As original equipment manufacturers reevaluate whether to make or buy parts for their products under conditions of intense competition, small to medium-size manufacturers that specialize in producing well-defined types of products have a unique opportunity to become world-class competitors. The authors present a prescriptive approach for staying or becoming a successful parts supplier. They follow a printed circuit board manufacturer, Hadco Corporation, along the four different paths suggested by the strategic supplier typology they developed from a survey of 200 New Hampshire manufacturers.
1. M. Merenda, A. Kaufman, and C. Wood, “Collaboration and Technology Linkages: A Strategic Typology” and “Empirical Evidence on Problem-Solving Suppliers” (Durham, New Hampshire: University of New Hampshire, Whittemore School of Business and Economics, New Hampshire Industry Group Working Papers, 1994).
2. N. Rosenberg, “Technological Change in the Machine Tool Industry, 1840–1910,” Journal of Economic History 23 (1963): 413–443;
S. Helper, “Strategy and Irreversibility in Supplier Relations: The Case of the U.S. Auto Industry,” Business History Review 65 (1991): 781–824; and
J.F. Quinn and F.G. Hilmer, “Strategic Outsourcing,” Sloan Management Review, Summer 1994, pp. 43–55.
3. M. Porter, Competitive Advantage: Creating and Sustaining Superior Performance (New York: Free Press, 1985).
4. Our survey utilized a questionnaire developed by the Northeast Manufacturing Technology Center. See:
National Institute of Standards and Technology/Northeast Manufacturing Technology Center and New York State Department of Economic Development, “Quick View: Manufacturing Intake Questionnaire” (Troy, New York: NEMTC/RPI, 1992).
5. A. Kaufman, R. Gittell, M. Merenda, W. Naumes, and C. Wood, “Porter’s Model for Geographical Competitive Advantage: The Case of New Hampshire,” Economic Development Quarterly 8 (1994): 43–66.
6. Merenda et al. (1994).
7. K.B. Clark and T. Fujimoto, Product Development Performance: Strategy, Organization, and Management in the World Auto Industry (Boston: Harvard Business School Press, 1991).
8. T. Nishiguchi, Strategic Industrial Sourcing: The Japanese Advantage (New York: Oxford University Press, 1994).
9. R. Howard, “Can Small Business Help Countries Compete?,” Harvard Business Review, November–December 1990, pp. 88–103; and
Clark and Fujimoto (1991).
10. E. von Hippel, The Sources of Innovation (New York: Oxford University Press, 1988).
11. S.J. Balog and H.G. Macnguyen, “Hadco” (New York: Shearson Lehman Hutton, 21 November 1989), p. 3.
12. Throughout this case study, we used Hadco annual reports, forms 10-K, and internal documents for much of our information about Hadco.
13. Balog and Macnguyen (1989).
14. Von Hippel (1988), pp. 4, 19–24.
15. R.A. Rasmussen, “Hadco: The Change,” CircuiTree, October 1992, p. 28.
16. B.R. Watts and M.M. Pompian, “Hadco Corporation” (New York: Needham & Co. Investment Analysis, 30 June 1988), p. 5.
17. Von Hippel (1988), pp. 20–21.
18. Balog and Macnguyen (1989), p. 14.
19. Watts and Pompian (1988), p. 3.
20. Balog and Macnguyen (1989), p. 3.
21. Watts and Pompian (1988), pp. 1, 5.
22. C.C. Kenney, Riding the Runaway Horse: The Rise and Decline of Wang Laboratories (Boston: Little, Brown, 1992), pp. 69–70, 94–105.
23. C.H. Ferguson and C.R. Morris, Computer Wars (New York: Times Books, 1994), p. 138; and
Kenney (1992), pp. 166–169.
24. Ferguson and Morris (1994), chapter 2; and
Kenney (1992), chapter 10.
25. Rasmussen (1992), p. 28.
On the importance of capital investments in this industry, see:
N. Rosenberg, Inside the Black Box: Technology and Economics (Cambridge: Cambridge University Press, 1987), pp. 180–183.
26. Rasmussen (1992), pp. 25–26.
27. P.M. Senge, The Fifth Discipline: The Art and Practice of the Learning Organization (New York: Doubleday Currency, 1990).
28. “The Hadco Vision,” New Hampshire High Tech News, June 1992, p. 1.
29. For a more complete discussion of the competitive advantage provided by supplier certification, see:
G. Walker, A. Kaufman, M. Merenda, and C. Wood, “The Transmission of an Interfirm Innovation” (Dallas, Texas: Academy of Management Proceedings, 1994).
30. Rasmussen (1992), pp. 31–32.
31. G. Strout, “Identifying the Building Blocks in Leading-Edge PCBs,” Electronic Packaging & Production, May 1993, pp. 17–19.