MMRCDISCUSSION PAPER SERIES

No. 527

Triad perspective of global supply chain integration among R&D,
production, and marketing activities
Masayasu, NAGASHIMA
mnagashi@fc.ritsumei.ac.jp
Ritsumeikan University
Junjiro, SHINTAKUThe University of Tokyo
Takahiro, TOMINO
Meiji University
May 2020

東京大学ものづくり経営研究センター
Manufacturing Management Research Center (MMRC)
Discussion papers are in draft form distributed for purposes of comment and discussion. Contact the author for
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http://merc.e.u-tokyo.ac.jp/mmrc/dp/index.html

Triad perspective of global supply chain integration
among R&D, production, and marketing activities
Masayasu, NAGASHIMA
Nagashima.masayasu@kochi-tech.ac.jp
Kochi University of Technology
Junjiro, SHINTAKUThe University of Tokyo
Takahiro, TOMINO
Meiji University

Abstract
The present study examines the triad coordination among R&D, production, andmarketing activities when they are separated globally. We explore the global integration
drivers to promote triad integration. Earlier research focused on supply chain integration(SCI) of directly linked activities, including R&D and production, production andmarketing, and marketing and R&D, and attempted to solve their dyadic trade-offs. The
present study focuses on triad integration among R&D, production, and marketing in
supply chain research because the triad perspective can help understand the complex
phenomenon of global SCI.
Keywords: Global supply chain management, supply chain integration, tacit knowledge,
externalization, front loading

