Strategic Management of Supplier-Manufacturer Relations in New Product Development

Abstract

This paper discusses the role of contractual and organizational arrangements for the governance of supplier-manufacturer relationships in new product development projects. We present cross-sectional project level data from 50 manufacturer-supplier relations in new product development in the European Major Home Appliance industry using a single dyadic interaction as the unit of analysis, to combine institutional decisions driving the governance of inter-firm relations and their organizational implementation. Our results show that (a) relational outcome depends on the type of joint activities, (b) it can be decomposed into short term (efficiency) and long term (learning) effects, (c) less articulate types of joint development activities increase efficiency, while more articulate joint development activities increase partner's learning, and (d) inter-organizational structuring decisions are significant explanatory variables to understand relational outcome. Implications for the organization of vertical collaboration in new product development projects are derived focusing on the emerging trade-off between short and long term objectives as a central issue in guiding relational strategies.

Keywords: Innovation, Inter-organizational relationship, New product development, Supply chain management

JEL Classification: O32, M11