Collaborative concept development using supplier competitions: Insights from the automotive industry

Collaborative concept development using suppliercompetitions: Insights from the automotive industry

Benedikt Langner, Victor P. Seidel *

Saıd Business School, University of Oxford, Park End Street, Oxford OX1 1HP, United Kingdom

1. Introduction

With the goal to develop highly novel innovations, manufacturing firms may engage technologysuppliers not only as sources of existing component parts but also as collaborators in joint productdevelopment. In the automotive industry, collaboration between the primary ‘‘original equipmentmanufacturer’’ (OEM) automotive firms and skilled suppliers is an example of such activity (Wynstraet al., 2001), in some cases involving suppliers as early as the concept development stage (Bonaccorsiand Lipparini, 1994). Indeed, concept development practices can have significant impact oninnovation outcomes (Krishnan and Ulrich, 2001). While past studies have shown that manymanufacturers now involve their suppliers in concept development (McIvor et al., 2006), the details ofsuch collaborative processes are not well understood, especially with the respect to the roles that bothsides take and how these roles might change over time.

J. Eng. Technol. Manage. 26 (2009) 1–14

A R T I C L E I N F O

Article history:

Available online 1 April 2009

JEL classification:

O32 (Management of Technological

Innovation and R&D)

Keywords:

Concept development

Technological

collaborations

Supplier involvement

A B S T R A C T

Firms may seek to collaborate with skilled suppliers not only to

access existing technologies but also to jointly develop new

concepts. We sought to examine the details of collaborative

concept development through matched cases of novel convertible

roof projects in the European automotive industry. The result is a

three phase model marked by the use of supplier concept

competitions to probe possible features and by the selective

maintenance of distance to suppliers. Knowledge transfer and integra-

tion practices, differences depending on initial experience, and

implications for managing such distributed systems of innovation

are highlighted.

� 2009 Elsevier B.V. All rights reserved.

* Corresponding author. Tel.: +44 1865 288 912.

E-mail address: [email protected] (V.P. Seidel).

Contents lists available at ScienceDirect

J. Eng. Technol. Manage.

journal homepage: www.elsevier.com/locate/jengtecman

0923-4748/$ – see front matter � 2009 Elsevier B.V. All rights reserved.

doi:10.1016/j.jengtecman.2009.03.007

mailto:[email protected]

http://www.sciencedirect.com/science/journal/09234748

http://dx.doi.org/10.1016/j.jengtecman.2009.03.007

In this study we investigated collaborative concept development, the process whereby both theOEM firm and the supplier take active roles in developing and influencing how the concept is refinedinto an actual product. By taking an in-depth investigation of two projects in which an automotiveOEM firm and supplier jointly developed new concepts for novel convertible roof systems, a processmodel could be inducted to provide insight on the changing nature of relationships amongcollaborators. Furthermore, we were interested in how this process might differ for firms that have ahigher or lower level of experience with the technology in question.

2. Collaborative product development

Studies of collaborative product development have identified both the opportunities andchallenges of inter-firm innovation. Research in this domain can be described across two main areas:research on the potential outcomes of collaborative development and on the specific managementpractices involved.

2.1. The opportunities and challenges of collaborative development

Collaborative product development in many past studies has been shown to lead to benefits indevelopment time (Droge et al., 2000), quality (Clark, 1989) and cost (Kamath and Liker, 1990). Thepositive impact on development cost and time can be the result of many factors. Skilled supplierresources can help to reduce the critical path of the development project (Clark and Fujimoto, 1991),and collaboration may enable early problem-solving, leading to a stronger focus on manufacturabilityfrom the beginning (Clark and Fujimoto, 1991; Handfield, 1994). Production costs can be reducedwhen the manufacturing knowledge of suppliers brings opportunities for simplified production intothe development process (Dyer and Ouchi, 1993; Kamath and Liker, 1990). With respect to productquality, Clark (1989) suggested that through skilled supplier involvement more uniquely designedcomponents may be used, leading to improved product performance. One benefit associatedspecifically with front-end collaborative concept development is in the setting of cost andperformance specifications early in the process (Petersen et al., 2003).

For suppliers, collaboration with OEM firms provides an important means of refining newlydeveloped technologies, which they can then market to other manufacturers (Takeishi, 2001). Inaddition, collaboration has been shown to correlate to a positive effect on suppliers’ financial returnand innovative capabilities (Chung and Kim, 2003).

