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Initiating Supplier New Product Development Projects: A Behavioral Investigation

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  • David A. Wuttke
  • Karen Donohue
  • Enno Siemsen

Abstract

While suppliers are often an excellent source of product innovation for buyers, their propensity to undertake or continue a product development project can be elusive. This study examines how characteristics of the innovation project, including the type of project revenue, type of cost uncertainty, and the contract frame, influence the decision to accept, and subsequently continue, an innovation project. Through a series of controlled behavioral experiments, we find that acceptance rates increase when projects are characterized by a low real options value or an entirely new (vs. replacement) revenue stream. While these factors have less influence on the supplier's decision to continue the project, once accepted, continuation rates do increase if acceptance and continuation decisions are made by the same person. We also find that using a reward (vs. penalty) frame for sustaining supplier engagements significantly increases acceptance rates.

Suggested Citation

  • David A. Wuttke & Karen Donohue & Enno Siemsen, 2018. "Initiating Supplier New Product Development Projects: A Behavioral Investigation," Production and Operations Management, Production and Operations Management Society, vol. 27(1), pages 80-99, January.
    • Handle: RePEc:bla:popmgt:v:27:y:2018:i:1:p:80-99
    DOI: 10.1111/poms.12784
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    Cited by:

    1. Jung-Fa Tsai & Chin-Po Wang & Ming-Hua Lin & Shih-Wei Huang, 2021. "Analysis of Key Factors for Supplier Selection in Taiwan’s Thin-Film Transistor Liquid-Crystal Displays Industry," Mathematics, MDPI, vol. 9(4), pages 1-18, February.
    2. Fan, Di & Xiao, Chengyong & Zhang, Xiao & Guo, Yujuan, 2021. "Gaining customer satisfaction through sustainable supplier development: The role of firm reputation and marketing communication," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 154(C).
    3. Lütkemeyer, Daniel & Heese, H. Sebastian & Wuttke, David A. & Gernert, Andreas K., 2022. "Pricing and market entry decisions in personalized medicine," International Journal of Production Economics, Elsevier, vol. 253(C).
    4. Boyuan Zhong & Houcai Shen, 2022. "New brand introduction and selling mode choice for online retailers with network effect," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(5), pages 1340-1350, July.
    5. Juzhi Zhang & Suresh P. Sethi & Tsan‐Ming Choi & T. C. E. Cheng, 2020. "Supply Chains Involving a Mean‐Variance‐Skewness‐Kurtosis Newsvendor: Analysis and Coordination," Production and Operations Management, Production and Operations Management Society, vol. 29(6), pages 1397-1430, June.
    6. Golmohammadi, Amirmohsen & Taghavi, Majid & Farivar, Samira & Azad, Nader, 2018. "Three strategies for engaging a buyer in supplier development efforts," International Journal of Production Economics, Elsevier, vol. 206(C), pages 1-14.
    7. Wenqing Wu & Kexin Yu & Saixiang Ma & Chien-Chi Chu & Shijie Li & Chengcheng Ma & Sang-Bing Tsai, 2018. "An Empirical Study on Optimal Strategies of Industry-University-Institute Green Innovation with Subsidy," Sustainability, MDPI, vol. 10(5), pages 1-17, May.

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