Innovation incentives and the design of value networks

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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.
value networks, innovation management, profit sharing, partner selection, game theory, transaction cost theory, multi-criteria decision analysis, mixed-integer linear programming
  • [Publication 1]: Toni Jarimo, Urho Pulkkinen, and Ahti Salo. 2005. Encouraging suppliers to process innovations: a game theory approach. International Journal of Technology Intelligence and Planning, volume 1, number 4, pages 403-423. © 2005 Inderscience Enterprises. By permission.
  • [Publication 2]: T. Jarimo and H. I. Kulmala. 2008. Incentive profit-sharing rules joined with open-book accounting in SME networks. Production Planning & Control, volume 19, number 5, pages 508-517. © 2008 by authors and © 2008 Taylor & Francis. By permission.
  • [Publication 3]: Henri Hytönen, Toni Jarimo, Ahti Salo, and Erkki Yli-Juuti. 2008. Markets for standardized technologies: patent licensing with Principle of Proportionality. Helsinki University of Technology, Systems Analysis Laboratory, Research Report E21. © 2008 by authors.
  • [Publication 4]: Toni Jarimo and Ahti Salo. 2008. Multi-criteria partner selection in virtual organisations with transportation costs and other network interdependencies. Helsinki University of Technology, Systems Analysis Laboratory, Research Report E22. © 2008 by authors.