In a recently published article my co-author and I show that the choice of the level of centralization of product design decisions should be made contingent to the product complexity and behavioural factors of project managers involved in the decisions. In particular, we examine the influence of the cognitive ability, resistance to change, and cognitive effort of the project managers on the choice of the level of centralization of product design decisions. A methodology coming from complexity science is adopted and a simulation analysis is carried out. Results confirm that product complexity affects the relationship between the level of centralization of the product design decisions and product performance. Furthermore, we show that the benefit of centralized product design decisions are influenced by the level of cognitive effort, cognitive ability, and resistance to change of project managers. The analysis is performed in two different contexts characterized by varying levels of trust between the buyer and supplier.
These findings provide interesting managerial implications. We prescribe project managers involved in new product design first clearly identify the level of trust charactering the buyer-supplier relationship. When there is high trust between the buyer and supplier, the produce complexity is low, and the cognitive load placed on the project managers is low, we prescribe that the buyer should adopt a highly centralized new product development process. We find this to be the case independent of the cognitive ability and resistance to change of decision makers. For high product complexity, independent of the cognitive effort, centralized product design is highly recommended when the project managers possess high cognitive ability. In the other cases, we find that centralization does not deliver much benefits. In these other cases, low centralized product design decisions could also help in obtaining the desired product performance.
On the other hand, when there is low trust between buyer and supplier, the decision maker has low cognitive ability, and the problem complexity is also low, high centralization is beneficial for improving product performance. High level of centralization is also beneficial when the product complexity is high and the cognitive ability is high. These results hold independent of cognitive effort and resistance to change of decision makers. In all other circumstances, low centralization is prescribed.
Source: Giannoccaro, I., Nair, A. 2016. Examining the roles of product complexity and managerial behavior on product design decisions: An agent-based study using NK simulation. IEEE Transactions on Engineering Management, 63(2), 237 – 247.