Cost Goals and Information Timing : How They Interact to Affect Cost Reduction in a Product Design Environment

Greater competition has increased pressure to reduce product costs and design times. To introduce products more quickly, some companies begin designing products before all relevant design information is available and continue modifying product specifications during the design process. We experimentally examine how cost goals (specific cost target versus general cost goal) and information timing (receive all design information upfront versus staggered throughout the design period) interact to influence cost reduction. Using goal-setting theory and literature on information timing, we predict and find that information timing has a moderating effect on the effectiveness of cost goals. Specifically, we find that staggered, as opposed to upfront, information improves performance for groups with a general cost goal, but hinders performance with a specific cost target. Additionally, consistent with prior goal research, we find that groups with a specific cost target outperform those with a general cost goal when all information is received upfront. However, when groups receive staggered design information, having a specific cost target produces results not significantly different than a general goal. Thus, our findings suggest that information timing is a potential boundary condition within goal setting's theoretical framework and may help explain why more companies have not adopted target costing