Technological change, information processing and supply chain integration

Abstract

PurposeTechnologies change quickly in the automotive industry. This can provide opportunities to firms from emerging economies who try to enter the world stage of automotive production, provided they can react to this more nimbly than established competitors. How technological change affects the supply chain coordination of incumbents from developed economies and new entrants from emerging economies should strongly determine the speed of competitive reaction. By using the example of automotive transmission development, the purpose of this paper is to provide a conceptual model for the analysis and offer research propositions.Design/methodology/approachThe authors build a conceptual model based on information processing theory and offer research propositions based on case study evidence of four automotive original equipment manufacturers (OEMs) and five suppliers.FindingsThe authors find symptoms of two larger trends: increasing specialization and technological linkages and a need to increase external supply chain integration beyond traditional structures. Comparing the effects on Japanese and German incumbents, the authors find that increasing external supply chain linkages proves to be harder for Japanese OEMs. Tight links and routines in the Japanese supply chain networks may harm OEM efficiency under the new technological conditions, e.g. the lack of complete part specifications and high demands for customization. Looking at effects on emerging market firms, Chinese OEMs use quasi-open modular production settings in transmission development and lean strongly on inputs from specialized foreign tier-one suppliers. Speed advantages must be weighed against long-term disadvantages of dependence and insufficient R&D investments.Research limitations/implicationsThe study explores how technological change affects inter-firm development processes. The authors propose a framework and hypotheses based on information processing theory and link the findings to the discussion on the impact of national institutional context on supply chain coordination.Practical implicationsOEMs wanting to adapt complex existing internal structures to the changing demands for information processing should focus first on improving internal capacities by improving the amount and richness of information flow. Implementing new standards for simultaneous and standardized software development across the supply chain is a key point for this. A second step should be to boost the internal capacity to process higher richness of information, i.e. to understand the meta-knowledge necessary to integrate across technological areas in the development of electronic control units (ECUs).Originality/valueThe authors draw on original interview data in developed and emerging markets and information processing theory to explore the complexity of inter-firm coordination in automotive supply chains.