PROFIT SHARING AND INTER-ORGANIZATIONAL SOFTWARE R

摘要

Profit sharing is often seen as a way to increase the performance of inter-organizational relationships. However, in existing literature profit sharing is most often discussed in the context of supply chain of parceled goods and research remains limited in studying increasingly important area of software research and development work. When comparing software development with the development of parceled goods, there are several differences that influence inter-organizational activities. Software is difficult to determine, it is non-material, does not have physical appearance or existence, the amount of development work is difficult to estimate, the outcomes from software development are difficult to characterize, and the requirements are often unclear during the software development project. Also, the practices used during the software development project have an impact on the amount of post-project maintenance work that can account a very high percentage of the total investments in the product. All these characteristics render inter-organizational collaboration rather different from parceled goods. Profit sharing could be a good way to eliminate or minimize problems arising from the above characteristics.rnThis paper considers profit sharing in the context of software development in telecommunications industry. The study was a survey among managers working with inter-organizational software research and development collaboration between multinational companies, namely, two OEM companies and their suppliers. We had altogether 183 responses and the average response rate across the cases was 32 %. The key measurements were success and profit sharing. The respondents' experiences from "most successful" and "most unsuccessful" cases were investigated. The respondents were also asked to define the success in their own terms in order to further clarify the factors that the success consists of. For the measurement of profit sharing, the different levels of profit sharing were based on 5-level model established in existing research ranging from hourly invoiced sub-contracting to division of total profits of the end-product. In general this model ex ante assumes that the collaboration success is better with the higher levels of profit sharing than the lower ones.rnThe results of our study reveal that the definitions of collaboration success and performance differed between OEMs (original equipment manufacturers) and supplies. The results also indicate that even the partnership type of relationships are praised in the literature, they are rarely used in the software development collaboration context. In addition, we establish that the satisfaction to the level of profit sharing revealed curvilinear relationship and not linear increasing as expected, also exhibiting some differences between OEMs and suppliers. Finally, contrary to the expectations, the results show that the profit sharing is not a strong predictor of success in inter-organizational R&D. Therefore, the main results suggest that the earlier literature indicating that profit sharing is an appropriate in improving the performance of inter-organizational R&D cannot be directly transferred into the context of software development. Also the differing points of view between OEM and supplier need to be considered when considering profit sharing as a mechanism to improve inter-organizational collaborative R&D. We further outline the practical and theoretical implications of findings of the study.