Sunday, January 18, 2009

R&D Competition Dilemma

There always a lag time after R&D dept starts inovating and its products come to market. this everybody knows. what common people doesn't know? Sutton (2001:319) argues a firm engage in R&D competition faces dilemma as to whether it should publicize the fact that it has committed funds to a project or maintain secrecy. it gains from publishing its investment in that this may dissuade rivals from investing (coordination). It gains from secrecy when knowledge of its investment would encourage rivals to invest; here, secrecy delays rivals' responses.

Thus, which best way the firm should take? in simple thinking, the balance of advantage between openness and secrecy depends on how a firm's investment alters the profitability of rivals' investment? don't you believe? Why not?

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