Challenges with collaboration have also been identified. Contrary to studies demonstrating shorterdevelopment times, Eisenhardt and Tabrizi (1995) found that collaboration may slow thedevelopment process, such as in their study set in the turbulent computer hardware industry.Furthermore, collaborating with suppliers can create substantial costs for managing the relationship(Bruce et al., 1995). In addition, by involving suppliers in product development, OEM firms run the riskof losing knowledge, as competitive-relevant information is disseminated through suppliers (Littleret al., 1995) or capabilities are lost as the firm struggles to stay up-to-date (Takeishi, 2002).Collaboration can also mean the manufacturer is locked-in to a given technology (Handfield et al.,1999). For suppliers there is the risk of not getting a return on investment (Helper et al., 2000) or ofhaving OEMs use information provided to squeeze their margins and shift the risks and problems ofdevelopment onto them (McIvor et al., 2006; Wasti and Liker, 1997). With these considerations, anegative relationship between collaboration with suppliers and a manufacture’s capability to innovateis possible for both parties (Koufteros et al., 2005) which highlights the need to understand how theprocess is managed in successful collaborative engagement.

2.2. Collaborative management practices

Many management practices have been defined as important for collaborative developmentsuccess, such as developing a partner management approach through a company-wide strategy (vanEchtelt et al., 2008), promoting internal collaboration between departments (Hillebrand and Biemans,2004), and formalizing selection and evaluation processes (van Echtelt et al., 2008). While suppliers’

B. Langner, V.P. Seidel / J. Eng. Technol. Manage. 26 (2009) 1–142

technological capabilities are naturally crucial (McCutcheon et al., 1997), OEM firms’ productengineers often perceive the suppliers’ cooperativeness as having at least as important an effect onsuccessful project outcomes (McCutcheon et al., 1997), highlighting the key importance ofrelationships between partners on project outcomes (Handfield et al., 1999; Hoegl and Wagener,2005). These relationships are proposed to need to be centered around familiarity and trust (Bruceet al., 1995; Petersen et al., 2003).

A number of studies have emphasised the potential benefits of involving suppliers early, such as inthe concept development phase (e.g. Takeishi, 2001), and have argued for the positive impact of higherfrequency and quality of communication (e.g. Littler et al., 1995; Ragatz et al., 1997; von Corswant andTunalv, 2002) throughout the process. However, the earliest phases of product development aretypically less predicable (Seidel, 2007; Veryzer, 1998) and so may provide more challenges in thecollaborative context.

Overall, despite insights into many aspects of collaborative development with a focus on firm-widearrangements (Cagliano et al., 2000), little is known of how the collaboration and joint work actuallyoccurs on a project level (Hoegl and Wagener, 2005). This is particularly true with respect to howengagement may differ during different phases of development. While early supplier involvement andparticipation in the concept stage is recognised as likely to be beneficial, the actual process ofcollaboration at this stage is relatively unexplored. This study sought to address the opportunity tounderstand the collaborative process in more depth.

3. Research method

Qualitative research has particular strength in investigating topics which have not received sufficientresearch attention (Maxwell, 2005), specifically in relation to the investigation of processes. Theexploratory nature of the research suggested that rich data was needed to identify relevant factors,making case studies an appropriate method (Edmondson and McManus, 2007; Stebbins, 2001). Theresearch was designed to look at two matched cases of collaborative concept development that wouldeach incorporate both OEM firm and supplier perspectives, and the cases involved the development of anovel roof for a new model of convertible automobile. In each case an European OEM firm as well asskilled suppliers specialising in convertible roof systems were involved in concept development.

Convertible roofs are a part of the car that has been traditionally developed and built by skilledsystem suppliers. The fact that such structures and associated technologies are a key characteristic ofthe respective car, and that they have a substantial interface with the rest of the vehicle, makes a closecollaboration between the OEM and the system supplier necessary. Therefore, it was an appropriatedomain for investigating the process of collaborative concept development. The two projects reflecteda degree of market and technological uncertainty for the firms involved, and were considered morethan incremental advances. Both of the projects were completed and the convertible modelssuccessfully launched to the market within the year of interviewing project participants. An overviewof the two cases is given in Table 1.

3.1. Projects investigated and data collected

LuxCar is an European automotive OEM firm which decided to extend its model range with aconvertible. As the initial knowledge base of LuxCar on convertible roof design was low, the firm had to

Table 1Cases studied.

LuxCar project MidCar project

Objectives Develop soft-top roof and body for luxury

automobile

Develop hard-top roof and body for mid-class

automobile

Duration Approximately 4 years Approximately 6 years

Initial experience Low: first convertible project for over 5 years High: substantial ongoing experience in convertible

projects with suppliers

B. Langner, V.P. Seidel / J. Eng. Technol. Manage. 26 (2009) 1–14 3

rely substantially on support from specialist roof systems suppliers. LuxCar was required to use asmuch carry-over content in the project from other vehicle programs as possible, and this limitationmade the development of the roof system a substantial challenge.

MidCar is an European automotive OEM firm that developed a new midrange convertible. For thefirst time it decided to develop a retractable hard-top instead of a soft-top convertible. Despite havingconsiderable experience with respect to soft-tops, the project represented a major challenge in termsof part count and interface complexity with the rest of the vehicle.

