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Does Component Sharing Help or Hurt Reliability? An Empirical Study in the Automotive Industry

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  • Kamalini Ramdas

    (Darden Graduate School of Business, University of Virginia, Charlottesville, Virginia 22906)

  • Taylor Randall

    (David Eccles School of Business, University of Utah, Salt Lake City, Utah 84112)

Abstract

Component sharing--the use of a component on multiple products within a firm's product line--is widely practiced as a means of offering high variety at low cost. Although many researchers have examined trade-offs involved in component sharing, little research has focused on the impact of component sharing on quality. In this paper, we examine how component sharing impacts one dimension of quality--reliability--defined as mean time to failure. Design considerations suggest that a component designed uniquely for a product will result in higher reliability due to the better fit of the component within the architecture of the product. On the other hand, the learning curve literature suggests that greater experience with a component can improve conformance quality, and can increase reliability via learning from end-user feedback. The engineering literature suggests that improved conformance in turn increases reliability. Sharing a component across multiple products increases experience, and hence, should increase reliability. Using data from the automotive industry, we find support for the hypothesis that higher component reliability is associated with higher cumulative experience with a component. Further, we find support for the hypothesis that higher component reliability is associated with a component that has been designed uniquely for a product. This finding suggests that the popular design strategy of component sharing can in some cases compromise product quality, via reduced reliability.

Suggested Citation

  • Kamalini Ramdas & Taylor Randall, 2008. "Does Component Sharing Help or Hurt Reliability? An Empirical Study in the Automotive Industry," Management Science, INFORMS, vol. 54(5), pages 922-938, May.
    • Handle: RePEc:inm:ormnsc:v:54:y:2008:i:5:p:922-938
    DOI: 10.1287/mnsc.1070.0791
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    References listed on IDEAS

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