Effects of product platform strategy on companies’ financial performance

Paper in proceeding, 2017

There is a constantly increasing need for companies to reduce product development cost and lead-time to become more efficient. Therefore, many companies have adopted a product platform strategy. But, the research on financial performance effects of product platform use is still limited. Therefore, the purpose of this paper is to investigate the effects of product platform strategy on financial performance, and how these effects are moderated by cost efficiency pressure. The data was collected through an online questionnaire targeting the Swedish manufacturing industry, and all firms in that industry with more than 100 employees and having product development within their business unit. The final sample was 160 business units, a response rate of 48.5 percent. The analyses show that the degree of platform use has positive effects on financial performance, but a higher degree of cost efficiency pressure will affect financial performance negatively. We also found a moderation effect; the degree of platform use has positive financial effects in markets with low or medium high cost efficiency pressure, but in contexts with high cost efficiency pressure the same positive effect could not be found.