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Optimal Profits Sharing Tactics between Partners of a High-tech Virtual Enterprise Based on Stackelberg Game

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2 Author(s)
Gao Chang-yuan ; School of Economy and Management, Harbin University of Science and Technology, P.R.China, 150040 ; Liu Song

Drastic market fluctuation and high innovation risks have made it difficult for high-tech enterprises to compete for development when facing the impact of globalization. The underlying fact is a sole high-tech enterprise ordinarily does not possess the necessary competencies for reacting to demands of market timely. To establish a high-tech virtual enterprise (HTVE) is an effective method to cultivate sustainable competition advantages of high-tech enterprises. Generally speaking, most of the partners in a HTVE might incline to reduce their innovation efforts during the process of cooperation for worrying about irrevocable loses resulted from unpredictable risks. Thus reasonable profits sharing methods are needed for motivating partners' enthusiasm. But, conventional profits sharing methods based on centralized control mechanism are not suitable for a HTVE, because partners may unnecessarily try to achieve the largest whole profits of HTVE impartially. In practice, it is the business correlations that decide the cooperation type between partners. So this paper firstly examines what the best cooperation type is for different partners according to the correlations of the tasks the partners assume. Obviously, different cooperation type needs different profits sharing mechanism to sustain and foster the stability of a HTVE. Then, the paper provides extensive profits sharing method for the partners who readily tend to form a centralized cooperation relationship. As for the partners who do business under a decentralized cooperation type, making an optimal internal pricing tactic may be a better manner than through centralized control to assure the whole optimization. Thus, the paper subsequently lays emphasis on exploring the optimal pricing tactics of newly developed high-tech product for the transaction between decentralized partners based on Stackelberg game theory. Finally, the optimal equilibrium solutions for every partner to obtain maximum profits are given. The s- tudy of optimal profits sharing tactics may serve as a reference for a HTVE to establish feasible motivation mechanism to achieve better whole performance

Published in:

2006 International Conference on Management Science and Engineering

Date of Conference:

5-7 Oct. 2006