Critical factors for involvement in customers’ product development: an SME perspective

Abstract

Purpose

This paper aims to identify critical factors that influence small and medium-sized enterprise (SME) suppliers’ involvement in their customers’ product development and contrast these with the factors identified from the customer perspective.

Design/methodology/approach

A multiple case study approach was used, including four companies. Data were collected through 32 semi-structured interviews, six workshops and documents.

Findings

A model is presented that merges this study’s nine identified critical factors with seven critical factors from the customer perspective. The model provides a dual perspective of supplier involvement in product development, wherein the supplier and customer perspectives are concurrently addressed. Some factors are unique for the supplier, but several mirror those on the customer side.

Research limitations/implications

The study is based on data from SME suppliers in Northern Europe. As it is expected that SME companies are more constrained by limited resources, future studies could study critical factors at larger suppliers.

Practical implications

Customers and suppliers having insights about the critical factors can provide better conditions for product development for the other actor; for example, when evaluating customer–supplier integration.

Originality/value

The presented model of critical factors provides a more nuanced picture of supplier involvement in product development as prior research has been biased toward the customer perspective. This study emphasizes the importance of contextual information that has been unnoticed in the literature.

Citation

Flankegård, F., Johansson, G. and Granlund, A. (2023), "Critical factors for involvement in customers’ product development: an SME perspective", Journal of Business & Industrial Marketing, Vol. 38 No. 13, pp. 143-153. https://doi.org/10.1108/JBIM-06-2022-0277

1. Introduction

Collaboration between customers and suppliers can make an important contribution to product development outcomes and provide competitive advantages (Laage-Hellman et al., 2021). The importance of customer–supplier collaboration in product development was recognized by researchers as early as the 1980s (Johnsen, 2009). Valuable contributions have been published in a variety of literature domains, such as product development management (Van Echtelt et al., 2008), operations management (Rosell et al., 2014) and industrial marketing and purchasing (Laage-Hellman et al., 2021). The initiative for such collaboration can come from either the customer (Li et al., 2021) or the supplier (Athaide et al., 2019). When collaboration is initiated by the customer, who commercializes the product and often coordinates interdependent development activities with suppliers, this is commonly referred to as supplier involvement in product development. Supplier involvement in product development is defined as the integration of the supplier’s resources and capabilities, as well as the tasks and responsibilities it assumes for developing a component on behalf of the customer (Van Echtelt et al., 2008; Mikkelsen and Johnsen, 2019). Supplier involvement can be beneficial to the customer, leading to shorter time-to-market (Ragatz et al., 1997), more innovation (Yeniyurt et al., 2014) and access to resources (Sundquist and Melander, 2021), among other benefits. Suppliers can benefit from an increase in knowledge (Eslami and Lakemond, 2016) and new products that can be offered to other customers (Laage-Hellman et al., 2021).

Much research has focused specifically on the critical factors that customers should consider when involving suppliers in their product development, but according to Johnsen (2009), few studies have taken the supplier perspective (LaBahn and Krapfel, 2000). Critical factors are those that influence the outcome of supplier involvement in product development, and awareness of these factors enables customers and suppliers to create better conditions for involvement. Although a few studies emphasize the supplier perspective (Oinonen and Jalkala, 2015; Hwang et al., 2019; Flankegård et al., 2021), studies that adopt the customer perspective still predominate, as shown in a recent systematic review and meta-analysis of the literature on supplier involvement by Suurmond et al. (2020). Furthermore, several scholars recommend that research should focus more on the supplier perspective (Mikkelsen and Johnsen, 2019; Merminod et al., 2022), indicating limited insights into suppliers’ perspectives on critical factors for involvement in customer product development. However, what are considered critical factors may differ between large firms and small and medium-sized enterprises (SMEs), as SMEs have differences in resources, organizational structure, competencies, technology base, etc. (Ledwith, 2000; Nicholas et al., 2011). Furthermore, asymmetric relationships between large firms and SMEs may influence the relationships (Flankegård, 2021). Therefore, to fill this gap, this study aims to identify critical factors that influence SME suppliers’ involvement in their customers’ product development and contrast these with the factors identified from the customer perspective.