Introduction
Economic globalization has led to the proliferation of business activities to various
countries, thus complicating supply chain integration (SCI). Parts and materials are often
procured from several countries, products are assembled in low-income countries, andthe final products are exported worldwide. Effective management and coordination ofthese global activities is challenging. Moreover, earlier studies on supply chain statesfound that coordination among different companies requires advanced management (Leeet al., 2007; Sezen, 2008; Eltantawy et al., 2009; Lo and Power, 2010). Global integrationof the inter-enterprise supply chain is challenging.
In earlier studies, industry players considered the supply chain an essential feature that
helped create high-value products and services for end consumers (Lee et al., 2007; Sezen,
2008; Eltantawy et al., 2009; Lo and Power, 2010). Manufacturing firms were often
compelled to compete profitably without establishing interorganizational collaborative
relationships or mutually beneficial partnerships with suppliers and distributors (Stock etal., 2010). Similarly, intraorganizational (cross-functional) integration is imperative forcompetition (Turkulainen and Ketokivi, 2012). Therefore, from a supply chain
management (SCM) viewpoint, there are inter- and intraorganizational integrations,which are the present study’s focus.
1Integrating all product-flow processes is essential for effective and efficient supply
chain coordination. In the present-day global economy, each multinational company(MNC) competes successfully with help from cooperative partners worldwide (Gulati etal., 2000). Thus, SCI remains a critical factor for global SCM.
Although the it is important to integrate all supply chain activities from upstream todownstream to realize high-performance outcomes, this integration is highly complicatedbecause of the diverse actors (Bowersox et al., 2000; Fawcett and Gregory, 2002;
Nagashima, 2017). Too often, various departments and organizations work independently(Bowersox et al., 2000).
The present study examines how to implement triad coordination among R&D,
production, and marketing spread across countries and explores the key factors driving
global integration to promote triad integration.
The study draws on a case study of a Japanese electronics manufacturing company,
Company X. An overview of the literature on new product development for overseas local
markets and global SCI is presented, followed by the case study. Finally, results, findings,
and theoretical contributions are put forward.
Literature review
This study addresses two problem areas: new product development for overseas local
markets and global SCI.
New product development for overseas local markets
Taskforce team for developing products
Since the 1990s, rapid economic globalization has raised the issue of how MNCs
efficiently carry out R&D and produce and sell products to overseas markets (Bartlett andGhoshal, 1989; Birkinshaw and Hood, 1998; Govindarajan and Trimble, 2012).
International business globalization studies mainly focus on the trade-offs between theneeds of global and local markets (Samiee and Roth, 1992; Cavusgil et al., 1993). In
particular, when the local market is a developing country, there are often large differencesamong the needs for global products. Thus, trade-off issues are likely to arise (London
and Hart, 2004; von Zedtwitz et al., 2015). Thus, it is difficult to adapt the technologies
and knowledge developed in the home country to product strategies in the local markets(Govindarajan and Trimble, 2012).
To address this issue, Govindarajan and Trimble (2012) claimed that, to achieve
product innovation for emerging countries, task force organizations, called local-growthteams (LGTs; e.g., venture companies) must be established in the local markets,
independent from their home countries. The LGT is a cross-functional organization withvarious functions required for development. The present study examines how MNCs caneffectively organize themselves to develop, produce, and market products in local
markets.
Global SCI
Creating new products is a multidimensional effort involving various functional divisions,such as R&D, production, and marketing. Earlier studies have shown that the level ofintegration among these functions significantly impacts a firm’s competitiveness index(Olson et al., 2001; Brettel et al., 2011; Turkulainen and Ketokivi, 2012; Turkulainen etal., 2017). This issue leverages the same logic as the SCM discussion. Extant literature
on SCM can be broadly divided into two types: those focusing on intra-company
organizational collaboration and those on inter-company collaboration extending toconsumers and suppliers (Flynn et al., 2010). The present study focuses on internal SCM.
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Although intra-SCI becomes imperative as globalization progresses and functions are
distributed worldwide, integration is highly complicated, given the diversity of actors
along the supply chain (Bowersox et al., 2000; Nagashima, 2017). The complexity ismainly a result of the common trade-off relationships among the objectives of functionalorganizations (Skinner, 1969; Silveira and Slack, 2001). The conflicting and dyadic
relationships among each function of R&D, production, and marketing are described asfollows.
Integration of R&D and production
Integrating R&D and production has been recognized because of increased production
outsourcing in recent years (Kotabe, 1998; Kotabe and Murray, 2004). In particular,
horizontal integration has worked well for digital consumer goods, and electronics
production service has expanded (Sturgeon, 2003).
Under these conditions, there is homogeneous product performance between firms,
and the focus of competition shifts from product differentiation to the speed of volume
increase and expansion of the product line-up (Christensen, 2003). In parallel, theadvantages of carrying out both R&D and production in the same company arecommended. Although historically, United States firms have tended toward R&D
innovation (Starr and Ullman, 1988), they have been able to maintain competitive
advantages, even in commodity products, through production innovation (Wheelright andClark, 1992). In addition, coordinating R&D and production is related to concurrent
engineering issues, which is imperative to the competitiveness of Japanese manufacturing
companies (Takeuchi and Nonaka, 1986; Clark and Fujimoto, 1991; Fine, 1998).
Integration of production and marketing
Studies on the conflict between production and marketing can be traced to Shapiro (1977).
See Parente (1998) for a review. The production viewpoint stresses the need to
manufacture standardized products in large volumes, whereas the marketing perspective
underlines the need to provide the maximum range of products with short delivery leadtimes and flexible quantities. This conflict between production and marketing has beencalled the productivity dilemma (Abernathy, 1978). Literature on the concepts related tojust-in-time production and lean production systems introduced by Japanese companies
are included in this area (Schonberger, 1986; Womack et al., 1990).
Integration of marketing and R&D
Most of the earlier studies on marketing and R&D interfaces have concentrated on theinteractions of marketing and R&D in new product development (Maltz et al., 2001).
Studies were mainly from the viewpoint of conveying market information to the R&D
division (Becker and Lillemark, 2006).
Although there are several conflicts between the functions of marketing and R&D,
whether these functions should be integrated has been debated for a long time (Griffin
and Hauser, 1996; Lau et al., 2010). For example, marketing sections interact withcustomer needs, which are oriented toward short-term responses, whereas R&D sections
tend to be oriented toward product innovation through medium- to long-term efforts.
Studies have concentrated on the need for systems to adjust to such conflicts in a company(Lawrence and Lorsch, 1967).
Need for comprehensive and triad perspectives
Most of the studies have focused on the SCI of directly linked activities, such as R&D
and production, production and marketing, and R&D and marketing. They explored3

