Dynamic R&D with strategic behavior

We consider a two-player infinite-horizon discrete-time game where the players invest in R&D in order to develop a new technology to reduce production costs. We compute firms’ equilibrium R&D investment strategy as a function of the level of knowledge in the economy. The latter changes endogenously with firms’ decisions to invest in R&D. We show that firms do not invest in R&D if the knowledge level is too low, while both firms do R&D when the level of knowledge is high. However, there is an intermediate knowledge region where there are two pure Nash equilibria: either no firm does R&D or both firms do R&D. Multiplicity of equilibria leads generally to a challenging selection problem. In our context, it is shown that the case of both firms investing in R&D can be Pareto-dominating for both players. It follows that government actions which allow an economy to increase the level of knowledge above a threshold may be welfare enhancing.     

具有不同决策规则的Cournot双寡头模型分析

以寡头市场中两家具有有限理性且以产量竞争的异质企业为背景,建立了一个离散时间的非线性动态古诺双寡头模型.讨论了模型的边界均衡点和Cournot-Nash均衡点的存在性和稳定性,给出了Cournot-Nash均衡点的稳定区域.通过数值模拟,利用单参数分岔图分析了随着参数的变化,系统的复杂动力学行为的变化情况.得出调整速度太大会导致Cournot-Nash均衡点失去稳定性,系统将产生混沌吸引子等复杂的动力学现象.此外初值极小的变化将导致系统产生巨大的波动.同时企业成本函数的差异性也会使得系统产生不同的分岔.     

Challenges, approaches and architecture for distributed process integration in heterogeneous environments

Integration and coordination of distributed processes remains a central challenge of construction information technology research. Extant technologies, while capable, are not yet scalable enough to enable rapid customization and instantiation for specific projects. Specifically, the heterogeneity of existing legacy sources together with firms’ range of approaches to process management makes deployment of integrated information technologies impractical. This paper reports on an architecture for distributed process integration named process connectors that addresses heterogeneity in a scalable manner. The process connectors architecture incorporates two key approaches that address heterogeneity over varying time scales. The SEEK: Scalable Extraction of Enterprise Knowledge toolkit is reviewed as a mechanism to discover semantically heterogeneous source data. The SEEK approach complements existing data integration methods for persistent sharing of information. To make use of shared data on a per project basis, a schedule mapping approach is presented that integrates firms’ diverse individual schedules in a unified representation. The schedule mapping approach allows integration of process views that have different levels of detail, while allowing participants to maintain their own view of the process. Collectively, SEEK and the schedule mapping approach facilitate a broad range of analyses to support coordination of distributed schedules. While this paper focuses primarily on schedule process integration, the process connectors architecture is viewed as providing a broad solution to discovery and integration of firms’ process data.     

Firms’ involvement in Open Source projects: A trade-off between software structural quality and popularity

Open Source (OS) was born as a pragmatic alternative to the ideology of Free Software and it is now increasingly seen by companies as a new approach to developing and making business upon software. Whereas the role of firms is clear for commercial OS projects, it still needs investigation for projects based on communities. This paper analyses the impact of firms’ participation on popularity and internal software design quality for 643 SourceForge.net projects. Results show that firms’ involvement improves the ranking of OS projects, but, on the other hand, puts corporate constraints to OS developing practices, thus leading to lower structural software design quality.     

Equilibrium stability of a nonlinear heterogeneous duopoly game with extrapolative foresight

We make a further attempt to investigate equilibrium stability of a nonlinear Cournot duopoly game with adaptive adjustment toward best reply by assuming heterogeneous firms where one firm only uses naive expectations whereas the other employs a simple forecast technology to form sophisticated expectations. More precisely, based on the knowledge of actual production of the competitor and its actual rate of change, the clever firm is able to evaluate its opponent's output in the near future by virtue of straightforward extrapolative foresight. We finally arrive at a conclusion that this seemingly rational mechanism takes a positive effect on convergence to equilibrium behavior. Inconsistent with common intuition, we demonstrate that stronger foresight ability is not always better to stabilize the equilibrium. Particularly, perfect foresight dose not give rise to the best stabilizing factor.     

