The Effects of Innovation Capability on New Product Development Performance: The Evidence of Zhejiang Province´ SMEs

New product development could be recognised as a key success factor in an increasingly competitive,global economy. The purpose of this paper is to examine the relations between innovation capability and new product development(NPD) performance in small and medium-sized business in China. This study builds a model related to the most important dimensions of innovation capability that influence mostly NPD performance of firms, such as technology, organization, strategy, manufacturing and marketing. Then it examines the relationships between these dimensions of innovation capability and NPD performance. A practical survey was carried out in the manufacturing industry of Zhejiang Province. Strategic planning capability, technology capability and marketing capability positively influence the NPD performance of manufacturing SMEs. Contrary to our prediction, market linking capability has a significant negative effect on NPD performance. Effects of other innovation capability dimensions are not significant. In general, it provides empirical evidence that different aspects of innovation capability will have significant different impact on the new product performance. Results of this study could lead to effective management of innovation for the SMEs in manufacturing industry and benefits for the firms´ managers.