methods to solve dyadic trade-offs (Kahn, 1996; Silveira and Slack, 2001). However,these methods provide limited insight and fail to capture SCI comprehensively as a singlesystem firm-wide perspective (Hammer, 1990; Naylor et al., 1999; Chen et al., 2007;
Brettel et al., 2011).
Furthermore, although extant studies have shown that triad-functional collaborationand integration are particularly important when creating innovative products, its
execution has not been elucidated. For example, Turkulainen et al. (2017) state that, toachieve functional integration, team structures (i.e., a group of individuals from different
units working together and sharing collective responses for outcomes), integrator roles(i.e., a formal role serving as a contact between and within organizational units), andrelationship building (i.e., informational communication across organizational units
through various means) are key activities. However, Turkulainen et al. (2017) did notdescribe each activity’s role in promoting functional integration in specific contexts, suchas new product development.
Therefore, the present study elaborates the organizational mechanisms for realizing
the internal SCI required in new product development, especially for developing
innovative products (i.e., products for emerging local markets).
Research design
A multiple case study method is applied to describe a complex phenomenon and a context
for the real-world supply chain. Yin (1994) identified that case studies are mostappropriate for exploratory research.
Qualitative data on the microwave oven business at Japanese Company X were derived
from 17 in-depth interviews between 2005 and 2019. Company X is one of the world’s
largest electronics manufacturing MNCs. In particular, four managers from Company X
Appliances in China, seven managers from Home Appliances Company in Japan, and six
from Home Appliances Company’s China factory were interviewed. These managers are
responsible for R&D, production, and marketing activities.
In this empirical study, we provide a framework from a triad perspective on themethods to implement effective global integration of interrelated activities among R&D,
production, and marketing (Figure 1). This approach could help in exploring significant
findings that have been overlooked from the dyad perspective, but are necessary for
obtaining high-performance outcomes.

