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To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.technovation.2009.12.003 Byline: Jaegul Lee (a), Francisco M. Veloso (b), David A. Hounshell (c), Edward S. Rubin (b) Keywords: Technology policy; Auto industry; Sources of innovation; Learning; Patent Abstract: This article investigates how regulated automakers and upstream component suppliers comply with 'technology-forcing' regulations, or laws that set performance standards beyond their usual technological capabilities. In particular, this article examines how firms manage and organize their research and development (R&D) processes concerning automobile emissions control technologies amid the uncertainties resulting from the issuance of new regulations. This study involves the analyses of patents, interviews with experts, references to technical papers published for conferences of the Society of Automotive Engineers (SAE), and use of learning curves. The results of this study show that the high regulatory standards under the technology-forcing regulation played an important role in forcing technological innovations and determining subsequent direction of technological change. Component suppliers were important sources of innovation in the 1970s, but over the course of technological evolution, automakers gradually emerged as the locus of innovation. This study also shows that firms strategically manage architectural and component knowledge in the presence of uncertainties about their technological capacity to meet new auto emissions control standards. Author Affiliation: (a) School of Business Administration, Wayne State University, 320 Prentis Building, Detroit, MI 48202, USA (b) Department of Engineering and Public Policy, Carnegie Mellon University, Pittsburgh, PA 15213, USA (c) Department of Social and Decision Sciences, Carnegie Mellon University, Pittsburgh, PA 15213, USA

To purchase or authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1540-5885.2008.00312.x Byline: Jaegul Lee (1), Francisco M. Veloso (2) Abstract: This paper analyzes how uncertainty and life-cycle effects condition the knowledge boundary between assemblers and suppliers in interfirm product development. Patents associated with automotive emission control technologies for both assemblers and suppliers are categorized as architectural or component innovations, and technology-forcing regulations imposed by the government on the auto industry from 1970 to 1998 are used to define periods of high and low uncertainty. Results confirm that suppliers dominate component innovation whereas assemblers lead on architectural innovation. More importantly, when facing uncertainty firms adjust their knowledge boundary by increasing the knowledge overlap with their supply-chain collaborators. Suppliers clearly expand their knowledge base relatively more into architectural knowledge during such periods. But assemblers' greater emphasis on component innovation in periods of greater uncertainty is only true as a relative deviation from an overall trend toward increasing component innovation over time. This trend results from an observed life-cycle effect, whereby architectural innovation dominates before the emergence of a dominant design, with component innovation taking the lead afterward. Thus, for assemblers life-cycle effects may dominate over task uncertainty in determining relative effort in component versus architectural innovation. This work extends research on strategic interfirm knowledge partitioning as well as on the information-processing view of product development. First, it provides a large-scale empirical justification for the claim that firms' knowledge boundaries need to extend beyond their task boundaries. Further, it implies that overlaps in knowledge domains between an assembler and suppliers are particularly important for projects involving new technologies. Second, it offers a dynamic view of knowledge partitioning, showing how architectural knowledge prevails in the early phase of the product life cycle whereas component knowledge dominates the later stages. Yet the importance of life-cycle effects versus task uncertainty in conditioning knowledge boundaries is different for assemblers and suppliers, with the former dominating for assemblers and the latter more influential for suppliers. Finally, it supports the idea that architectural and component knowledge are critical elements in the alignment of cognitive frameworks between assemblers and suppliers and thus are key for information-exchange effectiveness and resolution of task uncertainties in interfirm innovation. Author Affiliation: (1)Wayne State University (2)Carnegie Mellon University Article note: Address correspondence to: Jaegul Lee, School of Business Administration, Wayne State University, 320 Prentis Building, Detroit, MI, 48202. Tel.: (313) 577-4565. Fax: (313) 577-5486. E-mail: jaegul.lee@wayne.edu.