance, conceptualized and empirically tested NPD team intelligence as a cognitive decision-making process, and found that NPD team intelligence is positively related to new product creativity and success. Alternatively, Hoegl and Parboteeah (2007) investigated the influence of cognitive decisionmaking process (the so-called “collaborative process,” p. 149) on the performance effects of domain-relevant skills and creativethinking skills in innovation teams and found that cognitive decision-making process have negative effects on the relationship between creative-thinking skills and team performance (e.g., team efficiency and effectiveness). Furthermore, these studies showed that experience has a positive, but stress a negative impact on cognitive decision-making of NPD project teams (e.g., Kim and Wilemon, 2001; Barczak and Wilemon, 2003; Akgun et al., 2007a,b). This study attempts to reconcile these inconsistencies in the innovation literature described above, by adopting the perspective that cognitive and intuitive decision making comprise a continuum construct. We examine the relationship between this construct and new product creativity, and the moderating impact of experience and stress on this relationship. Specifically, we argue that NPD teams often need to make decisions in highly turbulent conditions where there may be a shortage of relevant information and/or technology and markets change rapidly. In such unstructured conditions NPD teams may most likely make spontaneous intuitive judgments that are so crucial to creativity (Diehl and Stroebe, 1991). The extant literature suggests that teams use a combination of cognitive and intuitive judgments for decision effectiveness (discussed in the next section). Moreover, we examine the possibility that team experience and stress moderate the curvilinear cognitive/intuitive decision-making relation. In the next section, we will discuss in detail why NPD teams need to incorporate their intuitive judgments into their decision-making in turbulent conditions and the moderating impact of experience and stress between intuition and new product creativity.

2.3. The relationship between environmental turbulence and intuition The role of environmental turbulence (so also called “looselystructured situations”) as a trigger to intuition has been well discussed in the strategic management and human resource management literature (Burke and Miller, 1999; Khatri and Ng, 2000; Hodgkinson and Sadler-Smith, 2003). This literature has identified the reasons of the use of intuition as the most appropriate approach in turbulent conditions: these are (1) availability of little previous precedent in the face of new emerging trends (Agor, 1986); (2) limited and/or poor quality of data (Frantz, 2003); and (3) complexity of situations (Patton, 2003). According to Patton (2003), in times of uncertainty intuitive synthesis enables executive managers to assess complex situations and deal with incomplete or poor data. We argue that, much like executive managers, NPD teams operating in turbulent conditions may face similar problems and also make intuitive judgments during the NPD process. The literature reveals that teams usually have difficulties in detecting meaningful cause-and-effect relationships and forming stable mental models of the marketplace in order to make cognitive judgments because of the rapid changes in needs and wants of customers, short product cycle, and quick depreciation of “knowhow” in turbulent conditions (Dickson, 1992). Moorman and Miner (1997) also noted that under turbulent conditions existing precedents in terms of structure, norms, and culture embedded in organizations may no longer to be valid to allow teams to make cognitive judgments. Similarly, Akgun et al. (2006) argued that NPD teams establish new specifications and designs salient to the changing conditions under turbulent conditions by using their senses and being practical. Furthermore, complexity of situations, frequent changes in information and the enormous number of stimuli facing NPD teams due to turbulence disrupt coordinated thinking and the information processing ability of NPD teams (e.g., communication delays may be expected); thus teams cannot rely on their cognitive abilities under such conditions. For instance, in a chaotic environment, NPD teams may not be able to make cognitive judgments effectively due to poor data so that making intuitive judgment would be the only effective solution for them (Pauchant and Mitroff, 1990). We propose that Hypothesis 1. Environmental turbulence will positively lead to more intuitive decision making. 2.4. The relationship between intuition and product creativity Creativity is defined as “the production, conceptualization, or development of novel and useful ideas, processes, or procedures” (Shalley et al., 2004, p. 215). Given the importance of developing creative products to organization success and survival in today’s competitive environment, several studies have examined how the composition and collaborative functioning of NPD teams might affect the decision making process and output of this process, such as new product creativity (Akgun et al., 2008; Hoegl and Parboteeah, 2007; Moorman, 1997). In this literature, new product creativity is defined as “the degree to which a new product is novel and its introduction changes marketing thinking and practice” (Moorman and Miner, 1997, p. 94). While such prior studies recognize the potential influence of intuition on new product creativity (e.g., Glaser, 1995), few studies provide empirical validation of how intuitive judgments of NPD teams would lead to new product creativity. The creativity literature (e.g., Schön, 1983, 1987; Tassoul and Buijs, 2007; Puccio et al., 2007; Buijs et al., 2009; Visscher and Fisscher, 2009) suggests that effective problem solving is a process that balances diverging and converging activities. This process is

