Innovation incentives and the design of value networks

Participation in value networks is vital for companies as competition has moved increasingly to the level of company networks. Consequently, the growing complexity of the globally networked business environment necessitates the use of supportive tools in the management of network relations. This Dissertation studies the value networks from two perspectives. First, as companies expect a return on their contributions to the network, the Dissertation constructs profit-sharing rules that serve as innovation incentives for the network partners. Second, the Dissertation builds models for the identification of network synergies in partner selection. The developments rest on game theory, transaction cost theory, and multi-criteria decision analysis. The results are normative in that the developed models give insight to decision-makers at three levels: (i) the company decision-maker wants to optimise the company's participation in various networks, (ii) the network decision-maker needs to incentivate the network partners to contribute to the network, and (iii) the policy-maker aims to construct socially optimal instruments for the innovation system. Overall, the use of jointly agreed profit-sharing rules and synergetic partnerships supports the attempts to reduce transaction costs, offering benefits to the firms who participate in value networks

Title: Partner Selection and Utility Sharing in Collaborative Networks

First, optimal partner selection is studied in the context of temporary project organisations, called virtual organisations (VO). Second, utility-sharing mechanisms that steer the network partners away from suboptimal behaviour are studied through game theoretic models. Both research topics are motivated by realistic case-examples. The thesis is composed of a brief summary article and two papers. In the first paper, we develop mixed integer linear programming (MILP) models to support the configuration of VOs in a virtual organisation breeding environment (VBE). Apart from the basic model – which focuses on the minimisation of total fixed and variable costs – we present extensions which capture transportation costs, elaborate alternative measures for capacity risk, and account for inter-organisational dependencies due to an earlier collaboration history. Computational experiments suggest that our MILP models are tractable for problems of reasonable size and consequently potentially useful for VO decision making. The second paper studies the design of process-innovation incentives in supplier networks. We present a real-life case study from the boat-building industry to illustrate the importance of explicitly encouraging suppliers to continuous improvement. Motivated by the case study, we construct a game theory mode