New Product Development (NPD) innovation is a critical activity in the current economic environment. In order to manage their NPD innovation projects, firms use Management Controls Systems (MCS). However, the effect that these systems have on NPD innovation is not clear. One stream of research suggests that MCS help NPD innovation while another stream suggests MCS hinder NPD innovation. Past research has shown that the role and style of MCS used may offer explanations on why MCS can both help and hinder NPD innovation. This paper adds another explanation by examining the relationship between three models (divisional, activity/decision and conversion/response) of a commonly used MCS, known as the Stage-Gate Process in the NPD innovation literature, and three types of NPD innovation projects (incremental, semi-radical and radical). The insights from an ethnomethodology informed field study are used to understand how and why the firms may use a different MCS (Stage-Gate Process models) for different NPD innovation project types.

Introducing new products into the market is an important way for firms to enhance their competitive advantage (Kumar and Phrommathed, 2005). In particular, firms now place emphasis on the following strategies in New Product Development (NPD) innovation - first mover advantage, fast product introduction, better product functionality and shorter product life cycles (Davila, 2000). To implement these strategies, academics and practitioners stress the importance of Management Control Systems (MCS) within firms. We follow Bisbe and Otley (2004) to define MCS in that it refers to the processes utilized by the organizational participants to mobilize resources and action towards some individual or shared interests.

According to Cooper (2001, p. 4), "NPD innovation is one of the riskiest, yet most important endeavors of the modern corporation." An example of the risk is the uncertainty in the market acceptance of the new product. To minimize risks, managers employ MCS to keep NPD innovation projects on track (Bonner, 2005). The MCS in an NPD innovation context is thus, a "mechanism used to influence the means and achieved desired ends by specifying and monitoring the behavior and activities to be followed by the NPD innovation team" (Bonner et al., 2002, p. 234).

One common MCS in NPD innovation used by firms is the `Stage-Gate' process. This process comprises groups of development activities classified as `stages' which are evaluated for resource allocation decisions at specific points known as `gates'. Early research in this area carried out extensive studies of several projects and proposed different stage-gate process models (Cooper and Kleinschmidt, 1987; Wheelwright and Clark, 1992; and Barnett and Clark, 1998). While these process models enhance the extant NPD innovation literature, disagreement exists regarding the usefulness of these models (and generally MCS) for a firm's NPD innovation efforts (Eisenhardt and Brown, 1995).

Knowledge Management Journal, Control Systems, New Product Development, Management Controls Systems, NPD Innovation Projects, Innovation Literature, Organizational Integration, Product Innovation, NPD Innovation Framework, Business Processes, Organizational Structures, Decision-Making Process, Ethnomethodology.