The authors examine the moderating effect of product innovativeness on cross-functional integration in Japanese and U.S. firms and test the contingency model with data from 788 Japanese and 612 U.S. new products. The results show that national culture affects integration patterns. Product innovativeness significantly moderates the integration–performance relationship in Japanese firms but not in U.S. firms. When developing highly innovative products, Japanese firms should increase the level of cross-functional integration in conducting technical activities (compared with marginally innovative products) but decrease the level of integration in conducting market analysis and launching activities. In U.S. firms, however, cross-functional integration has a similar effect for more and less innovative products. This may suggest the high cost of implementing a differentiated integration pattern in a strongly individualistic culture.
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