Supplier Involvement in New PD Projects Dimensionality and Contingency

This article was downloaded by: [Middle East Technical University]
On: 7 March 2010

Access details: Access Details: [subscription number 901480723]
Publisher Taylor & Francis
Informa Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House, 37-
41 Mortimer Street, London W1T 3JH, UK
International Journal of Production Research

Publication details, including instructions for authors and subscription information:
http://www.informaworld.com/smpp/title~content=t713696255
Supplier involvement in new product development projects: dimensionality

and contingency effects
Jayanth Jayaram a
a
Department of Management Sciences, Moore School of Business, University of South Carolina,
Columbia, SC 29208, USA
First published on: 14 March 2007
To cite this Article Jayaram, Jayanth(2008) 'Supplier involvement in new product development projects: dimensionality
and contingency effects', International Journal of Production Research, 46: 13, 3717 — 3735, First published on: 14 March
2007 (iFirst)
To link to this Article: DOI: 10.1080/00207540600787010
URL: http://dx.doi.org/10.1080/00207540600787010
PLEASE SCROLL DOWN FOR ARTICLE
Full terms and conditions of use: http://www.informaworld.com/terms-and-conditions-of-access.pdf
This article may be used for research, teaching and private study purposes. Any substantial or
systematic reproduction, re-distribution, re-selling, loan or sub-licensing, systematic supply or
distribution in any form to anyone is expressly forbidden.
The publisher does not give any warranty express or implied or make any representation that the contents
will be complete or accurate or up to date. The accuracy of any instructions, formulae and drug doses
should be independently verified with primary sources. The publisher shall not be liable for any loss,
actions, claims, proceedings, demand or costs or damages whatsoever or howsoever caused arising directly
or indirectly in connection with or arising out of the use of this material.
International Journal of Production Research,
Vol. 46, No. 13, 1 July 2008, 3717–3735
Supplier involvement in new product development projects:

dimensionality and contingency effects
JAYANTH JAYARAM*
Department of Management Sciences, Moore School of Business,

University of South Carolina, Columbia, SC 29208, USA
(Revision received October 2005)

Downloaded By: [Middle East Technical University] At: 21:29 7 March 2010
In contrast to previous literature, we hypothesize supplier involvement in new

product development (NPD) projects to be multidimensional in nature and test
this assumption using data from a large sample of NPD projects. We also test the
contingent influence of supplier involvement on NPD project performance. The
results supported the claim of multidimensionality of supplier involvement. Three
distinct factors – communication and information sharing, design involvement
and infrastructure – comprising supplier involvement were found. These factors
were significantly related to one or more measures of NPD project performance.
The study also found support for the contingent influence of market stability on
the supplier involvement – NPD project performance relationships. The results
suggest that managers ought to consider adopting different bundles of supplier
involvement practices that depend on the level of stability in markets and also on
the type of NPD performance objective that is being considered.
Keywords: New product development; Contingency theory; Supplier involvement
1. Introduction
The practitioner press and academic publications continue to emphasize the

importance of supplier integration in new product development (NPD) projects.
There is considerable research that examines the role of supplier integration in NPD
projects. For example, recent attempts at investigating supplier’s role in NPD
projects have focused on ‘extent of involvement’ of suppliers (i.e. how prevalent and
in what form are suppliers involved in NPD projects) and on timing issues (i.e. in
what stage of the NPD project are suppliers involved). Yet, the findings from this
stream of research are paradoxical. Despite the conceptual claims of advantages
stemming from supplier integration, empirical findings are mixed (De Meyer and
Van Hooland 1990, Hartley et al. 1997a). In fact, Ittner and Larcker (1997) found
that supplier involvement actually hampered NPD project performance by
lengthening product development lead times. Similarly, in a survey of 109 Swedish
companies, 79% of the responding companies reported the use of supplier
involvement in product development teams; however, this factor did not significantly
relate to development lead times (Trygg 1993).
*Email: jayaram@moore.sc.edu
International Journal of Production Research

ISSN 0020–7543 print/ISSN 1366–588X online ß 2008 Taylor & Francis
http://www.tandf.co.uk/journals
DOI: 10.1080/00207540600787010
3718 J. Jayaram
The notion that the effect of supplier integration on measures of NPD project
performance has contingency effects is gaining attention. For example, Eisenhardt
and Tabrizi (1995) found that the use of early supplier involvement was positively
related to time to market only in the mature mainframe segment of the industry and
not in the growing personal computer segment of the industry. We depart from prior
works and hypothesize that supplier integration has a multidimensional role in NPD
projects. Through an empirical study, we identify the multidimensional nature of
supplier integration and offer insights into the role of supplier integration in
NPD projects.
The purpose of the research is three-fold. First, we identify key dimensions of
supplier integration in new product development projects. Second, we examine the
effects of supplier integration dimensions or ‘bundles’ (i.e. groups of inter-related
supplier integration items) and new product development project performance.
Finally, we examine contingency effects of size and market stability on the supplier
integration–NPD project performance relationship.
This paper is organized as follows. First, the literature is reviewed to identify key
supplier integration practices at the NPD project level. Propositions are introduced
concerning the relationship between the deployment pattern of supplier integration
practices and NPD project performance. The research methodology is described
next, focusing on the sampling procedure and measurement issues. Factor analysis is
used to reduce the underlying dimensions or to ‘bundle’ the various key supplier
integration practices identified from the literature, and regression analyses are used
to examine the relationships between supplier integration factors and NPD project
performance. Contingency effects of the variables ‘size’ and ‘predictability of market
demand’ on the relationships between supplier integration factors and project
performance are reported. Last, the results of the study and their managerial
implications are discussed.
2. Supplier involvement
Traditionally, supplier management in US companies has been characterized by

