Initiating Supplier New Product Development Projects: A Behavioral Investigation

David A. Wuttke, Karen Donohue, Enno Siemsen

Research output: Contribution to journalArticlepeer-review

13 Scopus citations

Abstract

While suppliers are often an excellent source of product innovation for buyers, their propensity to undertake or continue a product development project can be elusive. This study examines how characteristics of the innovation project, including the type of project revenue, type of cost uncertainty, and the contract frame, influence the decision to accept, and subsequently continue, an innovation project. Through a series of controlled behavioral experiments, we find that acceptance rates increase when projects are characterized by a low real options value or an entirely new (vs. replacement) revenue stream. While these factors have less influence on the supplier's decision to continue the project, once accepted, continuation rates do increase if acceptance and continuation decisions are made by the same person. We also find that using a reward (vs. penalty) frame for sustaining supplier engagements significantly increases acceptance rates.

Original languageEnglish (US)
Pages (from-to)80-99
Number of pages20
JournalProduction and Operations Management
Volume27
Issue number1
DOIs
StatePublished - Jan 2018

Bibliographical note

Funding Information:
The authors thank the editors and reviewers for their many helpful suggestions and comments, which greatly improved this study. This study also benefitted immensely from the feedback of seminar participants at Iowa State University, University of Wisconsin-Madison, Arizona State University, Indiana University, University of Minnesota, Technical University Dortmund, and Cornell University. Funding was provided by a Dean’s Grant from the Carlson School of Management.

Publisher Copyright:
© 2017 Production and Operations Management Society

Keywords

  • behavioral operations
  • buyer–supplier relationship
  • supplier innovation
  • supply chain contracts

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