Research On Firms’ Strategies Of Vertical Cooperative Innovation Behavior In A Supply Chain

Innovation refers to the behavior as well as the process that individuals or organizations master the resources and knowledge to create new and valuable results with spirit or materials, according to certain goals and tasks. Technological innovation is always viewed as a powerful driver for economic growth, and the fundamental of firms’ survival and development. Given this, In regard to this, companies spare no efforts to build innovation groups and implement products along with service innovation in the process of operation, focusing on creating competitive advantages and gaining market shares. With the shortening product life cycle, the intensifying market competition, and especially the accelerating pace of technological progress in information era, however, autonomous enterprises suffer from the higher cost and risk pressure in innovation activities. Facing the above changing global environment, firms are increasingly taking a holistic-open view and engaged in forming innovation alliances with various partners, ranging from suppliers, competitive enterprises, research institutes and even consumers, thus implementing the cooperative innovation.As a new management paradigm and the emerging research domain, cooperative innovation is attracting renewed attention from both academia and industry. Some theoretical and empirical researches consistently suggest the positive effect of cooperative innovation on firm performance optimization. Cooperative innovation, especially the vertical cooperation in a supply chain, can help enterprises to acquire and integrate both internal and external innovation resources, meanwhile, enhance the investment of enterprises involved in cooperative innovation projects, in turn stimulating the demand and optimizing the overall profits. Vertical cooperative innovation has been regarded as cost and risk sharing, and sales promoting mechanism for the firm to incentivize his seller or buyer. In recent years, in the field of supply chain management, considerable empirical and theoretical research efforts have been devoted to the understanding of vertical cooperative innovation in enterprises. But most of research literatures on vertical cooperative innovation were confined to the behavior and decisions only. And there are few articles consider some other factors and variables related to innovation activities and the market demand, such as consumers’ reference price and product price.Considering the above issues, based on the combing and analysis of existing research literatures, this paper further investigates the firms’ vertical cooperative innovation behaviors and decisions in different situations, and solves the game equilibriums of enterprises. The main research contents and results of this paper include the following aspects:Firstly, research on the firm’s strategies of vertical cooperation innovation with reference-price effects. Referring to the research works in the field of marketing and psychology, this paper study the firm’s vertical cooperation innovation strategy under reference-price effect. From the perspective of interdisciplinary interaction, we explore the influence/impact of reference-price effect mechanism on vertical cooperation innovation decisions. The solutions of game model shows that the reference-price effect has significant impact on the firm’s innovation investment decision, and vertical integration of supply chain can effectively promote the innovation investment of channel members, improving overall profit of the system.Secondly, research on the cooperation innovation and pricing strategies in a supply chain consisting of a manufacturer and a retailer. This part focuses on the integration problem of innovation investment and pricing strategy for firms involved in vertical cooperation mechanism. By formulating a game model, the article comprehensively depicts firms’cooperative activities on innovation in the supply chain and their respective pricing decision, focuses on the analysis of the upstream manufacturer’s innovation investment and wholesale pricing, as well as the innovation expense and retail pricing of the downstream retailer. Moreover, the study discusses and extends the results for a managing perspective.Thirdly, research on the dynamic integration of upstream and downstream enterprises’ cooperative innovation and pricing strategies. In the process of enterprise operation, its innovation and pricing decisions must be constantly changing over time. Considering this, based on previous research work, this article further builds the differential game model from a dynamic perspective, systematically depicting the vertical cooperative innovation and pricing decisions of enterprises, at the same time to solve channel members’own dynamic innovation and pricing game equilibrium strategies in different situations, and carries on the dynamic contrast and integration.The article has abundant research results and extends the relevant theoretical achievements in the field of supply chain management and cooperative innovation, as well as provides scientific reference and guidance for managers to fulfill efficient innovation management.