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Open or Closed? Technology Sharing, Supplier Investment, and Competition

Author

Listed:
  • Bin Hu

    (Kenan-Flagler Business School, University of North Carolina, Chapel Hill, North Carolina 27599)

  • Ming Hu

    (Rotman School of Management, University of Toronto, Toronto, Ontario M5S 3E6, Canada)

  • Yi Yang

    (School of Management, Zhejiang University, Hangzhou, Zhejiang 310027, China)

Abstract

Competing technologies in emerging industries create uncertainties that discourage supplier investments. Open technology can induce supplier investments, but may also lead to intensified future competition. In this paper, we study competing manufacturers’ open-technology strategies. We show that despite the risk of intensifying future competition, open technologies by competing manufacturers may constitute an equilibrium and can indeed induce supplier investments. In addition, we identify a technology-risk-pooling benefit; namely, by opening technologies, competing manufacturers can induce supplier investments in both technologies and later adopt the one preferred by the market. However, manufacturers may also exhibit the prisoner’s dilemma and close their technologies despite the risk-pooling benefit. In this case, there is potential for collaborative technology sharing through cross licensing. Finally, we show that manufacturers may sometimes close their technologies to force supplier investments.

Suggested Citation

  • Bin Hu & Ming Hu & Yi Yang, 2017. "Open or Closed? Technology Sharing, Supplier Investment, and Competition," Manufacturing & Service Operations Management, INFORMS, vol. 19(1), pages 132-149, February.
    • Handle: RePEc:inm:ormsom:v:19:y:2017:i:2:p:132-149
    DOI: 10.1287/msom.2016.0598
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    Cited by:

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    4. Arkadiusz Świadek & Jadwiga Gorączkowska & Karolina Godzisz, 2021. "Conditions Driving Low-Carbon Innovation in a Medium-Sized European Country That Is Catching Up–Case Study of Poland," Energies, MDPI, vol. 14(7), pages 1-17, April.
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    10. Chen, Junlong & Sun, Chaoqun & Shi, Jiayan & Liu, Jiali, 2022. "Technology R&D and sharing in carbon emission reduction in a duopoly," Technological Forecasting and Social Change, Elsevier, vol. 183(C).
    11. Chen, Xu & Wang, Xiaojun & Zhou, Mingmei, 2019. "Firms’ green R&D cooperation behaviour in a supply chain: Technological spillover, power and coordination," International Journal of Production Economics, Elsevier, vol. 218(C), pages 118-134.
    12. Jasper Veldman & Edward Anderson & Niels J. Pulles & Gerard Gaalman, 2023. "Developing a shared supplier with endogenous spillovers," Production and Operations Management, Production and Operations Management Society, vol. 32(3), pages 723-739, March.
    13. Baozhuang Niu & Kanglin Chen & Lei Chen & Chao Ding & Xiaohang Yue, 2021. "Strategic Waiting for Disruption Forecasts in Cross‐Border E‐Commerce Operations," Production and Operations Management, Production and Operations Management Society, vol. 30(9), pages 2840-2857, September.
    14. Zhang, Qi & Zhu, Xide & Lin, Gui-Hua, 2024. "Green technological licensing strategies with fixed-fee among rival firms under emissions trading scheme," European Journal of Operational Research, Elsevier, vol. 318(1), pages 110-130.
    15. Liu, Lu & Feng, Lipan & Jiang, Tao & Zhang, Qian, 2021. "The impact of supply chain competition on the introduction of clean development mechanisms," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 155(C).

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