The remainder of this paper is organized as follows. First, an overview of the critical factors from the customer perspective is provided, followed by a description of the research process. Then, the identified critical factors from the supplier perspective and an extended model of the critical factors are presented and discussed. Finally, conclusions are drawn and a summary of the main contributions, managerial implications, limitations of the study and potential directions for future research are presented.

2. Critical factors from the customer perspective

To contrast the critical factors from the supplier perspective with the customer perspective, this section summarizes the critical factors from the latter perspective that are presented in the literature. The factors are categorized into three key dimensions (Van Echtelt et al., 2008; Mikkelsen and Johnsen, 2019) of supplier involvement in product development. The first dimension relates to the use of the supplier’s resources and capabilities (cf. Van Echtelt et al., 2008; Mikkelsen and Johnsen, 2019). The second dimension relates to the tasks and responsibilities assigned to the supplier (cf. Wynstra and Pierick, 2000; Van Echtelt et al., 2008). The third dimension relates to the integration between the supplier and the customer (cf. Mikkelsen and Johnsen, 2019).

2.1 Critical factors related to the resources and capabilities dimension

The factors related to the resources and capabilities dimension are:

• customers’ competence;

• customers’ internal collaboration capability; and

• supplier selection and evaluation.

Regarding customers’ competence, studies have shown that customers benefit from having manufacturing competence to understand suppliers’ processes to use suppliers successfully (Von Haartman and Bengtsson, 2009). Competence within functional and project management is important for building teams with complementary skills and minimizing opportunistic behavior (Yan and Dooley, 2014). Other skills are conflict management competence (Um and Oh, 2021) and relational skills (Le Dain et al., 2011).

Successful collaboration with a supplier depends on a customer’s internal collaboration capability; otherwise, there is a risk for misunderstandings, project delays, higher project development costs, and lower product quality (Hillebrand and Biemans, 2004, p.115), particularly when goals are incompatible (Melander and Tell, 2019). A case study of German multinational companies highlighted that technology roadmaps are useful for harmonizing product development and sourcing strategies. It supports decision-making regarding whether new technologies should be developed in-house or sourced externally (Schiele, 2010). The same study also suggests that a well-documented and clear product development process, stating both whom and when to involve, is important for ensuring a smooth collaboration. Internal collaboration also depends on employees’ understanding of how they can contribute to the project, have time for interaction and know its importance (Hillebrand and Biemans, 2004).

Supplier selection and evaluation are important means to verify the supplier’s ability to meet lead time, quality and cost criteria (Petersen et al., 2005; Lind and Melander, 2019). Supplier selection based on their competence is important for product quality and innovativeness (Koufteros et al., 2007). Suppliers should have both the technical competence to solve a given task and the managerial skills to organize activities (Le Dain et al., 2011; Eggers et al., 2017). A compatible culture positively affects project performance because it synchronizes expectations and behaviors (Eggers et al., 2017) and influences interaction in the project (Petersen et al., 2005). Therefore, the supplier’s values, education (Schoenherr and Wagner, 2016) and whether there is a feeling of non-existent organizational boundaries (Emden et al., 2006) should be evaluated. A systematic and structured way of working, documented in the new product development (NPD) process, facilitates intra-organizational collaboration between manufacturing and design, making it easier to align activities between the customer and supplier (Eggers et al., 2017). Other aspects to evaluate are the supplier’s financial stability and the available capacity to ensure that the supplier has sufficient dedicated resources for its involvement. Suppliers should not only be evaluated when selecting them, but also throughout their involvement in measuring real performance (Le Dain et al., 2011).

2.2 Critical factors related to the tasks and responsibilities dimension

Two critical factors relate to the tasks and responsibilities dimension:

1. timely involvement; and

2. aligned strategy and goals.

Timely involvement is extensively discussed in the literature. Suurmond et al. (2020) concluded in their meta-analysis of prior publications that early involvement, as often recommended in literature, is not always beneficial in terms of cost, quality and time to market. However, the literature presents several factors that should be considered when deciding when to involve the supplier, such as the rate of technological change (Handfield et al., 1999), technological novelty, complexity and level of responsibility given to the supplier (Wynstra and Pierick, 2000).

