Checkpoints in New Product Development

Outsourcing the development of new products requires firms to establish strategies to monitor and control progress. We explore the value of establishing checkpoints within the product development lifecycle and provide a basis for determining the most appropriate point at which to review the progress of a development project. We find that establishing checkpoints reduces risk and allows firms to adjust their revenue-sharing ratio according to the progress of the project. We determine that the success of outsourcing is affected by the feasibility of the project and the level of effort and capabilities of the agent.