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According to the literature, perceived risk is more than a uni-dimensional construct (Stone and Gronhaug, 1993). Specifically, in the field of NPD, it involves various facets that affect the NPD projects a firm is conducting. It is, therefore, crucial to conceptualize the risk constructs in the NPD domain and identify components relating to them. Churchill (1979) suggests that the first step in developing instruments with desirable psychometric properties is to specify the domain of the construct. The specification of the construct domain makes it clear what is included in the construct definition and what is not. In line with the above- recommended procedure, I began the journey by examining the existing literature as mentioned by Churchill (1979) that the “researcher should consult the literature when conceptualizing constructs and specify domains” (p. 67). During the review, my aim was to identify those characteristics of NPD projects that either researchers or practitioners have found to increase the riskiness of an NPD effort. For this purpose, I reviewed both academic and practitioner literature to ensure that no risk factors were overlooked and to identify as many risk factors as possible.

I identified several articles within NPD literature that address the problems associated with NPD projects. Some of the articles from academic literature emphasize the role of risk in NPD projects such as the Keizer and Halman, (2009); Loch et al. (2008); Sicotte and Bourgault, (2008); Thamhain and Skelton, (2007); Wallace et al., (2004). Similarly, Tang et al. (2009) and Denning, (2013) identified risk factors that caused delays and failures of Boeing 787 Dreamliner NPD project. The majority of other articles, however, do not directly address the topic of risk and thus do not provide extensive references regarding possible NPD project risk factors. Instead, these articles deal only with the discussion and analysis of the risk management strategies that can be used to address different NPD project risks (Mu et al., 2009; Kim and Vonortas, 2014). Other studies have analyzed the relationship of risks with different contingency factors such as risks associated due to the board of directors (Wu and Wu, 2014), risk and performance (Jun et al., 2011; Mu et al., 2009) and risks in SMEs (Owens, 2007; Millward and Lewis, 2005). A summary of risk factors was already illustrated in Table 1-3. It is further evident from the table that with few exceptions, there has been no agreement regarding the dimensions or components of NPD project risk in most cases.

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Among these few risks where there was consensus, technological, marketing and organizational risks were prominent (e.g. Keizer et al., 2002; Mu et al., 2009; Smith, 1999). A possible explanation of their frequent appearance in the NPD literature is the fact that technology, market, and organizations are the three most essential components of any NPD process (Mu et al., 2009) and due to which firms pay more attention in diagnosing the risks pertinent to these components. However, the success of an NPD project, is not only determined by managing these risks, but also by managing other internal and external risk factors which can be influential on the NPD process (Keizer et al., 2002; Kim and Vonortas, 2014). And therefore, these factors need to be included in the list of risk factors.

I further noticed that most of the researchers provided lists of risk factors either based on their personal experiences with NPD projects (e.g. Denning, 2013; Meyer et al. 2001; Tang et al. 2009) or their proposed risk factors were not consolidated with the academic literature thereby limiting their applicability to a wide variety of NPD projects. For example, Keizer and Halman, (2009) list of risk factors was entirely based on case studies in a FMCG company. Moreover, the authors make no attempt to reconcile their findings with the NPD literature. Further to this, the age of the studies on which the list of risk factors was based was another issue. Due to dynamic environmental turbulence, the organizational setting is constantly changing, and there may be corresponding changes in the risk factors that should be included in NPD (Schmidt et al., 2001). Finally, the existing risk classifications do not provide any rigorous and structured conceptualization of NPD project risks i.e. these risk definitions were lacking a clear definition and conceptualization which leads towards a clear understanding of risk components/sub-dimensions and their mutual interactions with each other.

The Development of Proposed Risk Taxonomy

In order to come up with comprehensive risk taxonomy, I followed Armstrong et al. (2012), Pittaway and Cope (2007) and Pittaway et al. (2004) approach (emergent coding scheme).

Step 1

Following this approach, the relevant content (which is in this case risk types) of the 123 articles were imported into NVIVO where each article was coded using emergent coding. This approach allowed the key risk types to be emerged from the 123 articles and helped me

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to identify which papers would contribute to which risk types (as illustrated in Appendix 1- column 1). This step resulted in 30 pages of listed potential project risks (305 risk factors).

Step 2

The next step was to group similar risk types together in order to get a clearer conceptualization of the general types of NPD project risk factors and in order to consolidate these risk factors in to a parsimonious and unified classification. This was achieved through careful analysis of the definitions and conceptualization of extracted risk factors. What is especially noteworthy here is that I found considerable synergy between the risk factors with different labels. I noted that, even though, two risk factors are labelled differently, but the substance of these two risks was identical. In other words, same risk factors were merely been re-labelled under new titles. I sorted out commonly cited risk factors in an iterative and interpretive manner. The list of risk factors and categories were combined and modified in the light of commonly cited risk in an intuitive manner in order to come up with underlying risk factors. Several iterations were performed in order to develop these underlying risk factors in which the risk factors were as distinct as possible. This procedure resulted in the identification of 18 underlying risk factors. These risk factors are: technological rapidity and the firm‟s technological capability, market rapidity, customer perceived risk, marketing capability and competition. resources, human resources, planning, control and strategic management, supply chain management risk, financial unpredictability, lack of funding risk, political risk, macro-economic risk, social risk and natural risks.