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sometimes characterized as a “diamond-shaped” model of creativity, in that a large number of options are initially generated in the divergent stage to “keep options open” and not miss any opportunities, followed by a point of crystallization and a convergent stage where the number of options is reduced and a solution is eventually found (Puccio et al., 2007; Visscher and Fisscher, 2009). This literature suggests that neither divergent nor convergent activities by themselves are enough to support creative decision-making: balance between the two activities is required. Additionally, while the convergent stage focuses on narrowing down the available options and finding a solution, it is also fair to say that the divergent stage is at least equally important in arriving at an end result. As noted by Boland and Collopy (2002), “. . . [I]t is difficult to design a good alternative, but once you have developed a truly great one, the decision about which alternative to select becomes trivial” (p. 4).1 The divergent stage may be associated with more intuitive techniques (such as brainstorming, synectics, or Delphi panels) and the convergent stage with more rational or cognitive techniques (such as tradeoff analyses, analytic hierarchy process applications, or complex screening models), but in reality both intuitive and rational techniques are used in both stages. For example, rational techniques such as TRIZ or Quality Function Deployment can be profitably used in the divergent stage, while more intuitive methods (such as managerial judgment, customer feedback) are commonly used at the convergent stage.2 This literature further suggests that the diamond model of creative problem solving may be overly simplistic. A creative designer may use a divergent process to develop a “frame” for a design situation that provides guidance for a solution; further convergent analysis may show that this frame leads to undesirable or unattainable consequences and it needs to be rethought. Thus, designing is better thought of as a cyclical or reflective process marked by a continuous balance between divergence and convergence (Schön, 1987). One stream of literature suggests that intuition appears to be positively associated with creativity (e.g., Glaser, 1995; Walck, 1996). According to this literature, creativity depends on the consideration and utilization of multiple factors to problem solving, and intuitive judgments would help people do so. Andersen (2000), for instance, argued that the creative alternatives (i.e., other possible alternatives not yet considered) are more likely to be the result of intuitive judgments because intuition allows people to “think outside the box” and make the association of new combinations of means and ends. Moreover, Walck (1996) pointed out the critical role of intuition in managing change in less structured situations where cognitive judgments usually fail in generating creative solutions. Based on a review of a large amount of research on type and management she concluded that intuition appears to be positively associated with creativity and managing change in such situations. Another stream of research suggests that making intuitive judgments alone may not lead to desired results (e.g., Eisenhardt, 1989; Fredrickson, 1985). According to this research, those who can integrate their intuitive and cognitive judgments perform better on novel problem-solving tasks because such integrations help them recognize underlying schema of the problem structure rather than just the surface characteristics being considered (John-Steiner, 1985). In more detail, Papadakis and Barwise (1997) and Eisenhardt (1989) suggest that managers should make both cognitive and intuitive judgments in order to obtain effective decisions. According to Eisenhardt (1989), effective managers generate a large number of alternatives by making intuitive judgments, but do not analyze all

1

We thank a reviewer for this suggestion. For a general reference on these and related techniques, see Crawford and Di Benedetto (2008), Appendix B. 2

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thoroughly. They usually choose a few of them to focus on based on their intuitive judgments. Furthermore, Fredrickson (1985) found empirical evidence that the effectiveness of decision-making depends on both cognitive and intuitive judgments together. He argued that most successful managers frequently call upon their intuition; then they justify and rationalize their intuitive decisions with charts, graphs, and spreadsheets. Moreover, Hough and Ogilvie (2005) examined the impact of different cognitive styles on decision outcomes (e.g. decision quality and perceived effectiveness) and found that intuitive/thinking managers who make both intuitive and cognitive judgments develop more effective and creative solutions to the problem they had. Similarly, Barron and Harrington (1981) noted that engaging in divergent thinking exercises (e.g. intuition, cognition, and sensing) can help people generate creative solutions. All of these arguments are conceptually related to that of Schön (1987), who proposed a reflective relationship between divergent and convergent processes in creativity. Based on these arguments, we conclude that the use of a combination of intuitive and cognitive judgments would help NPD teams compare unrelated situations and analyze the structure of the problem in a deep schematic format in order to develop creative products. As recommended by Gupta et al. (2006), the correct test for a continuum construct (e.g. cognition–intuition) would be to test for an inverted U-shaped relationship between the degree of construct (e.g. intuition–cognition) and team performance (e.g. new product creativity). That is, at the extremes (mostly intuition or mostly cognition), team performance would be lower than at the midpoint (where intuition and cognition are both employed). Therefore, we propose that: Hypothesis 2. There will be an inverted U-shaped relation (a combination of intuitive and cognitive judgments) between intuitive/cognitive decision-making and new product creativity. 2.5. Team experience moderating the curvilinear intuitive/cognitive decision making-new product creativity relationship One of the most fundamental tenets in theories of decisionmaking in general and intuition in particular holds that the effectiveness of decisions is contingent on the depth of decision makers’ knowledge. These authors view knowledge as an input to the effectiveness of intuitive judgments (Dane and Pratt, 2007). Glaser (1995), for example, noted that “intuition unconsciously integrates one’s attributes of knowledge, intelligence, experience, and respect for the unknown into responsive and productive decision-making and, ultimately, into action. This is how intuition helps create innovations” (p. 43). The findings of limited empirical studies also supported this theoretical argument (Leybourne and Sadler-Smith, 2006; Burke and Miller, 1999). For instance, Leybourne and Sadler-Smith (2006) investigated the role of experience on the effectiveness of intuitive judgments of project managers and found that experienced managers are less likely to rely on rules and guides instead practice intuitive judgments derived from patterns and knowledge that are stored in long term memory. Similarly, an in-depth study of 60 highly experienced project managers revealed that the majority of managers who made intuitive judgments either based on their past experience or by repeatedly making them (Burke and Miller, 1999). This study also found that employees who are older and/or hold managerial positions tend to make intuitive judgments more and be more effective on their decisions. Based on past research and theory, we investigate the possibility that the proposed curvilinear intuitive/cognitive decisionmaking–new product creativity relation is moderated by NPD team

