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A framework of economic analysis for tapered technology-manufacturing alliances

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  • Chou, Yon-Chun
  • Huang, Hsing-Yi
  • Jahn, John
  • Kuo, Chien-Hung
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    Abstract

    Globalization of production has altered the configuration of supply chains in many industries. Besides outsourcing, joint ventures and strategic alliances are increasingly established to create competitive production organizations. This paper addresses a case of tapered technology-manufacturing alliance between a process technology firm with captive manufacturing capability and an efficient manufacturing firm in an asset-heavy industry. A framework of economic analysis is first developed for fusing the factors of technology licensing, manufacturing efficiency, risk sharing, and demand uncertainty. Analysis methods of capacity economics are next described for participation analysis, capacity allocation, and contract term tradeoffs. Finally, we demonstrate the utility of the methods by numerical examples with stylized industry data and by an analysis of alliance stability when facing potential new entrants.

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    Bibliographic Info

    Article provided by Elsevier in its journal International Journal of Production Economics.

    Volume (Year): 127 (2010)
    Issue (Month): 2 (October)
    Pages: 249-261

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    Handle: RePEc:eee:proeco:v:127:y:2010:i:2:p:249-261

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    Web page: http://www.elsevier.com/locate/ijpe

    Related research

    Keywords: Supply chain configuration Taper integration Technology-manufacturing alliances Economic analysis Capacity allocation;

    References

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    1. Gene M. Grossman & Elhanan Helpman, 2002. "Integration Versus Outsourcing In Industry Equilibrium," The Quarterly Journal of Economics, MIT Press, vol. 117(1), pages 85-120, February.
    2. Erica L. Plambeck & Terry A. Taylor, 2006. "Partnership in a Dynamic Production System with Unobservable Actions and Noncontractible Output," Management Science, INFORMS, vol. 52(10), pages 1509-1527, October.
    3. Kaouthar Lajili & Joseph T. Mahoney, 2006. "Revisiting agency and transaction costs theory predictions on vertical financial ownership and contracting: electronic integration as an organizational form choice," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 27(7), pages 573-586.
    4. Swaminathan, Jayashankar M., 2000. "Tool capacity planning for semiconductor fabrication facilities under demand uncertainty," European Journal of Operational Research, Elsevier, vol. 120(3), pages 545-558, February.
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    7. Chou, Yon-Chun & Cheng, C.-T. & Yang, Feng-Cheng & Liang, Yi-Yu, 2007. "Evaluating alternative capacity strategies in semiconductor manufacturing under uncertain demand and price scenarios," International Journal of Production Economics, Elsevier, vol. 105(2), pages 591-606, February.
    8. Rosenthal, Edward C., 2008. "A game-theoretic approach to transfer pricing in a vertically integrated supply chain," International Journal of Production Economics, Elsevier, vol. 115(2), pages 542-552, October.
    9. Huang, George Q. & Qu, T., 2008. "Extending analytical target cascading for optimal configuration of supply chains with alternative autonomous suppliers," International Journal of Production Economics, Elsevier, vol. 115(1), pages 39-54, September.
    10. Teece, David J., 1986. "Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy," Research Policy, Elsevier, vol. 15(6), pages 285-305, December.
    11. Erica L. Plambeck & Terry A. Taylor, 2005. "Sell the Plant? The Impact of Contract Manufacturing on Innovation, Capacity, and Profitability," Management Science, INFORMS, vol. 51(1), pages 133-150, January.
    12. Thomas, Douglas J. & Tyworth, John E., 2006. "Pooling lead-time risk by order splitting: A critical review," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 42(4), pages 245-257, July.
    13. Wang, Li Ming & Liu, Li Wen & Wang, Yong Jie, 2007. "Capacity decisions and supply price games under flexibility of backward integration," International Journal of Production Economics, Elsevier, vol. 110(1-2), pages 85-96, October.
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    Cited by:
    1. Sarkis, Joseph & Zhu, Qinghua & Lai, Kee-hung, 2011. "An organizational theoretic review of green supply chain management literature," International Journal of Production Economics, Elsevier, vol. 130(1), pages 1-15, March.

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