Capabilities Driving Competitive Advantage in New Product Development: Coordination Capability, Absorptive Capability, and Information Technology Capability

Abstract

Coordinating demand-side and supply-side partners’ resources is critical for creating competitive advantage in new product development (NPD). Recently, the interorganizational coordination efforts have been further augmented through complementary investments in product lifecycle management (PLM). PLM provides an integrated collaborative product development platform that enables firms to effectively conduct complex and communication-intensive interorganizational coordination. The capabilities of coordinating demand-side and supply-side partners and of employing PLM system in interorganizational coordination are likely to be critical in determining firms’ competitive NPD advantage. Hence, the first purpose of this study is not only to understand what the impact of coordination capability with demand-side and supply-side partners will be on competitive NPD advantage, but also to investigate how IT capability derived from implementing PLM systems shapes the role of coordination capability in creating competitive NPD advantage. Moreover, successful NPD requires firms to have highly developed absorptive capability allowing them to internalize and translate partners’ knowledge into product development. Somewhat overlooked has been the moderating effect of absorptive capability on the competitive impact of coordination capability. Hence, this study’s second purpose is to understand how absorptive capability shapes the role of coordination capability in creating competitive advantage in NPD.