Assessing the importance of industry in the adoption and assimilation of IT: Evidence from Italian enterprises

We analysed the role of industry in determining the diffusion and business value created by IT. Data was collected for this purpose by surveying 192 large enterprises in Italy. Our research revealed three findings. First, in the material services and non-hi-tech manufacturing industries, firms had a relatively limited adoption of IT, resulting in little business impact. Second, firms’ IT spending behaviour depended on their industry type and not on their IT capabilities. However their capabilities were more important than industry in explaining why firms achieved benefits from IT adoption that depended on the previous accumulation of IT resources and other capabilities. Third, industry type determined the degree to which IT affected profitability and its effectiveness in helping firms to defend their competitive advantage. Specifically, the slower the adoption of IT in an industry, the greater its impact on the firm's profitability.The implications of these findings for managers and policy-makers are discussed.     

Chaotic dynamics in the software market with network externalities

In this study, we built discrete-time dynamic systems to investigate the chaotic dynamics of a software market with network externalities. Monopoly and duopoly systems are considered separately. The chaotic features of both monopoly and duopoly models are verified through numerical simulations, including bifurcation diagrams, maximal Lyapunov exponent, and strange attractors. In the monopoly model, the strategy of distributing low-quality versions is evaluated. The impacts of decision parameters on the dynamics of the system are also investigated. Meanwhile, the Ott, Grebogi, and Yorke method is adopted to control chaos in the monopoly model by making moderate changes in the market evolution speed of the low-quality version software. In the duopoly model, the system dynamics are illustrated numerically. Three different cases are considered in evaluating decisions of firms regarding distribution or non-distribution of the low-quality version software. Furthermore, the compatibility parameter is examined with regards to its impacts on the dynamics of the duopoly system.     

Supplier selection and order lot sizing modeling: A review

With globalization and the emergence of the extended enterprise of interdependent organizations, there has been a steady increase in the outsourcing of parts and services. This has led firms to give more importance to the purchasing function and its associated decisions. One of those decisions which impacts all firms’ areas is the supplier selection. Since the 1950s, several works have addressed this decision by treating different aspects and instances. In this paper, we extend previous survey papers by presenting a literature review that covers the entire purchasing process, considers both parts and services outsourcing activities, and covers internet-based procurement environments such as electronic marketplaces auctions. In view of its complexity, we will focus especially on the final selection stage that consists of determining the best mixture of vendors and allocating orders among them so as to satisfy different purchasing requirements. In addition, we will concentrate mainly on works that employ operations research and computational models. Thereby, we will analyze and expose the main decision's features, and propose different classifications of the published models.     

Product mix strategy and manufacturing flexibility

The manufacturing industry is facing a turbulent and constantly changing environment, with growing complexity and high levels of customisation. Any investment solution should address these problems for a dynamic market and within limited budget boundaries, so that companies try to remain competitive. The authors propose a real options model to support firms making important investment decisions, specifically decisions associated with the acquisition of new equipment aimed at allowing firms to increase their manufacturing flexibility for the production of both standard and customized products. This paper is partially based on a real operating experience related to visual finishing technology features in an industrial company that conforms to the definitions of the product mix. The authors’ motivation for this work is driven by firms’ desire to satisfy specific customer needs, and to respond to them quickly under uncertain demand. Our goal, using theories from finance, production management, and product offering management, is to conclude that there is a relevant difference between the evaluation of the technology that is to be chosen, and the potential value due to product mix adaptations that are able to provide the maximum return from investment. We address problems related to standard and customized production systems, and the decision to invest in a set of resources that will enable this choice.     

