PROFIT AND RISK SHARING IN A VIRTUAL ENTERPRISE

Jouko Karjalainen (), Tero Haahtela (), Pekka Malinen () and Vesa Salminen ()
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Jouko Karjalainen: Department of Industrial Engineering and Management, Helsinki University of Technology, PO Box 5500, Espoo, FIN-02015 HUT, Finland
Tero Haahtela: TAI Research Centre, Helsinki University of Technology, PO Box 5500, Espoo, FIN-02015 HUT, Finland
Pekka Malinen: TAI Research Centre, Helsinki University of Technology, PO Box 5500, Espoo, FIN-02015 HUT, Finland
Vesa Salminen: Lappeenranta University of Technology, PO Box 20, FIN-53851 Lappeenranta, Finland

International Journal of Innovation and Technology Management (IJITM), 2004, vol. 01, issue 01, 75-92

Abstract: Organizations are increasing the use of partnerships but improved models addressing the sharing of profits and risks are needed to foster innovations in networked new product development. We have used a case study approach to explore the implementation of profit- and risk-sharing mechanisms in a virtual enterprise. Lack of a shared vision may have been the most important cause for the early decomposition of the virtual enterprise. Therefore, the trust did not start to accumulate during the cooperation. This would have been imperative for the implementation of profit sharing mechanisms, because risk attitudes seemed to favor hierarchical rewarding mechanisms.

Keywords: Innovation; networks; partnerships; product development (search for similar items in EconPapers)
Date: 2004
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DOI: 10.1142/S0219877004000040

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