Comparing inter-organizational new product development strategies: Buy or ally; Supply-chain or non-supply-chain partners?

Recent supply chain and innovation literature emphasizes the importance of involving external organizations in product development. Building upon this stream of work, this study differentiates four inter-organizational new product development (NPD) strategies based on two dimensions: the external source (supply chain sources [SCS] and non-supply-chain sources [NSCS]) and form of engagement (ally and buy). Using theoretical arguments from the knowledge-based view, we compare the effects of these four strategies on product novelty and product financial performance. Moderated structural equation modeling is used to test the hypotheses, based on survey responses of 267 projects, partially complemented by archival objective data. Results suggest that some strategies are more effective for enhancing product novelty, while others are more beneficial for improving product financial performance. Furthermore, this study reveals no distinction between supply chain and non-supply-chain sources' influences on product novelty. We also show that technology interdependence carries a significant role in enhancing the positive association between product novelty on product financial performance. Overall, this study demonstrates companies need to carefully design their inter-organizational NPD strategies to suit various needs of innovation projects.