Understanding the Impact of Collaboration Software on Product Design and Development
Information Systems Research
Codifiability, Relationship-Specific Information Technology Investment, and Optimal Contracting
Journal of Management Information Systems
An overlapping process model to assess schedule risk for new product development
Computers and Industrial Engineering
Impacts of internal and interorganizational information systems on the outsourcing of manufacturing
The Journal of Strategic Information Systems
Journal of Management Information Systems
Future State of Outsourcing Supply Chain Information Systems: An Analysis of Survey Results
International Journal of Enterprise Information Systems
Journal of Management Information Systems
Low-risk opportunity recognition from mature technologies for SMEs
Journal of Engineering and Technology Management
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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 of components in the auto industry. More recent literature has developed the concept of product architecture as another choice variable that may be one of the 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 of their investment in the skills needed to coordinate development of complex 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.