Outsourcing has become an important strategy for many firms. Yet, firms need to compete with their competitors who also outsource and may share the same suppliers. This article explores how a firm could outperform others in managing the division of labor with a supplier in product development. Drawing on the empirical data collected from the Japanese auto industry, this paper shows that an automaker needs capabilities to coordinate various activities both externally with a supplier and internally within its own organization, in order to gain better component development performance. Overall, the results imply that outsourcing does not work effectively without extensive internal effort.

Drawing on an empirical study on automakers' management of supplier involvement in product development in Japan, this paper shows that when the design of a component is outsourced to a supplier, how much and what automakers know about the component matters for them to gain a better outcome. While the actual tasks of designing and manufacturing components could be outsourced, automakers should retain the relevant knowledge to obtain better component design quality. The paper argues that knowledge partitioning should be distinguished from task partitioning, and provides some implications for the knowledge-based theory of the firm.The results indicate that effective pattern of knowledge partitioning differs by the nature of component development project in terms of technological newness. For regular projects, it is more important for the automaker to have a higher level of architectural knowledge (how to coordinate various components for a vehicle) than of component-specific knowledge, which is supposed to be provided by the supplier. However, when the project involves new technology for the supplier, it is important for the automaker to have a higher level of component-specific knowledge to solve unexplored engineering problems together with the supplier. In innovative projects, effective knowledge partitioning seems to demand some overlap between an automaker and a supplier, rather than efficient and clear-cut boundaries, which are optimal for regular projects. Such "fluid" nature of knowledge boundaries contingent on the project types poses a challenge for firms seeking both technological leadership as well as efficiency in established products.Developing and maintaining knowledge about an outsourced component is by no means easy. When the actual design tasks are outsourced, automakers miss substantial opportunities to gain relevant knowledge through learning by doing. Also, obtained knowledge may be diffused among competitors through shared suppliers. Another problem for automakers is that component-specific knowledge is important for only limited cases (innovative projects). Even worse, component-specific knowledge has a trade-off relationship with architectural knowledge.Such an inherent dilemma of managing knowledge, however, may provide some automakers with the opportunity to achieve sustainable competitive advantage. Additional analysis shows that one automaker managed both types of knowledge better than others in a manner that deals effectively with the dilemma. Its organizational mechanisms include career development policies, extensive documentation of technological information, internal training programs, and incentive schemes. The difficulty in implementing those mechanisms in a consistent and complementary manner seems to explain why there was a significant variance among automakers in knowledge level, even when the actual tasks were carried out by a shared supplier.(414 words) 1

This article presents the results of a questionnaire survey sent to a sample of automobile manufacturers in the United States and Japan (including Japanese-managed plants in the United States) during the spring of 1990. The data support observations that Japanese and U.S. practices tend to differ in key areas and Japanese suppliers perform better in dimensions such as quality (defects) and prices (meeting targets, reducing prices over time); and that Japanese-managed auto plants established in the United States have, in general, adopted Japanese practices and receive extremely high levels of quality from Japanese as well as U. S. suppliers. These findings provide evidence that Japanese practices and performance levels are transferable outside Japan and suggest that considerable improvements are possible for U.S. suppliers supplying U. S. auto plants. In addition, the survey indicates that U.S. firms have adopted at least some practices traditionally associated with Japanese firms, apparently reflecting some convergence toward Japanese practices and higher performance levels in supplier management.

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This paper examines the development process of music businesses on mobile Internet in Japan and Korea, two leading countries in the world that have been enjoying rapid growth of mobile Internet businesses. Based on the "Large Technological System" perspective (Hughes 1983(Hughes , 1989, this paper sees music copyright management institutions as a "reverse salient" in the large technological system of mobile music businesses. We argue that the development of mobile music business has been and will be dependent on how to revise copyright management institutions in accordance with changes and advancement of technologies and other sub-components in the large technological system. For discussion and comment only; please do not reproduce, cite, or quote without the authors' permission.