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

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.