Competing or coordinating: IT R&D investment decision making subject to information time lag

In this paper, we apply a dynamic option‐game framework to examine the impact of information time lag on Research and Development (R&D) investment in innovative information technology (IT) industry. We focus on incentives of competition and coordination in R&D. Our results show that shorter information time lag may induce firms to coordinate their investments and avoid over‐investment. The threshold of information time lag developed in this paper can facilitate managerial decisions on whether to compete or coordinate R&D investments.