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.