Decision-Making Mechanism of Cooperative Innovation between Clients and Service Providers Based on Evolutionary Game Theory

Abstract

With the maturity of the service outsourcing market and the development of business relations, the core of outsourcing is shifting from transactional services to risk sharing and value creation. The client and service provider have an increasing interest in service innovation. Although cooperative innovation between them has many benefits, the two parties do not necessarily establish a cooperative innovation relationship. Regarding this issue, an evolutionary game focusing on client-service provider cooperative innovation behavior is constructed and solved. Based on the results and a corresponding numerical simulation, the decision-making mechanism of the cooperative innovation behavior is studied, and suggestions are provided regarding how to promote cooperative innovation. The results show that the benefits of both the client and service provider when they innovate cooperatively being greater than that when they innovate independently cannot guarantee that the system will certainly evolve to a stable state in which both parties adopt a cooperation strategy. However, as long as a condition in which either party gains more than zero when it innovates independently is established in addition to the preceding condition, the system will certainly evolve to a stable state in which both parties adopt a cooperative strategy. The following measures can be taken to promote client-service provider cooperation: improving the initial probabilities of the two parties choosing the cooperative strategy; increasing the innovation benefit when one party innovates independently; reducing the innovation cost and spillover coefficient when one party innovates independently; increasing the penalty when one party cooperates and the other party does not; decreasing the innovation cost when the two parties both choose the cooperation strategy; increasing the excess benefit when the two parties both cooperate; setting reasonable benefit distribution and cost sharing proportions.