Initial interviews were conducted with senior managers of the OEM firms, consisting of the head ofroof system engineering at MidCar and the project leader for the entire vehicle at LuxCar. In each of thecases the senior managers were asked to identify the key actors involved with concept developmentfrom both the supplier and OEM firm. Through very open access, seven different perspectives could begained for each case, including those of all project and roof module leaders, as summarized in Table 2.

Interviews lasted between 40 min and 2 h and were conducted in person and were transcribed.Non-English language interview data were translated into English by a bilingual speaker as needed. Inaddition to the interviews outlined above, follow-up phone interviews were done for both cases inorder to check ambiguous statements or to explore some areas that had become more importantduring the analysis stage. Furthermore, the follow-up interviews were used to discuss the core ideas ofthe model in order to validate them. Apart from being more focused in topics, these further discussionswere similar in length.

In analysing the cases the approaches suggested by Eisenhardt (1989) for case analysis and Langley(1999) for developing process models were followed. After the initial interviews each of the twoconcept development cases was examined individually. To do this the interviews were coded and anumber of themes in three distinct phases could be identified. In comparing the themes occurring ineach of the phases a process model could be inducted showing a set of common practices that werementioned by at least one of the participants in each of the cases. At the same time a number ofdifferences between the two cases were evident due to differences in initial domain specificknowledge by the two participating OEM firms. Together this data allowed us to develop a model ofcollaborative concept development and highlight differences based on initial level of experience.

4. The collaborative concept development process

The two projects were found to follow a common process of concept development, with threedistinct phases of activities as summarized in Table 3 and as described in the next section. The firstexploratory stage, during which the concept is initiated and initial specifications are drafted, wasdominated by OEM firm activities. This was followed by a competition phase in which the OEM firminvites skilled suppliers to pursue concept development, with the aim to convince the OEM firm of theirtechnical concept for the roof, typically through the generation of a working model. In the final phase ofengagement, the OEM firm and the chosen supplier for the first time worked in a joint approach, as theyoptimized the concept in preparation for final development activities and production.

Table 2Interviews conducted.

LuxCar project MidCar project

OEM interviews Vehicle project leader Vehicle project leader

Roof system module leader Roof system module leader

Head of engineering Head of engineering

Head of concept development

Lead engineer

Supplier interviews Supplier project leader Supplier project leader

Roof system module leader Roof system module leader

Chief design engineer

Head of engineering


Despite similarities in the overall process, the first two phases exhibited some significantdifferences due to the variation in the initial level of knowledge held by the two OEM firms withrespect to convertible roof design. MidCar started from a position of relatively high initial experience,due to several decades of soft-top roof design and the employment of engineers that had previouslyworked at suppliers specialising in this area. In contrast, LuxCar had very little initial experience, andthe impact of these differences will also be described.

4.1. An overview of the three phases

In this section we provide a further overview of the concept development activities undertaken byboth OEM firm and suppliers, illustrating how a concept went from initial idea to a concept to beoptimized into a final product. As summarized in Table 3, the first phase of collaborative conceptdevelopment, a phase of concept exploration by the OEM firm, was initiated with the creation of thegeneral concept idea. In the MidCar case the engineering department which held the responsibility forconvertible roof systems realised that a number of competitors were in the process of developingretractable hard-tops, and, in the words of the head of engineering ‘‘that there must be better conceptsfor delivering hard-tops than there were at that point on the market.’’

While a recognition of a new convertible design was sparked by the presence of new hard-topmodels, there was a rather broad exploration for what the concept would embody, as described by themodule leader for MidCar: ‘‘In the early phase we explored a number of routes. Do we want a soft-top?A hard-top? Will it be lightweight or normal?’’ As will be described further in sections that follow, thissearch was informed by some limited contact to suppliers, as well as reliance on the OEM firm’s ownmarket and technical scanning abilities.

This initial exploration occurred up to a point where the first fundamental concept decisions weretaken at the senior level of the OEM firm. For the MidCar case the hard-top option was chosen by theprogram head and his team, and in the LuxCar case the decision was taken at the CEO level. In each case,an OEM project team then developed a first broad concept based on their initial knowledge and therequirements of the wider architecture of the vehicle, which formed an initial set of specifications to passalong to suppliers interested in competing for the opportunity to collaborate on the final project.

In the competition phase, OEM firm specifications formed the basis of and the boundaries forconcept development activities within supplier firms. While Krishnan and Ulrich (2001) emphasisedthat in defining a concept both customer needs as well as engineering characteristics are determined,at this point in the process the OEM firm has defined customer needs, and so the competition phasefocuses on achieving engineering specifications. The suppliers in this phase developed the maintechnical concept features like the kinematic system (describing how the convertible roof wouldmove) as well as making decisions on the materials used – such as sheet metal or plastic.

