In this talk, we contribute towards renewable energy development literature by investigating location advantages and the moderating role of product complexity using negative binomial models. Our finding that neither national culture, labor cost nor market growth rate influences the likelihood of product development in a country was surprising. Though expected, we also found supporting evidence for the hypothesis that complex products have a higher likelihood of being developed in countries with higher national capability. Lastly, we found that as each of a country’s market size, engineering workforce size and national capability increases, the likelihood of product development in that country increases, and the importance of these location advantages follows the same order.

In this talk, I summarize findings on four elements of the relationship between Global Product Development or Globally distributed Product Development (GPD) and product complexity. I examine this relationship in the context of energy, medical, industrial and electronic equipment developed for American companies outside each development program’s home-country. In the first study, I use multinomial logistics models and find that product complexity, specificity, strategic importance and designing firm’s capability are directly related to the modes of global product development. These modes are namely global partnerships, captive offshoring and global outsourcing. The more complex products are developed through global partnerships or captive offshores, while the less complex products are globally outsourced. However, the difference in complexity among the three modes varies by region when I divide the world into emerging and mature regions. It is largest in emerging regions and statistically non-significant in mature regions. In the second study, I investigate factors that drive product development to different countries around the world. Using negative binomial models, I find that market size, national capability and number of engineering graduates are directly related to the amount of product development in a particular country, while market growth rate and labor cost are not. I also find that as product complexity increases, the importance of the national capability as a location advantage increases, and that national and firm capability are statistically related to each other. In the third study on host national culture, I find that national culture influences the internal team dynamics, but not necessarily where product development is eventually located. Finally, I qualitatively characterize the global product development strategy, organization structure, processes and people, and gather some recommended coordination practices. These include modularizing, not only the product, but the process as well to allow closed-loop monitoring in order to ensure that design expectations were perceived as intended.

Gard Global Group’s managing director, Pedzi Makumbe, gave a talk on Global Product Development at Harvard University. The talk highlighted the latest thinking in global product development, and the significance of interdisciplinary research. Success in GPD comes from considering the technology, engineering and social aspects of with people living in different countries.

Interesting article Ravi, but your views on the demise of the US are highly exaggerated. In a perfect world, we will continue moving towards a world of regional centers of excellence. In that particular case, we (US) will retain some of our competitiveness in areas where we are the best in the world. Hence the very notion of linking innovation and national competitiveness is NOT an outdated mental model. Secondly, the world is not perfect and there are many regional standards and policies that affect the flow of knowledge or innovation as you put it. This is particularly true in the case of the energy industry which is much more intertwined with local policy than the IT industry. See following link for original post: http://tinyurl.com/5adrws

Pedzi Makumbe, Gard Global Group’s managing director gave a well received talk at Colby College in Waterville, ME on the 19th of October. He was also featured in the inaugural issue of the Oak Scholars newsletter.