Buyer-Supplier Collaboration in New Product Development Between Two Equally Powerful Firms: A Case Study of ABB and SKF

Abstract

Collaboration in new product development (NPD) is becoming ever more important as firms specialize and rely on suppliers to provide the latest technology. Most studies on supplier involvement are of collaborations between a powerful buyer and a less powerful supplier, and taking the buying firm's perspective. In contrast, this study focuses on a collaborative NPD project between two equally powerful firms, including both firms' perspectives. A case study of a project between ABB and SKF was conducted. It is shown that not only is the supplier selection important, but it is also important for the buying firm to have an attractive project to motivate the supplier to join the project. Such attractions include business opportunities and learning possibilities. However, these learning possibilities could be viewed as harmful by the buying firm. Particularly when considering that the supplier was equally powerful. Fear of knowledge spillover that could make it possible for the supplier to become a future competitor could hinder the collaboration. These fears were avoided mainly through trust built during prior history with the supplier project.