Understanding New Product Co-Development Relationships in Technology-Based, Industrial Markets

This study focuses on new product co-development relationships, where a seller and buyer enter into a relationship to mutually undertake the development of an innovative product. We draw upon the relationship marketing literature as well as the theoretical frameworks of agency theory and transaction cost analysis to investigate the antecedent conditions that foster such co-development relationships, and the manner by which these factors subsequently influence sellers’ satisfaction with the relationship. The results of our empirical study reveal that the extent to which sellers undertake new product co-development relationships is a function of perceived buyer knowledge and the extent of prior interactions with the buyer as well as the degree of product customization involved. Further, perceived buyer knowledge moderates the sellers’ satisfaction with such co-development efforts.