short term arm’s length contracts with little or no role in design and engineering
(Clark 1989). In contrast, Japanese manufacturers involved suppliers early in the
development process, assigned significant responsibility, and communicated
extensively and directly with product and process engineers. Thus, supply base
management took on a strategic orientation. In particular, this strategic orientation
is important in NPD projects. Companies like Sun, Tandem and Mips have
recognized that design and production of new products can no longer be
accomplished by a single firm and thus have resorted to supplier integration
(Saxenian 1991). The Silicon Valley firms cater to a fragmented computer market
that consists of distinct markets for super-computers, super minicomputers,
engineering work stations, networked minicomputers, personal computers, parallel
and multiprocessor computers, and specialized educational computers. This
competitive context has led to the development of specialized systems producers
and their networks of suppliers. Thus, the challenge is to successfully integrate the
key suppliers and assimilate this integration into the buying aspect of new product
development.
Supplier involvement in new product development projects 3719
Research has associated superior NPD project performance with early supplier
involvement (Gupta and Wilemon 1990) and extensive supplier involvement (Imai
et al. 1985, Clark and Fujimoto 1989). Clark and Fujimoto (1989) found that for
Japanese car manufacturers, supplier involvement accounted for about one-third
of the productivity advantages and 4–5 months of lead time advantages. Bonaccorsi
and Lipparini (1994) reported the following benefits of early supplier involvement:
lower development costs, standardization of components, consistency between
design and suppliers capabilities, and reduction in engineering changes, higher
quality with fewer defects, improvement in supplier’s manufacturing process,
availability of detailed process data, and reduction in time to market.
In another interesting contrast, Swink et al. (1996) found in a series of five NPD
projects in high tech companies, that early supplier involvement strategy was
effective in reducing overall development time for highly innovative products.
Hartley et al. (1997a) found that the timing of supplier’s involvement was
significantly related to perceived contribution to product development success. In
the same study, they also found a statistically significant relationship between NPD
project success and supplier involvement.
2.1 Elements of supplier integration
2.1.1 Timing and extent of supplier involvement. Ragatz et al. (1997), in a recent
study, found several practices that differentiated successful and less successful
supplier integration efforts. Specifically, they found the following practices to be
important: (1) supplier’s participation in NPD team of buyer; (2) direct commu-
nication with key suppliers; (3) shared education and training programs; (4) common
linked information systems (EDI, CAD/CAM, e-mail); (5) co-location of buyer/
seller personnel; (6) technology information sharing; and (7) customer requirements
information sharing. In this study, we included all the items that were found to be
significant in Ragatz et al.’s study but modified the items in some cases to enrich
the concepts by capturing additional details. For example, we included item 2 as a
separate item but also added three additional items to substantiate communication
at the three NPD stages of concept development, prototype and full production.
Also, in lieu of item 6, we added the items, sharing design knowledge and sharing
manufacturing knowledge with suppliers.
2.1.2 Joint strategic programs. Besides, early supplier involvement and extent of
involvement in different stages of the NPD process, key suppliers also participated in
joint strategic initiatives with buyers that enhanced NPD capabilities. For example,
some studies have documented the fact that firms solicit input and suggestions from
suppliers on issues relating to design modifications, problem solving, reduction in
number of parts and critical components (Bonaccorsi and Lipparini 1994, Hartley
et al. 1997b, Liker et al. 1996, LaBahn and Krapfel 1994). This was formalized
through a systematic method of soliciting suggestions from suppliers through
initiatives such as suggestion programs. Some firms provide structural mechanisms
such as co-location of key supplier personnel with the NPD team to facilitate the
exchange of input and suggestions (Ragatz et al. 1997, Twigg 1997a).
3720 J. Jayaram
Thus, the empirical literature in supplier integration have studied issues relating
to early supplier involvement, types of involvement in the different stages of the
NPD process and joint strategic programs which developed firm capabilities in new
product development initiatives. In the early supplier involvement literature, the
dominant emphasis has been on communication and sharing of NPD project-specific
information with suppliers.
3. Dimensionality of supplier integration
This review of the literature suggests that the broad array of supplier integration
practices affecting NPD project performance can be grouped into three major
categories: (1) communication and information sharing at different stages of the
NPD process; (2) participation of key suppliers in different stages of the NPD
process (such as being part of the NPD team); and (3) participation in joint strategic
programs with the buyer firms. Based on the existing literature we included 18 items
that belonged to the three categories: communication and information sharing,
participation of suppliers in different stages of NPD process and joint strategic
programs (see table 1 for listing of items).
Our research focus was to verify if these three categories of supplier integration
practices are empirically justified. We suggest that supplier integration practices are
best grouped around NPD goals. That is, supplier integration efforts are deployed to
support distinct NPD project specific activities. Thus:
Proposition 1: Supplier integration practices can be grouped according to the type of
activity they are meant to support in NPD projects.
The above proposition suggests that supplier integration practices can be grouped
into the sub-dimensions of ‘communication and information sharing’, ‘participation
in different stages of NPD’, and ‘joint strategic programs’. Our next proposition
focuses on these three supplier integration factors: we propose that these underlying
factors will also be related to NPD project performance. In particular, we wish to
determine if joint strategic programs (for example) is related to product cost
performance. Thus:
Proposition 2: There is a positive relationship between each supplier integration factor
(e.g., Communication) and measures of NPD project performance (e.g., product cost
performance); i.e. the supplier integration factors found from the factor analysis are
significant predictors of NPD project performance.
Our goal in this research is to determine whether sets or ‘bundles’ of supplier
integration initiatives (from factor analysis related to Proposition 1) are related to
one or more dimensions of NPD project performance (Proposition 2). Finally, we are
interested in contingency effects of size and market stability on the relationships
between supplier integration factors and project performance. Based on past
literature, the two contextual factors of size and market stability are investigated.
Thus,
Proposition 3: The impact of supplier integration factors on NPD project
performance is dependent on contextual factors. Specifically: (a) size moderates
the influence of supplier integration factors on NPD project performance;
Table 1. Descriptive statistics of supplier involvement practice items.
Supplier involvement practices items Sample size Mean SD
Communication and Information sharing

