Product architecture, inter‐firm vertical coordination and knowledge partitioning in the auto industry

Abstract

Abstract This study investigates the dynamics of knowledge partitioning, integration and coordination in vertical inter‐firm relationships by addressing the following research questions: How and to what extent does product architecture shape the allocation of design tasks and inter‐firm coordination? What variables do firms have to consider in making decisions concerning the organization of co‐design projects? Following a ‘quasi‐experimental’ research design approach, we conducted a comparative study of two similar auto component co‐development projects (air‐conditioning systems) carried out by a Japanese first‐tier supplier with two European automakers. Despite the coeteris paribus conditions defined by the research design, we observed significant cross‐firm differences in task and knowledge partitioning and in the relationship governance. The study shows that firm‐specific factors (e.g. pre‐existing technological and organizational capabilities) ‐ not product architecture per se ‐ resulted the key determinants of cross‐firm differences. From this perspective our findings contributes to the broader debate about the co‐determination of product architectures, firms' vertical scope and industry architecture.