Optimal design of uptime-guarantee contracts under IGFR valuations and convex costs

Hezarkhani, Behzad

doi:10.1016/j.ejor.2016.06.032

Cited by 8 publications

(7 citation statements)

References 30 publications

(30 reference statements)

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“…The data on the frequency with which each topic has been addressed are contained in the following table (Table 5). The research topic that most frequently appears in the papers analysed involves performance (21.51%), which is studied from the perspective of different theories, such as Contingency theory (Ceci & Masini, 2011), Linear programming (Geng, Chu, Xue & Zhang, 2011), Resource dependence theory (Shah, Jajja, Chatha & Farooq, 2020;Chang et al, 2019), Agency theory (Datta, 2020), Game theory (Arabi, Mansour & Shokouhyar, 2018;Gómez & Heredero, 2013;Hezarkhani, 2017;Lee et al, 2016) and Resource-based theory (Fang, Palmatier & Steenkamp, 2008;Yan et al, 2020;Zhang et al, 2019), These results are consistent with those reported by Wang, Lai, and Shou (2018), identifying numerous studies that analyse the impact that servitization has on performance.…”

Section: Discussion Of Resultssupporting

confidence: 75%

“…It is also an ideal theoretical model for analysing the relationships between consumers and service providers (Hsieh & Yeh, 2018). Hezarkhani (2017) uses Game theory to manage these relationships, seeking to coordinate the parties' efforts to optimise the gains made by the entire system, instead of focusing on the decision-making problems they face. Gómez & Heredero (2013) consider that gamification leads to an improvement in users' experience, pursuing the aim of motivating, achieving, promoting and upholding greater engagement with the features of the products and services that firms offer them.…”

Section: Discussion Of Resultsmentioning

confidence: 99%

“…Sustainability has been addressed through sundry approaches, such as Institutional theory (Stål & Corvellec, 2018); Social practice theory (Retamal & Schandl, 2018;Sousa-Zomer & Miguel, 2016); Game theory (Arabi et al, 2018;Chang et al, 2019;Hezarkhani, 2017), and Resource-based theory (Leismann, Schmitt, Rohn & Baedeker, 2013).…”

Section: Research Topicsmentioning

confidence: 99%

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A review of servitization theoretical foundations

Martín

Garrido

2021

JIEM

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Purpose: This study seeks to analyse how the servitization topic has been addressed through different theoretical approaches. More specifically, the aim is to answer two key questions: What theoretical approaches have been used to study the phenomenon of servitization? What specific aspects of the servitization process have been analysed through each theoretical approach?Design/methodology/approach: This paper adopts a systematic literature review. The first step involves a descriptive analysis, which is then followed by a thematic one.Findings: The results show that the topic of servitization has been analysed according to the main boundary of the firm theories (Resource-based view, Game theory, and Transaction cost economics) and to organizational boundaries (Contingency theory and Resource dependence theory), among others. From the perspective of these theoretical frameworks, the following topics have received the most scholarly attention: Performance, Capabilities, Supply Chain Management, Business Model, Strategy, and Sustainability.Originality/value: Observations are made on the relevance that diverse theories have on the development of research into servitization. The most suitable theoretical lenses are recommended for future research.

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Section: Discussion Of Resultssupporting

confidence: 75%

Section: Discussion Of Resultsmentioning

confidence: 99%

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A review of servitization theoretical foundations

Martín

Garrido

2021

JIEM

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“…Some other work combines the design of PBC with marketing‐related decisions. For example, Hezarkhani (2017) studies the optimal design of uptime‐guarantee contracts for the service provider when the customer's valuation of a contract with a given guaranteed uptime level has an Increasing Generalized Failure Rate (IGFR) distribution. Li (2020) studies joint optimization of repair technology and market segmentation strategy for the uptime‐centered services.…”

Section: Literature Reviewmentioning

confidence: 99%

Negotiation for service contracting: incentives, bargaining power, and customer risk aversion

2022

Int Trans Operational Res

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In this paper, we analyze negotiation of service contracts when an equipment user (customer) outsources product failure repair service to an MRO (Maintenance, Repair, and Overhaul) supplier. The customer is risk averse due to serious consequences of system disruption. The two parties negotiate pricing terms and repair rate. We model the bilateral negotiations under three types of service contract: (i) fixed‐fee contract under which the customer pays a lump sum, (ii) pay‐per‐repair contract under which the customer pays for each repair incident, and (iii) uptime‐based contract under which the customer pays for product uptime. We investigate how different incentives under each contract interact with agents' bargaining power and customer risk aversion in the negotiation process, both theoretically and numerically. Despite that previous studies have shown that fixed‐fee contract generally does not provide incentives for suppliers to invest in repair capacity while uptime‐based contract does, we find that under a bargaining framework fixed‐fee contract can result in the highest (yet suboptimal) repair rate. Furthermore, consensus on contract types may not be achieved between the two parties. For the supplier, uptime‐based contract can result in the highest payoff while pay‐per‐repair contract leads to the lowest. For the customer, it may prefer to choose pay‐per‐repair contract when it is less risk averse and when the supplier has more bargaining power. Our results show some unexplored merits of other types of contracts when the advantages of uptime‐based contract have been highly cited.

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“…Additionally, although with a slightly different focus, an evolutionary game approach has been adopted to explore outsourcing as part of servitization; this research highlights the importance of collaborative approaches when it is difficult to provide highquality services (Ma et al, 2020). On the other hand, there are several papers written about the unrelated subject of gamification and servitization (Hezarkhani, 2017;Lee et al, 2016; Should we cooperate? S€ uße and Wilkens, 2014).…”

Section: Game Theory (Exploring Strategic Decision Making)mentioning

confidence: 99%

Should we cooperate? Game theory insights for servitization

Wagstaff

Burton

Zolkiewski

2021

JOSM

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PurposeAn abundance of literature suggests that organisations adopting a cooperative approach achieve greater rewards than those that act in opposition or isolation. An emerging body of work also highlights the multiple actors involved in servitization. Despite this, in some contexts the benefits of servitization are not apparent. This paper examines business relationships in the oil industry and how they affect levels of servitization.Design/methodology/approachA mixed method study employing qualitative and quantitative methods was used to fully explore the context. In the quantitative phase, 48 oil industry specialists responded to a scenario based on game theory. This aimed to determine if the relationships between their respective organisations are cooperative or adversarial. Abduction drove a second qualitative phase. This consisted of a series of semi-structured interviews used to explore the servitization level and influence of servitization on relationships and vice versa.FindingsThe statistical results suggest that all parties used adversarial strategies despite the publicised intent to work cooperatively. The interviews suggested that increasing (decreasing) servitization could increase (decrease) cooperation and, in turn, value co-creation but revealed nuances to this effect. It also adds to our understanding of the darker side of servitization by illustrating the impact of mimetic isomorphism.Originality/valueThe findings add to understanding of the complex dynamics around servitization by showing that it is only at advanced levels of servitization that cooperative behaviour is observed, and base and intermediate levels result in non-cooperative behaviour and thus illustrate the importance of adopting a multi-actor lens to explore servitization.

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Optimal design of uptime-guarantee contracts under IGFR valuations and convex costs

Cited by 8 publications

References 30 publications

A review of servitization theoretical foundations

A review of servitization theoretical foundations

Negotiation for service contracting: incentives, bargaining power, and customer risk aversion

Should we cooperate? Game theory insights for servitization

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