Information security in networked supply chains: impact of network vulnerability and supply chain integration on incentives to invest

Recent supply chain reengineering efforts have focused on integrating firms’ production, inventory and replenishment activities with the help of communication networks. While communication networks and supply chain integration facilitate optimization of traditional supply chain functions, they also exacerbate the information security risk: communication networks propagate security breaches from one firm to another, and supply chain integration causes breach on one firm to affect other firms in the supply chain. We study the impact of network security vulnerability and supply chain integration on firms’ incentives to invest in information security. We find that even though an increase in either the degree of network vulnerability or the degree of supply chain integration increases the security risk, they have different impacts on firms’ incentives to invest in security. If the degree of supply chain integration is low, then an increase in network vulnerability induces firms to reduce, rather than increase, their security investments. A sufficiently high degree of supply chain integration alters the impact of network vulnerability into one in which firms have an incentive to increase their investments when the network vulnerability is higher. Though an increase in the degree of supply integration enhances firms’ incentives to invest in security, private provisioning for security always results in a less than socially optimal security level. A liability mechanism that makes the responsible party partially compensate for the other party’s loss induces each firm to invest at the socially optimal level. If firms choose the degree of integration, in addition to security investment, then firms may choose a higher degree of integration when they decide individually than when they decide jointly, suggesting an even greater security risk to the supply chain.     

A Nonlinear Duopoly with Efficient Production-Capacity Levels

In this paper, we propose an oligopoly model where each firm can produce with linear costs up to its “maximum efficient scale” level and then it incurs quadratic costs for the production exceeding that level. As a consequence, the discrete dynamic model of firms’ choices over time is expressed by a piecewise-smooth map. For this model, we show how border collision bifurcations are responsible of the main qualitative changes in the dynamic of the system. In particular, employing specific numerical examples, we explain the basic mechanism of creation/destruction of periodic points and limit cycles through border crossings as the parameters of the model are changed.     

Game theory applied to dynamic duopoly problems with production constraints

In this paper an application of differential game theory in the area of microeconomics is presented. The problem considered is that of a dynamic duopoly where two firms each limited by a maximum capacity of production, share the same market, and try simultaneously but independently to maximize their profits over a certain planning horizon. While the static duopoly theory does not address itself to the question of the process by which changes in the price are brought about, but only compares the prices before and after the change takes place, the dynamic market theory, considered in this paper, allows for an analysis of how the price changes with time and what trajectory it follows. Necessary conditions for the existence of a Nash equilibrium solution in the general case are discussed and more specific results for the special case of linear demand and quadratic cost functions are developed.     

eCRM 2.0 applications and trends: The use and perceptions of Greek tourism firms of social networks and intelligence

Although previous CRM studies treat eCRM as a synonymous with 1:1 communications and personalised service at an individual basis, web 2.0 further enables firms and users to generate customer value and build customer relations through social networking, co-learning, co-production and collaboration. The paper advocates the development of eCRM 2.0 strategies aiming at exploiting both the networking and social/customer intelligence of web 2.0 by integrating and engaging customers and communities along firms’ value chain operations. The usage and readiness of Greek tourism firms to embark on eCRM 2.0 strategies was examined by conducting an e-mail survey and focused groups with tourism professionals. Despite the low adoption rates of eCRM 2.0, respondents were aware and greatly concerned about the practical implications of this field, which in turn elucidated an agenda for future research studies.     

Did IT consulting firms gain when their clients were breached?

Despite all the research investigating the impact of data and information technology (IT) breaches to the market value of the breached firms, few studies explore the effects of breach events on the stock price of consulting firms that supplies the know-how and infrastructure to create, implement and maintain those information systems that were hacked. Information transfer theory and capital market expectation suggest that as more data breaches occur every year, investors, clients and customers may well look beyond the faults of the individual firms, and place some responsibility on the shoulders of these IT providers. In this study, we investigated a total of 83 breach events affecting a wide range of US firms in various industries in year 2006 and 2007. We found that the market value of the IT consulting firms is positively associated with the disclosure of IT security breaches. The IT consulting firms realized an average abnormal return of 4.01% during the 2-day period after the announcement. Using the event-study method and Ordinary Least Squares Regression to calculate and analyze these firms’ abnormal returns, we found evidence that as the number of breached records increased, the IT consulting firms tended to suffer negative returns. In addition, the observed impact was more salient for breaches that affect technology intensive firms than retailing or other firms. In other words, generally speaking, the IT consulting firms have similar experiences with the attacked firms.     

