Abstract
Firms in various industries experience how smart products that are based on digital technologies are changing the basis for competition and competitiveness. Particular challenges arise when established mechanical technologies are integrated with digital technologies to create new offerings. As firms increasingly embrace the challenge of smart product development, this particular challenge materializes as not only a product design and integration problem but also a technology-sourcing problem. To investigate a situation in which managers face challenges in leading smart product development, we conducted a case study of four global enterprises, drawing on internal and external documents, as well as in-depth interviews with managers and senior professionals in different positions. We found that established management models that are characterized by vertical relationships within industries need to be supplemented with a horizontal perspective. Based on these findings, we suggest that two established models for sourcing and integration of mechanical technologies need to be supplemented with two others for the integration and sourcing of digital technologies. Thus, management needs to handle four parallel models to succeed with smart product development. The article concludes with identified challenges and suggestions for how managers combine the two models.