Regarding aligned strategy and goals, it is important to establish these early to avoid conflict in later project stages (Yan and Dooley, 2014). Aligning the supplier’s strategy so that technological road maps, business models, goals and ambitions harmonize the market position is important to ensure that the supplier’s future technology will support the customer (Van Echtelt et al., 2008; Melander et al., 2014). Involving the supplier in setting project goals, such as the technical performance of the product and business goals, improves decision-making in the project. This is particularly important when greater responsibility is assigned to the supplier, for example, when the customer and supplier jointly develop the product (Petersen et al., 2005).

2.3 Critical factors related to the integration dimension

Two critical factors relate to the integration dimension:

1. mutual trust and commitment; and

2. information sharing.

Mutual trust and commitment are important for information sharing and the supplier’s willingness to make buyer-specific investments (Yeniyurt et al., 2014). Trust in intercompany relationships is characterized by actors’ reliance on each other’s commitments (Gibson and Birkinshaw, 2004) and that each other’s actions will lead to a positive outcome (Anderson and Narus, 1990). Trust complements non-disclosure agreements and contracts, which are often used to protect sensitive information (Melander et al., 2014), and supports transparency about problems that enable the customer to help the supplier solve them (Le Dain et al., 2011). A supplier’s willingness to contribute and invest in the project is influenced by their expectations of the current and long-term benefits of the relationship (La Rocca et al., 2012). However, there are additional long-term benefits, such as the opportunity to receive new ideas and information from the customer, access to new markets (Walter et al., 2001), the opportunity to learn (LaBahn and Krapfel, 2000) and future business opportunities (Steenstra et al., 2020). In addition, customers should be aware that a one-sided commitment can weaken this relationship. For example, customers who are strongly committed to the supplier may be exposed to opportunistic behavior by the supplier (Song and Di Benedetto, 2008).

Information sharing is critical for the coordination of interdependent project activities (Hoegl and Wagner, 2005), understanding and aligning customer requirements (Ragatz et al., 1997; Le Dain et al., 2011) and problem-solving (Le Dain and Merminod, 2014). Some situations require more extensive information sharing, such as the high interdependence between sub-projects (Sobrero and Roberts, 2001), learning intentions (Lakemond et al., 2006) and uncertainty regarding product features (Sundquist and Melander, 2021). Involving suppliers in the development of modular components with clear interfaces may require less information sharing (Takeishi, 2001). Therefore, companies need to know the degree of information sharing that is needed and desirable (Laage-Hellman et al., 2021).

Figure 1 summarizes the critical factors outlined in the literature from the customer perspective.

3. Method

3.1 Research design and empirical setting

A multiple case study approach was used to identify the critical factors influencing SME suppliers’ involvement in customers’ product development in a real-life context (Yin, 2018). Three criteria were used to select the cases. First, to avoid bias toward a specific industry segment, suppliers from different segments were selected (Miles et al., 2020). Second, suppliers were selected based on their willingness to provide access to information. Third, suppliers should carry out product development, either to develop original products as part of customers’ systems or products or to develop products based on customer specifications.

The study included four SMEs located in a Northern European country, referred to as Companies A–D. The size of the companies varies between 30 and 210 employees. Company A has customers worldwide, while the customers of Companies B–D are situated mainly in northern Europe. All companies have extensive experience in involvement in customers’ product development projects, and usually, several customer projects run in parallel. Companies A and B develop and manufacture sub-systems that are included in their customers’ larger systems primarily in process industries; for example, in paper mills and water treatment systems. The technology used can be considered mature and primarily includes mechanics. Companies A and B are product owners with full responsibility for the development and manufacturing of their sub-systems. The sub-systems are based on a product architecture with pre-designed modules. However, customers’ unique requests often require adaptation and re-design of the sub-systems and new components to be developed. The sub-systems are normally produced in low volumes for customers in process industries. Companies C and D are contract manufacturers of frequently recurring products, and the customers ordered the product more than once. These products are based on mature technology. Suppliers’ responsibilities in product development processes vary across different projects. Usually, the customer is the product owner, with the main responsibility for the product development process. Companies C and D are primarily involved in providing inputs from a manufacturing perspective. Company C manufactures different customer-specific polymer products for use in a wide variety of industries, including power distribution and electronics. Company D is a contract manufacturer of sheet metal components for heavy automotive original equipment manufacturers (OEMs).