1. Direct communication with key suppliers 338 7.250 2.260
2. Communicating with key suppliers during concept stage 338 5.400 2.740
3. Communicating with key suppliers during first prototype stage 337 7.010 2.340
4. Communicating with key suppliers during full production stage 335 6.760 2.810
5. Sharing design knowledge with key suppliers 338 5.730 2.800
6. Sharing manufacturing knowledge with key suppliers 337 5.350 2.830
7. Sharing customer requirements with key suppliers 338 6.250 3.080
Participation/Involvement in different stages of NPD
8. Participation of key suppliers in NPD team 338 5.860 2.710
9. Involvement of key suppliers in defining the architecture of new products 336 4.220 2.820
10. Involvement of key suppliers in setting design specifications 338 4.511 2.729
11. Involvement of key suppliers in product design 337 4.570 2.740
12. Involvement of key suppliers in prototype building and small scale testing 337 5.950 2.840
Joint strategic programs
13. Shared education & training programs with key suppliers 337 3.420 2.620
14. Common linked information systems(EDI, CAD/CAM, e-mail) 336 4.890 3.030
15. Colocation of project personnel and key suppliers 336 3.340 2.770
16. Seeking input/suggestions from key suppliers on design modifications 337 5.600 2.680
17. Seeking input/suggestions from key suppliers on problem solving 338 6.210 2.510
Supplier involvement in new product development projects
18. Seeking input/suggestions from key suppliers on reduction in number of parts and critical components 329 4.260 2.800
Note: supplier involvement practice items are on a 0–10 scale with 0 ¼ ‘Not Used’, 1 ¼ ‘Extremely Low Use of Practices’ and 10 ¼ ‘Extremely High Use of Practices’.
3721
3722 J. Jayaram
(b) market stability moderates the influence of supplier integration factors on NPD
project performance
4. Survey methodology
The unit of analysis for this research was a new product development project.
Firms from a variety of industries were selected in order to test for contingency
relationships across different settings. Data collection was conducted using a survey
instrument. The ideal respondent for the survey was specified to be ‘the person with
overall responsibility for overseeing product development projects’. The instrument
was analysed for content validity by product development managers from three
different industries before data collection. Each manager completed the survey and
provided feedback on wording of the items, understandability, organization of

the survey and length of the survey. The instrument was refined based on this
feedback. The exact wording of the survey items is given in the appendix.
4.1 Sample characteristics

