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Examining the Roles of Product Complexity and Manager Behavior on Product Design Decisions: An Agent-Based Study Using NK Simulation

In practice, product design decisions in a buyer-supplier setting can be either centralized or decentralized. Yet, it is unclear in what circumstances either of these settings can result in higher new product performance. In this study, we show that the choice of the level of centralization of product design decisions should be made contingent to the product complexity and behavioral factors of project managers involved in the decisions. In particular, we examine the influence of the cognitive ability, resistance to change, and cognitive effort of the project managers on the choice of the level of centralization of product design decisions. A methodology coming from complexity science is adopted and a simulation analysis is carried out. Results confirm that product complexity affects the relationship between the level of centralization of the product design decisions and product performance. Furthermore, we show that the benefit of centralized product design decisions is influenced by the level of cognitive effort, cognitive ability, and resistance to change of project managers. The analysis is performed in two different contexts characterized by varying levels of trust between the buyer and supplier. We discuss the implications of our findings for theory and practice.