Collaborative innovation: weak commitments and unenforceable contracts Online publication date: Fri, 14-Feb-2020
by John D. Hanson; Joachim Henkel
International Journal of Procurement Management (IJPM), Vol. 13, No. 1, 2020
Abstract: Innovation that crosses organisational boundaries, such as those between buyers and sellers, requires complementary investments of assets by participants. This creates a contracting problem with the possibility of opportunistic behaviour. We show that this problem can be overcome using the mechanism of weak commitments. In situations where both parties can see a return on their investment in innovation that increases with their partner's investments, there is a bounded range of commitment that can be made unilaterally by either party within which cooperative behaviour becomes the dominant strategy for both parties. This finding is important because it shows that collaborative innovation is possible without the need for elaborate contracts or reliance on intangible constructs such as relational trust or reputational cost. This suggests that collaboration is possible in situations where it was previously considered unlikely and suggests new approaches to research on inter-firm collaborations.
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Procurement Management (IJPM):
Login with your Inderscience username and password:
Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.
If you still need assistance, please email subs@inderscience.com
Our Blog 
Follow us on Twitter 
Visit us on Facebook