A Study Of R&D Contracts Between Manufacturer And Disadvantaged Supplier Under Homogeneous Competition

As market competition intensifies,the survival and development of enterprises are increasingly dependent on innovation and R&D.Innovation capability has also become one of the important core competencies of the country.In the supply chain perspective,R&D activities of one firm have the potential to enhance the profits of upstream and downstream members of the supply chain,so supply chain members have the incentive to participate in the R&D activities of other upstream and downstream members of the supply chain.Based on the supply chain structure of two upstream asymmetric suppliers under homogeneous competition and one downstream manufacturer,this paper develops decision models in which the manufacturer provides R&D cost subsidy contract to the disadvantaged supplier and the manufacturer provides incremental revenue sharing contract to the disadvantaged supplier to study the dynamic game equilibrium results of the manufacturer and the upstream disadvantaged supplier,and compares the effects of the two different contract forms on the level of R&D investment of the disadvantaged supplier,the profit levels of the manufacturer and the disadvantaged supplier,and the other parts of the supply chain at the game equilibrium.It is found that both the R&D cost subsidy contract and the revenue sharing contract can increase the R&D investment level of the disadvantaged supplier.The R&D cost subsidy contract makes the disadvantaged supplier’s profit increase to some extent,but too high a proportion of R&D cost subsidy will reduce the manufacturer’s profit;the R&D input level and profit of the dominant supplier will be negatively affected by the R&D cost subsidy contract.The revenue sharing contract will significantly improve the R&D investment level and profit level of the disadvantaged supplier,and the manufacturer’s profit will also be higher;while the performance of the dominant supplier will be more severely hit.