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experience, which is composed of relevant knowledge, training, and exposure to events similar to the current situations. We argue that past experience is especially critical for novel projects that often confront NPD teams with novel problems and uncertain situations that force them to make intuitive judgments. There is considerable evidence in the extant literature suggesting that employees’ past experience makes a significant contribution to new product creativity in organizations (Imai et al., 1985; Hutt et al., 1988; Moorman and Miner, 1997). For instance, Moorman and Miner (1997) showed that there is a positive relationship between dispersed and collectively held knowledge and new product creativity. Furthermore, the literature revealed that experienced teams rely on intuition which involves the perception of the holistic patterns (Dreyfus and Dreyfus, 1986); and such holistic patterns allow team members to foresee new combinations of means and ends, and to formulate more creative solutions to current problems (Hoegl and Parboteeah, 2007). Therefore, we propose that: Hypothesis 3. Team experience will moderate the inverted Ushaped relation between intuitive-cognitive decision-making and new product creativity such that teams who score high on experience will exhibit higher new product creativity in response to intermediate intuitive judgments (a combination of intuitive and cognitive judgments) than those who score low on experience. 2.6. Team stress moderating the curvilinear intuitive/cognitive decision-making new product creativity relationship The extant literature also indicates that work or job stress embedded in most of novel projects is expected to moderate the effectiveness of decision-making on team performance (Mandler, 1982; Pauchant and Mitroff, 1990; Kontogiannis and Kossiavelou, 1999). Team stress is defined as “feeling of crisis and anxiety as a whole where team crisis refers to a sense of urgency and team anxiety indicates fear” (Akgun et al., 2007a,b, p. 628). Barczak and Wilemon (2003), for instance, noted that NPD teams are often confronted with stressful situations since they usually work under high workload pressures due to cognitively challenging tasks and time constrain. The literature also reveals that stress due to high workload pressure is harmful to creativity (Elsback and Hargadon, 2006). Perlow (2001) found that product development personnel show low level of creativity and high level of stress when time pressure is high. We argue that team stress may have a potentially disruptive effect on intuitive/cognitive decision-making effectiveness on new product creativity because of the following theoretical arguments discussed in the extant literature. The literature noted that team stress may adversely affect sense making and information processing abilities of team members, making team members unable to comprehend the situation accurately (Akgun et al., 2007a,b). The literature also revealed that team stress restricts team members’ knowledge and experience to make holistic judgments on the interactions between process and project variables, and their consequences (e.g., Pauchant and Mitroff, 1990). Moreover, it is argued in the literature that team stress reduces the ability of team members to interpret new information fairly and to evaluate alternatives precisely (Mandler, 1982). However, as discussed earlier past experience, sense making, and holistic judgments are bases of intuitive/cognitive decision-making. Thus, these arguments imply that high stress might have a negative impact on the relationship between intuitive–cognitive decision-making and new product creativity. Therefore, we propose that Hypothesis 4. Team stress will moderate the inverted U-shaped relation between intuitive–cognitive decision-making and new product creativity (teams who score lower on stress will exhibit

