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The effect of incentive schemes and organizational arrangements on the new product development process


Natter, Martin; Mild, Andreas; Feurstein, Markus; Dorffner, Georg; Taudes, Alfred (2001). The effect of incentive schemes and organizational arrangements on the new product development process. Management Science, 47(8):1029-1045.

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 & Error approach. This becomes an important factor for new product success when the agents' performance measures are conflicting.

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 & Error approach. This becomes an important factor for new product success when the agents' performance measures are conflicting.

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17 citations in Web of Science®
26 citations in Scopus®
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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Business Administration
Dewey Decimal Classification:330 Economics
Language:English
Date:2001
Deposited On:09 Dec 2016 11:37
Last Modified:09 Dec 2016 11:42
Publisher:Institute for Operations Research and the Management Science
ISSN:0025-1909
Publisher DOI:https://doi.org/10.1287/mnsc.47.8.1029.10228
Other Identification Number:merlin-id:14210

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