A Comparative Study on the Risk Management Behavior of Small Scale and Large Scale Businesses in New Product Development.

Abstract

This is descriptive study designed to investigate the variations of risk management behavior within small scale businesses vis-a-vis large scale businesses in New Product Development. Determining the risk-identification, risk-evaluation, and risk strategies among and across small- and large- scale businesses were the objectives of this study. Respondents were chosen through purposive sampling given a specific criteria and key informant interviews were conducted personally to obtain qualitative data. Subsequently raw data results and findings were subjected to categorical, and thematic analysis to establish patterns and divergences in risk management behavior. Results showed a number of perceived risks with many commonalities amongst and across small- and large-scale enterprises under the Food and Beverage Category. Companies A, B, and C (small-scale businesses) identify risk through inventory checks, and research on competitors and target markets. They evaluate risks through product testing, different processes of attaining customer feedback, and financial and sales assessments. Companies X, Y, and Z (large- scale businesses) identify risks by conducting formal approaches in competitive analysis and market research, and gathers additional information regarding supply, timetable of development, and financial aspects in NPD. They evaluate risks by conducting sensory evaluations (some quantitative, some qualitative) and calculating the food cost of the new product. Prevalent risk strategies employed by both small- and large-scale companies are Reduction, and Limitation. It can be concluded that small-scale and large-scale enterprises under the Food and Beverage category have more similarities than differences in terms of risk management behavior. Similarities in risk-identifying, risk-evaluating, as well as, risk strategies prove to be dominant while the differences lie in the specific techniques and processes used in identifying, and evaluating risks.