higher new product creativity than those who score higher on stress). 3. Method 3.1. Procedure and participants Data for this research were collected using a multi-faceted approach, i.e., personal data collection effort of the first author, mail survey, personal interviews, and follow-ups conducted by two professional marketing research companies located in Ankara and Istanbul. 568 firms that were identified by the Istanbul and Ankara Chamber of Commerce were listed in our initial sampling frame. These firms were located in the industrial zones of the cities of Ankara and Istanbul, Turkey; they were selected because they regularly develop new products and export them to many different countries all over the world. After we eliminated firms for which the questionnaire was inappropriate (i.e., no NPD occurred), the overall sample was reduced from 568 to 395. Of the eligible sample, 155 firms (39%) responded. Of the 155 respondent firms, 25 firms (16.12%) had up to 99 employees, 34 firms (21.93%) had 99–249 employees, 48 firms (30.96%) had 250–499 employees, and 48 firms (30.96%) had more than 500 employees. Industries represented in the sample included telecommunications, food, material, software, machinery, chemical, and service technologies. The product innovations were primary consumer durables (35.1%), industrial materials or parts (33.8%), consumer services (22.8%), and industrial services (8.3). The final database used for the analyses consists of 155 product or project managers and 310 team members. Before starting on data collection process, all team managers and randomly chosen team members were called for individual data collection appointments. Respondents’ participation in this study was strictly voluntary. All contacted respondents participated in the study. Data were gathered through individual data collection sessions that took an average of 40 min. A total of 465 data collection sessions with team leaders and members referring to 155 product/project development teams were conducted. On average, data from three members of each team were collected. Data from multiple respondents were used to measure the different variables in order to overcome the common problems associated with single sourcing. New product creativity and environmental turbulence were measured using data from product/project managers since they were expected to provide more reliable and objective data on team performance and contextual variables. Team intuition, team knowledge, and team stress were measured using aggregated responses from multiple team members (excluding product/project managers). In addition, using the multiple item estimators for within-group inter-rater agreement (James et al., 1984), we found generally strong agreement across all teams between manager and team member evaluations of outcome variable (new product creativity: 0.89). This supports the use of the team managers as dependable key informants for these variables. 3.2. Measures We developed measures that were used to operationalize the constructs by identifying previously developed and tested scales in the extant literature. All constructs used in this study refer to the team as the unit of analysis; hence all measures were specified on the team level. One person first translated items into Turkish and then a second person back-translated them into English. The two translators then jointly reconciled all differences. Later, twenty people who were involved in at least one NPD project pre-tested the Turkish version of the questionnaire. A pretest was conducted

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Table 1 Means, standard deviations, and correlations among variables. Variable

M

SD

1

2

3

4

5

6

1. Team size 2. Market turbulence 3. Technical turbulence 4. Team intuition 5. Team experience 6. Team stress 7. New product creativity

7.40 3.08 3.02 2.56 2.90 3.83 3.05

2.49 0.76 0.83 0.53 0.66 0.54 0.74

– 0.01 0.02 0.07 0.08 0.03 0.14

– 0.57** 0.58** 0.13 0.11 0.23*

– 0.45** 0.46** 0.09 0.25*

– −.55** −.52** −.49**

– −.28* 0.07

– 0.05

Note: N = 155. * p < .05 (two-tailed). ** p < .01 (two-tailed).

including 25 members of product development teams. Translations of the items used are included in Appendix A. We conducted an exploratory factor analysis including thirtyone measured items of six variables. A principal component with a varimax rotation and an eigenvalue of one as the cut-off point was used for this analysis. A single factor was extracted for each multiple-item reflective scale. After performing the exploratory factor analysis, which is a useful technique for scale construction, we conducted a subsequent confirmatory analysis in order to assess the resulting scales. The results of confirmatory factor analyses are discussed below. On the basis of a literature review that identified previously developed and tested scales of intuition (Elbanna, 2006; Elbanna and Child, 2007; Khatri and Ng, 2000; Sadler-Smith and Shefy, 2004), a new measure of team intuition was developed for the purposes of this study. Based on results of confirmatory factor analysis, two of the five original items were eliminated from the scale (3 items, Cronbach’s Alpha = .82). Items were dropped if they demonstrated a high level of error within the factors they were representing. Environmental turbulence was measured using an eightquestion scale that was adapted from Jaworski and Kohli (1993). Exploratory factor analysis revealed two types of environmental turbulence: technical (3 items, Cronbach’s Alpha = .78) and market turbulence (4 items, Cronbach’s Alpha = .84). This finding is consistent with Jaworski and Kohli (1993). The median split was used to assess environmental turbulence as high and low. Team experience was measured using two items adapted from the measurement scales of Akgun et al. (2007a,b). These two items loaded on one factor related to team experience (2 items, Cronbach’s Alpha = .74). Team stress was measured using all ten items adapted from the measurement scales of Bartone et al. (1989). Based on results of confirmatory factor analysis, three of the ten original items were eliminated from the scale (7 items, Cronbach’s Alpha = .86). New product creativity was measured using a seven-question scale that was adapted from Moorman (1995). All seven items loaded on one factor related to new product creativity (7 items, Cronbach’s Alpha = .80). Team size (number of employees in the project) was selected as a control variable because the NPD literature revealed that process effectiveness (e.g., product success) is influenced by the size of the team (Akgun et al., 2007a,b). We tested the hypotheses after controlling for its effect. 4. Results Table 1 presents the means, standard deviations, and correlations among the variables. As shown in the table, both market and technical turbulence were positively related to team intuition (r = .58, p < .01 for market turbulence; r = .45, p < .01 for technical turbulence). Team intuition correlated negatively with new product creativity (r = −.49, p < .01). Finally, new product creativity was