The sampling frame was firms in ‘high-tech’ industries which was defined to include
firms belonging to the Standard Industrial Classification (SIC) codes 35–38
comprising industries such as Industrial Equipment, Computers, Electronics and
Electrical Equipment, Motor Vehicles, Scientific Instruments and Medical Devices.
Firms belonging to these SIC codes were chosen because they represent industries
involved in manufacturing relatively high value-added and in most cases high
technology products. An initial contact list of approximately 5000 firms was
generated from two groups of sources – membership lists in professional associations
and commercial mailing lists. From the contact list of 5000 firms, 1500 firms were
selected at random (without replacement) for the initial mailing. A follow up post
card mailing after 2 weeks of the initial mailing and a second mailing after 4 weeks
of the initial mailing yielded 338 usable surveys (24% response rate).
4.2 Measures
Four aspects of project performance were measured in this study: product cost,
conformance quality, design quality and time to market. The respondents were asked
to provide an eleven-point rating of the project’s performance relative to objectives
set for the project, where 0 represented ‘Worse’ and 10 represented ‘Exceeded
Targets’.
The survey instrument measured the extent of use of 18 supplier integration
practices. Respondents were asked to indicate the extent to which each of these
practices was used by the firm in the NPD project in question (see table 1). If a
practice was not used by a firm, the respondent was asked to circle ‘Not Used.’ The
extent of use scale was a 10-point scale with endpoints labelled ‘Not Used’ (¼1) and
‘Used to a Great Extent’ (¼10). Means and standard deviations for the extent of use
ratings for the 18 supplier integration practices items are presented in table 1.
5. Analysis and results
5.1 Dimensions of supplier integration practices (Proposition 1)

The 18 supplier integration items were subjected to principal components factor
analysis with varimax rotation. Out of the original list of 18 items, seven items were
dropped because of cross-loadings. They were:
. seeking input and suggestions from key suppliers on design modifications;
. seeking input and suggestions from key suppliers on problem solving;
. involvement of key suppliers in prototype building and small scale testing;
. sharing manufacturing knowledge with key suppliers;
. sharing customer requirements with key suppliers;
. communicating with key suppliers during concept stage;
. seeking input and suggestions from key suppliers on reduction in number of

parts and critical components.
The factor analysis revealed a stable, three-factor solution with each of the factors
having eigenvalues exceeding one. The cumulative percentage of total variance
explained due to these three factors was 58%. Table 2 presents the results of the
factor analysis.
5.2 Research shows supplier integration comprises of three dimensions

It can be seen from table 2 that there was a high degree of convergence within each
factor or dimension (the lowest factor loading within a factor was 0.635). Also there
was a high degree of divergence across factors as indicated by the lack of cross-
loading of any item on more than one factor. An examination of the factor loadings
for the items suggested the three factors: communication and information sharing,
design involvement, and infrastructure. It may be recalled that Proposition 1, stated
that supplier integration practices can be grouped according to the type of activity
supported in the NPD process. Based on the results in table 2, Proposition 1 was
supported.
The items forming each of the supplier integration factors were then tested for
internal consistency using Cronbach’s alpha (Cronbach 1951). As can be seen from
table 2, the scales for each of the supplier integration factors were internally
consistent and the constructs were reliable, with Cronbach’s alphas ranging from
0.63 to 0.84. Overall, the analyses indicated that the constructs were unidimensional
and reliable; therefore, the factor scores were used in further analyses relating to
Proposition 2.
5.3 Direct relationship between supplier integration factors and

NPD project performance (Proposition 2)
Proposition 2 argued for a direct relationship between supplier integration factors
and measures of NPD project performance. In contrast, Proposition 3 stated that the
supplier integration factor-NPD project performance relationships are contingent
on the two contextual factors of size and market stability. Moderated hierarchical
regression analysis was used to isolate the main effects of supplier integration factors
3724
Table 2. Results of factor analysis of supplier involvement practices.
Factor 1
(Communication Factor 2
and Information (Design Factor 3
Variables sharing) Involvement) (Infrastructure)
Participation of key suppliers in NPD team 0.700 0.189 0.246

Direct communication with key suppliers 0.775 0.190 0.191
Sharing design knowledge with key suppliers 0.635 0.359 0.377
Communicating with key suppliers during first prototype stage 0.752 0.268 0.137
Communicating with key suppliers during full production stage 0.649 0.153 0.122
Involvement of key suppliers in defining the architecture of new products 0.157 0.818 0.186
Involvement of key suppliers in setting design specifications 0.271 0.737 0.072
Involvement of key suppliers in product design 0.279 0.704 0.281
J. Jayaram
Shared education & training programs with key suppliers 0.157 0.315 0.686
Common linked information systems(EDI, CAD/CAM, email) 0.214 0.060 0.666
Colocation of project personnel and key suppliers 0.127 0.142 0.715
Eigenvalues 8.016 1.199 1.138
Percentage of variance explained 25.414 19.933 12.171
Cumulative percentage of total variance explained 25.414 45.348 57.518
Cronbach’s alpha 0.845 0.816 0.6251
on NPD project performance (Proposition 2), and to independently assess how

contingency variables (i.e. size and market stability) moderated the relationship
between supplier integration and NPD project performance (Proposition 3). The
overall procedure for each dependent performance variable (i.e. conformance
quality, design quality, product cost and time-to-market) was the same. In step 1, the
control variable, size and the three supplier integration variables were added as a set.
The size variable was entered first to control for any extraneous effect across
industries and organizations. The number of employees was used as a proxy for firm
size. Significant effects here would indicate a direct relationship between supplier
integration and NPD project performance.
5.4 Contingent relationship between supplier integration factors and NPD

project performance (Proposition 3)
In step 2, the contingency variable, market stability was added to verify for a main
effect between market stability and NPD project performance, before testing for
potential interaction effects involving market stability. This approach is consistent
with standard procedure for moderated hierarchical regression analysis (Stone and
Hollenbeck 1989). Market stability was operationalized as the extent to which
market demand was predictable. Finally, in step 3, the cross products of each of the
supplier integration factors and market stability were added as a set. Entering the
three interaction terms simultaneously controlled for possible multicollinearity
among the variables. Evidence of moderated relationships exists when the set of
interaction terms accounts for significant residual variance in the dependent variable.
Significant effects here would indicate that market stability moderated the
relationship between supplier integration and NPD project performance, thereby
providing support for Proposition 3. Tables 3–6 show the results of moderated
hierarchical regression analyses.
5.5 Research shows direct relationship between supplier integration and

