A typology of coordination strategy in multi-organizational product development

Purpose ‐ The purpose of this paper is to explore a manufacturer's strategy to coordinate efforts of multiple suppliers' involvement in the product development process. The paper also proposes critical factors in determining the appropriate coordination strategy. Design/methodology/approach ‐ Based on the synthesis of the literature and relevant theories, a typology of coordination strategies is developed. Propositions are developed pertaining to the performance implications of the coordination strategies and the key determinants of the effectiveness of the coordination strategies. Findings ‐ Four ideal types of coordination strategies are: centralized-programming, centralized-feedback, decentralized-programming, and decentralized-feedback. Prior research and recently reported industry examples indicate that a manufacturer's coordination with multiple suppliers varies in terms of the information-processing structure and the locus of control. The effectiveness of a manufacturer's coordination strategies is influenced by the extent of component modularity, product complexity, technology uncertainty, and the technical capability of suppliers. Practical implications ‐ The four coordination strategies involve trade-offs on certain performance dimensions. Decentralized-programming promotes process efficiency, while centralized-feedback facilitates problem solving. Centralized-programming favors integrative product design, while decentralized-feedback favors innovation from supplier's technical expertise. Originality/value ‐ While research on supplier involvement in product development has primarily focused on a single supplier's integration in the process, this paper extends understanding of multi-organizational coordination by applying information-processing decision-making theories to the product development context.