not significantly related to neither team experience (r = .07, ns) nor team stress (r = .05, ns). A confirmatory factor analysis that covered the main variables (i.e., market and technical turbulence, team intuition, and new product creativity) and the moderators (team experience and stress) suggested that the model fits the data well (2 (438) = 761. 72; p < .01; 2 /df = 1.73; comparative fit index = .92; Tucker–Lewis index = .90; root-mean-square error of approximation = .043). It also showed that all of the factor loadings were significant, with the lowest t value 2.14 (p < .01), thus confirming the convergent validity of the constructs. Nested chi-square difference tests also suggested that the six-factor model had a statistically better fit than did all of the other alternative models. For example, compared with a five-factor model combining the items of team intuition and new product creativity into a single factor, the six-factor model had a significantly better fit, 2 (1) = 59.43, p < .01. Moreover, the six-factor model had a significantly better fit than did a single factor model, 2 (10) = 132.57, p < .01. These results provide evidence for discriminant validity. As recommended by Bagozzi et al. (1991), a series of two-factor models were estimated in order to assess the discriminant validity. To do that, individual factor correlations, one at a time, were restricted to unity. The fit of the restricted models was compared to those of the original model. The chi-square change (2 ) in each model was significant, 2 > 4.65, which suggested that the constructs demonstrated discriminant validity. Furthermore, as seen in Table 1 the relatively low to moderate correlations provided further evidence of discriminant validity. Examination of the correlation matrix also indicates no multicollinearity among the variables. The intercorrelations among the central variables of the study ranged from 0.05 and 0.58, which is well below the 0.80 value suggested by Hair et al. (1995). Skewness ranged from −1.13 to 0.64 and kurtosis ranged from −1.27 to 0.19 values are well below the levels suggested for transformation of variables. These results indicated that the variables were well below the level required transformation of variables (skewness of 2 and kurtosis of 5 as indicated by Ghiselli et al., 1981). The hypotheses were examined in two regression models. First, to assess the impact of turbulent conditions, team intuition was regressed on market and technical turbulence. The results (see Table 2) showed that both market turbulence (ˇ = .33, p < .01) and

Table 2 Regression results of environmental turbulence. Independent variables

Dependent variable: team intuition Standard coefficient

Market turbulence Technical turbulence R2 F

0.33** 0.35** 0.14 4.35**

Note: N = 155. *p < .05 (two-tailed). ** p < .01 (two-tailed).

M. Dayan, C.A. Di Benedetto / Research Policy 40 (2011) 276–286

4.00

Technical Turbulence

4.00

High Experience

3.75

Market Turbulence

3.75

Low Experience

3.50

New Product Creavity

Environmental Turbulence

282

3.25 3.00 2.75 2.50

3.50 3.25 3.00 2.75 2.50

2.25

2.25

2.00

2.00

Raonal

Both

Intuive

Raonal

Fig. 1. The role of environmental turbulence on intuition.

Table 3 Results of hierarchical regression analysis.

First step Team size Second step Team intuition Team experience Team stress Third step Team intuition × team experience Team intuition × team stress Team experience × team stress Team intuition × team experience × team stress Fourth step Team intuition2 Fifth step Team intuition2 × team experience Sixth step Team intuition2 × team stress Seventh step Team intuition2 × team experience × team stress

ˇ

R2

F

0.00

0.12

0.06

3.07*

0.01

0.23

0.00

0.13

0.03

4.21*

0.00

0.21

0.03

5.11**

.03 −.25** −.04 −.06 .08 −.06 .03 .09

.06 −.29* −.05 −.34**

Intuive

Fig. 2. Curvilinear interaction of intuition and team experience for new product creativity on new product creativity.

technical turbulence (ˇ = .35, p < .01) were significantly and positively associated with team intuition, supporting Hypothesis 1. Fig. 1 illustrates this relationship based on low—making cognitive judgments only, intermediate—a combination of both, and high—making intuitive judgments only as well as market and technical conditions and suggests that environmental turbulence-team intuition relationship is stronger when turbulent conditions (both market and technical conditions) are high as opposed to when they are low. Second, to assess the impact of team intuition on new product creativity using team experience and stress as moderating factors we used hierarchical regression analysis (Cohen and Cohen, 1983). After centering our independent variables (Aiken and West, 1991), we entered into a regression equation the control variable, team size, in the first step, the main effect variables (intuition, experience, and stress) in the second step, and to control for potential linear trends, the linear two-way and three-way interactions in the third step. Next, to test our main prediction that team intuition would have a curvilinear relation to new product creativity (Hypothesis 2), we entered the quadratic team intuition term in the fourth step. As shown in Table 3, the coefficient associated with this term was statisti-