3.2 Data collection and analysis

Data were collected through interviews, workshops and documents. An overview of the interviews and workshops is presented in Table 1. A total of 32 semi-structured interviews were conducted with individuals representing different roles in the companies, including CEOs, managers in engineering, production, sales, quality, logistics and purchasing as well as design engineers, technical project leaders, key account managers, purchasers and factory workers. The interviewees were selected based on their insights, experiences and involvement in product development projects. The interviews lasted 27–72 min.

All but one of the interviews took place face-to-face at the companies’ premises. One interview was conducted by phone because the interviewee had to be elsewhere because of unforeseen events. Two researchers participated in each interview and a semi-structured interview guide was used. The main body of questions concerned the interviewees’ experiences of challenges and successes in being part of customers’ product development projects. Probing questions encouraged interviewees to provide specific examples of successful and challenging experiences, critical moments and lessons learned from previous assignments. All interviews were audio-recorded and transcribed. Thereafter, the quotes in the paper were translated from the original language to English.

A total of six workshops were held with the case companies. Half of the workshops, no. 1–3 in Table 1, were conducted individually with Companies A, B, and C, respectively. These workshops complemented the interviews and addressed issues such as the structure of the product development process, the challenges experienced and how these challenges were dealt with when involved in customers’ product development projects. At least two of the researchers participated in these workshops and the companies were represented by two to eight people. The other three workshops, no. 4–6 in Table 1, were held jointly and included participants from several companies. Companies A and C participated in all three workshops; Company B participated in workshops no. 5 and 6, while Company D participated in only one workshop and went bankrupt afterwards. In the first joint workshop, participants presented and discussed the challenges the companies faced and how these were or could be mitigated. In the second and third joint workshop, the findings from the interviews and the company-specific workshops were discussed to create a cross-company perspective. All three researchers involved in this paper participated in these joint workshops and the number of company participants varied from four to six.

Documents such as process descriptions and checklists were collected to complement and triangulate the data from the interviews and workshops. The documents included a checklist used by the engineering department in Company C to gather customer requirements, a process model for product development in Company A and work instructions for managing product development projects in Company C. The documents collected deepened the understanding of the issues and aspects mentioned in the interviews and workshops about the suppliers’ way of working and their view of involvement in their customers’ product development.

The data analysis followed the three concurrent activities of data reduction, data display and conclusion drawing proposed by Miles et al. (2020). Data reduction began with open coding of all interview transcripts (Maxwell, 2013). The initial codes that had something in common were combined into a single code. For example, “documented process,” “clear project closure” and “useful and followed product development process” were grouped as “established product development process.” The next step was to sort the initial codes into clusters by focusing on similarities, differences and linkages between the initial codes (Merriam, 1998), thus creating data-driven critical factors. For example, “established product development process,” “established checklists” and “use of design tools” were clustered into “established process models, design tools and checklists.” By identifying linkages among the data-driven list of critical factors, they were categorized into different types. These different types of critical factors were then matched in terms of the pattern against the three dimensions of supplier involvement, “resources and capabilities,” “tasks and responsibilities” and “integration.” While this is described as a linear and mainly data-driven process, the analysis process reflected several iterations between theory and data throughout the analysis to increase the understanding (Dubois and Gadde, 2002) and to review the emergent theory against existing theory (Voss et al., 2002). One of the researchers was responsible for the open coding step, while the subsequent steps were carried out jointly by all participating researchers. The software tool NVivo was used for coding and clustering to enable tracing back to the transcripts. Data displays were used to organize the data into clusters and categories to support analytic reflection (Miles et al., 2020) and empirical reflections when drawing conclusions (Tsang, 2014).

4. Identified critical factors from the supplier perspective

Nine critical factors influencing suppliers’ involvement in customer product development were identified from a supplier perspective. These are described in detail in the following sub-sections and structured into the identified resources and capabilities, tasks and responsibilities and integration dimensions.

4.1 Critical factors related to the resources and capabilities dimension

Four critical factors related to the resources and capabilities dimension were found:

1. supplier’s competence;

2. established process models, design tools and checklists;

3. supplier’s internal collaboration capabilities; and

4. a modular product architecture.

The supplier’s competence in manufacturing, material characteristics and design were mentioned as reasons for lower product costs and increased product quality. Customers consulted suppliers regarding product design concepts:

Many designers know that I have been in this industry for a long time. They call and ask: “Do you think it is possible to have the design this way, can you manufacture this?” (Technical Project Leader, Company D).

