Revenue sharingmodels in strategic alliances

Inter-organizational product development is becoming more common as even large manufacturers lack necessary knowhow to develop competitive products without external help. Especially development of products that include complex components, software and artificial intelligence require diverse knowhow, which leads organizations to seek special skills from external sources. Exploiting external stakeholders in product development can induce many benefits such as increase creativity, improve product quality and speed up the product development processes. Although the benefits of utilizing external companies’ expertise in product development is well recognized, less is known about how companies share the jointly generated value among each other. This study investigates cases presented in previous literature about companies’ risk and revenue sharing arrangements in different industries. Objective of this study is to construct illustrative revenue sharing models that OEMs could utilize when deepening their relationships with technology companies.