NPD project performance
With firm size and market stability controlled, supplier integration factors as a set
were significantly related to all measures of NPD project performance –
conformance quality (R2 ¼ 0.026, F ¼ 11.723, P50.01), design quality
(R2 ¼ 0.011, F ¼ 3.942, P50.01), product cost (R2 ¼ 0.032, F ¼ 11.744, P50.01)
and time-to-market (R2 ¼ 0.023, F ¼ 7.433, P50.01). Specifically, the infrastruc-
ture dimension of supplier integration had a significant main effect on conformance
quality (b ¼ 0.197, P50.01) and product cost (b ¼ 0.183, P50.01). The commu-
nication and information sharing dimension of supplier integration had a significant
main effect on design quality (b ¼ 0.184, P50.05) and time-to-market (b ¼ 0.147,
P50.05). The design involvement dimension of supplier integration was marginally
associated with product cost (b ¼ 0.101, P50.10). Overall, these findings provide
preliminary support for Proposition 2 and suggest that, other things equal, a
program of supplier integration that emphasizes communication and information
sharing with key suppliers, involving key suppliers in design efforts and
infrastructure ( joint training, shared information systems, etc.) is a valuable
approach for strengthening NPD project performance.
3726 J. Jayaram
Table 3. Results of regression analysis for supplier involvement, market stability

and conformance quality.
Variables Step 1 Step 2 Step 3
Control
Size 0.016 0.003 0.009
Supplier involvement
Communication and information sharing 0.015 0.020 0.017
Design involvement 0.027 0.026 0.032
Infrastructure 0.202 0.197 0.037
Market stability 0.159 0.043
Supplier involvement/Market stability interactions
Communication and information 0.072
sharing SI Market stability
Design involvement SI Market stability 0.020

Infrastructure SI Market stability 0.242
R2 0.026 0.004
R2 0.041 0.067 0.071
F 11.723 3.104
F 14.220 10.855 20.453

*P50.10; P50.05; P50.01.
Table 4. Results of regression analysis for supplier involvement, market stability and
design quality.
Control
Size 0.018 0.030 0.031
Supplier involvement
Supplier involvement/Market stability interactions
R2 0.011 0.008
R2 0.033 0.045 0.053
F 3.942 3.981
F 11.409 7.675 9.274

*P50.10; P50.05; P50.01.
Table 5. Results of regression analysis for supplier involvement, market stability and
product cost.
Control
Size 0.028 0.010 0.009
Supplier integration
Supplier integration/Market stability interactions

R2 0.032 0.010
R2 0.037 0.069 0.079
F 11.744 3.457
F 12.927 12.212 23.857

*P50.10; P50.05; P50.01.
Table 6. Results of regression analysis for supplier involvement, market stability

and time to market.
Control
Size 0.085 0.069 0.073
Supplier integration
Supplier integration/Market stability interactions
R2 0.023 0.010
R2 0.021 0.044 0.054
F 7.433 2.309
F 7.011 7.559 13.461

*P50.10; P50.05; P50.01.
3728 J. Jayaram
5.6 Research shows differential influence between supplier integration and NPD
project performance depending on level of market stability
Beyond the direct relationships between supplier integration and NPD project
performance, there was also support for the contingency approach to supplier
integration. As a set, the supplier integration–market stability interaction terms
accounted for significant incremental variance in all NPD project performance
measures (i.e. conformance quality, design quality, product cost and time-
to-market). This result indicates that market stability does in fact moderate the
supplier integration–NPD project performance relationship, thereby providing
support for Proposition 3. In testing the more specific moderation propositions,
the results indicate that supplier integration–infrastructure interacts with market
stability to predict conformance quality (b ¼ 0.242, P50.01), and product cost
(b ¼ 0.260, P50.01). Also, supplier integration–communication and information
sharing interacts with market stability to predict design quality (b ¼ 0.162, P50.01),
and time-to-market (b ¼ 0.198, P50.01).
5.7 Size has no influence on the supplier integration: NPD project

performance relationship
Interestingly, there was no support for size as a moderator in the supplier
integration–NPD project performance relationship. In this research, size was
operationalized as number of employees in the company. It is conceivable that
other operationalizations of size could have yielded different results.
5.8 Is the performance effect of supplier integration stronger in stable