One of the suppliers exemplified how they influenced customers to select cheaper materials that were better for the environment. It is important to demonstrate competence in the assignment to build customer confidence in being selected as a supplier:

Our component may cost thirty thousand Euros, which is not so much money in these large projects including investments of hundred million Euros. But the costs can be high if something does not work (Engineering Director, Company A).

Supplier’s design competence can also be a differentiator from competitors and increase the likelihood of winning orders:

Having design competence differentiates us from many of our competitors. If it was only about manufacturing, the number of competitors would be vast (CEO/Owner, Company C).

The suppliers considered that established process models, design tools and checklists were important for a successful project outcome. Additionally, the suppliers varied in their definitions of and adherence to the product development process models. The two larger suppliers, Companies A and D, had defined the product development process models. For example, a Purchasing and Logistics Director believed that project coordination would be enhanced by improving and following the product development process model:

I believe that if we improved and defined our process, we would do better. Everyone tries to help out. But I think, that if one could better address the issues to those responsible, then it would probably be easier (Purchasing and Logistics Director, Company A).

Design tools (e.g. design for manufacturing and failure mode and effects analysis) improve product quality and communication with customers, sub-suppliers and other departments. Checklists were used to ensure that customer requirements were captured, that tools manufactured by sub-suppliers fulfilled specifications and to check the design before handing it over to production:

Something that works much better is the extensive checklists that we use when working with our sub-suppliers in China when developing the tools for the products (Engineering and Sales Manager, Company C).

The checklists were also helpful when introducing new employees and entailed that companies became less dependent on individual employees. Supplier’s internal collaboration capabilities were important for meeting lead times and from a producibility perspective:

There was a lot of understanding for each other’s challenges and the designers were very active in their collaboration with manufacturing […] So it went well, straight through the production and the delivery was on time (Production Manager, Company A).

Several interviewees considered that the co-location of sales, design, manufacturing and decision-makers made it easier to communicate and enabled fast decision-making:

It is very easy to have a dialogue between departments. Having short decision paths makes it easy to discuss problems. It’s uncomplicated in that way, and that is good. After all, we have sales, development, and production in one place (Marketing Director, Company A).

However, empirical data also provide several examples of how different departments are unaware of each other’s responsibilities, challenges and information needs. As a result, handovers between departments and the project and receiving line organization failed, causing delays. The lack of proper handovers and insufficient understanding of each other’s roles and responsibilities jeopardized the project goals, highlighting the importance of internal collaboration capabilities.

Having a modular product architecture reduced time and cost among the suppliers that were product owners, Companies A and B. To some extent, the suppliers introduced standard modules successfully but did not use the inherent potential of previous designs:

It really looks the same and has the same function. But I want it in my way, and X wants it in another way. But if you choose to standardize such a design, it will save time. So maybe we should add more standard details to the existing ones (Design Engineer, Company B).

In addition to causing unnecessary work for designers, it also caused extra work for sourcing and manufacturing by introducing new components with similar characteristics:

It makes it difficult for purchasing and manufacturing in daily operations if you constantly design more and more components. I believe that we need to standardize (Design Manager, Company A).

4.2 Critical factors related to the tasks and responsibilities dimension

Two critical factors related to the tasks and responsibilities dimension were identified:

1. early involvement; and

2. aligned and followed-up targets and specifications.

Early involvement in customer product development projects is desirable because it improves information exchange. When the supplier was involved early, it usually entailed that the supplier gained insights into the inherent challenges in the design and a better understanding of the product requirements:

If I get involved in an early stage, I usually get enough knowledge about the product. […] I understand what the requirements are on the material (Design Manager, Company C).

Companies C and D, the contract manufacturers, wanted to be involved early to have the possibility to impact the design to avoid costs because of unnecessarily complicated component design, which could negatively affect the ease of manufacturing. Company D wanted to provide design input before the tendering phase because it allowed them to adapt the design to fit their manufacturing processes and put in a competitive offer:

[…] so that we are given the opportunity to offer a product more favorably, because we have been involved in an early stage (Key Account Manager, Company D).

The absence of aligned and followed-up targets and specifications caused extra work, cost and lower product quality. Company A struggled with the consequences of interpreting the requirements in a different way than the customer’s other sub-contractors, which was found when components had been delivered:

You work with their [the customer’s] sub-contractors, and they have a somewhat different view on how customer’s specifications should be interpreted (Quality Manager, Company A).

