Collaboration between Competitors' NPD Teams: In Search of Effective Modes of Management Control

Abstract

Successful collaboration between new product development (NPD) teams maintained by competitors (so-called horizontal NPD collaboration) requires the use of formal modes of management control that simultaneously coordinate the teams' interdependent development activities and encourage their cooperative behavior. Nevertheless, prior theoretical and empirical research suggests that formal control modes required to improve coordination may also drive uncooperative, opportunistic behavior. To help managers in horizontal NPD collaborations select appropriate control modes, this study draws on organizational theory of management control and develops a conceptual framework that specifies the impact of one partner's use of input, process, and output controls on the other partner's perception of coordination effectiveness and cooperative behavior. The results of a scenario-based experiment with 110 expert practitioners show that managers perceive the competitor's use of input control as harmful and process control as helpful for achieving coordination effectiveness. Moreover, managers respond positively to the competitor's use of input control and negatively to the competitor's use of output control when it comes to cooperative behavior. Together, the results indicate that no single mode of formal management control simultaneously enhances both coordination and cooperative behavior in horizontal NPD collaborations.