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The Effect of Incentive Schemes and Organizational Arrangements on the New Product Development Process

Author

Listed:
  • Martin Natter

    () (Department of Production Management, Vienna University of Economics and Business Administration, Pappenheimgasse 35/3/5, A-1200, Vienna, Austria)

  • Andreas Mild

    () (Department of Production Management, Vienna University of Economics and Business Administration, Pappenheimgasse 35/3/5, A-1200, Vienna, Austria)

  • Markus Feurstein

    () (Department of Production Management, Vienna University of Economics and Business Administration, Pappenheimgasse 35/3/5, A-1200, Vienna, Austria)

  • Georg Dorffner

    () (Department of Medical Cybernetics and Artificial Intelligence, University of Vienna, Freyung 6/2, A-1010, Vienna, Austria)

  • Alfred Taudes

    () (Department of Production Management, Vienna University of Economics and Business Administration, Pappenheimgasse 35/3/5, A-1200, Vienna, Austria)

Abstract

This paper proposes a new model for studying the new product development process in an artificial environment. We show how connectionist models can be used to simulate the adaptive nature of agents' learning exhibiting similar behavior as practically experienced learning curves. We study the impact of incentive schemes (local, hybrid, and global) on the new product development process for different types of organizations. Sequential organizational structures are compared to two different types of team-based organizations, incorporating methods of quality function deployment such as the house of quality. A key finding of this analysis is that the firms' organizational structure and agents' incentive system significantly interact. We show that the house of quality is less affected by the incentive scheme than firms using a trial and error approach. This becomes an important factor for new product success when the agents' performance measures are conflicting.

Suggested Citation

  • Martin Natter & Andreas Mild & Markus Feurstein & Georg Dorffner & Alfred Taudes, 2001. "The Effect of Incentive Schemes and Organizational Arrangements on the New Product Development Process," Management Science, INFORMS, vol. 47(8), pages 1029-1045, August.
  • Handle: RePEc:inm:ormnsc:v:47:y:2001:i:8:p:1029-1045
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    File URL: http://dx.doi.org/10.1287/mnsc.47.8.1029.10228
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    References listed on IDEAS

    as
    1. Frank M. Bass, 1969. "A New Product Growth for Model Consumer Durables," Management Science, INFORMS, vol. 15(5), pages 215-227, January.
    2. Mitzi Montoya-Weiss & Roger J. Calantone, 1999. "Development and Implementation of a Segment Selection Procedure for Industrial Product Markets," Marketing Science, INFORMS, vol. 18(3), pages 373-395.
    3. Kathleen Carley & Michael J. Prietula & Zhiang (John) Lin, 1998. "Design Versus Cognition: the Interaction of Agent Cognition and Organizational Design on Organizational Performance," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 1(3), pages 1-4.
    4. Morris A. Cohen & Jehoshua Eliasberg & Teck-Hua Ho, 1996. "New Product Development: The Performance and Time-to-Market Tradeoff," Management Science, INFORMS, vol. 42(2), pages 173-186, February.
    5. Francesco Luna, "undated". "Computable Learning, Neural Networks and Institutions," Computing in Economics and Finance 1996 _037, Society for Computational Economics.
    6. Shantanu Dutta & Om Narasimhan & Surendra Rajiv, 1999. "Success in High-Technology Markets: Is Marketing Capability Critical?," Marketing Science, INFORMS, vol. 18(4), pages 547-568.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Edoardo Mollona & Andrea Marcozzi, 2009. "Self-emerging coordination mechanisms for knowledge integration processes," Mind & Society: Cognitive Studies in Economics and Social Sciences, Springer;Fondazione Rosselli, vol. 8(2), pages 223-241, December.
    2. Lim, Wei Shi & Tang, Christopher S., 2006. "Optimal product rollover strategies," European Journal of Operational Research, Elsevier, vol. 174(2), pages 905-922, October.
    3. Tay, Nicholas S.P. & Lusch, Robert F., 2005. "A preliminary test of Hunt's General Theory of Competition: using artificial adaptive agents to study complex and ill-defined environments," Journal of Business Research, Elsevier, vol. 58(9), pages 1155-1168, September.
    4. Chan, Lai-Kow & Wu, Ming-Lu, 2002. "Quality function deployment: A literature review," European Journal of Operational Research, Elsevier, vol. 143(3), pages 463-497, December.
    5. repec:spr:jmgtco:v:28:y:2017:i:2:d:10.1007_s00187-016-0243-4 is not listed on IDEAS
    6. Brian Sallans & Alexander Pfister & Alexandros Karatzoglou & Georg Dorffner, 2003. "Simulation and Validation of an Integrated Markets Model," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 6(4), pages 1-2.

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