The Strength of IT-Based (Virtual) Interfirm Ties in the Development of Complex Product Systems - Information Technology and Product Development - page 178

and where organizational resources are scarce. Also, the sponsoring firm is able
to appropriate a significant portion of the information value that is being exchanged
through this medium. It suffices to add that this case of virtual embeddedness is anal-
ogous to the conventional notion of the strength of weak ties (c.f. Granovetter, 1973),
where firms can solve problems quickly through partner firms that are acquaintances
but not necessarily friends.
The obvious downside of the linear (functional) type of virtual embeddedness is
that it provides only economies of learning as it pertains to the specified scenario. In
other words, linear embeddedness has the potential to enhance the depth of knowl-
edge (pertaining to specialization) as opposed to breadth of knowledge. It does not
provide the focal company with possibilities for earning economies of scale and
scope that could exist if more channels of communication were employed in solv-
ing NPD problems in CoPS. In these virtually embedded networks, modularity often
plays a significant role in managing interfirm collaboration in CoPS.
9.5 Open V-Embeddedness
Open V-embeddedness in CoPS is similar to open-source movements, hence the
name. Like open-source communities, the ties that govern systems development
under these arrangements are informal in that no specific organization controls their
system inputs and outputs. Furthermore, the IT connections made here may seem
shallow , which suggests that the participating firms have chosen one or few IT con-
nections. Although system developers that are plugged into this network are likely
to be part of other communities for CoPS development, it is possible that they will
spend most of their project time using this specific network because expertise is
more broadly and easily available. This makes this model of virtual embeddedness
suitable for research and design phases of NPD in CoPS. The approach to problem
solving in this model is the community-based approach (Fowler et al., 2004).
Consider open source development labs (OSDL), a consortium of firms formed
by open-source companies and developers from around the world to further the
growth of the Linux operating system. This consortium includes companies such
as IBM, Fujitsu, HP, Hitachi, NEC, Oracle, Intel, Novell, AMD, Google, Cisco, and
Motorola. In OSDL, no single member organization controls the forums used to
share information. However, because of the strategic value of this collaboration to
participating firms, firms such as IBM spend about $100 million on Linux develop-
ment each year, a small proportion of what the company once spent on proprietary
software (Chesbrough, 2007). Each company involved in this collaboration freely
shares information about developments in an open, virtual format.
9.6 Clique V-Embeddedness
The notion of cliques in network research is not new. Just as individuals do, compa-
nies can form informal cliques. A clique is generally defined as a subset of members
who are more closely identified with one another than with others in a group and