IEEE TRANSACTIONS ON ENGINEERING MANAGEMENT, VOL. 63, NO. 2, MAY2016 237 Examining the Roles of Product Complexity and Manager Behavior on Product Design Decisions: An Agent-Based Study Using NK Simulation Ilaria Giannoccaro and Anand Nair Abstract—In practice, product design decisions in a buyer– supplier setting can be either centralized or decentralized. Yet, it is unclear in what circumstances either of these settings can re- sult in higher new product performance. In this study, we show that the choice of the level of centralization of product design de- cisions should be made contingent to the product complexity and behavioral factors of project managers involved in the decisions. In particular, we examine the influence of the cognitive ability, re- sistance to change, and cognitive effort of the project managers on the choice of the level of centralization of product design decisions. A methodology coming from complexity science is adopted and a simulation analysis is carried out. Results confirm that product complexity affects the relationship between the level of central- ization of the product design decisions and product performance. Furthermore, we show that the benefit of centralized product de- sign decisions is influenced by the level of cognitive effort, cognitive ability, and resistance to change of project managers. The analysis is performed in two different contexts characterized by varying levels of trust between the buyer and supplier. We discuss the im- plications of our findings for theory and practice. Index Terms—Human behavior, new product development (NPD) process, organization design, project success factors, simu- lation, social psychology, supply chain integration. I. INTRODUCTION O VER the past decade, new product development (NPD) capability has been recognized as a proxy for innova- tion capabilities of firms [1]. Several studies have in fact shown that NPD is an effective way through which firms are able to adapt the current hypercompetitive and fast changing environ- ment and gain and maintain a position of competitive advantage in the market [2], [3] In this regard, supplier involvement in product design de- cisions has received much attention in the literature since the supplier impacts NPD performance in terms of cost, time, and product quality [4]–[8]. Given the role played by suppliers, ef- fective management of buyer–supplier relationships becomes critical for NPD success. However, despite the need for an Manuscript received July 27, 2015; revised November 9, 2015; accepted December 14, 2015. Date of publication February 5, 2016; date of current version April 15, 2016. Review of this manuscript was arranged by Department Editor B. Jiang. I. Giannoccaro is with the Department of Mechanics, Mathematics, and Management, Politecnico di Bari, Bari 70126, Italy (e-mail: ilaria. giannoccaro@poliba.it). A. Nair is with Department of Supply Chain Management, Eli Broad College of Business, Michigan State University, East Lansing, MI 48825 USA (e-mail: nair@broad.msu.edu) Color versions of one or more of the figures in this paper are available online at http://ieeexplore.ieee.org. Digital Object Identifier 10.1109/TEM.2015.2510031 effective management of the buyer–supplier relationships dur- ing NPD, research in the area remains underdeveloped [8]. We refer to an interorganizational product design problem, where a buyer and supplier jointly design a new product. In line with the extant literature, this problem is conceptualized as a search problem, which consists of proposing alternative product configurations by making interdependent decisions on product attributes [9]–[11]. Each product configuration is asso- ciated with a payoff (i.e., customer willingness to pay) and the goal of the search process is to identify the configuration with the highest payoff (i.e., the highest product performance). Since product performance is related to the commercial success of a product, our conceptualization is specifically focusing on the external NPD success. Prior research has emphasized the role of organizational struc- ture on the search process [12], [13]. Organizational structure for NPD is reflected in centralization and formalization [14]. While formalization has received much research attention [15], salient aspects of centralization still remain unaddressed in the extant literature. Centralization refers to the extent to which the buyer controls and makes all the decisions on the product attributes so as to optimize the overall payoff. In essence, the buyer controls even the decisions that are under the purview of the supplier. Conversely, in low centralization, the buyer and the supplier independently make a set of decisions on the product attributes. In this paper, we study the level of centralization that the buyer should adopt in the management of the product design decisions so as to improve the product performance. Borrowing from the organizational studies suggesting that the right level of centralization to adopt mainly depends on the level of task complexity [16], [17], we argue that the choice of the level of centralization to adopt in the management of the product design decisions should be contingent to product complexity. So far, not many studies have investigated the relationship between the level of centralization and product complexity. Our aim is to fill this gap and to investigate the relationship between the level of centralization of product design decisions and prod- uct performance in the presence of varying levels of product complexity. The study contributes to the literature concerning the effective management of interorganizational new product design and shows that a contingent approach based on product complexity should be adopted. We adopt a behavioral perspective and include the effect of human factors characterizing project managers involved in new product design decisions in our analysis. While there are sev- eral studies concerning the impact of behavioral factors on the 0018-9391 © 2016 IEEE. Personal use is permitted, but republication/redistribution requires IEEE permission. See http://www.ieee.org/publications standards/publications/rights/index.html for more information.