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Collaborative Product Development With Competitors To Stimulate Downstream Innovation

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  • SINAN ERZURUMLU

    (Technology, Operations and Information Management Division, Babson College, Wellesley, MA 02457, USA)

Abstract

Open innovation through collaboration could be beneficial for various reasons, but participating firms must also consider the strategic consequences of their formation on the supply chain. This study is concerned with how open innovation through inter-firm collaboration and strategic alliances may generate value for competing suppliers by stimulating the adoption of the new component innovation by the downstream supply chain. The analysis specifically examines three types of firm interaction representing different levels of open innovation. First, in the joint venture, fully integrated suppliers would develop and market the component. Second, in the development alliance, partially integrated suppliers share the development outcome, but compete in marketing. Finally, independent suppliers do not form any kind of collaborative formation. The findings reveal that the value of open innovation comes not only from technology development, but also how well it stimulates the downstream OEM to invest.

Suggested Citation

  • Sinan Erzurumlu, 2010. "Collaborative Product Development With Competitors To Stimulate Downstream Innovation," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 14(04), pages 573-602.
    • Handle: RePEc:wsi:ijimxx:v:14:y:2010:i:04:n:s1363919610002787
    DOI: 10.1142/S1363919610002787
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    References listed on IDEAS

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    Cited by:

    1. Bin Liu & Guohua Yang & Qi Zhang, 2020. "Pricing Decisions and Innovation Strategies Choice in Supply Chain with Competing Manufacturers and Common Supplier," Sustainability, MDPI, vol. 12(21), pages 1-16, October.
    2. Xiong, Yu & Zhao, Pei & Xiong, Zhongkai & Li, Gendao, 2016. "The impact of product upgrading on the decision of entrance to a secondary market," European Journal of Operational Research, Elsevier, vol. 252(2), pages 443-454.

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