Networks and Markets

Networks influence human behavior and well being, and realizing this, individuals make conscious efforts to shape their own networks. Over the past decade, economists have combined these ideas with concepts from game theory, oligopoly, general equilibrium, and information economics to develop a general framework of analysis. The ensuing research has deepened our understanding of classical questions in economics and opened up entirely new lines of enquiry

Critical Success Factors For Supplier Selection: An Update

For many organizations effective supplier evaluation and purchasing processes are of vital importance. As the pace of market globalization quickens, the number of potential suppliers and the number of factors to consider when selecting suppliers increases. In this paper we present the critical success factors (CSFs) for supplier selection reported in the literature emanating from the seminal work of Dickson and provide an update based on reviewing more than 110 research papers. Our study indicates significant change in the relative importance of various critical success factors in the research reported during 1966-1990 versus 1990-2001. Increased competition and globalization of markets facilitated by Internet-based technologies have combined to dramatically change the ranking of factors while introducing new criteria to the supplier selection process. Based on the results of this study, we conclude that supplier selection criteria will continue to change based on an expanded definition of excellence to include traditional aspects of performance (quality, delivery, price, service) in addition to non-traditional, evolving ones (just-in-time communication, process improvement, supply chain management)

Transparency and Control in Platforms for Networked Markets

In this work, we analyze the worst case efficiency loss of online platform designs under a networked Cournot competition model. Inspired by some of the largest platforms today, the platform designs considered tradeoffs between transparency and control, namely, (i) open access, (ii) controlled allocation and (iii) discriminatory access. Our results show that open access designs incentivize increased production towards perfectly competitive levels and limit efficiency loss, while controlled allocation designs lead to producer-platform incentive misalignment, resulting in low participation and unbounded efficiency loss. We also show that discriminatory access designs seek a balance between transparency and control, and achieve the best of both worlds, maintaining high participation rates while limiting efficiency loss. We also study a model of consumer search cost which further distinguishes between the three designs

Fairness and Organizational Performance: Insights for Supply Chain Management

For this briefing document we review the organizational fairness literature with a focus on the supply chain context. Supply chain fairness is an under-researched topic and we seek to close this gap through a systematic literature review. We draw upon key contributions to the psychology, economics and organizations studies literature to illuminate the salient features of fairness in social and economic systems, such as supply chains. This briefing document highlights that fairness influences economic behaviour and firm performance in important ways. The literature shows that fairness in organizational practices can foster various sources competitive advantage and hence improve organizational performance. While there is a robust literature on fairness in the human resources management (HRM) domain, fairness perceptions by other stakeholder groups are underexplored and warrant further research attention. Moreover, while the business case for supply chain fairness is well established, other salient issues remain under-researched in the academic literature. We explore avenues for future research

Contracting for innovation : vertical disintegration and interfirm collaboration

Rapidly innovating industries are not behaving the way theory expects. Conventional industrial organization theory predicts that, when parties in a supply chain have to make transaction-specific investments, the risk of opportunism will drive them away from contracts and toward vertical integration. Despite the conventional theory, however, contemporary practice is moving in the other direction. Instead of vertical integration, we observe vertical disintegration in a significant number of industries, as producers recognize that they cannot themselves maintain cutting-edge technology in every field required for the success of their products. In doing this, the parties are developing forms of contracting beyond the reach of contract theory models. In this Article, we connect the emerging contract practice to theory, learning from what has happened in the real world to frame a theoretical explanation of this cross-organizational innovation and to reconceptualize the boundaries of the firm accordingly. We argue that the vertical disintegration of the supply chain in many industries is mediated neither by fully specified technical interfaces that allow suppliers to produce a modular piece of the ultimate product, nor by entirely implicit relational contracts supported only by norms of reciprocity and the expectation of future dealings. Rather, we suggest that the change in the boundary of the firm has given rise to a new form of contracting between firms -- what we call "contracting for innovation." This pattern braids explicit and implicit contracting to support iterative collaborative innovation by raising switching costs. These costs, represented by the parties' parallel transaction-specific investments in knowledge about their collaborators' capacities, deter opportunism under circumstances where explicit contracting, renegotiation, and the anticipation of future dealings cannot

Business in the World of Water

The book aims to: 1) clarify and enhance understanding by business of the key issues and drivers of change related to water; 2) promote mutual understanding between the business community and non-business stakeholders on water management issues; and 3) support effective business action as part of the solution to sustainable water management. The report poses three scenarios about the possible future of water in 2025 which serve as catalysts for exploration into how businesses can contribute to sustainable water management

COMBINING NETWORK THEORY WITH CORPORATE GOVERNANCE: CONVERGING MODELS FOR CONNECTED STAKEHOLDERS

Traditional corporate governance patterns are based on the interaction among composite stakeholders and the various forms of separation between ownership and control. Stakeholders cooperate around the Coasian firm represented by a nexus of increasingly complex contracts. These well-known occurrences have been deeply investigated by growing literature and nurtured by composite empirical evidence. Apparently, unrelated network theory is concerned with the study of graphs as a representation of (a)symmetric relations between discrete objects (nodes connected by links). Network theory is highly interdisciplinary, and its versatile nature is fully consistent with the complex interactions of (networked) stakeholders, even in terms of game-theoretic patterns. The connection between traditional corporate governance issues and network theory properties is, however, still under-investigated. Hence the importance of an innovative reinterpretation that brings to "network governance". Innovation may, for instance, concern the principal-agent networked relationships and their conflicts of interest or the risk contagion and value drivers – three core governance issues. Networks and their applications (like blockchains, P2P platforms, game-theoretic interactions or digital supply chains) foster unmediated decentralization. In decentralized digital platforms stakeholders inclusively interact, promoting cooperation and sustainability. To the extent that network properties can be mathematically measured, governance issues may be quantified and traced with recursive patterns of expected occurrences

COMBINING NETWORK THEORY WITH CORPORATE GOVERNANCE: CONVERGING MODELS FOR CONNECTED STAKEHOLDERS

Traditional corporate governance patterns are based on the interaction among composite stakeholders and the various forms of separation between ownership and control. Stakeholders cooperate around the Coasian firm, represented by a nexus of increasingly complex contracts. These well-known occurrences have been deeply investigated by growing literature and nurtured by composite empirical evidence. Apparently unrelated network theory is concerned with the study of graphs as a representation of (a)symmetric relations between discrete objects (nodes connected by links). Network theory is highly interdisciplinary, and its versatile nature is fully consistent with the complex interactions of (networked) stakeholders, even in terms of game-theoretic patterns. The connection between traditional corporate governance issues and network theory properties is, however, still under-investigated. Hence the importance of an innovative reinterpretation that brings to \u201cnetwork governance\u201d. Innovation may, for instance, concern the principal-agent networked relationships and their conflicts of interest or the risk contagion and value drivers \u2013 three core governance issues. Networks and their applications (like blockchains, P2P platforms, game-theoretic interactions or digital supply chains) foster unmediated decentralization. In decentralized digital platforms, stakeholders inclusively interact, promoting cooperation and sustainability. To the extent that network properties can be mathematically measured, governance issues may be quantified and traced with recursive patterns of expected occurrences