Initiating Supplier New Product Development Projects: A Behavioral Investigation

David A. Wuttke, Karen Donohue, Enno Siemsen

Research output: Contribution to journalArticlepeer-review

8 Scopus citations


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
Issue number1
StatePublished - Jan 2018


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

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