An innovation decision model for a cross-competition system with spillovers

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Abstract

We developed a game-theoretic model of an electronics manufacturing supply chain with cross-competition, in which each supplier trades with two common buyers simultaneously, and analyzed firms’ innovation investment strategies with spillover effects. The model’s structure and parameter space were motivated by key characteristics of the electronics manufacturing industry, such as rapid technological iteration, high spillover intensity, and cross-product competition. The results indicate that when the competition is weak, both process innovation and product innovation yield greater benefits to suppliers. However, fierce competition or increased investment scale can drive equilibrium shifts from innovations to non-innovations. Compared with product innovation, process innovation demonstrates greater resilience to competitive pressures in achieving dominance. At high spillover intensities, the benefits of product innovation can be completely negated, even in the presence of weak competition. This study constructs an innovation decision-making system for electronics manufacturing with cross-competition, providing guidance for innovation decisions in cross-competitive enterprises.

Keywords

decision model / product innovation / process innovation / spillover effects / electronics manufacturing / game theory

CHANGE HISTORY

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