Bridging inter‐ and intra‐firm boundaries: management of supplier involvement in automobile product development

Abstract

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.

Beyond Product Architecture: Division of Labour and Competence Accumulation in Complex Product Development

“…The case study presented here provided the occasion to contrast two ways of approaching the key choice concerning how to decide on the division of labor of innovation tasks within and across firms' boundaries, i.e., task allocation. Our empirical evidence adds further support to the literature that has pointed out the dangers of design outsourcing (Lincoln et al, 1998;Fine, 1998), and the centrality of performance integration as a criterion for 49 which component-specific knowledge should be maintained in-house (Takeishi, 2001(Takeishi, , 2002. In this respect, in organizing NPD, we highlight that managers should focus on task allocation and its consequences on the competences of the firm.…”

“…Figure 6 has captured how the template process is an instrument for leveraging both the advantages of learning by doing and of economies of scale. In the context of the innovation literature, focused on the questions how firms can design a 41 setting (comprising product and organization architecture) that is conducive to successful product innovation, our findings also support the idea that component-specific knowledge is a prerequisite for accumulating and maintaining architectural knowledge, and thus for being able to draw on external sources of innovation without losing control of product and project performance (Takeishi, 2001(Takeishi, , 2002. Our findings therefore suggest that system integrators must be seriously involved in some form of "doing" in order to "learn".…”

“…These insights extend but also partially revisit existing literature on system integration (Brusoni et al, 2001, Takeishi, 2001.…”

“…Building on and expanding previous literature (Brusoni et al, 2001;Takeishi, 2001Takeishi, , 2002Hoetker, 2006), our empirical evidence thus contradicts the so called 'mirroring hypothesis', i.e., that the structure of a product development organization must necessarily 'mirror' the architecture of the product it develops (Colfer, 2007). This is because Fiat changed its task allocation scheme considerably even with an unchanged product architecture.…”

“…As it turns out, for many firms outsourcing design and engineering tasks guided by modular product architecture led to problematic consequences, such a substantial decay of architectural knowledge and a subsequent loss of control over development projects (Lincoln et al, 1998;Takeishi, 2001Takeishi, , 2002Chesbrough and Kusunoki, 2001). Empirical evidence indicates a gap in our understanding of the impact of product architecture on task allocation, in particular as a response to the question of what type of competences firms developing complex products should retain in-house and what rationale they should follow in taking this decision.…”