Step 3

Each of the extracted risk factors (from step 1) was then classified and labelled according to the one of underlying risk factors (see column 4 in Appendix 1). This is a common approach which has been used by several researchers in software development sector (Moore and Benbasat, 1991; Smith, 1996).

Step 4

The next step was to accumulate these 18 risk factors into more abstract risk classification. This was achieved by first analyzing the process nature of NPD project risk. NPD is a process in which ideas or technologies are materialized, managed, and finally moved to market. Technology, operations, and marketing are the three most indispensable NPD process

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components. Success of product innovation is determined by both external influences and internal circumstances in which these factors interact. Technology is the carrier of new ideas, organization is the delivery process for the ideas, and market is where the technology meets the customers. Consistent with previous studies (e.g., Doering and Parayre, 2000; Keizer et al., 2002), I tried to accumulate the extracted 18 risk factors into these broader 3 categories of risk i.e. technological risk, market risk and operations risk. A problem here, however was that these three factors could not capture all extracted NPD related risks. Kim and Vonortas, (2014) and Keizer et al. (2002) argued that too often risk analysis in NPD was limited to technological, organizational and marketing risk factors. And, that the success of product innovation should be determined by the combination of both external influences and internal circumstances. These authors then suggested that NPD project risks factors should be assessed from technology, marketing, operations and finance risks. I therefore, used the notion of finance risk as main dimensions of risk factor which classify financial unpredictability and lack of funding in it.

An important underlying risk factor revealed in the analysis was supply chain risk. I considered it as a separate risk factor in the proposed taxonomy in order to emphasize on its importance in term of potential negative impact on NPD project. Particularly, in the last decade, a high complex and uncertain business environment characterized by increased competition, globalization, catastrophic events such as natural disasters e.g. Tsunami in 2004, Hurricane Katrina in 2005 and an economic recession emerged (Khan et al., 2008; Manuj and Mentzer, 2008). To remain competitive, firms started re-structuring their businesses to operate on a global basis to take advantage of external expertise, skills, goods and capital (Manuj and Mentzer, 2009). Consequently, supply chain management have become a key competency, essential for the survival of firms. For example, large savings in NPD projects can be generated by ensuring supplier integration (Zsidisin and Smith, 2005). Further, by using suppliers, third party logistic‟ resources and skills, firms can achieve efficiency in their NPD project, and are able to reduce both operational cost and product development lead- times and gain access to supplier technological capabilities (Zsidisin and Smith, 2005). However, the complexities in modern supply chains and reliance on the competitive advantage of the supply chain as a whole may lead to an increased exposure to supply chain risk (Manuj and Mentzer, 2008; Shelanski and Klein, 1995). For example, in December 2001, Land Rover had to face a nine month disruption in completing a NPD project related to key

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model Discovery due to bankruptcy of a Chassis supplier (UPF-Thompson) (Sheffi and Rice, 2005). The example shows that new risks emerge from the dependency and integration of firms in the supply chain. Despite such importance, in the context of NPD project, the risk has been previously considered in isolation and was not listed in mainstream NPD project risk classifications. Therefore, in this research, I argued that as supply chain becomes integral to NPD projects, it contributes significant risks to the NPD efforts and an additional theorization of supply chain risk factors is key to achieving an understanding of NPD project risks.

Among the underlying factors extracted in step 2, I located several factors associated to external environment of the firm. For example, political risk factor, macro-economic and social risk etc. The role of the environment has received a lot of attention in both strategic management research and in organizational theory. For example, Ritchie and Marshall, (1993) argue that business and organizational risks also emerge from environmental factors. Environmental risk factors are those that affect the overall business context across industries (Ritchie and Marshall, 1993). While the magnitude of this impact across different industry sectors may be different, everyone will be affected to some extent (Kouvelis et al., 2006). The review of NPD literature suggests that environmental risk or its associated factors have not been addressed to great extent and was also not the part of existing risk classifications. These factors were mainly addressed as isolated risk factors. Therefore, based on the fact that risks associated with environmental factors may pose a significant threat to NPD projects; I argued that an additional theorization of environmental risk factors is key to achieving an understanding of NPD project risks.

Thus, in addition to four main types of risks (technology, marketing, operation and finance); I classified 18 underlying risk factors further into supply chain and environmental risks factors. The six main risk factors and associated 18 underlying risk factors are presented in figure 2-2.

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Figure ‎2-2 Proposed risk taxonomy