MANAGING THE SUPPLIER-SUPPLIER INTERFACE IN PRODUCT DEVELOPMENT: THE MODERATING ROLE OF TECHNOLOGICAL NEWNESS

Abstract

When developing products such as computers, machinery and automobiles, interdependent components developed by different first-tier suppliers must fit together and perform as expected in the final product. Applying information processing theory and social network theory, this research explores three approaches that buyers can use to manage the interface between interdependent first-tier suppliers during product development. These are (1) using an interactive team, (2) making a supplier–supplier connection by encouraging first-tier suppliers to communicate, coordinate and mutually adjust and (3) using a modular design. Data were gathered in an online survey of buying firms in manufacturing industries and hypotheses were tested using hierarchical moderated regression. Results show that interactive teams increase the quality of the component system and that modular designs increase product development efficiency. Interactive teams are more beneficial for system quality when the technology used for components are new to suppliers.

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