Management Accounting during New Product Development: A Case Study Mitigating Financial Tradeoffs for Modular Products

This dissertation examines financial tradeoffs in new product development (NPD) and develops actionable insights for managing them. Structured in three main chapters, it approaches the topic by providing an integrative literature review, a method-oriented study, and a proprietary archival study.
The first main chapter presents an integrative literature review and contributes to the current state of research in two ways. It identifies financial tradeoffs arising from the conflicting objectives of optimizing a product's revenue, functionality and performance, direct costs, development overhead costs, and lead time. These tradeoffs are examined both at the individual product level and at its intersection with the overarching project level. By placing them at the center of the review, the chapter offers a new perspective and develops a conceptual framework that maps them. It thereby highlights the mechanisms through which modular product design influences the identified financial tradeoffs.
The second main chapter focuses on the scenario in which, contrary to scientific assumptions, the gap between allowable and realizable costs cannot be closed by cost management activities. ... mehrAs a result, financial tradeoffs become inevitable – an issue for which prior research provides only limited guidance. Drawing on target costing and cost-effectiveness – the additional property points per additional direct cost – the chapter proposes a practical approach that maximizes product properties while adhering to target costs. The approach configures the product in three successive steps. First, it establishes a segment-specific minimum product derived from a predecessor product, accounting for learning effects and cost benchmarks. Second, it incorporates mandatory components from commonality strategies. Third, it exploits further configurational options according to their cost-effectiveness, using one of three prioritization logics.
The third main chapter uses a proprietary archival dataset to analyze the influence of individual determinants – Time Effects, Production Effects, and Segment Importance – on the accuracy of forecasts related to the contribution margin of development projects. A correlated random effects regression identifies significant predictors of forecast accuracy. The chapter thereby complements earlier research, which relies predominantly on experimental or survey-based designs, by adding empirical evidence from archival company data.