Risk assessment and profit sharing in business networks

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29 Citazioni (Scopus)

Abstract

Nowadays network is the preferred governance form to conduct economic transactions.Network solution allows to reach flexibility maintaining cost and quality level. Sincenetwork concept refers to a great variety of organizational hybrids it is possible tochoose the one that fits better market requirements. The new trends in interorganizationrelationships push towards network solutions: companies are interestedin relationships with partners and customers to overcome resource dependence, toenter too risky market or simply differentiate their business portfolio. The proposedresearch focuses on the network concept aiming at highlighting threats andopportunities to investigate the double nature of the risk concept. Network structuresoffer flexibility and higher profit as a consequence and business risk sharingopportunity.These two aspects (profit and risk) are strictly related and have to be consideredtogether to depict a complete scenario; this implies that risk assessment andmanagement in network environment cannot neglect profit sharing or, in other words,that profit sharing mechanisms should use risk as driver. In this context our researchproposes a methodology to measure risk taking into account network peculiarities; riskestimation is a basic step to evaluate the opportunity cost of capital needed to computethe network Net Present Value (NPV) that is assumed as base in the profit sharingprocess. The profit sharing process has been tackled using the Shapley value approachthat is inspired to the fairness principle while the opportunity cost of capital is assessedusing the Capital Asset Pricing Model (CAPM).
Lingua originaleEnglish
Numero di pagine8
RivistaInternational Journal of Production Economics
Volume131
Stato di pubblicazionePublished - 2011

All Science Journal Classification (ASJC) codes

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  • Economics and Econometrics
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering

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