Incentive mechanism in application service outsourcing with considering cooperation time

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Science Research Management ›› 2015, Vol. 36 ›› Issue (4) : 136-144.

Tang Guofeng, Dan Bin

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Abstract

Incentive mechanism design is the most effective method to solve moral hazard problem of application service outsourcing. Cooperation time has an important impact on the incentive effect of application service outsourcing contract. Focused on the problem of how the cooperation time impacts the design of application service outsourcing incentive mechanism, the two-stage Stackelbergmodel is established to analyze the relationship between cooperation time and contract incentive effect under asymmetric information of service capabilities and effort level. The conclusions imply that the incentive effect of the contract increases with the revenue sharing proportion under longer cooperation time and decreases under shorter time; the customer enterprise should decrease the revenue sharing proportion with cooperation time.

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ASP (application service provider) / cooperation time / moral hazard / mechanism design / principal-agent

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Tang Guofeng, Dan Bin. Incentive mechanism in application service outsourcing with considering cooperation time[J]. Science Research Management. 2015, 36(4): 136-144

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