Value Chain Cost Analysis Based On Innovation Theory

Due to the advent of information technologies (IT), transaction costs andinformation asymmetry between buyers and suppliers have been largelyreduced. Hence factors that determine a company's competitiveness areshifting from product functionality to cost, speed, and flexibility toaccommodate customers' service needs. Meanwhile, the impact is also shapingthe value chain activities and enterprise organizational structure. The purposeof this research is to analysis the relationship between value chain linkage andtransaction costs, in order to propose innovative approaches for reducingagency costs and transaction costs of value chain activities.In the thesis, two approaches are included, innovation of processes andinnovation of organizational structures. Rather than focusing on the verticalintegration or the vertical disintegration (specialization), this researchproposes a concept of value space with an analytical framework. Memberswithin the value space dynamically exchange resources according tocustomers' needs to form a special value chain. Besides the innovation ofvalue chain shapes, organizational structures focus on the linkages betweenmembers, as well, in order to improve the optimal resource exchanges. Andthere is a case analysis for the importance of processes innovation betweenvalue chain members, focusing on the strategic alliance. The proposedanalytical framework is applicable to the development of value chainstrategies in both firms and industries.