Agile in NPD Manufacturing. The Decreasing Returns of NPD Agility on Product Innovation Performance

This study investigates the relationship between NPD Agility, the extent to which manufacturing firms adopt Agile practices in their new product development (NPD) processes, and product innovation performance, the level of technological advancement and the novelty of the product. Specifically, we examine how Agile approaches affect the innovativeness of products and whether this relationship varies depending on the innovation goals established at the outset of a project (incremental vs. radical). Drawing on survey data from 88 NPD projects in the manufacture of machinery and equipment industry, we employ hierarchical moderated regression and subgroup regression analyses to test our hypotheses. The results show that NPD Agility is positively related to product innovation performance, but the relationship follows a logarithmic pattern and thus exhibits decreasing returns — as initial gains in innovation performance are substantial but progressively diminish as Agility increases. Furthermore, the relationship is moderated by the project's innovation goal: for incremental innovation projects, we observe a strong logarithmic relationship, while for radical innovation projects, no significant relationship was found. Empirically, this study is among the few to provide quantitative evidence linking Agile practices with innovation performance in manufacturing contexts. For managers, the study suggests that while Agile practices can enhance product innovation, excessive Agility is marginal and may lead to inefficiencies, especially in incremental innovation projects where the benefits of plan-driven approaches should not be overlooked.