The Impact of Decision Rights on Innovation Sharing

Although innovation sharing between a buyer and supplier—a common practice in the automotive industry—can increase efficiency total profit of supply chain, suppliers are often reluctant to do so. Sharing innovations would leave supplier vulnerable position if were exploit information (e.g., by resharing supplier’s with competing suppliers). Anecdotal evidence from tells us that nature supplier-buyer relationship for most part depends on who short-run-focused procurement manager or long-term-focused engineer) manages relationship. In this paper, we examine how allocation decision rights short-run- long-run-focused employees affects collaboration firms. To accomplish this, model where is dual maker, consisting long-run- and/or employees. We characterize equilibrium show frequency collaborative outcomes lowest when has full control highest engineer setup can unilaterally enforce collaboration. A laboratory experiment confirms collaborations occur more frequently long-term focus charge actively involved making. Depending joint structured, help hurt collaboration: Collaboration it, whereas random joint-control case results as low case. This paper was accepted Serguei Netessine, operations management. Supplemental Material: The online appendix data available at https://doi.org/10.1287/mnsc.2021.4230 .