This means that the components are not designed in every detail, rather they are designed on aconceptual level to a point where the overall approach of the supplier is evident. In defining thesecharacteristics, the suppliers are responsible to a large extent for developing the product architectureitself, such as what different components the roof consists of and how these are linked together. Thistechnical side of the concept needs to be proposed by the suppliers, as they may take on theresponsibility for later implementing the concept through detailed design and manufacturing.

Table 3Summary of collaborative concept development activities.

Exploration phase Competition phase Engagement phase

Locus of activity OEM Suppliers Joint: OEM and chosen supplier

Primary concept

development activities

Initial concept ideation Feature development

within specifications

Identification of target conflicts

Exploration of concept

alternatives Development of

working model

Concept optimization

Primary concept selection

Specification setting


Overall, the roof concept was developed by the suppliers up to a point where an initial functionalmodel exists for the OEM firm to evaluate the suppliers’ abilities and match this to the OEM firm’s visionfor the concept. The module leader of the MidCar case described how important these models are:

‘‘One of the main variables in the competition was the lock concept...yet looking at [onesupplier’s] concept for the lock system, which they had to present to us in a model, I knewwithin three minutes that we would be working with [our ultimately chosen supplier...who]had exactly understood what was needed.’’ (Module Leader, MidCar OEM)

In the final engagement phase, the OEM firm and supplier jointly refine and optimize the concept,examining to what extent targets can be achieved or whether goal conflicts exist. As illustrated in theMidCar case, there can be problems even with the chosen supplier’s execution of the concept:

‘‘After the competition you have the results of the chosen supplier, who. . .could not fulfil theinterface requirements or some of the specifications to some extent–and that’s where you thenstart working. . .to improve and refine the concept to take it to its limits.’’ (Head of Engineering,MidCar OEM)

Further illustrating the changes that can be made to the concept and its implementation at thislater point, the chief design engineer of the chosen supplier to MidCar stated, ‘‘My team had to changethe technical concept several times because of their insistence on design requirements. Design aboveeverything else!’’

Part of the reason for such a focus on concept optimization is due to the fact that not all interfacerequirements were known at the outset. The project leader of the LuxCar supplier described this phaseas ‘‘shaking the concept into place.’’ He explained that while during the competition certainperformance targets are set, representing ‘‘a fence in which we developed the concept,’’ in theengagement phase ‘‘this fence was replaced by a white line, which we then negotiated with the OEM.’’Overall, the initial concept is frequently modified in the last phase until an optimal solution which isacceptable to both parties is found.

4.2. Knowledge transfer and integration practices in the exploration phase

To support the concept development activities outlined above, specific knowledge transfer andintegration practices were employed by the OEM firms to manage a process distributed between theirfirm and several suppliers. The main practices observed at the first phase are outlined in Table 4 andrelate to the exploratory activities of moving a concept from initial idea through to a set ofspecifications. For each practice in this table and those for the phases that follow, example evidence is

Table 4Exploration phase: OEM knowledge transfer and integration practices.

LuxCar project example evidence MidCar project example evidence

Transfer practice: Source concept

feasibility feedback while

maintaining distance and

flexibility

‘‘It was an internally-driven process,

but we were pulling in some

knowledge from various different

specialist contractor [suppliers].’’

(Lead engineer, LuxCar OEM)

‘‘At the early phase you won’t let a supplier

look at what’s going on...but there are

issues you can’t resolve without the

future suppliers.’’ (Module leader,

MidCar OEM)

Integration practice: Run

predevelopment projects

to examine feasibility

‘‘What we had looked into was a

retractable hardtop, but it quickly

became evident that it would not

be a good package for the car...’’

(Head of concept development, LuxCar OEM)

‘‘We started a number of predevelopment

projects to get an initial idea of how a

retractable hardtop would look...’’

(Head of engineering, MidCar OEM)

Integration practice: Develop

specifications to enable

low-interaction competition

‘‘We put all our insights into the

documents which we gave to [the

suppliers] at the beginning of the

competition.’’ (Lead engineer, LuxCar OEM)

‘‘The documents are the knowledge

we have and the goals we want to

achieve...if we have a radically new

product this is always the way.’’

(Module leader, MidCar OEM)


given from both LuxCar and MidCar. While OEM firm evidence is usually featured in these tables,supplier evidence agreed in each case with OEM firm evidence.

In the exploration phase the OEM firm was the main actor, and concept development was largelyinternal to the firm. To support the activities of concept ideation and exploration of conceptalternatives, the OEM firm only maintained distant relations with suppliers. ‘‘Overall it is an internalthing,’’ related the module leader of MidCar. This OEM firm practice, sourcing feasibility feedback fromsuppliers, while at the same time maintaining distance, is outlined in the first data row of Table 4 alongwith associated evidence from each project. A key motivation for maintaining such distance fromsuppliers is to maintain flexibility with regards to both the concept and whom they want to work withat later stages. The informal relations allowed the OEM project team members to talk to differentsuppliers, probing initial ideas and thereby being exposed to a wide set of different opinions to formthe basis of initial concept decisions. As the module leader for MidCar related in the followingextended quote (a summary of which is in Table 4):

