Dynamic cooperative value-added service strategies of the smart manufacturing platform considering the network effect and altruism preference

Abstract

Smart manufacturing platform has become an important carrier of digital transformation of manufacturing industry. However, due to the capital and technology constraints of manufacturing enterprises, a cross-border cooperation mode with cloud service providers has emerged. To expand users’ scale and enhance competitiveness, the manufacturing enterprise and the cloud service provider have focused on investing in value-added service (VAS) based on their resource endowments. Based on differential game theory and Bellman’s continuous dynamic planning theory, this study investigates dynamic cooperative VAS efforts decisions of the platform considering network effect and altruism preference. The results show that the network effect can stimulate the VAS efforts level of both manufacturer and cloud service provider. Moreover, the manufacturer's altruistic preference weakens the double marginal effect, which is conducive to improve the profit of the platform system, the VAS efforts level and the profit of the cloud service provider. However, the manufacturer's effort level is not affected by the manufacturer's altruistic preference, and it only benefits the manufacturer when the manufacturer’s altruistic preference coefficient is less than a certain threshold. In addition, the manufacturer derives far less profit growth from altruistic preference than the cloud provider does.