Document Type
Article
Publication Date
6-1-2006
Abstract
In today’s global business environment, companies in the durable consumer goods industry are engaged in a very competitive environment, in that they are facing continuously increasing consumer demands for lower cost products with the expectation of increasing feature sets. This competitive pressure is felt not only on the demand side but also on the supply side. An increasing number of suppliers from low cost countries offer products at significantly lower cost positions, whereas the concentration process in the retail channel forces manufacturers to maximize efficiency and productivity gains in order to maintain pricing and margins. Therefore, companies invest in Research and Development (henceforth R&D) to develop new technologies and products to distinguish themselves and their brands from competition by creating a sustainable competitive advantage. This paper investigates the driving forces that are behind the resource allocation decisions in technological innovation in the consumer goods industry. In particular, this paper suggests a model describing how companies arrive at “make” versus “buy” decisions, indicating that the decision making process is influenced by the design of collaborative relationships and the competencies of economic actors. Moreover, collaboration and competencies are influenced by the corporate cultures and business strategies of the economic actors. Finally, this paper will also contend that if “core competencies” are not correctly understood by economic actors, resource decisions to may lead to irreversible loss of competitive advantage and economic inefficiencies such as increases in transaction costs.
Keywords
economics -- research
Rights
© The Author(s). Kelvin Smith Library provides access for non-commercial, personal, or research use only. All other use, including but not limited to commercial or scholarly reproductions, redistribution, publication or transmission, whether by electronic means or otherwise, without prior written permission is strictly prohibited.
Department/Center
Design & Innovation
Recommended Citation
Zummersch, Martin, "Resource Allocation Problem in Research and Development in the Consumer Goods Industry: How Do Economic Actors Make Decisions in Technological Innovation As To When To Rely on Markets Versus Hierarchies?" (2006). Student Scholarship. 357.
https://commons.case.edu/studentworks/357