Variables

Both

Note: N = 155. R2 = 0.18 and F = 2.45* for the full model. Coefficients are standardized. * p < .05 (two-tailed). ** p < .01 (two-tailed).

cally nonsignificant (ˇ = .06, p > .05), and thus Hypothesis 2 is rejected. We hypothesized that team experience would moderate the inverted U-shaped team intuition–new product creativity relation (Hypothesis 3). To test this hypothesis we entered the relevant quadratic-by-linear interaction (team intuition2 × team experience) in the fifth step. The coefficient term was statistically significant (ˇ = −.29, p < .05), thus Hypothesis 3 was supported. As seen in Fig. 2, the relation between team intuition and new product creativity followed an inverted U-shaped function for teams with high experience. In addition, under conditions where both intuitive and cognitive judgments are used (i.e., towards the center of the inverted-U function), teams with high experience exhibited higher new product creativity than those with less experience. In order to further analyze this interaction, we estimated simple slopes at three levels of team intuition: low—making cognitive judgments (one standard deviation below the maximum of the regression curve), intermediate—a combination of both (maximum of the regression curve), and high—making intuitive judgments only (one standard deviation above the maximum of the curve). Results indicated that when team experience was high, the simple slope of the regression curve had a positive, nonsignificant value for low—making cognitive judgments only (b = 0.86, t = 1.12, p > .05), did not differ significantly from zero at intermediate—a combination of both (b = −.13, t = −.39, p > .05), and had a significant negative value for high—making intuitive judgments only (b = −1.66, t = −3.21, p < .05). When team experience was low, the simple slopes of the regression line did not differ significantly from zero (p > .05) at low—making cognitive judgments only, intermediate—a combination of both, or high—making intuitive judgments only. Therefore, these results provide support for Hypothesis 3. Finally, we predicted that team stress would moderate the inverted U-shaped relation between team intuition and new product creativity (Hypothesis 4). To test this hypothesis we entered the relevant interaction term (team intuition2 × team stress) in the sixth step. Inconsistent with Hypothesis 4, the coefficient associated with this term was not statistically significant (ˇ = −.05, p > .05). As seen in Fig. 2, the relation between team intuition and new product creativity followed an inverted U-shaped function for teams with high experience. In addition, under conditions of intermediate intuition (a combination of intuitive and cognitive judgments), teams with high experience exhibited higher new product creativity than those with less experience.

M. Dayan, C.A. Di Benedetto / Research Policy 40 (2011) 276–286

New Product Creavity

4.00 3.75

High Experience/Low Stress

3.50 High Experience/High Stress

3.25 Low Experience/Low Stress

3.00 Low Experience/High Stress

2.75 2.50 2.25 2.00 Raonal

Both

Intuive

Fig. 3. Curvilinear interaction of intuition, team experience, and team stress for new product creativity on new product creativity.

4.1. Post hoc analyses Even though the results failed to produce support for the moderating role for team stress on the curvilinear intuitive–new product creativity relation we explored the possibility that team experience and stress would jointly moderate the curvilinear intuition–new product creativity relation. In order to test this relation, the relevant three-way quadratic term (team intuition2 × team experience × team stress) was entered into the regression model in the seventh step shown in Table 3. The coefficient associated with this term was statistically significant (ˇ = −.34, p < .05). Fig. 3 shows that the relation between team intuition and new product creativity followed an inverted Ushaped function for teams with high experience and low stress. The figure also shows that under conditions of intermediate intuition (a combination of both intuitive and cognitive judgments), teams with high experience and low stress exhibited higher new product creativity than those with less experience and high stress, or both. For these latter combinations, the intuition–new product creativity relation did not follow the shape of an inverted U shape but was slightly negative. Moreover, the analysis revealed that in the case of high experience and low stress, the simple slope of the regression curve had a significant positive value for low intuition—making cognitive judgments only (b = 1.86, t = 2.33, p < .05), did not differ significantly from zero at intermediate—a combination of both (b = −.18, t = −.43, p > .05), and showed a significant negative value for high—making intuitive judgments only (b = −2.65, t = −2.93, p < .01). In all remaining cases, the simple slopes of the regression lines generally did not differ significantly from zero (ps > .05) at low—making cognitive judgments only, intermediate—a combination of both, or high—making intuitive judgments only. 5. Discussion 5.1. Theoretical implications Our research objectives were to examine the relationships between environmental turbulence, intuitive judgments, and creative decision-making by NPD project teams, and also to determine if team experience or stress moderated these relationships. We extend the findings of past research on intuition at the team decision level of analysis (e.g. Khatri and Ng, 2000; Child and Elbanna, 2007) and provide insights on what factors are precursors to team intuition and new product creativity. Consistent with our theoretical model derived from the prior literature, we find that market and technical turbulence are positively related to team intuition (Hypothesis 1), which is consistent with expectations and past research findings (e.g. Burke and Miller, 1999; Hodgkinson and Sadler-Smith, 2003). We also find that team experience moderated

