The Impact of Royalty Contract Revision in a Multistage Strategic R&D Alliance

摘要: This paper investigates the impact of royalty revision on incentives and profits in a two-stage (research development (R&D) stage marketing stage) alliance with marketer an innovator. The offers contracts to We find that potential for leads more severe distortions optimal initial offered by marketer. show if innovator plays significant role stage, should offer low rate initially then revise up later. Otherwise, she do opposite. identify two major effects revision. First, provides flexibility dynamically adjust rates across stages better align innovator's incentives. incentive-realigning effect improves marketer's profit. Second, makes it harder obtain private information from innovator, because worries will take advantage contract favorable one herself information-revealing hurts characterize what kind alliances marketers would benefit most so managers clearly establish expectation revision, markerters not commit contract. With are contingent R&D outcome we structure could be either substitutable (by fully capturing incentive re-aligning effect) or complementary weakening revealing depending whether stage. Managers may need use (if possible) replace accordingly improve profits. This was accepted Kamalini Ramdas, entrepreneurship innovation.