‘‘At the early phase you won’t let a supplier look at what is going on [and] what decisions aretaken, but there are issues which you cannot resolve without the future suppliers, so you needthem for this information. For instance, we were planning of storing the hydraulic system in asensitive area of the car. So we had to ask the suppliers: ‘Is that possible?’’’ (Module Leader,MidCar OEM)

This practice of sourcing information while maintaining distance was also confirmed by the MidCarsupplier who was eventually chosen for the project, who related the different ways in which initialprobes might be used by OEM firms:

‘‘When the OEM has his first own thoughts on the concept, he likes to ask us how we wouldsee the ideas [. . .] The OEM asks us to examine certain ideas—they do this with varioussuppliers, also with new ones to check their performance—[and] some of these investigationsare for more formal predevelopment projects, others are very informal.’’ (Module Leader,MidCar Supplier)

The second practice to highlight at this phase was the running of predevelopment projects toexamine the feasibility of concept alternatives. We classify this as a knowledge integration activity, asit involves applying knowledge gained to-date and determining the limits of such an approach, animportant step in developing and codifying specifications that will be passed along to potentialsuppliers For MidCar this knowledge integration activity occurred in the form of a number of complexpredevelopment projects in which different ideas for realising a hard-top were examined:

‘‘These initial projects were for us our insight-building, and they formed the foundation for thecompetition. One of the projects was too complex, one too simple, [and] in one of them the bootspace was too small. So our ideas evolved, and we concluded that in one configuration we havethe best styling, best package, and most robust overall system.’’ (Head of Engineering, MidCarOEM)

In the case of LuxCar there were also initial projects, but the scope of these projects was much lesscomplex and were focused on generating benchmarking targets as an outcome.

A final practice in this earliest stage was the development of specifications that would enable theconcept competition to be run with very low organizational interaction. The integration of knowledgegained through the codification of targets in specifications not only allowed later transfer ofknowledge to competing suppliers but also allowed the OEM firm to hide knowledge they did notwant to disclose, as illustrated in MidCar:

‘‘From early on we planned on developing a new safety system for the convertible that wouldrequire a certain space in the back of the car. Consequently, we reserved a certain space whichwe thought would be necessary in the package model that defines the available room...The[Computer Aided Design] data was given to the suppliers specifying the room for their conceptroof without disclosing what we actually would do with this space. This was a way of hiding ourknowledge.’’ (Module Leader, MidCar OEM)


In summary, this first phase of collaborative concept development was marked by OEM firm practicesthat sourced limited information from suppliers, integrated knowledge gained through this sourcingand associated predevelopment projects, guarded the OEM firm’s own protected knowledge, andprepared the groundwork for a competition among suppliers.

4.3. Knowledge transfer and integration practices in the competition phase

The concept competition phase was led by supplier activities that used specifications as a guide fordeveloping models of what the final concept could achieve. In support of this supplier activity weretwo primary knowledge transfer practices, as exercised by the OEM firm and as outlined in Table 5.

The first practice to highlight, the establishment of low-interaction organizational arrangements,was seen across both firms in how they related to the range of suppliers that were in contention forworking on the final project. As the building and maintaining of strong tie relationships is associatedwith costs (Hansen, 1999), this is avoided until a preferred partner is found. Rather than building up ahighly interactive communication system, all the communication in the MidCar case was with themodule leader during the competition. Related the head of engineering for MidCar, ‘‘In this periodthere were no questions of integration, the colleagues from the suppliers have their systemboundaries’’ given by the specification provided. Such low-interaction arrangements have beensupported in previous research that illustrates how codifiability, such as in the form of specificationdocuments, eases the transfer of knowledge (Zander and Kogut, 1995). Hansen (1999) showed thatweak ties are appropriate for knowledge transfer when the knowledge is not only codifiable, but alsoindependent, and independence is achieved by separating the roof from the rest of the car through theboundaries defined in the specifications.

A second practice at this phase was the definition of specific feedback events. Both cases showed amidpoint review as well as a final presentation of results by the supplier to the OEM firm. For MidCarthis took the form of specific technical review meetings, but in between such meetings there was to bevery little contact. In LuxCar there were also defined points at which a review would be held andfeedback given. The MidCar case provides a good summary of how interaction worked during thisphase:

‘‘The supplier disappeared [after receiving the documents] for four weeks without any contactwith us whatsoever...After the four weeks they reappeared and proudly presented their firstconcept. Then we were quite amazed because they did an incredible job in four weeks, but theconcept still had some problems. They got some feedback on that and then they went back anddeveloped the concept for another couple of weeks. Subsequently, they presented a relativelywell thought-through concept.’’ (Module Leader, MidCar OEM)

In summary, during this phase the OEM activities were primarily concerned with how knowledgewas transferred to the supplier for their own integration activities, and the organizational

Table 5Competition phase: OEM knowledge transfer practices.


