TY - BOOK
T1 - Innovation Incentives in Enterprise Networks
T2 - A Game Theoretic Approach
AU - Jarimo, Toni
N1 - Project code: G3SU00470
PY - 2004
Y1 - 2004
N2 - This paper explores the applicability of game theory to
the modelling of enterprise networks. Although these
networks have traditionally been studied by the
qualitative methods of industrial management, the
utilisation of game theory seems to provide new tools and
solution concepts for studying them. The paper reviews
earlier game theoretic studies on inter-firm cooperation
and presents a general stepwise pattern for game
theoretic modelling of network economy. In addition, the
paper constructs a game theoretic model for studying
possibilities for creating innovative incentives in an
enterprise network.
Inter-firm cooperation is characterised by the
interaction of several decision-makers where, on the one
hand, the network companies seek joint gains by
networking, but, on the other hand, individual companies
have their own objectives which may be in partial
conflict with those of other companies. Here, game theory
provides tools for the formal analysis of situations
where multiple decision-makers may have partially
conflicting interests, but cooperation between them is
allowed.
The determination of innovation incentives in enterprise
networks is studied through an application of game
theoretic modelling. An example from the boat-building
industry is presented to illustrate the relevance of
innovation incentives in enterprise networks.
Specifically, three different equilibrium concepts are
applied to determine innovation incentives under
different circumstances. The proposed model helps award
innovations that improve the efficiency of the network.
In addition, the efficiency-improving arrangements can be
implemented so that none of the network companies has to
suffer. Consequently, the enterprise network becomes
innovative and the network companies need not fear their
own losses when the efficiency-improving arrangements are
implemented. The model also helps share the surplus
utility gained through the innovation among the companies
of the network.
AB - This paper explores the applicability of game theory to
the modelling of enterprise networks. Although these
networks have traditionally been studied by the
qualitative methods of industrial management, the
utilisation of game theory seems to provide new tools and
solution concepts for studying them. The paper reviews
earlier game theoretic studies on inter-firm cooperation
and presents a general stepwise pattern for game
theoretic modelling of network economy. In addition, the
paper constructs a game theoretic model for studying
possibilities for creating innovative incentives in an
enterprise network.
Inter-firm cooperation is characterised by the
interaction of several decision-makers where, on the one
hand, the network companies seek joint gains by
networking, but, on the other hand, individual companies
have their own objectives which may be in partial
conflict with those of other companies. Here, game theory
provides tools for the formal analysis of situations
where multiple decision-makers may have partially
conflicting interests, but cooperation between them is
allowed.
The determination of innovation incentives in enterprise
networks is studied through an application of game
theoretic modelling. An example from the boat-building
industry is presented to illustrate the relevance of
innovation incentives in enterprise networks.
Specifically, three different equilibrium concepts are
applied to determine innovation incentives under
different circumstances. The proposed model helps award
innovations that improve the efficiency of the network.
In addition, the efficiency-improving arrangements can be
implemented so that none of the network companies has to
suffer. Consequently, the enterprise network becomes
innovative and the network companies need not fear their
own losses when the efficiency-improving arrangements are
implemented. The model also helps share the surplus
utility gained through the innovation among the companies
of the network.
KW - network economy
KW - enterprise networks
KW - game theory
KW - innovation management
KW - demand supply chain management
M3 - Report
SN - 951-38-6456-1
T3 - VTT Tiedotteita - Meddelanden - Research Notes
BT - Innovation Incentives in Enterprise Networks
PB - VTT Technical Research Centre of Finland
CY - Espoo
ER -
