Product co-development in an emerging market: the role of buyer-supplier compatibility and institutional environment

© 2016 Elsevier B.V. In emerging markets, supply chains increasingly serve as critical value chains through which ideas, practices and knowledge flow to and from suppliers and buyers. Drawing on buyer-supplier collaboration literature and organizational learning theory, we examine the antecedents and underlying mechanisms of product co-development. Due to emerging markets’ unique institutional environments, we further investigate how government intervention and guanxi importance moderate supplier-buyer collaborative outcomes. Dyadic data from 323 supplier-buyer pairs in China largely support our theoretical framework. Partners’ knowledge commonality has a curvilinear (inverted U-shaped) relationship to product co-development, whereas goal compatibility has a positive impact on product co-development. Mutual learning partially mediates the main effect. Furthermore, government intervention weakens the positive effect of mutual learning on product co-development whereas guanxi importance strengthens this relationship. This research provides fresh theoretical and managerial implications to supply chain collaboration in emerging markets.