Collective efficiency of network structures — an example of automobile industry

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Abstract

Network forms of contracting allow participants to achieve economic benefits as a result of their joint interaction — collective efficiency. Numerous studies of modern economists demonstrate its existence, but most of them are limited to considering the qualitative estimate of this category, not paying due attention to its quantitative assessment. There are macroeconomic methods for measuring the total collective efficiency associated with assessing the distribution of value added. But measuring collective efficiency at the micro-level, for individual participants in network interaction, is difficult due to the lack of adequate assessment tools. In this study, it is proposed to use a proxy indicator to measure and compare the collective efficiency of network participants with a different number of counterparties. The study aims to compare the collective efficiency of networks with different levels of links’ stability between participants — networks with a relatively small number of suppliers and long-term relations with them, and networks with a relatively lower degree of links and a bigger number of suppliers. A comparative analysis of the efficiency of networks with different numbers of first-tier suppliers was carried out both under relatively stable conditions for the functioning of network structure and under conditions of external shocks. Global networks in the automotive industry (Ford, General Motors, Volkswagen and Honda) are considered as real examples. The article also compares the efficiency of network and vertically integrated structures. BYD Company Limited, the world’s largest manufacturer of electric vehicles, is taken as an example of a vertically integrated structure that provides the full cycle of auto production. The results obtained in the study and the possibility of their meaningful interpretation confirmed the adequacy of the proposed tools.

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About the authors

I. P. Komarova

Plekhanov Russian University of Economics

Author for correspondence.
Email: Komarova.IP@rea.ru
Russian Federation, Moscow

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