Trust and Knowledge Management in New Product Development

Purpose - To supplement the inadequate protection of contract against opportunism for corporate collaboration during new product development, the building up of more intimate relationship between business partners has been proposed. Past studies have indicated that trust relationship encourages participating parties to share knowledge for a designated objective. The purpose of this study is to examine the impact of trust relationship on new product performance with knowledge management as the mediator. Design/methodology/approach - In this empirical study, a research model was constructed to test the effect of trust on knowledge sharing, knowledge interpretation, knowledge responsiveness and product performance. Data were collected through an on-line questionnaire survey. 312 valid responses were collected and data was analysed by using structural equation modelling. Originality/value - Studies focus on trust and knowledge management for corporate collaboration in new product development (NPD) is rare in literature. This paper addresses this important issue through a large scale empirical study to confirm that knowledge management backed up by strong trust relationship among business partners will provide positive impact to new product performance. Practical implications - The findings of this study indicate that managers engaged in new product development should cultivate good relationships with their partners in the outset. Trust facilitates knowledge sharing and better responsiveness to the market. As a result product performance is enhanced.