A dialogue about the consequences of requirement changes was found to be important. This was exemplified by a situation where the customer had requested a change in the requirements, but the supplier did not clearly communicate the consequences of such changes on the product cost:

There were a lot of changes in the specifications initiated by the customer that made the component much more advanced. They did not ask for the price, and we said nothing.; […] the component became three times as expensive (CEO/Owner, Company C).

4.3 Critical factors related to the integration dimension

Three critical factors related to the integration dimension were identified:

1. customer training;

2. contextual information; and

3. specified speaking partners.

Customer training is especially important for Companies C and D to ensure ease of manufacturing. Both companies experienced that some of the customer’s designers lacked knowledge about how to design polymer or sheet metal components, which resulted in poorer quality and unnecessarily expensive products. Some customer designers did not understand the differences between designing metal or plastic components:

There are customers I have talked to, who do not know what injection moulded plastic is. They thought we would turn the component (Production Manager, Company C).

One company has long-term relationships with customers and invited designers and purchasers to the manufacturing facilities for training:

Those who have been here, have in many cases got a completely different view […] many do not have that experience. They do not understand the connection between a design and production, and therefore neither the possibilities to reach the tolerance requirements when the component is processed in several steps (Key Account Manager, Company D).

The intention was not only to improve the design from a manufacturing perspective in the current projects, but also to impact designers before their involvement in the next project began so that the components presented in the tendering phase were adapted for manufacturing. Otherwise, it is difficult to obtain the proposed changes implemented owing to the dependencies on other components.

Contextual information was important as a complement to the product specifications and requirements:

It is good if you can have a physical meeting the first time, or have a very good video call, where you can look at the component together. To see the environment of the component, the other surrounding components, and how it is intended to work. It is good if we get product knowledge. I sometimes miss that. We need to have a clear picture. What do you use a component for? There is a lot in a car today that looks a certain way. The component has a function, for example, to withstand vibrations. It can be difficult to see how the component is designed for that, crash requirements, etc. (Technical Project Leader, Company D).

The contextual information enabled suppliers to identify possibilities for product improvement and ease of manufacturing. One example is that the customer had not specified the electrical insulation capability, which became obvious to the supplier when asking for additional information. Often, contextual information exists at the customer level, but the customer does not understand the importance of sharing the information with the supplier or the supplier does not ask for it:

We were convinced that the product would be used indoors…, but it turned out that it would not be indoors at all. Instead, it was out on the plain where it can be very windy and drifting snow. So, we had to spend an awful lot of hours reworking it (Sales Engineer, Company B).

Specified speaking partners made communication easier and reduced lead time. For example, engineers found it easier to discuss technical issues directly with their counterparts at the customer level:

I have had direct contact with the designer, which is great because then you can ask about tolerances and such details, you get a good understanding (Technical Project Leader, Company D).

However, this was not always accepted by customers, who directed purchasers as the entry point for communication. One issue that endangered or postponed agreed-upon time plans is uncertain as well as long response times from customer-speaking partners:

The design function team make a draft and send it to the customer for approval. It may take […] yeah, the contact person may be on vacation or something, you don’t know. It may take a week before they get a response. (Sales Engineer, Company B).

5. Discussion

An extended model of the critical factors influencing supplier involvement in customer product development is shown in Figure 2. The left side of the model displays the critical factors identified in the literature from the customer perspective and the right side displays the empirically derived critical factors from the supplier perspective. The letters (A–D) next to each critical factor on the right-hand side denote the companies where the factor was identified.

