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This paper focuses on the connection between product complexity and vertical integration using original empirical evidence from the auto industry. A rich literature has addressed the choice between internal production and external sourcing ofcomponents in the auto industry. More recent literature has developed the concept ofproduct architecture as another choice variable that may be one ofthe important contributors to product complexity. In this paper, we connect these two important decisions and study them jointly. We use the property rights approach to argue that complexity in product design and vertical integration of production are complements: that in-house production is more attractive when product complexity is high, as firms seek to capture the benefits oftheir investment in the skills needed to coordinate development ofcomplex designs. We test this hypothesis with a simultaneous equations model applied to data from the luxury-performance segment of the auto industry. We find a significant and positive relationship between product complexity and vertical integration. This has implications for optimal incentive structures within firms, as well as for interpreting firm performance.

We argue that organizations often fail to organize effectively because individuals have lay theories about organizing that lead to coordination neglect. We unpack the notion of coordination neglect and describe specific cognitive phenomena that underlie it. To solve the coordination problem, organizations must divide a task and then integrate the components. Individuals display shortcomings that may create problems at both stages. First, lay theories often focus more on division of labor than on integration. We discuss evidence that individuals display partition focus (i.e. they focus on partitioning the task more than on integration) and component focus (i.e. they tend to focus on single components of a tightly interrelated set of capabilities, particularly by investing to create highly specialized components). Second, when individuals attempt to reintegrate a task, they often fail to use a key mechanism for integration: ongoing communication. Individuals exhibit inadequate communication because the ‘curse of knowledge’ makes it difficult to take the perspective of another and communicate effectively. More importantly, because specialists find it especially difficult to communicate with each other, the

An important managerial problem in product design in the extent to which testing activities are carried out in parallel or in series. Parallel testing has the advantage of proceeding more rapidly than serial testing but does not take advantage of the potential for learning between tests, thus resulting in a larger number of tests. We model this trade-off in the form of a dynamic program and derive the optimal testing strategy (or mix of parallel and serial testing) that minimizes both the total cost and time of testing. We derive the optimal testing strategy as a function of testing cost, prior knowledge, and testing lead time. Using information theory to measure the test efficiency, we further show that in the case of imperfect testing (due to noise or simulated test conditions), the attractiveness of parallel strategies decreases. Finally, we analyze the relationship between testing strategies and the structure of design hierarchy. We show that a key benefit of modular product architecture lies in the reduction of testing cost.

This article is the second in a series of two focusing on the involvement of purchasing and suppliers in product development. The first article has introduced a framework defining purchasing involvement in product development in terms of a series of specific activities across four different management areas. These activities range from operational activities concerning the actual design of a new product to strategic activities, like the formulation of policies for supplier involvement in development projects. This second article investigates the driving and enabling factors that influence the need for and the ability of firms to carry out the various activities from our framework. In that way, it provides indications in which situations certain activities are more important than others and suggestions as to how to enable an organisation to perform purchasing involvement in product development in an effective and efficient way. 1. A Framework for Purchasing Involvement in Product Development Previously, we introduced a framework that defines purchasing involvement in product development in terms of a series of specific activities across four different management areas (Wynstra et al. (1999), see Table 1). The framework has been developed on the basis of a large

The successful timing of organizational activities depends not only on effective planning and coordination, but also temporal responsiveness – the ability of organizational actors to adapt the timing of their activities to unanticipated events. In this paper, we examine the individuallevel dynamics underlying temporal responsiveness: we examine how organizational actors evaluate timing changes; e.g., changes from existing organizational schedules, routines, expectations, and plans. We review a broad body of psychological, economic, sociological, anthropological and organizational research on time to introduce a reference point model of how people perceive and evaluate time in organizations. We extend these findings to examine the psychology of how changes in timing are valued. Several propositions are presented about personal schedule changes and how individual actors evaluate them. When Plans Change 3

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The paper discusses the role of extemporaneous action and bricolage in designing and implementing information systems in organizations. We report a longitudinal field study of design and implementation of a Web-based groupware application in a multinational corporation. We adopt a sensemaking perspective to analyze the dynamics of this process and show that improvisational action and bricolage (making do with the materials at hand) played a vital role in the development of the application. Finally, we suggest that this case study provides an occasion to reconsider how we conceptualize information systems development (ISD). Keywords: Web-based groupware, systems development, sensemaking, improvisation, bricolage 1.

Schedule risk is an important category of risk in complex system product development. This paper presents a framework that facilitates understanding schedule risk from a systems perspective. Research findings from literature and a Delphi-type survey of experienced product development managers and system engineers at a major aerospace company are synthesized into a framework characterizing sources of schedule uncertainty. The framework includes not only key uncertainty drivers but also the hypothesized or theorized relationships between them. Since risk is more than just uncertainty, consequences of schedule overruns and of schedule uncertainty itself are also discussed. This research contributes a more comprehensive, systems view to the studies of product development and risk management and to the practice of both in industry. The paper also examines potential paths for future

Building on the literature of dynamic capability and organizational learning, we examine strategy execution in hyper-competition as a problem of how organizations can re-configure their learning capability to match with their radically different learning demands. Organizations in hyper-competitive environments face an increasing gap between their learning opportunities and needs, and actual learning performance. In order to survive they must improve their absorptive capacity so that they can learn simultaneously broad, deep and fast. We define such a learning contingency as hyper-learning. To do so, the organization must systematically interlace exploration—that seeks to maximize learning breadth— and exploitation—that seeks to maximize learning depth. Unlike in traditional learning cycles, exploration and exploitation during periods of hyper-learning are not insulated from each other through time or structure. We explore seven software firms engaged in Web system development during the hey-day on dot.com frenzy and investigate how these companies were able to hyper-learn. We distinguish two mechanisms to speed up exploration: distributed gate-keeping and extended grafting of external knowledge; and two mechanisms to speed up exploitation: simple design patterns and peer networks.