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the relationship between team intuition and new product creativity (Hypothesis 3), which is consistent with the extant literature. For instance, Prietula and Simon (1989, p. 59) defined intuition as “a sophisticated form of reasoning based on chunking that an expert hones over years of specific task experience.” We did not, however, find evidence to support the hypotheses that a curvilinear relationship exists between intuitive/cognitive decision-making and new product creativity (Hypothesis 2) or that team stress moderates this relationship (Hypothesis 4). This suggests that the relationships among these variables are more complex that would have been predicted by the extant literature. The extant literature has shown that intuitive decision-making in NPD leads both to higher quality products and, ultimately, greater customer satisfaction (e.g., Koestler, 1964; Glaser, 1995). Our findings suggest that the more turbulent the environment is, the more a firm will not be able to make cognitive-based decisions based on “hard” environmental information (since the environment it faces is always changing) and will be forced to rely to a greater extent on intuition. Our findings are consistent with the theoretical argument that intuitive people have a stronger preference for collaborative methods such as role play and discussion groups than did people who prefer to make cognitive judgments (Sadler-Smith and Riding, 1999; Riding, 1991). Moreover, our results extend the current theoretical arguments on the effect of experience on decision outcomes (direct positive relationship between intuition and outcomes, e.g. Leybourne and Sadler-Smith, 2006; Burke and Miller, 1999) by showing that the positive impact of intuition on new product creativity depends on whether a combination of intuitive and cognitive judgments is used by NPD teams and the level of stress under which NPD teams are working. Further analysis, presented in Fig. 3, shows that even among high-experience teams, the amount of stress further moderates the relationship. In fact, the only clear curvilinear relationship between intuition and new product creativity exists under conditions of high experience and low stress. That is, our results revealed that for teams that had less experience, and exhibited high stress, or both, increased reliance on intuition (making intuitive judgments only) had no significant effect on new product creativity. We hypothesized that stress would have a negative effect on new product creativity under conditions of intermediate intuition (a combination of both intuitive and cognitive judgments) because stress may adversely affect sense making and holistic judgments of teams. We found that stress moderates the intuition–new product creativity, but only if teams are highly experienced. Under conditions of less experience, high stress, or both, teams either do not have proficiencies to exhibit new product creativity or they cannot utilize their existing knowledge due to prevailing high level of stress. In sum, the results collectively show that environmental turbulence increases the likelihood of the use of intuition (intuitive judgments alone or intuitive and cognitive judgments together) in developing creative products, and stress plays a central role in the relationship between intuition–new product creativity relation and experience. 5.2. Future research and limitations Consistent with prior conceptual arguments and empirical results, our findings showed that contextual variables (e.g., high support for creativity and high workload pressure) may have a moderating impact on the relation between work design of professional work and creativity of employees (e.g., Elsback and Hargadon, 2006). Similar to these studies, we also found that certain conditions, such as experience and stress, had a significant impact on the curvilinear relation between intuition and new product creativity in NPD projects. However, further research should investigate a moderating impact of other contextual factors (i.e.,

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managerial justice, intra-team trust, managerial trust, and task complexity) on this relationship. Dayan and Di Benedetto (2008, 2009), for instance, found empirical evidence that procedural and interactional justice had a positive impact on the effective functioning of NPD teams. Interestingly, although one might expect that environmental turbulence and stress should be logically related, we found no correlation between market turbulence and stress (r = .11, p > .05) and technical turbulence and stress (r = .01, p > .05). The sample mean for stress would be one of the reasons for this surprising result. The relatively high sample mean for stress, 3.83 (with 5 as the scale maximum), implies that the differences in stress cannot be explained by different levels of turbulent conditions. However, there would be some other factors fostering the level of stress among NPD teams because stress is an abstract construct that cannot be explained by one factor. Kim and Wilemon (2001), for instance, identified sources of team member stressors. Thus, further research would examine the moderating impact of these sources (i.e., task-complexity) between intuition and creativity. Further research should also examine relationship and characterbased factors (e.g., cohesion among team members), team-related factors (e.g., team proximity), and emotional and cognitive aspects of teamwork (e.g., emotional intelligence, and transactive memory system-TMS) as possible moderators between intuition and creativity. Akgun et al. (2005), for instance, argued that TMS reduces the cognitive load of each team member and helps teams utilize their holistic judgments more effectively; thus we assume that TMS would also moderate this relation. We acknowledge the limitations to our study. First, due to a time lag (over 1 year) between project completion and data collection, respondents might not have remembered precisely some of the issues included in the survey. However, past research noted that the use of retrospective data is acceptable as long as reported measures are reliable and valid (Miller et al., 1997). Our measures demonstrated the criteria of reliability and validity. Second, the perceptual judgments of respondents on measures may not truly reflect the true phenomenon of interest. We attempted to reduce this limitation by collecting the data from multiple informants (project managers and team members) and assuring of complete anonymity and confidentiality of respondents. Third, utilizing a cross-sectional design would be also considered as a limitation. This research design may not provide accurate results about the flow of knowledge. Past research recommended that a longitudinal research design would advance our knowledge toward the development of intuitive judgments over time. Fourth, the sample size is somewhat small and limited in scope to one country, Turkey, where collectivism is one of the dominant cultural values (Hofstede, 1980). Hence, teamwork and collaboration is more highly respected in Turkey than most Western cultures. However, previous literature on intuition (e.g., Alves et al., 2006) noted that the use of intuitive judgments would differ from culture to culture. Hence, the findings of this study should be generalized to countries that share similar values with Turkey. Finally, due to the complexity of the decision-making process, we note that there may be some different interpretations of some of the constructs we have used, particularly in the case of intuition versus cognition. We had asked respondents to assess the use of intuitive and cognitive judgment throughout the NPD process. While we have argued that intuition and cognition are used throughout the NPD process, it is possible that some respondents may feel, for example, that intuitive judgment is heavily used in the first part of the process, while rational decision-making is used more in the second part (or even vice versa). It would be interesting in a future study to determine if intuition and cognition are indeed utilized in decision-making throughout all stages of the NPD process, or whether there are patterns in which one is predominantly

