Essays on Value Co-Creation, Co-Production, and the Interface between Operations and Recommender Systems

• Main Author: Demirezen, Emre Muzaffer
• Other Authors: Kumar, Subodha
• Format: Others
• Language: en
• Published: 2013
• Subjects: Value co-creation; contracting; subscription based systems
• Online Access: http://hdl.handle.net/1969.1/150962

In this dissertation, I study coordination or collaboration settings that are either within company or at inter-organizational levels in the form of three essays. In the first essay, I study the relationship between a client and a vendor in value co-creation environments such as knowledge intensive services. I consider that the client gets utility from the project throughout the development period. The output is contingent on the effort levels of each party and I allow these effort levels to be dynamic. Hence, the client needs to optimally decide the terms of the payment so as to maximize the project output and minimize its cost. In my second essay, I study another value co-creation environment. In this case, unlike the first essay, I assume that the effort levels are not observable but might be monitored. In both essays, I analyze the performance of different contracts and find the best one for the client in diverse settings. Among several other results, I derive the conditions under which the client chooses not to observe vendor’s effort level and operates in a double moral hazard environment. In addition, I show that the remaining time of the project and the client’s valuation of the project regulate the behavior of the effort levels and some other characteristics in the collaboration. In the third essay, I consider a subscription based rental organization, such as Netflix and Blockbuster. In these environments, the satisfaction of customers de- pends on the availability of requested products. Hence, it is important for these firms to satisfy as much demand as possible. Recommender systems, in a DVD- rental context, are typically used to help customers in finding the right movies for them. However, recommendations can be utilized to shift demand among movies considering the inventory level and future demand to increase the number of satisfied customers or profitability. I address this issue by considering inventory in the optimization of recommender systems. I present several results that could be utilized by managers in order to make important tactical and operational decisions. Results suggest that the proposed approach may improve profitability of the firms substantially.