or unstable markets?
Although the above results revealed that market stability moderates the supplier
integration–NPD project performance relationship, the question of whether the
strength of the effect is more dominant in stable markets as opposed to unstable
markets is yet to be answered. To address this issue, post-hoc correlation analyses
were conducted. The entire sample was split into two sub groups, high market
stability and low market stability based on median scores on the market stability
question. Based on median score split, 179 firms were classified into the ‘high market
stability’ group, and 163 firms were classified into the ‘low market stability’ group
with five non-usable responses on account of missing data. The correlation analyses
of the significant supplier integration factors (communication and information
sharing, and infrastructure dimensions) with NPD project performance in both the
sub-groups are reported in table 7.
It may be recalled that the previous analyses revealed moderating or contingency
relationships between supplier integration and all the measures of NPD project
performance. In other words, the impact of supplier integration on NPD project
performance differed according to the level of market stability. It was not clear
whether the impact or effect size was stronger in the case of firms facing stable
markets or in contexts wherein firms faced unstable markets. The results in table 7
indicate a distinct separation of effect sizes for the performance measures of design
quality, product cost and time-to-market. However, in the case of conformance
Table 7. Correlational analysis of significant supplier involvement factors and project

performance in high and low market stability groups.
Conformance Design Product Time-

Supplier integration factor quality quality cost to-market
Communication and information sharing

High market stability group – 0.259 – 0.119
Low market stability group – 0.091 – 0.164
Infrastructure
High market stability group 0.198 – 0.234 –
Low market stability group 0.191 – 0.116 –

P50.05; P50.01.
quality, the difference in effect size in the two groups is not clear. It is interesting
to note that the pattern of results was similar for the performance variables of design
quality and product cost, in that the effect of supplier integration on these
performance measures were stronger in firms facing stable markets as opposed to
firms facing unstable markets. However, for the performance variable of time-
to-market, the opposite was true, i.e. the impact of supplier integration on time-
to-market was stronger in firms facing unstable markets as opposed to in firms
facing stable markets. This result makes sense because of the type of supplier
integration that is in question. Sharing of information and communicating with key
suppliers can be expected to have a stronger influence on time-to-market in dynamic
and unstable markets as opposed to stable markets.
6. Discussion
Until recently, the importance of supplier integration practices was supported

primarily by case studies and anecdotal evidence rather than by large-scale studies.
In the limited empirical studies that existed, there was mixed evidence as to the
importance of supplier integration in NPD projects. We examined a comprehensive
set of 18 supplier integration practices and four NPD project performance measures.
We proposed that deploying supplier integration practices as a set has merit in a
strategic NPD environment. The results indicate that:
. Supplier integration practices can be grouped into the three factors of
communication and information sharing, design participation and infra-
structure development of joint programs with key suppliers.
. Supplier integration factors were positively to NPD project
performance, measured as: product cost, conformance quality, design quality
and time-to-market.
. The impact of supplier integration on NPD project performance was
contingent on market stability, but not on size.
. For the performance measures of product cost and design quality, the
supplier integration effect size was higher in stable markets as compared to
unstable markets.
. For the performance measure of time-to-market, the supplier integration
effect size was higher in unstable markets as compared to stable markets.
3730 J. Jayaram
. Supplier integration positively and significantly influenced conformance

quality in both stable and unstable markets, with no marked differences in
effect size.
6.1 Implications for supply chain professionals

