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New product development and the effect of supplier involvement

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  • Yoo, Seung Ho
  • Shin, Hojung
  • Park, Myung-Sub

Abstract

This study investigates the problem of new product development (NPD) under supplier involvement (SI) program in a supply chain comprising a single supplier and a single buyer. The buyer, the Stackelberg leader in the supply chain, configures the design quality of the product and determines the extent of SI – the degree to which the supplier is involved in the NPD project – in order to utilize the complementary capability of the supplier. The supplier in charge of production determines the level of conformance quality to design specifications. Using the principal-agent paradigm, we propose an analytical framework that investigates the role of the SI program in the NPD project, incorporating essential factors such as the R&D cost, the transactional inefficiency, the production cost, and the transfer payment. We provide rich managerial insights into the decentralized NPD practice by analyzing the equilibrium behaviors of major decision variables (design quality, conformance quality and SI extent) with respect to internal and external environmental conditions.

Suggested Citation

  • Yoo, Seung Ho & Shin, Hojung & Park, Myung-Sub, 2015. "New product development and the effect of supplier involvement," Omega, Elsevier, vol. 51(C), pages 107-120.
    • Handle: RePEc:eee:jomega:v:51:y:2015:i:c:p:107-120
    DOI: 10.1016/j.omega.2014.09.005
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    3. Shalpegin, Timofey, 2020. "Collaborative product development: Managing supplier incentives for key component testing," European Journal of Operational Research, Elsevier, vol. 285(2), pages 553-565.
    4. Zahoor, Nadia & Khan, Zaheer & Wu, Jie & Tarba, Shlomo Y. & Donbesuur, Francis & Khan, Huda, 2023. "Vertical alliances and innovation: A systematic review of the literature and a future research agenda," Technovation, Elsevier, vol. 122(C).
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    6. Seung Ho Yoo & Dawoon Jung & Kun Soo Park, 2022. "Product design outsourcing in a supply chain: impact of the design and conformance quality trade-off," Operational Research, Springer, vol. 22(4), pages 4029-4055, September.
    7. Yoo, Seung Ho & Cheong, Taesu, 2018. "Quality improvement incentive strategies in a supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 114(C), pages 331-342.
    8. Zolfagharinia, Hossein & Zangiabadi, Maryam & Hafezi, Maryam, 2023. "How much is enough? Government subsidies in supporting green product development," European Journal of Operational Research, Elsevier, vol. 309(3), pages 1316-1333.
    9. Kim, Bosung & Kim, Sang Won & Park, Kun Soo, 2021. "Promoting supplier's environmental innovation via emission taxation," International Journal of Production Economics, Elsevier, vol. 240(C).
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