Supplier integration in new product development: Computer mediated communication, knowledge exchange and buyer performance

• Supplier integration in new product development (NPD) is investigated in the context of U.S. manufacturing.
• Communication channel effectiveness on knowledge exchanged and buyer performance is empirically tested.
• Email and F2F communication have a positive effect on knowledge exchanged. Web-based tools have a negative effect.
• A positive relationship is found between knowledge exchanged and buyer NPD effectiveness and efficiency.
• A positive relationship is found between buyer NPD effectiveness and efficiency and buyer market performance.

In new product development (NPD), the buyer–supplier relationship is changing. Suppliers are becoming an integral part of the design team. This study investigates the effectiveness of computer-mediated and face-to-face communication channels on knowledge exchange between buyer and supplier firms, and ultimately buyer NPD and market performance. Open innovation literature and media richness theory are used to develop hypotheses which are then empirically tested using data collected from 157 R&D project managers from U.S. manufacturing firms. To date, empirical studies on the link between supplier integration and buyer performance show conflicting results. Structural equation modeling found a significant positive link between knowledge exchange and NPD performance, measured both in terms of effectiveness and efficiency, and a significant positive link between effective and efficient NPD and market performance. A surprising finding is that contrary to media richness theory, email can perform like face-to-face communication transmitting rich information and having a positive relationship to knowledge exchange between buyer and supplier. It was also found that with face-to-face communication, knowledge exchange fully mediates the relationship with effective NPD while with email communication knowledge exchange fully mediates the relationship with efficient NPD. Video conferencing was found to have no significant effect on knowledge exchange and the effect of web-based tools was significant and negative. The implications of these findings in theory and practice are discussed.