Partners' Resource-commitment Decisions in R&D Outsourcing

It is studied that the resource-commitment decisions and the profits of the outsourcer and the supplier under three profit sharing arrangements and different market environments, and the impact of market return and profit sharing arrangement on their resource commitments. The mixed sharing arrangement is improved, and the optimum profit sharing arrangements are found out, each of which suits a certain market environment best. It is discovered that the outsourcer can't raise the possibility of R&D outsourcing by giving the supplier partial payment in cash in advance, it will he lowered on the contrary, and therefore, the outsourcer should substitute specific assets for cash; the outsourcer should adopt improved mixed sharing arrangement in R&D outsourcing when market return is small, and fixed sharing arrangement when market return is large, especially when the proportion of R&D investment to the total investment is large.