The empirical findings show nine critical factors for involvement in customers’ product development from the suppliers’ perspective. In essence, many of these mirror the factors described in the literature from the customer perspective (Johnsen, 2009). The factors related to the dimension of resources and capabilities are partly similar; competencies and internal collaboration capabilities seem to be essential for both customers and suppliers. Competence development is based on the intention to learn, and Huang and Chu (2010) have shown that inter-organizational learning between customers and suppliers, as well as the internalized learning process within the supplier, contribute significantly to the supplier’s product development capabilities. However, there can also be tensions between the two parties in terms of competencies. While a customer may benefit from its suppliers’ involvement in other customers’ product development by the suppliers learning about new technologies (von Corswant and Tunälv, 2002), knowledge transfer to their competitors via the supplier is a potential risk (Melander and Tell, 2019). Suppliers’ development of their competencies can lead to competence-based trust from their customers (Rosell et al., 2014), which can strengthen the value of the supplier in an asymmetrical relationship with the customer (Chen et al., 2017). One factor that emerged in the study as specific to SMEs is the presence of an established process model and the use of design tools and checklists. However, such process models should not be too complex. Previous studies show that the use of condensed versions of a stage gate process model to guide product development can help SMEs be more successful in their innovation activities than using full versions of the model (Leithold et al., 2015). The findings from this study underline the importance of a systematic development process as it supports the exchange of contextual information.

Another factor that is unique from the supplier perspective is the use of modular product architecture. This has hardly been addressed in previous supplier involvement research, although Rodríguez-Escudero et al. (2023) indicate that SME suppliers can benefit from devising process modularity. Product modularization allows faster product customization for different customer needs at a lower cost (Pirmoradi et al., 2014) and has the potential to reduce development time and costs, as noted in previous studies in the product platform literature (Jiao et al., 2007). Leite et al. (2016) argue that product architecture, including commonality and product platforms, can be used to improve SMEs’ product development performance.

The factors in the tasks and responsibilities dimension also seem to reflect the customer and supplier perspectives. However, there are nuances when comparing the perspectives. Customers aim for timely involvement when it is most beneficial to them. Suppliers, on the other hand, want early involvement. As this study shows, and in line with the findings of Wlazlak et al. (2019), early involvement was identified as a way to influence the design and specifications to achieve alignment with the supplier’s production system. It was the experience of the companies in this study that early involvement brought a better understanding of product requirements and inherent design challenges and enabled the desired contextual information, thus increasing the chances of delivering suitable products to meet the customer’s needs. This shows that there are interdependencies between the identified critical factors, i.e. the critical factors in one dimension create the conditions for critical factors in other dimensions.

The alignment of targets and specifications relates to the challenges identified in the literature, that product requirements can change, are ambiguous (Flankegård et al., 2021) and are characterized by imperfect communication (Fernandes et al., 2015). Schmidt-Kretschmer et al. (2007) indicate that SMEs have problems with managing requirements because of insufficient monitoring and poorly organized customer contacts and recommend the implementation of a requirement change process.

The factors in the integration dimension show two purposes from the supplier perspective. One is to raise the customers’ awareness of the supplier’s manufacturing processes, which, according to this study, can be supported by customer training. Previous studies show that training provided by the customer improves the suppliers’ product development capabilities (Huang and Chu, 2010). In line with Von Haartman and Bengtsson, (2009), this study shows that training the customer in the supplier’s manufacturing processes can improve product and project performance. The other purpose is to be integrated by the customer to understand the customer’s products. Lind and Melander (2019) point out that it can be difficult for customers to articulate their needs. In response, a unique factor identified from the supplier’s perspective is contextual information that supports an understanding of the customer’s products and the unspoken requirements that are important for the supplier’s product development. Mutual trust and commitment, on the other hand, is a unique factor for the customer. Although trust and commitment did not emerge as a factor from the supplier’s perspective in this study, it cannot be ignored. For example, Chen et al. (2017) show that customer trust is important for suppliers to increase their value in asymmetric relationships and to avoid customers’ fear of sensitive information being shared with competitors (Yen and Hung, 2013).

A pattern among the identified factors is that the factors in the resources and capabilities and tasks and responsibilities dimensions are essentially related to internal product development capabilities of the supplier. The third dimension, integration, is more of a relational type. Although the study is too limited to provide evidence that one of the dimensions is more important than the other, the study found more factors related to internal capabilities. Nevertheless, previous studies on product development in SMEs have indicated that such capabilities are crucial for SMEs. Woschke and Haase (2016) found that focusing on internal capabilities by implementing appropriate organizational changes can actively strengthen overall product development capabilities. Our findings also suggest that internal collaboration capabilities are crucial for an SME when involved in customers’ product development, which is also consistent with implementing internal changes in the work organization to facilitate communication and collaboration (ibid.)

