Article ID: | iaor200969112 |
Country: | United States |
Volume: | 55 |
Issue: | 7 |
Start Page Number: | 1152 |
End Page Number: | 1169 |
Publication Date: | Jul 2009 |
Journal: | Management Science |
Authors: | Krishnan V, Bhaskaran Sreekumar R |
Keywords: | financial |
The growing sophistication of component technologies and the rising costs and uncertainties of developing and launching new products require firms to collaborate in the development of new products. However, the management of new product development that occurs jointly between firms presents a new set of challenges in sharing the costs and benefits of innovation. Although collaboration enables each firm to focus on what it does best, it also introduces new issues associated with the alignment of decisions and incentives that have to be managed alongside conventional performance and timing uncertainties of new product development. In this paper, we conceptualize and formulate the joint development of products involving two firms with differing development capabilities and examine the implications of arrangements that go beyond sharing of revenues to include sharing of development cost and work. We term these approaches that involve sharing of the development cost and sharing of the development work