Managing Global Product Development Teams: a mixed-methods study of (Knowledge) Governance Mechanisms

Abstract

Multinational companies (MNCs) have ceased to concentrate their product development activities on their home countries. To deliver innovative products for global markets that meet local customer demands, MNCs increasingly rely on global teams which often combine global product expertise with local market insights. This dissertation seeks to enhance the understanding of managing such teams by exploring the governance mechanisms applied to manage global teams. More specifically, this dissertation (1) enquires about the governance mechanisms applied to govern global product development teams, (2) explores the impact these governance mechanisms have on product development performance, (3) identifies context factors for the governance and performance of global product development teams and (4) derives practical advice for managers of global product development. While this dissertation studies context factors of global product development, it explicitly keeps some of these context factors constant by focusing on global product development teams operating in German-based MNCs from the business-to-business sector. As product development is a knowledge-intense process, governing global product development teams involves governing global knowledge integration. The Knowledge Governance Approach (KGA) which addresses effective knowledge governance therefore provides the theoretic basis for this dissertation. Based on the propositions of the KGA and recent empiric findings on MNC knowledge governance, this dissertation provides a research framework with hypotheses on the links between (a) governance mechanisms, (b) individual absorptive capacity to share knowledge with a global product development team, (c) knowledge integration within a global product development team and (d) performance of global product development projects. Following a mixed-methods research approach, these hypotheses are tested based on qualitative information from interviews with 11 product development expert practitioners and quantitative information from 120 global product development projects. The interview responses are examined using qualitative content analysis in order to refine the research model and better understand the context of global product development teams in German-based MNCs. The enhanced research model is then tested using quantitative data gathered from managers of global product development projects via an online survey. Out of the 476 individuals invited to participate in the survey, 200 project managers replied (42% gross response rate) and provided 120 complete, usable cases (25% adjusted response rate). The cases are analysed using Partial Least Squares Structural Equation Modeling (PLS-SEM). This second generation multivariate analysis tool enables the researcher to assess relationships between latent variables which cannot be directly observed. The results indicate that German-based MNCs mostly apply hierarchical governance mechanisms such as top management attention and heavyweight team structures to govern product development teams. Standard process development processes are also commonly applied as a governance mechanism, whereas rewards and socialization-based mechanisms are applied less intensely. When assessing the effectiveness of global product development mechanisms, significant differences can be observed between companies from high-velocity markets which are characterized by faster innovation cycles and higher development spending as compared to companies from moderate-velocity markets which operate in rather mature industry environments: In moderate-velocity markets, heavyweight team structures, top management attention, standard product development processes and rewards, in descending order, prove to be the most effective governance mechanisms for global product development teams as these mechanisms have the highest total effect on project performance. Socialization-based governance is hardly relevant in these markets. On the contrary, companies from high-velocity markets receive the highest effect on product development performance from standard product development processes, socialization-based mechanisms and rewards. The impact of heavyweight team structures is negligible in high-velocity markets, and top management attention even harms development performance. Besides these important findings on the application of governance mechanisms by industry, this dissertation provides insights on the effects of physical, linguistic and cultural distance between the members of global product development teams, and assesses the impact of tacitness on governance mechanisms. This dissertation uses these findings to derive specific advice to managers of global product development in MNCs. It considers a wide range of context factors impacting the governance of global product development teams, thus answering the call for rigor and relevance in management research. Areas for further research based on this dissertation include an expansion of scope to MNCs from different home-countries, to MNCs in the consumer goods markets or to MNC functions other than product development. Given the increasing internationalization of value chains within and across (multinational) companies, this dissertation provides useful insights on governance mechanisms for managers and management scholars.