In-House Globalization: The Role of Globally Distributed Design and Product Architecture on Product Development Performance

Abstract

Changes in the global economy and technological advances are stimulating an increasing geographic distribution of new product design and development efforts. For large organizations that design and develop complex products, this geographic distribution has added a new layer of complexity to product development operations. In this empirical study of a large auto manufacturer, we examine the operational performance implications of splitting the design of vehicle subsystems across multiple geographic locations. Our results indicate that global distribution diminishes the chance of completing tasks on time and degrades subsystem design quality. Finally, by examining the interplay between subsystem centrality and global distribution, we found that higher centrality in the product architecture amplifies the impact of global distribution on subsystem error rates.

Keywords: distributed work, global design, product architecture, new product development

JEL Classification: O32