Transfer practice: Establish

low-interaction organizational

arrangements

‘‘The Lead Engineer and the Module

Leader were predominantly in contact

with the competing firms. They

[alone] were responsible for bringing

information in-and-out’’

(Head of concept development,

LuxCar OEM)

‘‘It is sort of like short-track running. Once the

100m runners have started you don’t try to coach

them any longer...We give much less information

and have much less communication [after

providing specifications]...’’ (Module leader,

MidCar OEM)

Transfer practice: Define specific

feedback events

‘‘We gave them a six or eight weeks

timeline with a midpoint review’’

(Lead engineer, LuxCar OEM)

‘‘We also had technical review meetings with

them where we gave them some feedback...

for example [to tell them] with this lock

system you are still quite far away from

what we want.’’ (Module leader, MidCar OEM)


arrangements and structure of tasks was designed to provide for this division of activity. The suppliersthemselves were integrating new knowledge of the concept into their models, hoping to be chosen asthe preferred partner for the final stage where true collaboration would begin in earnest.

4.4. Knowledge transfer and integration practices in the engagement phase

The primary concept development activities in the final engagement phase were the identificationof target conflicts and the optimization of the overall concept. In support of these broad joint activities,there were four main knowledge transfer and integration practices exercised by the OEM firms, as setout in Table 6.

The first practice was the establishment of high-interaction organizational arrangements. For bothprojects, one aspect of this was the establishment of one (LuxCar) or two (MidCar) on-site supplierengineers at the OEM firm. In addition, both projects reported the use of team-building activities thathelped to facilitate the integration of the two organizations as they worked to understand how todevelop the final product. Secondly, there was the related practice of working to create a jointlanguage between the two organizations. This finding was expressed in MidCar, which had moreexperience, as much as it had been in LuxCar.

Third, there was specific integration of knowledge that had been collected in the competitionphase. This was the one finding that was expressed by the supplier interviews but not mentioned inOEM firm interviews. Suppliers recalled being told how some of the OEM firm’s input to the finaloptimization of the concept was informed by input that came from other suppliers in the competitionstage. Finally, there were joint problem-solving and optimization practices. These practices includedusing the resident engineers working alongside OEM engineers in developing the final aspects of theconcept.

These knowledge transfer and integrations practices marked the point when collaborationrequired new organizational structures and practices in order to reflect the inherent challenges ofbringing together the domains of OEM firm and supplier expertise to the challenges of developing afully functional system. The process was at times messy and contentious, as the assumptions andapproaches taken by each actor did not necessarily fit into that of the other as the roof system andvehicle were meshed. This process of creative conflict and pushing forward and back onspecifications relied on the practices above to enable resolution of problems and an optimizedconcept to be defined.

Table 6Engagement phase: OEM knowledge transfer and integration practices.


Transfer practice: Establish

high-interaction organizational

arrangements

‘‘We had a resident [supplier]

engineer who facilitated the

communication between us and

the various supplier engineers’’

(Module leader, LuxCar OEM)

‘‘Once the decision was taken for us

as a partner, the interaction and

exchange was much higher than

before’’ (Module leader, MidCar

supplier)

Transfer practice: Create joint

language

‘‘We had to develop a language as

part of developing the relationships.

I wrote a glossary of what I wanted

everything to be called in the roof

system’’ (Module leader, LuxCar OEM)

‘‘A huge task was for the OEM and

supplier world to create and define

a joint language and terminology’’

(Module leader, MidCar OEM)

Integration practice: Integrate

knowledge from competition phase

‘‘The OEM said, ‘Your competitor

did this, or did that. Did you think

about this?’’’ (Project leader,

LuxCar supplier)

‘‘They suggested solutions which we

knew they had picked up from our

competitor’s concept.’’ (Chief design

engineer, MidCar supplier)

Integration practice: Jointly

problem-solve and optimize

‘‘Ideas would be coming from both

sides to solve the problem’’

(Module leader, LuxCar OEM)

‘‘This means also that the teams sat

jointly at the CAD and tried to find

a solution...’’ (Module leader, MidCar

OEM)


4.5. Differences depending on initial experience

While the overall process was defined by common phases, some practices in the LuxCar projectdiffered from those at MidCar as a result of the differing initial experience levels of the OEMorganizations, as summarized in Table 7. While engaging in similar initial knowledge integrationpractices, at LuxCar these were largely in the form of benchmarking of competitors’ cars, supportingthe acquisition of basic technological knowledge to set initial targets for the competition. As thechosen supplier of LuxCar pointed out pointed out in working with LuxCar:

‘‘The predevelopment projects done by the OEM depend on their experience and knowledge ofroof systems. At that point in time their knowledge was relatively low, which limited theirability for explorations.’’ (Project Leader, LuxCar Supplier)

The difference in initial experience was also reflected in the level of detail in correspondingspecifications. While in the LuxCar case these were mostly targets, in the MidCar case the OEM firmspecified some specific technical details, like the number of roof shields for the hard-top. As theirmodule leader pointed out: ‘‘We spent a lot of time initially to set the frame, the conditions to makesure we receive a concept that suits us.’’

