A Study On Incentive Strategies Of New Service Development Based On Network Organization

Whether it is a developed country or not, it is no doubt that service industry is playing anincreasingly active role in its economy and employment. Service firms are confronted with rapidtechnological developments, fast changes in customer requirements, and hypercompetition, leadingto exceedingly short product life cycles. Survival chances and profitability have come to dependincreasingly on the capability to innovate fast and successfully. As the economies world overbecome more service oriented, firms recognize the need to compete on the ability of new serviceofferings .New service development is increasingly becoming a critical aspect of business strategyin both service and non-service industries. The characters of service, which include intangibility,inseparability, heterogeneity and perishability, lead to a short lifecycle of services and be copiedeasily. This makes service innovation is different from products and technology innovation. Itsdependence on external network are more obvious and prominent.The firm of NSD needs toconsider the various subjects involved in the process, and this is different from manufacturingcompanies. Multi-agent particiapation has greatly increased the difficulty of managing the activitiesof NSD. Incentive mechanism to NSD is essential for the purpose of preventing the emergence ofopportunistic behavior and acquiring more benefits.The theory of network organization is used to support the analysis of NSD in this paperbecause the traits of the two is similar. They are both compose of multi-agent, pursuit commoninterests, and they are supported by collective collaboration and information and communicationtechnology(ICT). This paper analyses how the theory of network organization can be fit to NSDbased on the connotation of network organization. This provides an evidence for discussing NSD bymeans of network organization.This paper considers the relationship among the firm of NSD andother external characteristics. And this paper builds a collaborative network of new servicedevelopment and probes its characteristics.Then, an incentive quantitative model is establishedbased on the principal - agent theory. A few suggestions are given to the companies of NSD afteranalyzing the model.Two mechanisms, the information sharing mechanism and the profitdistribution mechanism, in the process of NSD are also discussed. They are considered ascomplementary mechanisms of incentive mechanism. We hope get a better benefits if they areadopted in company with incentive mechanism. MATLAB 7.0 is used to make a simulation forincentive model. The results of simulation are consistent with the results of analysis. According tothe simulation results, more constructive proposals are given. Finally, this paper presents somedeficiencies of this article and some views about the future research are provided. Two main conclusions are given through these analysis. One is the establishment of the network of NSD,another one is the incentive strategy in terms of the external environmental factors, the network’sown factors and the factors of the external bodies.