Supplier integration in new product development: Computer mediated communication, knowledge exchange and buyer performance

a r t i c l e i n f o Keywords: New product development Open innovation Media richness Knowledge exchange Interorganizational communication In new product development (NPD), the buyer–supplier relationship is changing. Suppliers are becoming an integral part of the design team. This study investigates the effectiveness of computer-mediated and face-to-face communication channels on knowledge exchange between buyer and supplier firms, and ultimately buyer NPD and market performance. Open innovation literature and media richness theory are used to develop hypotheses which are then empirically tested using data collected from 157 R&D project managers from U.S. manufacturing firms. To date, empirical studies on the link between supplier integration and buyer performance show conflicting results. Structural equation modeling found a significant positive link between knowledge exchange and NPD performance, measured both in terms of effectiveness and efficiency , and a significant positive link between effective and efficient NPD and market performance. A surprising finding is that contrary to media richness theory, email can perform like face-to-face communication transmitting rich information and having a positive relationship to knowledge exchange between buyer and supplier. It was also found that with face-to-face communication, knowledge exchange fully mediates the relationship with effective NPD while with email communication knowledge exchange fully mediates the relationship with efficient NPD. Video conferencing was found to have no significant effect on knowledge exchange and the effect of web-based tools was significant and negative. The implications of these findings in theory and practice are discussed. New product development (NPD) is increasingly important to a firm's profitability and competitiveness. A successful new product can offer a sustainable competitive advantage and, in some cases NPD is the key driver of a firm's overall success (Loch, Stein, & Terwiesch, 1996). Developing successful new products can be particularly difficult in today's marketplace: competitive pressures are building, consumer tastes are rapidly changing, technological changes are accelerating and product life cycles are becoming shorter (Menon, Chowdhury, & Lukas, 2002). Consequently manufacturers are trying to introduce new products to the market quickly. But faster product development is not always better (McNally, Akdeniz, & Calantone, 2011). This has led to innovation processes becoming more networked, i.e. involving a greater number of external partners (Utterback et al., 2006). The spread of NPD roles across boundaries is often referred to as open innovation. Open innovation is the use of external ideas as well as internal ideas. That is external ideas or …