1,720,976 research outputs found
Value creation, value appropriation, and cooperation in team production
No full textWe propose a theoretical framework and develop a game-theoretical analysis to advance understanding of the cooperation dilemma in team production. We conceptualize team production as a process where productive and appropriative activities coexist, shifting the focus from whether team members cooperate to what type of cooperative behavior they are willing to adopt. Depending on the extent to which members cooperate to create value and compete to appropriate value, we can observe scenarios of full, partial, and no cooperation. After characterizing member behavior in the different scenarios, we study which form of cooperation can be sustained through repeated interaction, mutual monitoring, and reciprocity. To do so, we allow for different deviations from cooperation, which are then accompanied by different reactions according to an equivalent retaliation strategy. Our focus is on how member behavior and incentives to cooperate relate to teamsize. We also introduce conceptual elements that describe teamproduction in organizational teams as well as interorganizational relationships
Control and contract design in research collaborations: a complete contracts perspective
No full textIncumbent firms, especially in high-tech industries, often contract and collaborate with small research units on single projects. A delicate resulting contracting decision thus is how to allocate control. This paper considers the incumbent's problem to design a research contract that specifies: the allocation of control; the unit's research input, and its monetary compensation. Contracting is complicated by the unit's private information about its technological skills; research outputs also are not verifiable. Control affects the distribution of the private benefits from research and can be shared. From a complete contracts perspective, an allocation of control that is contingent on the unit's reported information provides the incumbent an additional instrument for designing the incentives. Control can generate countervailing incentives and mitigate the limitations of contracts in research environments, to the point of extracting the full surplus. The analysis further clarifies when control is centralized by the incumbent, when it is shared between the parties, and when it is delegated to the unit
Strategic interaction in alliances
No full textThis article studies strategic interactions between firms that form alliances to exploit synergistic benefits. Firms cooperate to create value, but they can also compete to capture value. Fundamental questions rarely addressed by strategy scholars relate to how the configuration of control over resources influences firms’ strategies, the potential for termination, and the emergence of cooperation and trust. The formal results reveal crucial aspects of the interorganizational rent-generating process and yield testable implications. With greater synergistic benefits, firms invest more, but they also compete more intensively to capture more value. With symmetric control, more value gets created, which limits the potential for termination but also exacerbates the competition for value; from a relational perspective, this form of control augments the calculative rationale of cooperation and trust
On the contractual governance of research collaborations: allocating control and intellectual property rights in the shadow of potential termination
No full textThis paper investigates the governance design problem of a large company that wants to engage a small and cashless firm into a research collaboration. This analysis reflects the frequently observed collaborations between pharma companies and biotechs, and an actual research contract is assessed to link theory to practice. The governance form refers to the allocation of control rights over the research process and property rights over research output(s), as determined by the initial contract; yet this contract is incomplete. The parties negotiate at a later stage from bargaining positions that depend on the initial choice of the governance, but they also contemplate the possibility that the collaboration will be terminated. By means of a simple model that captures the core aspects of the contractual environment, I answer a key research question: How should governance be designed in the shadow of potential termination to provide the research firm with the incentives to invest in the collaboration? First, it is in the company’s interest to choose a governance form that eliminates the possibility of termination and stabilizes the collaboration whenever possible. Second, if the collaboration cannot be stabilized, the company faces a trade-off between reducing the probability of termination and providing incentives, which is ultimately resolved by making the collaboration highly unstable. Third, property rights and control are substitutes in the governance design: If the company collects more property rights, it must relinquish more control rights
Employment relationships in knowledge-based firms: who should have power?
No full textThis paper investigates the relationship between an employer and a knowledge worker when an arrangement is set ex-ante to affect the relative bargaining position in the ex-post negotiation. Specifically, we study what drives the employer's decision to endow the worker with the rights to control the deployment of valuable resources when this choice affects the worker's bargaining power in the negotiation. Our analysis highlights how different informational asymmetries impact on the employer's problem of designing the employment contract to be offered to the worker
Second best
No full textThis article offers a brief overview of second best reasoning, sketches the theory and provides an example that illustrates the mechanics behind. The theory aims to identify the distortions generated by an economic friction that restraints a decision maker, using a three-step procedure: (i) compute the optimal choice of a decision maker in a frictionless environment (the first best solution); (ii) compute the optimal choice when an additional constraint due to the friction is added to the analysis (the second best solution); (iii) determine the disturbing effects of the friction by comparing the two solutions
Bargaining models
No full textNegotiation is a pervasive feature of social exchange. Bargaining theory and the related models examine the problem of rational individuals that pursue their own interest and must reach an agreement to divide the gains from cooperating. This article sketches two pillars of the literature on bargaining: the axiomatic solution of Nash (1950) and the solution of Rubinstein’s (1982) bargaining game with alternating offers. It also comments briefly on the recent applications of bargaining and cooperative game theory to strategy
What drives a platform's strategy? Usage, membership and competition effects
No full textWe develop a theoretical model to understand the strategic link between a platform's and developers' strategies, and the effect of within-platform competition on developers strategies. We qualify the nature of network effects taking place within platform markets, and show that the critical determinant of platform strategies and, those of developers, is the relative importance of the two components of the network effects; what we term quality versus membership effect
On the management of open innovation
No full textIn an open innovation relationship, the party that owns a key asset enjoys bargaining power that discourages the investments of the other party in the collaboration. We show that these incentives can be restored by conferring on the weak party the power to take decisions during the research process -- e.g., a pharmaceutical firm with manufacturing and commercialization assets offers the direction of a joint research project to a biotech partner. However, on many occasions, the strong party still captures more value from the collaboration by retaining the power to take decisions during research even if it produces less innovation value and fewer aggregate profits. We conclude that the potential of open innovation is underexploited. In particular, owners may not release enough power to take decisions on the use of their assets
Big tech, small tech, and the dynamics of technology life cycle: the case of AI’s evolution
No full textWe investigate the dynamic interplay between large incumbents (particularly Big Techs) that engage in corporate venture capital (CVC) investments and mergers and acquisitions (M&A), venture capital (VC) that finances startups, and startups that enter and exit the market. We aim to investigate the intricate mechanisms linking incumbents’, VCs’, and startups’ activities and affecting the technology life cycle. Theoretically, we build on previous research pointing to the “kill zone” and “innovation zone” effects of incumbents’ M&A activities, enlarging the analysis to CVC activities and moving from static to dynamic effects. Empirically, we juxtapose our findings from the Artificial Intelligence (AI) technology space with established frameworks of technology and industry evolution. Our research underscores the multifaceted roles played by incumbents in shaping the innovation ecosystem, especially within rapidly evolving domains like AI
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