Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • October 2015
  • Article
  • Production and Operations Management

Managing the Performance Tradeoffs from Partner Integration: Implications of Contract Choice in R&D Projects

By: Alan MacCormack and Anant Mishra
  • Format:Print
ShareBar

Abstract

Formal contracts represent an important governance instrument with which firms exercise control of and compensate partners in R&D projects. The specific type of contract used, however, can vary significantly across projects. In some, firms govern partnering relationships through fixed-price contracts, whereas in others, firms use more flexible time and materials or performance-based contracts. How do these choices affect the costs and benefits that arise from greater levels of partner integration? Furthermore, how are these relationships affected when the choice of contract is misaligned with the scope and objectives of the partnering relationship? Our study addresses these questions using data from 172 R&D projects that involve partners. We find that i) greater partner integration is associated with higher project costs for all contract types; ii) greater partner integration is associated with higher product quality only in projects that adopt more flexible time and materials or performance-based contracts; and iii) in projects where the choice of contract is misaligned with the scope and objectives of the partnering relationship, greater partner integration is associated with higher costs, but not with higher product quality. Our results shed light on the subtle interplay between formal and relational contracting. They have important implications for practice, with respect to designing optimal governance structures in partnered R&D projects.

Keywords

""Partner Integration; Contract Choice; R&D Project Management; Relational Contracts; Partnering Performance; Research and Development; Projects; Partners and Partnerships; Performance; Contracts

Citation

MacCormack, Alan, and Anant Mishra. "Managing the Performance Tradeoffs from Partner Integration: Implications of Contract Choice in R&D Projects." Production and Operations Management 24, no. 10 (October 2015): 1552–1569.
  • Find it at Harvard

About The Author

Alan D. MacCormack

Technology and Operations Management
→More Publications

More from the Authors

    • November–December 2022
    • Harvard Business Review

    Your Company Needs a Space Strategy. Now.

    By: Matthew Weinzierl, Prithwiraj (Raj) Choudhury, Tarun Khanna, Alan MacCormack and Brendan Rosseau
    • June 2022
    • Faculty Research

    FIELD Immersion 2022: Salt Lake City, Utah

    By: Alan MacCormack and Kerry Herman
    • 2021
    • Faculty Research

    Computer-Implemented Methods and Systems for Measuring, Estimating, and Managing Economic Outcomes and Technical Debt in Software Systems and Projects: US Patent 11,126,427 B2

    By: Daniel J. Sturtevant, Carliss Baldwin, Alan MacCormack, Sunny Ahn and Sean Gilliland
More from the Authors
  • Your Company Needs a Space Strategy. Now. By: Matthew Weinzierl, Prithwiraj (Raj) Choudhury, Tarun Khanna, Alan MacCormack and Brendan Rosseau
  • FIELD Immersion 2022: Salt Lake City, Utah By: Alan MacCormack and Kerry Herman
  • Computer-Implemented Methods and Systems for Measuring, Estimating, and Managing Economic Outcomes and Technical Debt in Software Systems and Projects: US Patent 11,126,427 B2 By: Daniel J. Sturtevant, Carliss Baldwin, Alan MacCormack, Sunny Ahn and Sean Gilliland
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College