Abstract

http://ssrn.com/abstract=1625963
 
 

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Aligning Partnering Strategy, Partner Governance and Partner Management in R&D Projects: The Impact of Contract Choice


Alan MacCormack


Massachusetts Institute of Technology (MIT) - Sloan School of Management

Anant Mishra


George Mason University - School of Management

September 30, 2011

MIT Sloan Research Paper No. 4782-10

Abstract:     
Firms increasingly look outside their organizational boundaries to identify partners that can improve the effectiveness of R&D projects. The strategy for using partners, however, varies significantly across projects. In some, partners are used primarily to lower development costs and/or supplement development capacity; whereas in others they are used to improve the performance or quality of the final product. How should these variations in partnering strategy impact the governance and management choices made within projects? We examine this question using data on 172 R&D projects from six different industries. We test hypotheses that examine first, how the choice of contract — whether fixed price, time & materials, or performance-based — for a project is shaped by its partnering strategy; and second, how this choice subsequently affects the relationship between partner integration and partnering performance in the project. The performance measures studied here focus specifically on partnering contributions to project costs and product quality. Our results indicate that the choice of contract is a function of the partnering strategy for a project, more flexible contracts being preferred in projects that seek long-run capability-based benefits and have broader scope of partnering relationships. These choices, in turn, impact the benefits associated with partner integration; while higher levels of partner integration are always associated with higher costs, they enable partners to contribute toward higher product quality only in projects that use more flexible contracts. We further show that in projects where partnering strategy and contract choice are misaligned, partner integration has no impact on product quality despite increasing project costs. We conclude by discussing the implications of our findings and suggest new directions for future research.

Number of Pages in PDF File: 37

Keywords: Partnering, Outsourcing, Collaboration, Contract Choice, Distributed Teams, Virtual Teams, Product Development, Project Management

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Date posted: June 17, 2010 ; Last revised: June 23, 2014

Suggested Citation

MacCormack, Alan and Mishra, Anant, Aligning Partnering Strategy, Partner Governance and Partner Management in R&D Projects: The Impact of Contract Choice (September 30, 2011). MIT Sloan Research Paper No. 4782-10. Available at SSRN: http://ssrn.com/abstract=1625963 or http://dx.doi.org/10.2139/ssrn.1625963

Contact Information

Alan MacCormack (Contact Author)
Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )
77 Massachusetts Ave.
E62-416
Cambridge, MA 02142
United States
Anant Mishra
George Mason University - School of Management ( email )
Fairfax, VA 22030
United States
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