In a recently published paper, my co-author and I examine how three types of inter-group structures - administrative (formalization and centralization), task (task interdependence) and physical (co-location) - influence project performance and buyer learning in NPD projects. Buying and supplying organizations rely on each other for developing better products in an efficient manner, which explains the popularity of involving suppliers in new product development (NPD). However, such involvement is not always successful, partially due to the challenges of structuring a buyer-supplier team to manage joint dependence and dependence asymmetry. adopting a contingency theory perspective, we study whether the national context moderates the effects of inter-group structures on project outcomes. We adopt a two group structural equation modeling approach to test hypotheses with survey responses from a sample of NPD projects in the United States (US) and China.
Survey responses from original equipment manufacturers (buyers) are used to test the hypotheses. The initial set of respondents comes from a commercial list provider who provided contact information of 2045 US-based company managers. Among this initial set, 2000 have email addresses and 45 have mail addresses. The initial set of respondents in China was extracted from member listings of manufacturer associations with a sample size of 580, all of which provided physical mailing addresses. Job titles and industries are used to screen respondents. Specifically, we limit the initial set of respondents to those that have responsibilities in the areas of engineering, manufacturing, product development, project management, or purchasing, which have been shown to be relevant for NPD projects. We limit industries to those that manufacture physical and discrete products and avoid service and software companies due to their significantly different innovation inputs, processes, and outputs. We adopted both electronic and hard-copy mailing approach for data collection. We hosted a two-part survey on Survey Monkey. The overall response rate for completed pairs of Part I and II surveys are 16.23%. Specifically, 186 completed surveys were collected online from the US out of 2000, indicating a response rate of 9.3%; 28 completed surveys were collected in mails out of 45 from the US, indicating a response rate of 62.2%; 212 completed survey were collected in mails out of 580 from China, indicating a response rate of 36.6%.
All the constructs are measured using existing scales. In order to control for measurement errors, we adopted the two-group Structural Equation Modeling (SEM) approach to test whether effects of the four structural factors on project performance and buyer learning differ significantly between China and the US. The research model is as follows:
Our results show the importance of taking a national contingent view when studying the performance implications of inter-group structures in NPD projects. We found both similarities and differences between the two countries regarding how inter-group structural factors impact project performance and buyer learning. The effects of task interdependence, compared to those of other structural factors, seem to be least country contingent. All other structural factors differ significantly in influencing project performance and/or buyer learning between China and the US. Specifically, the results from our study show that colocation enhances buyer learning only in China and not in the US. This emphasizes the importance of considering the congruence of China’s national context, which values collective behavior, with the opportunities presented by colocation, when studying how co-location influences project outcomes. Similarly, we found that formalization inhibits buyer learning in China but not in the US. The rules and procedures within a formalized structure of NPD projects constrain the natural tendencies of engaging in informal knowledge exchange among Chinese team members. Since formal rules and procedures are the way of professional life in the US, the constraining effects on buyer learning are not significant. Among the four structural factors examined, centralization differs most between China and the US in its performance implications. Due to its congruence with China’s power distant culture, socialistic ideology and informal institutional environment, a centralized structure hurts buyer learning more in the US than in China. However, contradictory to our hypothesis, centralization is found to hurt project performance more in China than in the US. This unexpected result might suggest the importance of considering the types of project goals when examining the effects of centralization. For more task-oriented goals, such as project performance, the comfort of working in a centralized inter-group structure (in China’s case) might amplify the damaging effect of centralization due to a lack of urgency to correct the counterproductive mechanisms. This could endanger the accomplishment of immediate tasks and thereby hurt project performance.
In summary, these significant differences between the two countries show that the national context, as a multi-dimensional variable, could significantly influence performance implications of inter-group structure in interorganizational NPD projects. These impacts could result due to different reasons, such as culture, ideology, and institutions, which present challenges in terms of measuring the exact intervening variables. Data from the US and China allows us to consider these facets to be subsumed within the national context and examine how various factors, together, might create contextual limits (or opportunities) for structuring interorganizational NPD projects. The context-dependent relationship of inter-group structure with project performance and buyer learning lends credence to the equifinality argument. Specifically, there are multiple ways in which structural elements can impact project performance and buyer learning and, depending on the underlying context, different structural arrangements can provide various pathways to improve NPD project performance.
