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Article Excerpt
INTRODUCTION
Organizational integration has become an issue of primary importance in the management of services and operations. In order to increase operational flexibility in the face of rapidly changing markets and technologies, organizations are finding it necessary to enhance focus on their core competences and divest themselves of ancillary activities (Prahalad and Hamel 1990). This necessitates closer and more deliberate action among units, divisions and organizations in order to coordinate the activities required to develop, produce and deliver competitive products and services. Organizational integration has emerged as a critical mechanism for facilitating this action (Frohlich and Westbrook 2001).
In particular, organizational integration has been previously advocated for enhanced performance in new product development (NPD) (Griffin and Hauser 1996; Gerwin and Barrowman 2002; Fliess and Becker 2006). Researchers have examined the performance effects of integration in NPD from an internal perspective, focusing on the interfaces linking marketing, R & D and manufacturing (Souder and Chakrabarti 1978; Souder 1988; Kahn and McDonough 1997) and from an external perspective, exploring the characteristics of customer-supplier interfaces (Ragatz, Handfield and Scannell 1997; Millson and Wilemon 2002; Koufteros, Cheng and Lai 2007). However, while research on internal integration in NPD has progressed to examining contingency factors that determine adequate levels of integration (Parry and Song 1993; Souder, Sherman and Davies-Cooper 1998; Calantone, Droge and Vickery 2002), contingency models exploring the appropriate timing and level of integration with suppliers in NPD have yet to be empirically tested.
The purpose of this study is to examine how contingency factors affect the timing and level of supplier integration into NPD, and how varying levels of integration affect project performance. The contingency factors analyzed in this study and their respective effects are broadly adopted from those studied by Griffin and Hauser (1996). These factors include situational dimensions (technological newness, buyer-supplier relationship and the strategic importance of the supplied item), the influence of situational dimensions on structural and process dimensions (timing and extent of integration), and an outcome dimension (project performance).
The remainder of this article consists of a review of the literature on organizational integration in NPD, an introduction to the research framework, and the development of the hypotheses to be tested in the study. This is followed by a discussion of the methods used to conduct the study, the research findings, its limitations and directions for future research.
LITERATURE REVIEW
Internal Integration in NPD
The seminal work on organizational integration was performed by Lawrence and Lorsch (1967). Their study of six organizations in the chemical processing industry revealed that high levels of differentiation between functions (i.e., focus) and high levels of integration between functions involved in product/process development were positively related to market performance. Their study also indicated that demands placed on each function by their respective environments are drivers of the levels of differentiation and integration achieved.
Following Lawrence and Lorsch (1967), a number of studies explored the link between functional integration and innovation performance. Souder and Chakrabarti (1978) and Souder (1988), in studies of consumer and industrial product organizations, found integration between marketing and R & D to be a significant differentiator between successful and unsuccessful NPD projects. Moenaert, Souder, DeMeyer and Deschoolmeester (1994) examined the impact of integration mechanisms on project success in a sample of 40 Belgian manufacturing organizations. Their results indicate that project formalization and good working relationships between marketing and R & D correlate positively with commercial project success. In a study that explored differences in perceptions of success among functions, Kahn and McDonough (1997) found that marketing and R & D managers perceived collaboration among marketing, R & D and manufacturing to be related to NPD performance, while manufacturing managers perceived no relationship between their collaboration with marketing and NPD performance. While these studies illustrate the importance of internal integration to innovation performance, they do not consider how the operational context affects the level of integration and its corresponding effect on project performance.
Recognizing the need to consider contextual factors, a number of contingency frameworks of internal integration began to emerge (Gupta, Raj and Wilemon 1986; Ruekert and Walker 1987; Griffin and Hauser 1996), and several adaptations of these contingency frameworks have been tested empirically. Parry and Song (1993) examined the effects of innovation strategy, environmental uncertainty and integration mechanisms on the required level of integration and the achieved level of integration in each of five stages of the NPD process. The results of their analysis of 274 high-tech Japanese organizations indicated that (1) prospector organizations (i.e., organizations pursuing a first-to-market strategy) perceive the greatest need for integration, (2) higher levels of uncertainty influence the perceived need for integration and (3) integration mechanisms used to promote positive relations between R & D and marketing positively affect the degree of integration achieved in each stage of development. A study of 74 Fortune 500 manufacturing organizations by Liker, Collins and Hull (1999) shows contrasting effects of differentiation mechanisms (i.e., rigid organizational structures and formalized work processes) and integration mechanisms on the degree of functional integration achieved, and highlighted the moderating effect of the newness of product design. Olson, Walker, Ruekert and Bonner (2001) illustrate the need for integration between different functions at different stages in the NPD process and its relative effect on project performance in their study of 34 NPD projects in nine Fortune 500 organizations. Their results also indicate a moderating effect of product newness. By examining organizational integration from a contingency perspective, these studies have fostered a richer understanding of the phenomenon that enable more informed and strategically aligned applications.
Supplier Integration in NPD
While the concept of involving suppliers in NPD has existed for over half a century (Wynstra et al. 2001), it is only over the last two decades that early supplier involvement (ESI) has received due attention in the academic literature. The initial surge of interest in ESI centered on exploring Japanese manufacturing practices. The primary focus of these studies was to explain the apparent competitive advantage that Japanese manufacturers (particularly those in the automobile industry) enjoyed over their U.S. and European counterparts (Clark 1989; Clark and Fujimoto 1991; Womack, Jones and Roos 1991). Perhaps the most critical finding with regard to ESI was that of Clark (1989), who discovered that much of the lead time and cost advantage that Japanese manufacturers enjoyed was attributable, in part, to intensive supplier involvement in engineering.
In the wake of this key finding, research in ESI shifted toward understanding the extent of global diffusion of the practice across manufacturing organizations. Birou and Fawcett (1994) conducted a comparative study of supplier involvement in NPD in U.S. and European manufacturing organizations. Their findings suggest that U.S. organizations employ ESI earlier, more frequently, and more extensively than their European counterparts. In their comparative study, Wasti and Liker (1999) suggest that the gap between supplier involvement efforts in the United States and Japan had narrowed significantly, revealing that differences only exist in the average length of the relationship between buyer and supplier and the dependence of the supplier on the buyer (in terms of sales percentage). Additionally, a number of other studies undertaken on ESI found...
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