Abstract
Abstract Uncertainty is a main source of opportunistic behaviors in research and development cooperations, which challenges strategic decisions ranging from investments to operations. To avoid opportunism arising in cooperations, commitments (either formal contracts or informal communications) are generally made in advance by members of an alliance. However, how does a commitment encourage R&D investments and ultimately enhance the total performance, without loss of flexibility in ex post operations? This study attempts to answer this by investigating a bounded commitment in the context of vertical collaborations in a supply chain. In this exploratory study, a 3-stage game model is used (by backward induction) to examine a two-echelon supply chain under a bounded commitment in NPD. Our analysis shows that upstream R&D investment is stimulated more and that both members are better off under the bounded commitment. At the same time, when the relative bargaining power between the supplier and the manufacturer falls into an appropriate area, it is possible to reach a bounded commitment, and the manufacturer is more sensitive to this relationship. Finally, the bounded commitment restrains opportunistic behaviors, but there is no strong sign that an increase in the ratio of the order outside the chain to the inside one can make firms better.
Highlights
Collaborating to research and develop new products is becoming unavoidable in firms’ strategic decision-making, in high-technology industries where digital tools used to facilitate distance collaboration
Opportunistic behavior appears to be a result of uncertainty in research and development (R&D) cooperations, impeding strategic decisions in firms
Based on the literature review, we study R&D cooperation for demand creation within a supply chain and commitments and flexibility in either supply chains or R&D cooperation, respectively
Summary
Collaborating to research and develop new products is becoming unavoidable in firms’ strategic decision-making, in high-technology industries where digital tools used to facilitate distance collaboration. The negotiations failed at the end of 1987 due to disagreements on the quotation price Another case is the cooperation between Dongfeng Motor (DFM) and Cummins Inc. that started in 1986. During their cooperation, they committed to keeping a long-term and steady partnership with each other. The upper stream (Cummins) made a commitment that the extra-chain sales of the components (i.e., engines) were limited at a certain level, uncertainty is considered in the commitment in advance. Their complementary R&D inputs significantly increased synergy, which has resisted corrosion of opportunistic behaviors.
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