Figure 1. Framework for Global Supply Chain Integration

Case of Company X microwave oven business unit in China
Company X is Japan’s leading electronics company, with consolidated sales of 8 trillion
yen and 280,000 employees as of April 2019. Its business areas include B-to-C activities,
such as home appliances, beauty products, and health care products, as well as B-to-B
activities, such as cooling and heating appliances for commercial use, automotive parts,
4and industrial components. Company X was organized around considerably independent
business units (BUs) segmented by product categories, such as microwave ovens,washing machines, air conditioners, and television sets.
Established in 1969, the various departments of the microwave oven BU of Company
X constantly engage with the markets through software, such as soft R&D, throughrecipes and soft promotion department in sales and marketing that demonstrated using a
microwave oven to customers and also allowed food sampling, because a microwave ovencreates value only when the hardware (function) and the software (cooking) are integrated
for a customer. In this case, the value implies that the customer could enjoy eating
delicious foods easily by using a microwave oven. Therefore, the R&D department should
understand the market needs, as well as the sales and marketing departments. This ideaof the importance of having interfaces with the market through such software is Company
X microwave oven BU’s core value since it was established.
The microwave oven BU entered China through a joint venture in 1994 in Shanghai.
At that time, the microwave oven BU had six production companies in countries including
the United States, the United Kingdom, Brazil, Taiwan, China, and Japan, consistent with
their strategy of having a production base near the emerging market. The Shanghai factoryhas suffered low profitability since its establishment because of stiff competition. Its local
capabilities in China were developed gradually over multiple phases by addressed deeper
localization, enabled by a more extensive cross-border integration of its home-grown
resources and capabilities.
Furthermore, Company X’s organizational structure combines manufacturing (R&D,
production, and marketing) in Japanese BUs of the home country and sales overseas of
the host country. This organization was established to balance both manufacturing andsales. However, having all manufacturing functions and skills built in BU organization
makes it complex for a sales organization because of the differences in values, processes,
and methodologies.
First Stage: Initial adaptation to local market (1994–1998)
The Company X microwave oven BU entered China and established a production
subsidiary in 1994. The operations were significantly motivated by labour arbitrage. A
considerable portion of their output was for the emerging Chinese market. Opening a
production subsidiary implied creating local competition in terms of production facilities
operating under the local conditions and constraints as well as local human resource
development. In particular, key people, such as those in charge of production lines, weretrained extensively at the BU in Japan. Thus, in the initial phase, the competitive value,
mainly in the production arena, relevant to China’s local conditions and constraints wascreated accordingly.
Initially, the factory in China was only in charge of production, while the BU in Japanwas in charge of R&D and marketing.
Second Stage: Manufacturing-centric for the global market (1999–2012)
The Company X microwave oven BU positioned China as its global production base andtransferred resources, in various forms, to its subsidiary in China, such as production
process know-how, quality management techniques, product design, and SCM. Througharbitrage and resource transfer, the Company X microwave oven BU has integrated its
operations in China into its global production network. In the early 2000s, over 50% of
global production came from China. However, they were concerned about competingwith Korean and Chinese manufacturers, who were strengthened by cheap, “made in5China” products in the global market. Therefore, the BU focused on developing the global
leader model for mass production.
The factory in China is engaged in mass production of microwave ovens that produced
a maximum of 4 million for export, mainly to the U.S. market. However, profitability has
fallen over the years due to rising labour and material costs that could not accommodate
the severe pricing from market. This unstable business structure that depends on theexport at severe pricing was further exacerbated by the deteriorating exchange rate.
Therefore, it was necessary to change this business structure significantly.
At this phase, the factory in China was in charge of production as well as productdesign of R&D, while the BU in Japan was in charge of product planning of R&D andmarketing.
Third Stage: Development of Local Product Planning Capabilities (2013–2019)
To address the issue of establishing a stable business structure, the factory in China
decided to discontinue supplying the U.S. market for mass sales and promote the growing
Chinese market without currency risk. In particular, the factory in China aimed to develop
different high-value products with enhanced cooking performance and adapted to theemerging Chinese market. By developing local product planning capabilities, in 2013, anew, high-value product category of steamer for the Chinese markets was launched. Thisappliance specialized in steaming, baking, and frying without a microwave oven function
to prepare delicious Chinese foods. The next section presents a detailed case on how todevelop, manufacture, and market this steamer oven by coordination for trade-off
problems among R&D, production, and marketing is described.
At this phase, the factory in China was in charge of R&D, production, and marketingfor Chinese market, while the BU in Japan was in charge of R&D and marketing for the
global market, except Chinese.
Case: Steam oven
The planning department at the factory in China played an important role in interfacingwith the market through the software of cooking food in a microwave oven, which is thecore value of the Company X microwave oven BU’s business operation. The role ofplanning was to understand the market needs for R&D and to promote product value forsales and marketing. In 2013, Mrs. Z., who was responsible for planning, collaborated
with R&D, production, and marketing.
Planning proved to be the mainstay in China for deeper localization, as the company
gathered critical knowledge and insights on local lifestyles related to the use of home
appliances. They found that Chinese people eat steamed dishes on a daily basis; thus,
there is extremely high demand for steaming dishes. However, there were few steam
ovens for home use in the Chinese market, while professional steam ovens were usedfrequently used in restaurants. To meet this demand, the planning made several surveys
as follows.
They found that there is limited kitchen space for installing yet another small cooking
appliance. In an average Chinese household, the kitchen is very small, and single-function
microwave ovens were already installed in most homes. Therefore, compactness was amandatory condition for developing the new steamer. Through these surveys, theplanning department found that the oven capacity had to hold the height of a baby bottle
and enough width to steam fish. The outer dimensions were determined as width 35 cm
× height 35 cm × depth 40 cm, with the internal dimensions of width 28 cm × height 28
cm × depth 18 cm. It was slightly larger than a rice cooker. The challenging part was tofit all the functions of steam, convection, and ventilation within the limited size to cook6

