The effects of joint reward system in new product development

Purpose – This study purports to examine the effects of a joint reward system (JRS) under a new product development (NPD) setting by identifying four neglected aspects of JRS that contains a procedural view (participation of reward decision and reward contingent on NPD phases) and a monetary view (risk‐free to participate and over‐reward incentive) in a conceptual model, and then to empirically test their effects on knowledge sharing and NPD performance. Design/methodology/approach – Using regression analysis, the proposed model was tested on 233 valid respondents (112 in R&D, 50 in marketing, and 71 in manufacturing), including 92 from electronics firms, 87 from semiconductor firms, 29 from biotechnology firms, and 25 from pharmaceutical firms in Taiwan. Findings – The results indicated that risk‐free to NPD project members is the most salient aspect of JRS on knowledge sharing and NPD performance. Joint determination of reward allocation was found to be a favorable JRS for only marketing and NPD performance. Rewards contingent on NPD phases have shown conflicting results between R&D and marketing. No relationship was found for over‐reward incentive on knowledge sharing and NPD performance. Despite the mixed effects of JRS, knowledge sharing is a strong predictor of NPD performance. Originality/value – This study extends understanding of the complexities of rewards on knowledge sharing and NPD success by decomposing and testing four unique aspects of JRS, which sheds a new light on NPD researches.