Process choice under asymmetric competition with exogenous and endogenous product success probabilities

Yasemin Limon, Christopher S. Tang and Fehmi Tanrısever

International Journal of Production Economics, 2024, vol. 275, issue C

Abstract: To develop novel products in a competitive market, firms are under pressure to reduce their time-to-market by adopting a “concurrent process” that involves an upfront investment to speed up the process by conducting the final stage of development and production simultaneously. While the concurrent approach provides a time advantage, it involves a financial risk because, unlike the “sequential process” under which the production process will begin only after the new product passes the requisite tests, the firm cannot recoup the upfront production-related investment should the product fail the qualification or market test. Given this trade-off and the uncertain success of the product, should a firm adopt the concurrent process in a competitive market with asymmetric market shares and impatient consumers? Also, how would a firm’s development strategy change if the probability of product success can be controlled through research investments?

Keywords: Supply chain management; Game theory; New product development; Process choice (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:275:y:2024:i:c:s0925527324001725

DOI: 10.1016/j.ijpe.2024.109315

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