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Rapid changes in the technological environment have significantly increased the strain experienced by NPD teams, particularly with regards to developing innovative products that meet both technology and market demands. This study argues that environmental dynamism positively influences the level of team strain but negatively influences product innovation. Moreover, this study further argues that the effect of team strain on product innovation will be positively moderated by perceived diversity in a team climate as it is defined in this study. To test the proposed hypotheses, 87 NPD team leaders and 336 members participated in the study. The results indicate that technology dynamism positively influences team strain and negatively influences product innovation, while market dynamism positively influences both variables. Further, the negative influence of team strain on product innovation is positively moderated by a team’s perception with regard to the diversity climate.       Key words: Market dynamism, technology dynamism, team strain, product innovation, perceived diversity climate.

The effects of environmental dynamism and team strain on product innovation: The moderating role of perceived diversity climate