The implications of the findings of this study are several. First, our results
demonstrate that supplier integration ‘bundles’ are significant predictors of NPD
project performance. The focus on NPD project performance as opposed to
manufacturing performance offers new perspectives on supplier management and
new product development. Also, our results support the view that the appropriate
unit of analysis for examining the effect of supplier integration is at the factor level
as opposed to a single-item level. This approach also finds support in NPD practice.
Second, the focus on four different aspects of NPD project performance – cost,
conformance quality, design quality and time – provides actionable guidelines for
managers. Our results indicate that supplier integration via infrastructure develop-
ment in joint strategic programs significantly enhance NPD project performance in
the areas of cost reduction and conformance quality improvement. An example of
such a program is co-location of project personnel and key suppliers. This is
consistent with the ‘guest design engineer’ concept of Twigg (1997b) who found that
collaboration between supplier design engineers and the design team ensured
conformance to target costs and quality characteristics. Common linked information
systems between the key suppliers and NPD project personnel is another example of
a program that builds infrastructure jointly between key suppliers and the NPD
team. Supplier integration via communication and information sharing is effective to
enhance design quality and time-to-market objectives in NPD projects. Our results
indicate that practices such as direct communication with key suppliers, and sharing
design knowledge with key suppliers are effective for this purpose. This result is
similar to the findings of Ragatz et al. (1997), who found that direct communication
with key suppliers, and technology sharing with key suppliers were key distinguish-
ing factors that separated successful NPD efforts from unsuccessful ones. Supplier
integration via design involvement marginally improved product cost performance
suggesting that involving key suppliers in design decisions such as defining the
architecture of new products and setting design specifications influences achievement
of product cost goals in NPD. This is especially important to consider as design costs
constitute a huge portion of committed product costs in new product development
(Susman and Dean 1992).
Third, our study found support for the contingent influence of supplier integration
on project performance bringing into question the notion that supplier integration is
imperative in all types of NPD project types. Specifically, we found that market
stability differentially influences the impact of supplier integration on NPD project
performance. This differential influence was found in the cases of all supplier
integration factors except design involvement. The implication of this result is that
firms facing highly stable markets need to deploy a different strategy with respect to
supplier integration, compared to firms facing highly unstable markets. Finally, our
research indicates that firms facing stable markets could use communication and
information sharing as the supplier integration strategy for influencing design quality
performance and infrastructure development as the supplier integration strategy for
influencing product cost performance. Firms facing highly unstable markets and
desirous of improving time to market performance should consider communication
and information sharing as the supplier integration strategy.
In summary, our study offers several contributions to the new product
development and purchasing literature. First, our study demonstrated that deploying
goal-oriented sets of supplier integration practices has a significant influence on
NPD project performance. This has major implications for crafting overall,
coordinated supplier integration strategies and linking these strategies to competitive
goals of new product development. Second, we have shown that there is merit in
looking at NPD project performance dimensions as key indicators for measuring
the effects of supplier integration practices. Third, the direct impact of different
supplier integration factors on NPD project performance revealed new insights.
Communication and information sharing and developing strategic infrastructure
programs with key suppliers were the two important factors influencing NPD project
performance. Fourth, market stability was shown to moderate the impact of supplier
integration factors on NPD performance measures. Finally, the effect sizes of
the impact of supplier integration on measures of NPD performance were shown to
be different based on levels of market stability thereby suggesting context
specific actions for practitioners. This study is an exploratory attempt to build
theory in the area of supplier integration. Thus, additional research is needed to
examine the robustness of our findings, and generalizations should be interpreted
with caution.
3732 J. Jayaram
Appendix: Relevant Extracts of the Research Survey Instrument
General Comments on this Appendix
1. The Instructions section and Section A is reproduced here to provide an idea

of the context of the entire survey instrument. In particular, please note that
responses to survey questions were in the context of a specified new product
development project which was identified by the respondents.
2. The questions pertaining to Supplier Involvement (Section B) and New
Product Development Project Performance (Section D) are reproduced here
in full to indicate the specific context that anchored all responses. Please note
that the effectiveness measures and importance measures were collected but
not used for this study.
INSTRUCTIONS SECTION
1. This survey takes 25 to 30 minutes to complete.
2. This survey asks about a recently completed (in the last 3 years) product
development project.
Please select a project where:
. first customer shipment has occurred, and
. the product is of either a manufactured or assembled nature
3. Due to the nature of the questions, for most companies the appropriate
person to complete this survey is a person with overall responsibility for the
development project. The respondent must have been involved in all phases of
the project from start to end, and should have interacted with both upper
management and project personnel for key project decisions.
4. Please return the survey using the enclosed envelope.
5. If you have any questions regarding this survey, please feel free to call (517)
355-1237.
SECTION A. PRODUCT DEVELOPMENT PROJECT
Pick a new product development project completed in the last 3 years for which you
were a project leader. By new product we mean any product that is new to your
company or division. This would also include
. innovations and new items
. new product lines
Name of the product for which you are responding:——————————————
Description of this product:————————————————————————
Supplier involvement in new product development projects

3733
3734 J. Jayaram
References
Bonaccorsi, A. and Lipparini, A., Strategic partnerships in new product development:

an Italian case study. J. Prod. Innovation Manage., 1994, 11, 134–145.
Clark, K.B. and Fujimoto, T., Lead time in automobile product development explaining the
japanese advantage. J. Eng. Technolo. Manage., 1989, 6(1), 25–58.
Clark, K.B., Project scope and project performance: the effect of parts strategy and supplier
involvement on product development. Manage. Sci., 1989, 35(10), 1247–1263.
De Meyer, A. and Van Hooland, B., The contribution of manufacturing to shortening design
cycle times. R&D Manage., 1990, 20(3), 229–239.
Eisenhardt, K.M. and Tabrizi, B.N., Accelerating adaptive processes: product innovation in
the global computer industry. Admin. Sci. Q., 1995, 40, 84–110.
Gupta, A.K. and Wilemon, D.L., Accelerating the development of technology-based new
products. Calif. Manage. Rev., 1990, 32(2), 24–44.
Hartley, J.L., Meredith, J.R., McCutcheon, D. and Kamath, R.R., Suppliers’ contributions to
product development: an exploratory survey. IEEE Trans. Eng. Manage., 1997a, 44(3),
258–267.
Hartley, J.L., Zirger, B.J. and Kamath, R.R., Managing the buyer-supplier interface for
on-time performance in product development. J. Oper. Manage., 1997b, 15(1), 57–70.
Imai, K., Ikujiro, N. and Takeuchi, H., Managing the new product development process: how
Japanese companies learn and unlearn. In The uneasy alliance: Managing the
productivity-technology dilemma, edited by R.H. Hayes, K. Clark and A. Lorenz,
1985 (Harvard Business School Press: Boston, MA).
Ittner, C.D. and Larcker, D.F., Product development cycle time and organizational
performance. J. Market Res., 1997, 34, 522–534.
LaBahn, D. and Krapfel, R., Early supplier involvement in customer new product
development: a contingency model of component supplier intentions. J. Business Res.,
2000, 47(3), 173–91.
Liker, J.K., Sobek, D.K., Ward, A.C. and Cristiano, J.J., Involving suppliers in product
development in the United States and Japan: evidence for set-based concurrent
engineering. IEEE Trans. Eng. Manage., 1996, 43(2), 165–178.

