We examine the relationship between supplier involvement, inter-firm communication and product development performance when suppliers participate in product development projects. We investigate whether the relationship differs depending on two factors, (1) knowledge distribution and (2) relational norm between a manufacturer and a supplier. Based on in-depth study of seven cases, we find that both factors significantly influence the relationship, but in a different way. First, supplier involvement and inter-firm communication improve project performance when they fit with knowledge distribution between organizations. Specifically, supplier involvement should be aligned with how knowledge related to product development is distributed in organizations. Inter-firm communication becomes more critical when knowledge is evenly distributed to both organizations. Second, relational norm provides a foundation and a safeguard for effective inter- firm coordination in product development projects. Relational norm improves project performance not only directly but also indirectly through improving the level of fit between knowledge distribution and supplier involvement/inter-firm communication.