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The analysis on the incentive mechanism of the service outsourcing industry cluster principal-agent model

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2 Author(s)
Kaijun Yang ; Bus. Sch., Hohai Univ., Nanjing, China ; Shu Wang

To tackle asymmetric information, agent ineffectiveness existing in the service outsourcing industry, the paper takes secondary subcontracting services inside the clusters into consideration, which discusses the effectiveness of incentives in principal-agent model of outsourcing. The game models are put forward. According to the results,the constraints range of incentives that the outsourcing contract-issuing party gives to the service outsourcing contract-undertaking party can be calculated. The incentives which are offered by outsourcing contract-issuing party are invalid and below the lowest bound. Meanwhile, when incentives are above the highest bound, outsourcing contract-issuing party can choose subcontract to maximize its benefits.

Published in:

Management Science and Industrial Engineering (MSIE), 2011 International Conference on

Date of Conference:

8-11 Jan. 2011