used early in the process and the other is more used in later stages. It is also possible that respondents are referring to the capabilities of individual team members: taken as a whole, the team has both cognitive and intuitive skills, but some team members are more cognitive and some are more intuitive. This issue is unresolved in the current study and would be an interesting avenue for future research.3 5.3. Practical implications The results have some practical implications. The present findings suggest that there are certain conditions that support creative decision making by NPD teams, and that some of these are at least somewhat controlled by top management. First, relevant experience of NPD team members boosts creative decision making, and therefore should be one of the criteria in assigning members to NPD teams. Although it is out of the scope of this study, it is possible that the more experienced team members are better able to apply their relevant experiences, and/or find a balance between intuitive and cognitive judgments, in order to obtain more creative new product ideas. Lower stress levels are also associated with more creativity. Although top management may not be able to (or may not want to) eliminate team member stress completely, certainly some effort at keeping stress at reasonable levels is likely to be rewarded with more creative decision-making. The extant literature may even provide some guidance in this regard. For example, top management support of the NPD project’s vision is related to lower stress levels among team members (Akgun et al., 2007a,b). There may also be interactions among these factors: more experienced team members may be better at handling stress. This is also out of the scope of the study, but suggests that the role of top management in team member selection and support cannot be ignored. Appendix A. Measurement scales for the variables Intuition (Cronbach’s Alpha = .82) Item 1: Did team members put more emphasis on feelings than data when making decisions during this project? (1 = data, 5 = feelings, 3 = both). Item 2: Did team members rely on their ‘gut feelings’ or ‘cognitive judgments’ or ‘both’ when making decisions during this project? (1 = cognitive judgments, 5 = gut feelings, 3 = both). Item 3: Did team members ‘analytically compare strengths and weaknesses of various options’ or ‘use their feelings’ or ‘both’ when making decisions during this project? (1 = analytically compared, 5 = used their feelings, 3 = both). Market turbulence (Cronbach’s Alpha = .84) Item 4: Customers’ preferences changed quite a bit over time. Item 5: Customers tended to look for new products all the time. Item 6: New consumers tend to have product-related needs that are different from those of our existing customers. Item 7: We are witnessing demand for our product and services from customers who never bought them before. Technology turbulence (Cronbach’s Alpha = .78) Item 8: The technology used in this product was rapidly changing.

3

We thank a reviewer for this observation.

M. Dayan, C.A. Di Benedetto / Research Policy 40 (2011) 276–286 Item 9: Item 10:

The technology in the industry was changing rapidly. A large number of new product ideas have been made possible through technological breakthrough in the industry.

Team experience (Cronbach’s Alpha = .74) Item 11: There was a critical mass of experienced people on the team who had developed and launched similar products before. Item 12: People in the team brought with them a wealth of information gained from prior assignments within this company. Team stress (Cronbach’s Alpha = .86) Item 13: Team members felt overwhelmed by work during this project. Item 14: Team members experienced tension on job during this project. Item 15: Team members felt that things were out of control during this project. Item 16: Sometimes, team members felt like giving up on the job during this project. Item 17: Team members felt pressured while working on this project. Item 18: Team members felt strain from working during this project. Item 19: Working on this project was a source of frustration to team members. New product creativity (Cronbach’s Alpha = .80) Item 20: This product challenged existing ideas for this category. Item 21: This product offered new ideas to the category. Item 22: This product was creative. Item 23: This product was interesting. Item 24: This product was very novel for this category. Item 25: This product spawned ideas for other products. Item 26: This product encouraged fresh thinking.

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