Sleeping with Competitors: The Impact of NPD Phases on Stock Market Reactions to Horizontal Collaboration

Journal of the Academy of Marketing Science (2015) 43:490-511; DOI 10.1007/s11747-014-0396-3

Kelley School of Business Research Paper No. 17-3

55 Pages Posted: 22 Dec 2016 Last revised: 5 Jan 2017

See all articles by Qingsheng Wu

Qingsheng Wu

Shanghai Jiao Tong University (SJTU)

Xueming Luo

Temple University

Rebecca J. Slotegraaf

Indiana University - Kelley School of Business - Department of Marketing

Jaakko Aspara

Hanken School of Economics; Aalto University School of Business (formerly known as Helsinki School of Economics)

Date Written: 2015

Abstract

Firms are increasingly collaborating with their competitors for new product development (NPD), yet the literature is almost silent on stock market reactions to these horizontal collaborations. Given the different skills and activities needed in each NPD phase, we analyze the differential stock market reactions to horizontal collaborations in the initiation, development, and commercialization phases of NPD. Analyses of a unique and comprehensive dataset with 831 NPD announcements of horizontal collaborations over 12 years reveal that, on average, the stock market reacts favorably to NPD-related horizontal collaboration in the initiation phase, but unfavorably in the development and commercialization phases. Further, these effects are asymmetrically moderated by the innovativeness of the new product and the collaborating competitor’s relative market and technological powers. Overall, our results highlight that failing to examine the specific NPD phase leads to an incomplete understanding of stock market reactions to horizontal collaboration for NPD. We offer theoretical and managerial implications regarding horizontal collaboration for each NPD phase, along with the relevant NPD project and competitor contingencies.

Keywords: Horizontal collaboration, Investors, Stock market reactions, New product development (NPD), Emerging markets

Suggested Citation

Wu, Qingsheng and Luo, Xueming and Slotegraaf, Rebecca J. and Aspara, Jaakko, Sleeping with Competitors: The Impact of NPD Phases on Stock Market Reactions to Horizontal Collaboration (2015). Journal of the Academy of Marketing Science (2015) 43:490-511; DOI 10.1007/s11747-014-0396-3; Kelley School of Business Research Paper No. 17-3. Available at SSRN: https://ssrn.com/abstract=2888509

Qingsheng Wu

Shanghai Jiao Tong University (SJTU) ( email )

800 Dongchuan Rd
Minhang, Shanghai 200240
China

Xueming Luo (Contact Author)

Temple University ( email )

1810 N. 13th Street
Floor 2
Philadelphia, PA 19128
United States

HOME PAGE: http://www.fox.temple.edu/mcm_people/xueming-luo/

Rebecca J. Slotegraaf

Indiana University - Kelley School of Business - Department of Marketing ( email )

Kelley School of Business
Bloomington, IN 47405
United States

Jaakko Aspara

Hanken School of Economics ( email )

P.O. Box 479
Helsinki, Helsinki 00101
Finland

Aalto University School of Business (formerly known as Helsinki School of Economics) ( email )

P.O. Box 21230
Helsinki, 00076
Finland

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