Evaluating the total effect of early supplier involvement on project team effectiveness: Collaboration and interaction

Motivated by the inconsistent findings of the linkage between early supplier involvement practice and new product development success, this study adopts both the resource-based perspective and agency theory to investigate dynamic relationships between the manufacturer and supplier during the collaboration process. Survey data were used to empirically examine the impact of the resource factor (i.e. collaboration effect) and agency factors (i.e. interaction effect) on project team effectiveness. The results showed that selecting suppliers with appropriate knowledge and resources is necessary yet insufficient to improve project team effectiveness. The agency problem plays a dominant role in determining the quality of collaboration. In particular, the study identified information sharing and task programmability as two key governance mechanisms to curb suppliers' opportunistic behaviour. The study provides insightful managerial and policy implications for firms considering early supplier involvement practice in their innovation process.

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