Ragatz, G.L., Handfield, R.L. and Scannell, T.V., Success factors for integrating suppliers
into new product development. J. Prod. Innovation Manage., 1997, 14(3), 190–202.
Saxenian, A.L., The origins and dynamics of production networks in Silicon Valley. Res.
Policy, 1991, 20, 423–437.
Stone, E.F. and Hollenbeck, J.R., Clarifying some controversial issues surrounding statistical
procedures of detecting moderator variables: empirical evidence and related matters.
J. Appl. Psychol., 1989, 74, 3–10.
Susman, G.I. and Dean Jr, J.W., Development of a model for predicting design for
manufacturability effectiveness. In Integrating design and manufacturing for competitive
advantage, edited by G.I. Susman, 1992 (Oxford University Press: New York).
Swink, M.L., Sandvik, C.J. and Mabert, V.A., Customizing concurrent engineering processes:
five case studies. J. Prod. Innovation Manage., 1996, 13, 229–244.
Trygg, L., Concurrent engineering practices in selected Swedish companies: a movement or an
activity of the few? J. Prod. Innovation Manage., 1993, 10, 403–415.
Twigg, D., A typology of supplier involvement in automotive product development (Research
Report), 1997a. Warwick Business School Research Bureau, University of Warwick,
Coventry, UK.
Twigg, D., Defining the concept of ‘guest engineering (Research Report), 1997b. Warwick
Business School Research Bureau, University of Warwick, Coventry, UK.

Supplier Involvement in New PD Projects Dimensionality and Contingency

Enviado por

Dados do documento

Descrição original:

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Supplier Involvement in New PD Projects Dimensionality and Contingency

Enviado por

Direitos autorais:

Formatos disponíveis

This article was downloaded by: [Middle East Technical University]

On: 7 March 2010

International Journal of Production Research

Supplier involvement in new product development projects: dimensionality

First published on: 14 March 2007

PLEASE SCROLL DOWN FOR ARTICLE

Full terms and conditions of use: http://www.informaworld.com/terms-and-conditions-of-access.pdf

Supplier involvement in new product development projects:

Department of Management Sciences, Moore School of Business,

(Revision received October 2005)

In contrast to previous literature, we hypothesize supplier involvement in new

Keywords: New product development; Contingency theory; Supplier involvement

The practitioner press and academic publications continue to emphasize the

International Journal of Production Research

Traditionally, supplier management in US companies has been characterized by

2.1 Elements of supplier integration

3. Dimensionality of supplier integration

Table 1. Descriptive statistics of supplier involvement practice items.

Supplier involvement practices items Sample size Mean SD

Communication and Information sharing

provided feedback on wording of the items, understandability, organization of

4.1 Sample characteristics

5. Analysis and results

5.1 Dimensions of supplier integration practices (Proposition 1)

. seeking input and suggestions from key suppliers on reduction in number of

5.2 Research shows supplier integration comprises of three dimensions

5.3 Direct relationship between supplier integration factors and

Table 2. Results of factor analysis of supplier involvement practices.

Participation of key suppliers in NPD team 0.700 0.189 0.246

on NPD project performance (Proposition 2), and to independently assess how

5.4 Contingent relationship between supplier integration factors and NPD

5.5 Research shows direct relationship between supplier integration and

Table 3. Results of regression analysis for supplier involvement, market stability

Variables Step 1 Step 2 Step 3

Design involvement SI Market stability 0.020

Variables Step 1 Step 2 Step 3

Variables Step 1 Step 2 Step 3

Design involvement SI Market stability 0.118

Table 6. Results of regression analysis for supplier involvement, market stability

Variables Step 1 Step 2 Step 3

5.7 Size has no influence on the supplier integration: NPD project

5.8 Is the performance effect of supplier integration stronger in stable

Table 7. Correlational analysis of significant supplier involvement factors and project

Conformance Design Product Time-

Communication and information sharing

Until recently, the importance of supplier integration practices was supported

. Supplier integration positively and significantly influenced conformance

6.1 Implications for supply chain professionals

Appendix: Relevant Extracts of the Research Survey Instrument

General Comments on this Appendix

1. The Instructions section and Section A is reproduced here to provide an idea

SECTION A. PRODUCT DEVELOPMENT PROJECT

Supplier involvement in new product development projects

Bonaccorsi, A. and Lipparini, A., Strategic partnerships in new product development:

engineering. IEEE Trans. Eng. Manage., 1996, 43(2), 165–178.

Você também pode gostar