产品功能定位与创新内生溢出决策模型研究

为揭示内生溢出的基本规律,建立了含有两种替代率参数的动态博弈模型,研究了在内生溢出假设下水平差异双寡头厂商的产品功能定位—–定价和创新投入问题.研究发现,内生溢出条件下产品定位差异一般显示出按各种参数的变化在最大与最小差异之间分布的特点,最大和最小差异仅仅是所提出模型的特例;创新投入与创新效率和吸收能力之间以及产品定位差异与各参数之间存在几种正相关与负相关函数关系,揭示了水平差异产品内生溢出和低成本创新的一些特点.     

考虑排污权交易的有限理性企业博弈模型研究

在有限理性基础上建立寡头垄断博弈模型,将其引入到排污权市场中,同时考虑了生产成本、污染治理成本、排污权交易价格的影响,使该模型更符合实际。将不同理性层次,不同结构的非线性成本函数,不完全信息等因素引入到博弈模型中,对改进后的模型的演化过程进行分析,找出博弈均衡点,并分析其稳定性。由于具有有限理性的双寡头Cournot博弈模型会产生丰富的动力学行为,因此对其进行数据模拟后并对混沌现象进行分析。在此基础上,运用延迟反馈控制法对寡头垄断博弈模型的混沌控制进行了解析分析,结果表明选择合适的控制因子可使模型稳定在Nash均衡。     

Strategic alliance via co-opetition: Supply chain partnership with a competitor

Why do two competitors form an alliance yet still compete with each other in the marketplace? Consider Yahoo's recent alliance with Microsoft to use its Bing search engine, yet both companies will compete with each other to sell search ads. In this paper we study dynamic alliance formation among competing firms with a multi-period model. In each period, there is a two-stage game of co-opetition. In Stage 1, two competing firms decide on forming a partnership by negotiating a contractual agreement; and in Stage 2, all firms in the market engage in price competition. We formulate the economic incentives and costs of the cooperation, propose the optimal contract and discuss the reasons for a temporary co-opetition and a delayed co-opetition. The results of the paper shed light on firms' strategic decision on co-opetition and provide implications to public policy makers.     

A Differential Game Model of Oligopoly

Most of the literature on oligopoly deals with profit-maximizing firms engaging in “static” repetitive games. As the number of firms increases, the Nash-equilibrium strategy for each Cournot oligopolist converges to the competitive solution. In a two-person, zero-sum differential game model of duopoly [1] we introduced dynamic elements and explored alternative entrepreneurial goals. The duopolists endeavor to outsell each other subject to a no-loss constraint; the saturation of present markets by past sales and the impact on future goodwill by current advertisement are handled through “state variables.” The differential game formulation [1, 2] offers two advantages: (a) near perfect information leads to frequent existence of pure strategy equilibria and (b) the use of optimal control theory facilitates the characterization of the time structure of an equilibrium. However, the two-person, zero-sum framework is too restrictive while a general theory for solving n-person, non-zero sum differential games has still not been developed [3, 4].     

Development of a quick credibility scoring decision support system using fuzzy TOPSIS

In this study, a quick credibility scoring decision support system is developed for the banks to determine the credibility of manufacturing firms in Turkey. The proposed decision support system is expected to be used by the banks when they want to determine whether an applicant firm is worth a detailed credit check or not. Using such a quick credit scoring decision model reduces the banks’ workload. The proposed credit scoring model is based on the financial ratios and fuzzy TOPSIS approach. It obtains two separate scores which reflect the attractiveness of manufacturing industries within the overall economy and manufacturing firms’ performance with respect to its competitors belonging to the same industry. These two scores are then used to determine the credibility of applicant manufacturing firms. The developed decision support system is tested with various real cases and satisfactory results are obtained. An application is also provided in the paper for illustrative purposes.     

Affiliated marketing

In information-intensive environments some firms may be sending their customers to other firms’ or affiliates’ websites in order to generate additional sales for their affiliates. Although this may provide a choice for the customers, from a firm’s point of view such strategies have the potential to cannibalize own sales. Hence, when customers purchase from other firms’ websites, the firm may loose its own customers. This study analyzes the optimality of such strategies using an analytical framework. The findings show that a firm may increase its prices and profit when its own customers purchase from other firm websites. An analysis of customer surplus and total welfare show that such strategies may have adverse effects. The results show that customer surplus and total welfare may decrease as a result of affiliations.