From sequential to integrated R&D process: Estimating the impact of a process change in automotive ECU development on flexibility and product quality

Japanese automobile manufacturers have required the suppliers of electrical control units (ECUs) to coordinate their software development activities to improve the effectiveness and stability of in-vehicle LAN network system which should offer high intelligent functionality. The purpose of the paper is to evaluate the impacts of a change in the process of software development from the traditional sequential approach to the one which is more integrated and adaptive to changes in the course of optimization. We conduct regression analyses (OLS and Tobit) utilizing project management data collected at an American automotive parts supplier over the six years between January 1, 2003 and December 31, 2008. Our empirical analysis can be summarized by three key findings. First, the adoption of the new integrated R&D process increased the frequency of specification changes that presumably helped to improve the effectiveness and stability of in-vehicle LAN network system. Second, the new process significantly raised a number of flaws caught during the development, and thus improved product quality observed after the shipment. Third, the introduction of the new process lowered productivity and raised the wage cost substantially. Additional implication for the role of firm-specific experience is also discussed.