Delegated Concept Testing in New Product Development
Jochen Schlapp, Gerrit Schumacher · Operations Research · 2022
How should a firm structure its concept testing processes when testing efforts must be delegated to self-interested testing agents? In “Delegated Concept Testing in New Product Development,” J. Schlapp and G. Schumacher analyze different configurations of testing processes and compare their relative benefits. The authors show that the optimal number of agents to be involved in a testing process critically depends on the costs of testing, the informational quality of test outcomes, and the agents’ tendency to strategically prolong the testing process. The authors also provide guidelines on how to manage the testing process: which product concepts a firm should test (or not), and how it should structure the incentives of agents. Rather surprisingly, the authors also find that the delegation of testing activities can increase a firm’s chances of successful concept selection. The article thus provides a comprehensive analysis of a key organizational issue that firms encounter during their concept testing processes, and it challenges some common decision rules.