Stephen J. Carson
Executive Summary
New product development processes have changed significantly over the previous two decades. Firms increasingly outsource new product development activities to external organizations as part of a process called rapid distributed innovation or open innovation. New product development relationships differ from ordinary marketing-channel relationships in that they often require a significant degree of creativity on the part of the supplier. Creativity is a delicate process and is vulnerable to many distortions if governed inappropriately, particularly if it is overcontrolled.
The author investigates the impact of client control on supplier task performance in outsourced new product development relationships. He uses data collected from research-and-development engineering, marketing, and product development managers in five high-technology industries: drugs and medicines; optical, surgical, and photographic instruments; communications equipment; motor vehicles and equipment; and aircraft and missiles. In relationships in which the outsourced task requires a high degree of creativity on the part of the supplier, ex ante (i.e., contractual) control in the form of detailed specifications for the supplier’s work is shown to increase supplier performance. In contrast, ex post (i.e., ongoing) client control is shown to decrease supplier performance, though certain highly skilled clients can overcome this effect. Behaviorally, clients exercise less control both ex ante and ex post in relationships in which the outsourced task requires a higher degree of creativity on the part of the supplier.
Managerially, the results suggest that clients should use more, not less, ex ante control to govern highly creative tasks. In general, clients should use less ex post control to govern highly creative tasks, though highly skilled clients can benefit from using greater ex post control. Ex ante control is argued to enhance the performance of creative tasks by coordinating the supplier’s creative efforts and improving the fit between the creative output and the client’s needs without the creativity damaging the effects of more hands-on control, increasing intrinsic motivation by assuring the supplier that its creative efforts will be valued by the client, and maintaining high expectations for deliverables in the face of inevitable failures over the course of the creative process.
For most clients in the study, the negative effects of ex post control on highly creative tasks are consistent with traditional arguments in the creativity literature, which suggests that outside control can decrease novel idea generation and risk taking on the part of the supplier, interfere with the supplier’s ability and discretion to apply its expertise in creative problem solving, impose greater formalization in relationship governance, and limit the supplier’s intrinsic motivation to develop creative solutions, among other effects.
Biography
Stephen J. Carson is an assistant professor in the David Eccles School of Business at the University of Utah. His research and teaching interests focus on innovation and creativity, new product development, outsourcing, marketing channel governance, high-technology marketing, intellectual property rights, pioneering advantages and disadvantages, “below-the-radar” marketing, and e-commerce. Professor Carson received a PhD from the University of Minnesota in 2000. His previous research has appeared in Journal of Marketing, Academy of Management Journal, and Organization Science, among other journals.
Journal of Marketing, Vol. 71, No. 1, January 2007
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