Supplier Development Responsibility and NPD Project Outcomes: The Roles of Monetary Quantification of Differences and Supporting-Detail Gathering

Authors

  • Finn Wynstra,

  • James C. Anderson,

  • James A. Narus,

  • Marc Wouters


  • The authors acknowledge the useful comments made by seminar participants at: Rotterdam School of Management, Erasmus University; Eindhoven University of Technology; and Stockholm School of Economics, in particular Erik van Raaij, Wendy van der Valk, Serge Rijsdijk, Jan van de Ende, Arjan van Weele, Deo Sharma, Angelika Lindstrand, and Björn Axelsson. The authors gratefully acknowledge the financial support of the Institute for the Study of Business Markets (ISBM), located at Penn State University.

Address correspondence to: Finn Wynstra, Rotterdam School of Management, Erasmus University, PO Box 1738, 3000 DR Rotterdam, Netherlands. E-mails: fwynstra@rsm.nl. Tel: +31 10 4081990.

Abstract

Firms increasingly rely on suppliers to perform tasks in new product development (NPD). Research has only recently begun to focus on the processes to manage this supplier development responsibility, and has hardly investigated how firms collect and analyze information regarding the cost and performance of alternative supplier offerings. Our study addresses this gap, through a field survey among 144 paired samples of project leaders and cost analysts involved in the same NPD projects. On the basis of literature and qualitative research, we conceptualize a substantive model. We first use a substantive validity assessment to vet the measures for the proposed constructs. We then test the substantive model with structural equation modeling using a multiple-sample analysis. The results strongly show that monetary quantification of differences and detail gathering play significant roles in successfully leveraging supplier development responsibility. The findings support the hypothesis that the extent of development responsibility that suppliers have leads the development team to a more focused monetary quantification of the differences in alternative supplier offerings. Monetary quantification of differences has a significant, positive effect on the extent of supporting-detail gathering and on the development speed of the project, whereas supporting-detail gathering has a significant, positive effect on the product advantage of the new product as well as development speed. These findings are robust across the two functional perspectives. Our study complements the literature on interfirm control and monitoring by demonstrating the effects of selective and focused output controls.

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