Collaborative Product Development with Competitors to Stimulate Downstream Innovation

International Journal of Innovation Management, Vol. 14, No. 4, pp. 573-602, August 2010

37 Pages Posted: 18 Jul 2011

Date Written: August 1, 2010

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.

Keywords: Collaboration, strategic alliances, open innovation, competitive strategy, new product development, supply chain management

Suggested Citation

Erzurumlu, Sinan, Collaborative Product Development with Competitors to Stimulate Downstream Innovation (August 1, 2010). International Journal of Innovation Management, Vol. 14, No. 4, pp. 573-602, August 2010. Available at SSRN: https://ssrn.com/abstract=1888311

Sinan Erzurumlu (Contact Author)

Babson College ( email )

231 Forest St.
Babson Park, MA 02457-0310
United States

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