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The Effect of Incentive Schemes and Organizational Arrangements on the New Product Development Process

Author

Listed:
  • Martin Natter

    (Department of Production Management, Vienna University of Economics and Business Administration, Pappenheimgasse 35/3/5, A-1200, Vienna, Austria)

  • Andreas Mild

    (Department of Production Management, Vienna University of Economics and Business Administration, Pappenheimgasse 35/3/5, A-1200, Vienna, Austria)

  • Markus Feurstein

    (Department of Production Management, Vienna University of Economics and Business Administration, Pappenheimgasse 35/3/5, A-1200, Vienna, Austria)

  • Georg Dorffner

    (Department of Medical Cybernetics and Artificial Intelligence, University of Vienna, Freyung 6/2, A-1010, Vienna, Austria)

  • Alfred Taudes

    (Department of Production Management, Vienna University of Economics and Business Administration, Pappenheimgasse 35/3/5, A-1200, Vienna, Austria)

Abstract

This paper proposes a new model for studying the new product development process in an artificial environment. We show how connectionist models can be used to simulate the adaptive nature of agents' learning exhibiting similar behavior as practically experienced learning curves. We study the impact of incentive schemes (local, hybrid, and global) on the new product development process for different types of organizations. Sequential organizational structures are compared to two different types of team-based organizations, incorporating methods of quality function deployment such as the house of quality. A key finding of this analysis is that the firms' organizational structure and agents' incentive system significantly interact. We show that the house of quality is less affected by the incentive scheme than firms using a trial and error approach. This becomes an important factor for new product success when the agents' performance measures are conflicting.

Suggested Citation

  • Martin Natter & Andreas Mild & Markus Feurstein & Georg Dorffner & Alfred Taudes, 2001. "The Effect of Incentive Schemes and Organizational Arrangements on the New Product Development Process," Management Science, INFORMS, vol. 47(8), pages 1029-1045, August.
    • Handle: RePEc:inm:ormnsc:v:47:y:2001:i:8:p:1029-1045
    DOI: 10.1287/mnsc.47.8.1029.10228
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    References listed on IDEAS

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    Cited by:

    1. Jan HRON & Tomas MACAK, 2011. "Adaptive organization design based on system integration," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 57(12), pages 565-572.
    2. Emin Karagözoğlu & Kerim Keskin & Çağrı Sağlam, 2021. "Race meets bargaining in product development," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(3), pages 702-709, April.
    3. Chan, Lai-Kow & Wu, Ming-Lu, 2002. "Quality function deployment: A literature review," European Journal of Operational Research, Elsevier, vol. 143(3), pages 463-497, December.
    4. Andreas Mild & Alfred Taudes, 2007. "An agent-based investigation into the new product development capability," Computational and Mathematical Organization Theory, Springer, vol. 13(3), pages 315-331, September.
    5. Ali M. Mouazen & Ana Beatriz Hernández-Lara & Farid Abdallah & Muhieddine Ramadan & Jawad Chahine & Hala Baydoun & Najib Bou Zakhem, 2023. "Transformational and Transactional Leaders and Their Role in Implementing the Kotter Change Management Model Ensuring Sustainable Change: An Empirical Study," Sustainability, MDPI, vol. 16(1), pages 1-34, December.
    6. Benedikt Müller-Stewens & Klaus Möller, 2017. "Performance in new product development: a comprehensive framework, current trends, and research directions," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 28(2), pages 157-201, May.
    7. Edoardo Mollona & Andrea Marcozzi, 2009. "FirmNet: the scope of firms and the allocation of task in a knowledge-based economy," Computational and Mathematical Organization Theory, Springer, vol. 15(2), pages 109-126, June.
    8. Edoardo Mollona & Andrea Marcozzi, 2009. "Self-emerging coordination mechanisms for knowledge integration processes," Mind & Society: Cognitive Studies in Economics and Social Sciences, Springer;Fondazione Rosselli, vol. 8(2), pages 223-241, December.
    9. Lim, Wei Shi & Tang, Christopher S., 2006. "Optimal product rollover strategies," European Journal of Operational Research, Elsevier, vol. 174(2), pages 905-922, October.
    10. Tay, Nicholas S.P. & Lusch, Robert F., 2005. "A preliminary test of Hunt's General Theory of Competition: using artificial adaptive agents to study complex and ill-defined environments," Journal of Business Research, Elsevier, vol. 58(9), pages 1155-1168, September.
    11. Brian Sallans & Alexander Pfister & Alexandros Karatzoglou & Georg Dorffner, 2003. "Simulation and Validation of an Integrated Markets Model," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 6(4), pages 1-2.

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