Impact of Social Media Technologies on New Product Development Performance: Theory and Empirical Evidence

In current unpredictable environments, it is essential to understand customers' needs as quickly as possible. Social media platforms are important sources of knowledge and developing a social media capability is critical in quickly sensing customers' requirements. Social media capability can enable firms to co-create internal knowledge between employees, functional departments, and business units and external knowledge with customers. Despite the potential of social media for innovation, prior research has not studied the internal processes that should be developed to manage and leverage the information obtained through social media. Drawing upon the IT-enabled organisational capabilities perspective and the social media affordances theory, this study proposes a research model on the impact of social media capability, social knowledge co-creation, and NPD dynamic capabilities on NPD performance. The research model was tested on a sample of large European firms using survey and secondary data. Results show that social media capability enhances NPD performance by enabling firms to co-create knowledge and developing NPD dynamic capabilities. This study contributes by: (1) operationalising and measuring social media capability and social knowledge co-creation; and (2) demonstrating how social media capability improves NPD performance by co-creating knowledge and developing NPD dynamic capabilities to develop new products.