Early Supplier Involvement in Customer New Product Development: A Contingency Model of Component Supplier Intentions

This study develops and tests a model of early supplier involvement in customer new product development. Four positive influences on supplier intention for early supplier involvement (ESI) are hypothesized: (1) customer promise; (2) interdependence; (3) customer technological innovativeness; and (4) supplier technical capability. Customer adherence to agreements is hypothesized to moderate the influence of customer promise, supplier technical capability, and customer technical innovativeness on supplier intention for ESI. These hypotheses were supported when tested with data from a mail survey returned by 422 (21.4%) component suppliers. For a subset of respondents, the survey data were compared to reports from a second key informant to assess data quality. A seven-factor structural equation model with 32 measures was assessed with Lisrel to test the hypotheses. A multigroup structural equation was used to test the contingency hypotheses. Results also show that customer power advantage decreases customer promise and customer adherence to agreements. The results support our contention that suppliers should attend to three key areas: (1) a customer's exchange behaviors; (2) the level of customer power advantage and interdependence; and (3) technical factors.