foods. Moreover, there was no industry standard for steam ovens for home use because
there were few steam ovens in the Chinese market at that time. Initially, the factory in
China designed the steamer based on the microwave standard with which they had beenworking. However, given that Chinese steamed dishes require a very large amount ofsteam, the microwave standard did not work.
After repeated coordination and trial designs among R&D, production, and planning,they succeeded in developing a heater structure that generates steam in a form that isdifferent from the conventional microwave ovens and with limited space. Moreover, a
new standard for Chinese steamed dishes that require a very large amount of steam wascreated. It was designed based on the numbers of tests to check how to release the steam
from the product and how to control the inside pressure due to the steam.
Although the initial survey of this steamer concept was evaluated carefully, it wasdifficult to predict the market demand size since no examples existed to evaluate thedemand volume of steam ovens for home use in the Chinese market at that time.
Furthermore, considering that Company X had a low market share since the Chinese
microwave oven market was very weak at that time (2%–3%), there were no sales
channels willing to take up the challenge of selling this new appliance. Most channels
were apprehensive because of the risk; just catering to the current microwave oven market
demand.
To solve the problem of predicting the market demand and absence of sales channels,
the planning department decided to expand the target segment from young mothers to
those who like to cook at home, specializing in the channel of internet sales. In particular,(1) advertising on online cooking programs and broadcasting it on video panels in taxis,(2) advance product release notice with recruitment of trial users, (3) advertising on blogs
of cooking experts, and (4) monitoring reports on cooking performance by third-party
organizations. Consequently, internet sales targeting those who like to cook at home led
to word-of-mouth communication and rapid growth in demand in a short time. This help
in predicting market demand.
Therefore, the planning department created a new steamer category for the Chinese
appliance industry, even though it was priced at 1,699 RMB, almost three times higher
than the average microwave oven in the market, which helped improve the performanceoutcomes of the factory in China.
However, this approach created new trade-offs between the global coherence of basic
design elements, such as global chassis and local adaptation to the market needs. Thus,
the deeper triadic integration among R&D, production, and marketing in China led to new
trade-offs between Japan and China.
Results
In this case study, the planning in charge of soft promotion was the key driver of global
integration among R&D, production, and marketing. Thus, why would such anorganization connect R&D, production, and marketing in this case? This question is
explored from the perspectives of triad integration and leadership as follows.
Triad integration at an early stage: front loading
SCI has been considered relay integration in the form of R&D and production, andproduction and marketing, as product development progresses (Krishnan et al., 1997;
Krishnan and Ulrich, 2001). However, it is necessary to consider integrating these threefunctions in a triad. If the problems occurring during mass production are not solved at
the product development stage, it will be costly and time consuming to push the problems
7

back to the R&D section. In addition, it would be too late to recognize that it is a productmarketing cannot sell once the relay of production marketing arises. Consequently, it
would be better to solve the problem related to these three functions as early as possible.
The planning in charge of soft was positioned as top entity in new product development
through advanced product planning actvities. In the early stages, the front loading of
problems can be done through proper communication with R&D, production, andmarketing.
Leadership of planning: Mrs. Z
Most of the models manufactured at the factory in China are exported with bad
profitability; however, there was a strong desire to change the business structure and sellmore of the products made in their own factory. Mrs. Z., in planning, played importantroles in managing, guiding, and motivating diverse team members toward these common
goals and objectives of the project. By elaborating and continuously communicating the
project mission like, “It was our first chance to develop, manufacture and market ourmade in China product to Chinese market and we have to absolutely answer customer
needs and make this introduction successful,” she motivated the cross-functional teamfrom the early stages of the project. She focused on designing processes to create powerfulproduct concepts, and ensuring that the concepts were translated into design andmanufacturing process details.
The planning department, headed by Mrs Z, in the factory in China interfaced with themarket through software, thus facilitating effective global integration among R&D,
production, and marketing activities as a driver.
Mrs Z. had broad experience as a product designer as well as in marketing in thefactory in China and had worked closely with the sales company as well. The planningteam in the China factory began to be integrated into the manufacturing and sales network
in China.
Findings
Two important findings emerged from the present study. First, the global SCI could be
implemented effectively if the triad perspective is considered for organizational capabilityof co-evolution of global integration and local adaptation, which have been overlookedfrom the dyad perspective in order to achieve high-performance outcomes.
Second, it was possible to build such a global SCI because the local capability ofplanning section in charge of soft to propose a market-led product concept, cultivated byits deeper data interpretation. This local capability made implementing global SCI
effective, thus convincing the parent BU in charge of global production in Japan and theirproduction subsidiaries in China as well as the Chinese marketing section.

8

Theoretical contribution
These findings have some important theoretical contributions. First, it is meaningful tofind out the strategy and process of global SCI among R&D, production, and marketing
activities for Japanese MNCs who could not achieve high-performance outcomes.
Second, it is necessary for the MNCs’ head offices to make the effective decisions ofsupply chain design on how to support in order to promote triadic regional integration.
This study uniquely contributes to studies on the strategy and process of global SCI
based on the triad perspective. We do hope that researchers, as well as MNC managers,
can benefit from this research to implement global SCI among R&D, production, andmarketing activities successfully, and that could lead to high-performance outcome.
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