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 decisionmakers 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.