During the competition phase the relative differences reversed. In the case of LuxCar, there was moreinvolvement by the firm of suppliers, involvement to the extent that LuxCar decided to be flexible onsome targets. Indeed, the module leader related that at the midpoint review, ‘‘We changed some targets,as for instance one of the suppliers could not package the roof in the car...’’ LuxCar considered that theconcept specification ‘‘is a fluid document. It was never set in stone. It as seen more as a guideline.’’ Thismore fluid competition process also took a relatively long time to manage, at over 6 months.

In contrast, MidCar treated the whole competition under a stricter 3 months timeline, which theylikened to ‘‘short track running.’’ MidCar was also very clear about the use of specifications: ‘‘The goalswere not and should not be modified during the competition. . . . You do give suppliers an indicationthat they are too far from a specification, but otherwise modifying the goals in the competition is toodangerous.’’

The final engagement phase in both projects was similar, with this phase marking the time duringwhich collaboration began in earnest and organizational structures adapted to facilitate suchinteraction.

Table 7Summary of process differences between low and high initial experience projects.

Low Initial Experience

(LuxCar) Project

High Initial Experience

(MidCar) Project

Exploration phase

Relative involvement

of suppliers by OEM

Lower: engagement with two

suppliers on general feasibility

questions

Higher: used three suppliers to refine

targets using detailed questions

Relative detail of specifications Lower: 12 broad targets and ‘‘best

in class’’ objective defined but

no detailed Computer-Aided

Design (CAD) data generated

Higher: main decisions on roof design

specified and detailed CAD data generated

Relative length of phase Shorter: only broad

benchmarking as outcome

Longer: complex predevelopment

projects completed

Competition phase

Relative involvement of

suppliers by OEM

Higher: interaction at midpoint

of process to clarify and redefine

targets

Lower: distance to suppliers actively

maintained by OEM

Relative degree of

specification change

Higher: targets redefined as

suppliers provided proposals

Lower: emphasis of OEM was to

keep concept stable

Relative length of phase Longer: more than 6 months Shorter: within 3 months


5. Discussion

This study probed the means by which firms established both high and low-interactionarrangements, while shifting the locus of knowledge integration between the OEM firm and suppliersduring collaborative concept development. The resulting process suggests several implications forfurther studies and for managing in such distributed innovation contexts.

5.1. The changing locus of knowledge integration

By examining the practices described from a knowledge integration perspective, a number ofpatterns become evident. Grant (1996) described how specialization of knowledge, such as betweenOEM firms and suppliers, can be combined with the control over how knowledge is transferred andintegrated as a means to promote the creation of new innovations. In the initial phase of collaborativeconcept development, the OEM is the main locus of knowledge integration, followed by the supplier inthe next phase, what Grant (1996) has described as integrating through sequencing. Differentspecialist knowledge from either the OEM firm or supplier is integrated while minimising the cost ofknowledge transfer due to the stickiness of knowledge (von Hippel, 1994). The locus of innovation isfocused on the area where the knowledge for that particular problem resides, such as the OEM firm forgeneral vehicle constraints or the supplier for roof architecture expertise.

Grant’s (1996) notion of a second integrating mechanism, ‘‘rules and directives,’’ occurs in the formof the specification that is passed to the suppliers. As the head of engineering for MidCar OEM related,‘‘It was a constrained concept competition. . . suppliers developed the concept within the conceptframe given by us.’’ Only in the last phase is knowledge integrated through group problem-solving.This occurs in contexts of increased task complexity and uncertainty that outweigh the cost ofknowledge transfer (Grant, 2006), and the locus of innovation becomes the joint project team.

The means by which knowledge is integrated also relates to how knowledge is transferred and thestrength of relationship ties required. The search benefits of weak ties (Hansen, 1999) are beneficialduring early stages, when first market and technical knowledge are integrated into concepts (Burchilland Fine, 1997). During competition, codifiability and independence are key criterion for easilytransferring knowledge between non-related groups (Zander and Kogut, 1995). Only in the last stageof the concept development does the OEM firm intensify its collaborative relations with the chosensupplier, at which time complex tacit information requires the formation of stronger tie relationships(Leonard-Barton, 1992). Overall, we see how in managing the changing nature of OEM-supplierrelationships, both knowledge integration practices and knowledge transfer practices play a role inmoving a concept from idea to working system.

5.2. Implications and further research

The study of relationships between firms and suppliers has a long history in the automotive setting,and this research sought to add to this body of knowledge by further focusing on those cases of jointdevelopment of advanced engineering solutions from very early stages. We call attention to two mainimplications of this study for managers from both automotive and non-automotive contexts seekingto improve their ability to innovate through the use of skilled suppliers.