By considering both project performance and buyer learning, our study highlights the multi-faceted performance implications of inter-group structures in interorganizational NPD projects. The results point to distinct ways in which the same inter-group structure could differentially or similarly impact project performance and buyer learning in NPD projects. For instance, co-location helps with both project performance and buyer learning in China, which shows the possibility of simultaneously improving both aspects of performance. In contrast, formalization helps with project performance in the US while hurting buyer learning in China, which shows a trade-off relationship between the two types of performance. For buyer learning, we witness a stronger contingent role played by the country context. In contrast, the effect of inter-group structure on project performance is more universal and less country-dependent. These results suggest the importance of simultaneously considering multiple types of performance when studying project structures in interorganizational innovation.
Our results show support to the relevancy of an organizational dependence view for differentiating performance implications of various inter-group structural dimensions in interorganizational project teams. By reducing uncertainty emanating from dependence asymmetry, formalization helps in creating an efficient NPD process in both countries. By increasing joint dependence, task interdependence facilitates buyer learning and co-location increases project performance in both countries. Overall, our results suggest that project success relies on a higher level of joint dependence with a prudent context-specific management of dependence asymmetry. These results lay a foundation for future studies that adopt an organizational dependence view to study effects of joint dependence and dependence asymmetry in interoganizational collaboration.
Unlike the other three dimensions, task interdependence relates to the value gained by performing two tasks together as compared to the value received when they are done independently. Previous literature has argued that task interdependence enhances cooperation by intensifying interactions and increasing perceived mutual dependence. With high task interdependence, individuals perceive others as closely-coupled partners rather than independent or competing entities. Such perceived mutual dependence encourages the emergence of collaborative behaviors and norms, such as open communication, autonomous adaptation, mutual respect, trust, and reciprocity. Our results confirm these findings and further show that one benefit of task interdependence is enhanced buyer learning. We also found that an interdependent task structure does not necessarily mean a less efficient and effective process, given the insignificant effects of task interdependence on project performance. Overall, our results suggest a more positive view about structuring a task interdependent structure to organize multi-group project teams.
Managerial Insights
This study helps project managers understand how inter-group structural factors distinctively influence NPD project outcomes. Specifically, we show that formalized rules and procedures improve project performance. However, managers need to recognize the adverse impact of formalization on buyer learning in certain national contexts. Hence, a balanced approach that incorporates some degree of informality in project management should work best for improving multiple goals simultaneously. Managers need to formalize inter-group interactions by specifying roles and rules, while leaving enough room for members to explore innovative ideas.
In NPD projects, managers often rely on an interdependent task structure with the hope that it fosters learning and instill a sense of team spirit. Our study supports the use of interdependent task structure in NPD projects. It enables utilizing complementary capabilities of the supplier. By jointly performing a task with the supplier, the buyer learns new innovation possibilities that could be part of subsequent NPD projects. The negative effect of task interdependence on project performance was not confirmed in our study, which further supports the benefits of an interdependent task structure. Buyer and supplier members can be co-located and be guided by formal rules and procedures when working in an interdependent task structure. In certain national contexts, spatial proximity not only enhances efficiency but also creates opportunities for buyer learning. Our findings show that centralized structures are detrimental in NPD projects for either project performance or buyer learning, depending on the underlying cultural, social and institutional contexts. So managers need to be cautioned when relying on a hierarchical administrative structure to manage an interorganizational NPD team.
Results of this study point to the importance of considering the national context, as a contingency factor, when organizing an interorganizational team. Our focus on the US and China is relevant in providing important insights to practicing managers since these two countries play important roles in emerging global product development initiatives. The findings from our study have direct implications for project managers in charge of interorganizational NPD teams in these two countries. Our results also present some directions for managers engaged in interorganizational NPD projects conducted in other countries to structure NPD teams to better fit the underlying cultural contexts.
Source: Yan, T., Nair, A. 2016. Structuring supplier involvement in new product development: A China-US study. Decision Sciences, 47(4), 589-627.