Early Supplier Involvement in New Product Development: A Model of the Suppliers’ Perspective

The authors investigated a type of buyer-seller relationship that occurs when a supplier becomes deeply involved in a manufacturer’s new product development activity; this is often called Early Supplier Involvement (ESI) in industry These relationships are interesting because they embody interorganizational issues and strategic concerns arising from new product development. Survey data collected from 4 12 suppliers nationwide supports including two new factors of a longterm strategic nature into the emerging relational exchange framework. Specifically, the influence of manufacturer technological innovativeness and supplier technological capability on supplier intention for ES1 are supported. Implications for the study and management of key buyer-seller relationships are drawn from the results Introduction Many firms find that they need to know how to understand, develop and manage strategic buyer-seller relationships (Anderson and Narus 1990; Dwyer, Schurr and Oh 1987; Heide 1994; Heide and John 1990; Webster 1992). Insight into the management of strategic relationships has been gained by studying dependence (Heide 1994; Heide and John 1988), commitment (Anderson and Weitz 1992) and relational norms (Heide and John 1992). Most empirical research on relationship management has occurred in traditional channel settings. Other critical relationships include comarketing alliances (Sengupta and Bucklin 1993) and manufacturer supplier partnerships (Heide and John 1990). For example, Just-In-Time and strategic sourcing programs require suppliers to invest in relationships with manufacturers (Frazier, Spekman and ONeal 1988; Spekman 1988). One type of relationship generating considerable interest among component suppliers and original equipment manufacturers (OEMs) is referred to as “Early Supplier Involvement, or ESI’” (Purchasing 1991a). ES1 immerses the supplier into a customer’s new product development process beginning at the conceptualization stage and continuing on to commercialization Through very close coordination, ES1 relationships reduce manufacturer product development times and improve product quality (Purchasing 1991b). ES1 relationships require suppliers to carefully manage and integrate interaction between their research-engineering-production systems and those of their customers. One major concern for suppliers is that participation in any one customer’s new product development process requires sizeable investments of managerial and engineering resources, which are recovered only ifthat customer’s product succeeds in the marketplace. While suppliers prefer less risky returns to their investments, those who choose not to engage in ES1 risk losing access to key customer decision makers and being locked out of the customer. Another concern for suppliers is whether manufacturers will revert to an adversarial mode once quality improvements and innovations are