The Research On Coordination Of Innovation Investment Among The Supply Chain Members

With the increased speed of technology innovation,the recent increase in competition and internationalization , the life cycle of products is short and customers are sensitive to time, so ourtsourcing is widely adopted. Successful outsourcing strategies can reduce costs, strengthen the core business competence, improve quality, increase profit margin and production efficiency. But the disadvantage is that innvation externalities between the activities retained and those outsourced. If such externalities are large, they will weakening the incentives for innovation, so the firm must work out more elaborate relations with its suppliers and strengthen supply chain management. Supply chain contract is a key factor influencing supply chain performances and has been valued by many scholars and are used to provide some incentives to adjust the relationship of supply chain partners to coordinate the supply chain, i.e. the investment in innovation of the members under decentralized supply chain is equal to that achieved under a centralized system.This dissertation studies the problem of coordination of innovation investment among the members under the demand uncertainty. The main contents of the research are as follows:1. Based on the analysis on the incompleteness of supply chain contracts, it was uncovered that the core problem of the coordination of innovation investment is designing the mechanism of coordination under the incomplete contract.2. Supply chain contracting models are extended by assuming the demand and variable costs to be endogenous. A common assumption in nearly all of the supply chain contracting literature is that both demand and variable costs are assumed to be exogenous. The game models under the wholesale price contract and profit-sharing contract with investment in innovation enhancing demand and reducing production costs are established, and the influence on the investment in innovation a supplier or manufacturer is engaged in is analyzed. We make game analysis and obtain equilibrium outcomes about investment in innovation and related conclusions under different contracts. Meanwhile, the paper addresses advantages of different kinds of contracts by comparing two types of contract under different values of parameters. 3. The coordinating mechanism of a supplier engaging in investment in innovation is put forward. The paper classifies the investment in innovation a supplier is engaged in into the cooperative innovation and the uncooperative innovation, the cooperative innovation will enhance demand for the final product and the uncooperative innovation will reduce the production costs. First, we makes analysis and proves that the decentralized decision can not coordinate the investment in innovation when the supplier is engaged in the uncooperative innovation, so it leads to the hold-up problem; thus, the coordinating mechanism of the parties agreeing to an initial wholesale price contract and sharing the ex-post profits is proposed and is proved that this mechanism can coordinate the investment in innovation of a supplier, further, the hold-up problem for the supplier's investment in innovation is resolved; at last, we analyze the coordination mechanism of investment in innovation under the condition of the linear demand function and the second cost function and conclude that the best initial wholesale price contract is unrelated to the distribution factor. The same mechanism will stimulate the supplier to implement less than the second-best investments when the supplier undertakes the cooperative innovation, so the mechanism can not coordinate the investment in innovation and the hold-up problem can not be solved.4. The coordinating mechanism of a manufacturer undertaking investment in innovation is put forward. We makes analysis and proves that the decentralized decision can not coordinate a manufacturer to invest in innovation and will lead to the hold-up problem when the manufacturer has an opportunity to invest in innovation that will either enhance demand or reduce the production costs. Thus, the coordinating mechanism of the parties agreeing to an initial wholesale price contract and sharing the ex-post profits is proposed and is proved that this mechanism can coordinate the investment in innovation of a manufacturer, further, the hold-up problem for the manufacturer's investment in innovation is resolved; at last, we analyze the coordination mechanism of investment in innovation under the condition of the linear demand function and the second cost function and conclude that the best initial wholesale price contract is unrelated to the distribution factor.