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Joint Product Improvement By Client And Customer Support Center: The Role Of Gain-Share Contracts In Coordination, Shantanu Bhattacharya, Alok Gupta, Sameer Hasija

Research Collection Lee Kong Chian School Of Business

We study the role of different contract types in coordinating the joint product improvement effort of a client and a customer support center. The customer support center's costly efforts at joint product improvement include transcribing and analyzing customer feedback, analyzing market trends, and investing in product design. Yet this cooperative role must be adequately incentivized by the client, since it could lead to fewer service requests and hence lower revenues for the customer support center. We model this problem as a sequential game with double-sided moral hazard in a principal-agent framework (in which the client is the principal). We follow …