The first implication is that the management of collaboration is also the management of distance.The model we described supports the contention that early supplier involvement can indeed play animportant role early in product development (Bonaccorsi and Lipparini, 1994; McIvor et al., 2006), butit also implies that firms may not wish to commit to a single partner early, but rather to use the earlyinformational benefits of weak ties in order to gather as much knowledge as possible in the earliesttwo stages. While managers from the automotive industry will be familiar with the need to attend toselection processes in working with suppliers (van Echtelt et al., 2008), this model of collaborativeconcept development shows how the concept development process itself can provide importantinformation in how to choose partnerships.

Some prior studies have emphasised the importance of increased communication in collaborativeproduct development (Littler et al., 1995; Ragatz et al., 1997) while others have suggested an inverted


u-shape relationship (Hoegl and Wagener, 2005). The process model we present suggests that thequestion should not be whether increased communication has a positive impact on collaborativeoutcomes but rather at what time different types of communication is beneficial. Indeed, our studysupports other studies that highlight how forms of collaboration differ depending on the phase of theinnovation process (Cagliano et al., 2000). Our findings suggest that by probing early and codifyingknowledge gained, a wider variety of possible outcomes might be possible. In the LuxCar case, thehead of concept development phrased it that, ‘‘we would have never realised that roof if we hadworked with only one supplier.’’ While models of more collaborative approaches to innovation tend toemphasise transparency and openness (Chesbrough, 2003; von Hippel, 2005), this study helps toidentify the benefits of controlled knowledge flows when working with distributed sources ofinnovation.

A second implication is that the process may need to be modified depending on the level ofexperience the team has with the technology in question. In a firm working on a number of differentadvanced projects, our research suggests that different timings in working through the stages may beappropriate depending on the experience base of the team in question. For projects were there is littleexperience, it may not be until the competition stage that targets can be fully appreciated (andrenegotiated), justifying the paradox of a faster initial exploratory stage for projects with less initialknowledge.

Previous studies have largely investigated collaborative phenomena from either an OEM firm or asupplier perspective, and with this study we wished to delve more deeply into the collaborativeprocess by exploring both sides of the relationship. While the approach we chose was designed to havemethodological fit for the exploratory nature of this study (Edmondson and McManus, 2007), werecognise the limitations of this approach. First of all, we selected successful cases to understand howsuch processes might unfold under somewhat different starting points of experience. However, thismeant that the relative success of these collaborative approaches could not be compared with theoutcomes that might be seen if the OEM firm developed a system on their own. Future studies in theautomotive context could look at the adoption of various technologies with and without the use ofsuppliers and under more wide-ranging number of suppliers engaged. As part of our research weconduced additional interviews with project leaders from areas other than convertible design, such asin the development of an innovative body component and a driver assistance system, and in suchprojects a very similar pattern of collaboration with suppliers existed. Large sample studies in theautomotive context could use our model as a starting point for exploring the impact on the number ofsuppliers used in competition, as well as the relative timing of when suppliers are engaged to competeon new concepts.

Secondly, in line with prior research on collaborative product development (Kamath and Liker,1990), it could be interesting to compare the European collaborative concept development processwith North American or Japanese cases. Japanese automotive firms have been recognised asmaintaining much stronger long-term relations and partnerships with their suppliers and to rely lesson competition (Clark, 1989; Morgan and Liker, 2006); there could be important differences based onthis differing cultural context.

Finally, in line with our interest in the implications this study has on other collaborative and moreopen approaches to innovation, further research can explore how competitions are used in earlyconcept development activities in other industries. Where products developed have a more directconsumer component, it could be important to consider how user information can be integrated intosuch concept competitions (von Hippel, 2005) and how this might change the nature of knowledgetransfer and integration, an area that our research did not address specifically.

6. Conclusion

Managers have long recognised that not all technological advances can come from within theirfirms, but while the potential value of partnerships is compelling, insights into how suchcollaborations work are still the object of much research. In support of this, a model of how firmsand suppliers jointly develop novel product concepts in the context of supplier concept competitionshas been presented, outlining how this process may differ depending on the OEM firm’s initial


expertise. Although the aim is one of collaboration, only in the third phase, when one supplier ischosen, do the OEM firm and supplier form strong ties and collaborate closely. Overall, the processdescribed reflects the desire to combine efficiency of organization with the use of a broad range of newknowledge. Lessons from this investigation help us understand more about the changing nature ofknowledge transfer and integration practices behind distributed systems of innovation.

Acknowledgements

Support from the International Motor Vehicle Program, administered through The Wharton Schoolat the University of Pennsylvania and the Massachusetts Institute of Technology, is gratefullyacknowledged. This research was conducted while the first author was a research student at SaıdBusiness School, University of Oxford.

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Collaborative concept development using supplier competitions: Insights from the automotive industry