6. Conclusion and implications

This study has identified critical factors that influence suppliers’ involvement in customers’ product development. The theoretical contribution lies in the identification of nine critical factors from the perspective of SME suppliers. The factors have been categorized and contrasted with the factors on the customer side. This provides a deeper insight into the phenomenon and contributes to a dual perspective that is missing in the current literature (Johnsen, 2009; Merminod et al., 2022). The findings show that many of the factors mirror those on the customer side, but some are unique to each side. Customers and suppliers are therefore likely to have different priorities, at least to some extent.

From a management perspective, suppliers need to understand how the different priorities and perspectives of customers and suppliers can hinder product development. The customer and the supplier may have prioritized different types of competencies. For example, the customer has more product system competence, while the supplier’s competence is more at the component level, which may result in the customer not understanding what knowledge is important to the supplier and the supplier not knowing what information to request (Oosterhuis et al., 2011). This study shows that these information gaps can lead to incomplete product requirements that are identified late in the project. Suppliers should also be aware that they may have missed important information if they were not involved early in the project. Therefore, suppliers are advised to assess the customers’ competence and intentions to understand the conditions for information sharing (Eslami and Lakemond, 2016). The lack of interactive activities, such as joint problem-solving and face-to-face meetings, can hinder information sharing (Huang and Chu, 2010). Boundary objects can be used to overcome information gaps by helping individuals to represent their knowledge and support the transformation of information for others (Carlile, 2002). This study shows that contextual information can, to some extent, mitigate incomplete product requirements and information gaps. The supplier must systematically ensure that contextual information is shared. Checklists such as those used by the companies in this study can be one way, but other boundary objects can also be useful.

6.1 Limitations and further research

This study has limitations that present avenues for future research. First, the findings are based on an exploratory study with four SMEs, which provides a deeper understanding of the critical factors from the suppliers’ perspective. To confirm and further develop a model of critical factors, it would be interesting to compare the presented findings with those of other types of companies and companies of different sizes, including novel technologies. Second, the customer–supplier interface may change over time (Lind and Melander, 2019). A longitudinal study may reveal additional critical factors and interdependencies that are otherwise overlooked. This would also improve our understanding of the long-term influence of critical factors. Third, the supplier’s ability to bridge resources in the supply network increases the supplier’s value in product development (Li et al., 2021). Therefore, a study that also includes sub-suppliers could reveal additional critical factors.

Figures

Figure 1

Critical factors for supplier involvement in product development from the customer’s perspective

Figure 2

An extended model of critical factors influencing supplier involvement in product development

Table 1

Overview of data collection

Company	No. of interviews	Role of interviewee and length of the interview
Interview overview
A	8	Engineering director (38 min), Production manager (44 min), Purchasing and logistics director (45 min), Marketing director (40 min), Product manager (48 min), Quality manager (43 min), Purchaser (42 min), Technical support engineer (30 min)
B	9	Managing director (25 min), Production manager (27 min), Design engineer 1 (39 min), Design engineer 2 (34 min), Design engineer 3 (55 min), Demand planner (27 min), Sales engineer (41 min), Factory worker 1 (21 min), Factory worker 2 (27 min)
C	9	CEO/owner (60 min), Engineering and sales manager (58 min), Production manager (65 min), Quality manager (29 min), Design engineer (45 min), Financial officer and HR generalists (44 min), Supply coordinator (28 min), Factory worker (34 min), Toolmaker (40 min)
D	6	Sales and purchasing director (67 min), Purchaser (31 min), Key account manager 1 (72 min), Key account manager 2 (52 min), Technical project leader 1 (44 min), Technical project leader 2 (46 min)
Workshop overview
No.	Companies	Length	Role of participants
1	A	2 h	CEO, Engineering director, Purchasing and logistics director, Marketing director, Sales manager, Technical support engineer, Quality manager, Purchaser
2	C	2 h	Engineering and sales manager
3	B	4 h	Managing director, Production manager, 3 Design engineers, 3 Sales engineers
4	A, C, D	3.5 h	A: Engineering director, Purchasing and logistics director C: CEO/Owner, Engineering and sales manager D: CEO, Technical project leader
5	A, B, C	6 h	A: Purchasing and logistics director B: Managing director C: CEO/Owner, Engineering and sales manager
6	A, B, C	5 h	A: Engineering director, Purchasing and logistics director, Quality manager B: Managing director C: Engineering and sales manager

Source:

Authors’ own work