Alliances and cost declaration

Abstract

Our model explores the co-existence of both cooperative and competitive behaviors in an alliance setting. Specifically, when alliance partners cooperatively choose observable contributions given reported costs, their self-interested behavior may lead to misreporting of costs related to these contributions. We show that truthful cost reporting by an alliance firm is valuable, thereby establishing that accurate cost reports are a determinant of successful alliance performance. Next we show that an alliance firm's cost reporting behavior may depend on the type of payoffs it receives from alliance, i.e., a share of profit or revenue, and also on the type of relationship between contributions, i.e., whether they are technical substitutes or complements. While we have focussed on highlighting factors which underlie cost misreporting, this study also may serve as a basis for investigating ways to design contracts to diminish the loss an alliance suffers from cost misreporting of the firms, thus increasing the chance that an alliance will be successful. Copyright © 2004 John Wiley & Sons, Ltd.

Logistics Cost Control Method of the Core Enterprise of the Supply Chain

“…Manufacture Customer Distributor Retailor optimize the overall cost of the supply chain as the goal, clarify the process, work together, and eliminate waste to increase the competitiveness of products [11]. Through the cross-industry alliance initiative, thoughts are unified; common trusts are strengthened throughout the supply chain [12]. As shown in Fig.…”

Interorganizational information sharing in the airline industry: An analysis of stock market responses to code-sharing agreements

“…faceted nature of partner objectives, performance can be difficult to measure in financial terms. Many successful alliances terminate because they are pre-programmed as such; some free-riders may consider a short-lived alliance successful as far as their intended objective (e.g., technology transfer) is achieved (Gensemer and Kanagaretnam 2004;Gulati 1998). The event study method provides valuable information in measuring the strategic values of alliance arrangements (Dos Santos et al 1993;Im et al 2001;Subramani and Walden 2001).…”