Subcontracting Product Development � Creating Competitiveness through Networking (Track 2, Session 5)
Author(s) :
Anna Kyrki (Lappeenranta University of Technology, Finland)
Abstract : Product development has become increasingly complex and resource-consuming. Consequently, internal development capabilities can prove insufficient for maintaining a firm�s competitive position. With the increasing amount of uncertainties related to the product development process, there is a growing need for flexibility and interorganisational cooperation even within this core activity. External cooperation and networking have been suggested as means for accessing necessary knowledge or resources. In this paper, cooperation is studied as the key to improving competitiveness, especially in case of small firms. Motivation for engaging in a network varies, but it is often seen as a necessary precondition for success or even survival of a firm. Possible reasons for cooperation include access to complementary resources, increased flexibility, economising, and dealing with the industry�s turbulence. Ability to coordinate and manage network of external actors can in itself become a firm�s core competence. The empirical part of the study describes supplier cooperation in four case companies operating in a knowledge intensive dynamic industry. The focus is on software product development cooperation with foreign suppliers. The findings of the study support the argument that contractual or project-based relationships and distributed product development can contribute to competitiveness of a firm in conditions of industry-related turbulence. The paper questions the assumption that contractual relationships are used only as short-term or tactical arrangements. Instead, it is suggested that contractual supplier relationships of a firm can be distinguished into two kinds of networks, a strategic one and a tactical one. Retaining relationships on a contractual level provides manoeuvrability while having access to a pool of external resources and capabilities. The paper contributes to the discussion of distributed product development by describing models and practical examples of organising software product development across company�s boundaries.

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