Optimal Timing of Collaborative Alliances in Technology Commercialization

Abstract

As the need for time-to-market becomes an imperative in high-tech industries.

more and more firms find that they can get to market quicker by collaborating with partners. However. more collaboration also engenders an environment where there will be intellectual property rights infringements and appropriation issues. In this paper. we show that in addition to patents and contracts. a firm can protect its innovation by finding the optimal time for releasing information to a potential partner. Our model. which derives the optimal timing function. balances the trade-off between the benefits of minimizing delay cost in commercialization with the risk of having the information appropriated by the potential partner. We show that firms should release information early when the cost of delay is high and when the salvage value of the idea after being rejected is high. We also show that the optimal timing approach mitigates the negative effects of increases in delay cost and exaggerates the positive effects of increases in the salvage value