Dynamic R&amp;D competition under uncertainty and strategic disclosure

Song, Yangbo; Zhao, Mofei

doi:10.1016/j.jebo.2020.11.033

Cited by 6 publications

(5 citation statements)

References 29 publications

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“…Ma et al (2021) focus on the solar PV industry and find that feed‐in tariff degression has an adverse effect on investors' incentives for R&D investment, and the negative effect deteriorates when R&D projects involve great uncertainty. Song and Zhao (2021) also demonstrate that uncertainty is an important feature of an R&D process, and propose a model to analyze how R&D uncertainty affects enterprises' decisions in a two‐stage R&D competition. Similar work can be seen in Jang (2019), Hao et al (2019), and Sendstad and Chronopoulos (2020).…”

Section: Literature Reviewmentioning

confidence: 99%

“…Different from the existing literature, we consider four different modes in which enterprises decide whether to form a technology alliance to improve the probability of R&D success and then compete in the same market if the patent technology is developed. Furthermore, similar to the approach of Song and Zhao (2021), we assume that if enterprises devote considerable time to develop the new patent technology, they realize that this problem is likely to be more difficult than expected and they may consider quitting. Then, the production process may be stopped if the patent technology has not been developed for a long time, which indicates R&D failure.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The result shows that the probability of R&D success plays an important role in determining the innovative enterprise's optimal licensing strategy Ma et al (2021). focus on the solar PV industry and find that feed-in tariff degression has an adverse effect on investors' incentives for R&D investment, and the negative effect deteriorates when R&D projects involve great uncertainty Song and Zhao (2021). also demonstrate that uncertainty is an important feature of an R&D process, and propose a model to analyze how R&D uncertainty affects enterprises' decisions in a two-stage R&D competition.…”

mentioning

confidence: 99%

“…to form a technology alliance to improve the probability of R&D success and then compete in the same market if the patent technology is developed. Furthermore, similar to the approach ofSong and Zhao (2021), we assume that if enterprises devote considerable time to develop the new patent technology, they realize that this problem is likely to be more difficult than expected and they may consider quit-…”

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confidence: 99%

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To ally or not to ally: Enterprises' preferences for technology alliance modes in transnational cooperation

Zhou

Cai

et al. 2023

Manage Decis Econ

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When entering a foreign market, transnational enterprises often conduct research and development (R&D) activities to develop patent technologies and then produce products to meet the technology standard of the target market. Technology alliance is an efficient way to enhance the enterprise's capability of R&D. We assume that the R&D process is uncertain and then construct four models based on different alliance modes. We further study the impacts of different factors on enterprises' expected profits and then investigate enterprises' preferences for alliance modes. Our study can provide decision support for transnational enterprises going abroad and enterprises in foreign markets on their choices of technology alliance modes.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

mentioning

confidence: 99%

mentioning

confidence: 99%

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To ally or not to ally: Enterprises' preferences for technology alliance modes in transnational cooperation

Zhou

Cai

et al. 2023

Manage Decis Econ

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“…Our paper deals with the strategic product development choice in a competitive environment, and it is related to two streams of research: R&D race and new product development (NPD). First, in the R&D race research stream, most economics literature focuses on a multistage stochastic race between a market leader and followers when the progress associated with the costly development efforts is uncertain (Doraszelski, 2003; Harris & Vickers, 1987; Miltersen & Schwartz, 2004; Song & Zhao, 2021). For instance, Harris and Vickers (1987) show that the optimal investment decision depends on the number of remaining stages.…”

Section: Literature Reviewmentioning

confidence: 99%

Sequential versus concurrent final phase product development: Approval uncertainty, time‐sensitive consumers, asymmetric competition, and government subsidy

Limon

Tang

Tanrısever

2023

Production and Operations Management

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Should a firm begin its production even before its new product is approved? In a competitive market with time‐sensitive consumers, a firm may choose to adopt the “concurrent process” by conducting the approval process and the production process in parallel so that the product will become available for sale once approved. However, to avoid incurring upfront (production related) investments that are nonrecoverable should the product fail to receive approval, a firm may opt for the “sequential process” so that the production process will only begin after approval. But such a sequential process can delay product launch, making the firm less competitive. These trade‐offs between the concurrent and sequential development processes and the recent Covid‐19 vaccine development motivate us to examine the process choice in the presence of three salient factors: (a) uncertain product approval, (b) time‐sensitive consumers, and (c) asymmetric firm competition—firms have different ex ante approval probabilities. Our equilibrium analysis reveals that it is possible for the laggard firm (the firm with lower ex ante approval probability) to aggressively adopt the concurrent process whereas the leading firm (the firm with higher ex ante approval probability) adopts the sequential process. First, as the approval requirement tightens, both firms have a lower chance of receiving approval, and the laggard firm is more likely to adopt the sequential process than the leading firm. Second, as consumers become more time sensitive, the leading firm is more eager to adopt the concurrent process than the laggard firm. Finally, when the firm asymmetry is large, competition does not always soften and both firms may compete directly by adopting the sequential process. We also examine the case when consumers are “forward‐looking” instead of “myopic.” We find that forward‐looking behavior increases competition and motivates both firms to adopt the concurrent process. Finally, we consider the case when the government offers subsidies to defray the nonrecoverable investments to increase the chance of having an approved product available sooner. Interestingly, we find such a subsidy can backfire resulting in lower consumer welfare and lower profit for the firms especially when consumers are time insensitive.

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