Knowledge Sharing in Interorganizational Product Development Teams: The Effect of Formal and Informal Socialization Mechanisms à Benn Lawson, Kenneth J. Petersen, Paul D. Cousins, and Robert B. Handfield Working collaboratively with suppliers is increasingly cited as a ‘‘best practice’’ in product development. The importance of sharing knowledge between buyer and supplier in this context has been well recognized, although comparatively little research exists on the interorganizational socialization mechanisms that facilitate it. The present research proposes and tests a theoretical model of the impact of formal and informal socialization mechanisms on the level of knowledge sharing within interorganizational product development projects and the subsequent effect on buyer firm performance. Results from this study of 111 manufacturing organi- zations in the United Kingdom largely support its hypotheses. It is revealed that informal socialization mechanisms (e.g., communication guidelines, social events) play an important role in facilitating interorganizational knowledge sharing, whereas formal socialization mechanisms (e.g., cross-functional teams, matrix reporting structures) act indirectly through informal socialization to influence knowledge sharing. The results also show that interorganizational knowledge shar- ing is positively associated with supplier contribution to development outcomes, which, in turn, improves buyer product development performance and, ultimately, financial performance. Product development managers are encouraged to build social ties between interorganizational development teams to increase the flow of knowledge and to improve both product development outcomes and financial performance. Introduction N ew product development (NPD) is central to the long term success and growth of a business (Brown and Eisenhardt, 1995; Clark and Fujimoto, 1991). Research in product de- velopment has shown an array of different variables to be important in successfully managing this process, with supplier involvement in interorganizational and cross-functional development teams one variable that has received increasing yet comparatively little atten- tion (Dro¨ge, Jayaram, and Vickery, 2000; Petersen, Handfield, and Ragatz, 2003; Primo and Amundson, 2002). Early and extensive involvement of suppliers in the design and development process has been associ- ated with improvements across a range of dimensions, including quality, cost, and product development cycle time (Bonaccorsi and Lipparini, 1994; Primo and Amundson, 2002; Ragatz, Handfield, and Scan- nell, 1997). However, the processes associated with ‘‘best practice’’ in supplier involvement in new prod- uct development are often characterized by managers and researchers as a ‘‘black box’’ (Handfield et al., 1999). à Authors contributed equally. The authors gratefully acknowledge the financial support and access provided by the Chartered Institute of Purchasing and Supply (CIPS), United Kingdom. Address correspondence to: Address correspondence to: Benn Law- son, School of Management, Queen’s University Belfast, Belfast BT7 1NN, United Kingdom. Tel.: þ 4428 9097 3274. E-mail: b.lawson@ qub.ac.uk. J PROD INNOV MANAG 2009;26:156–172 r 2009 Product Development & Management Association