The AERU Value Chain Compass

Incentives

Fairness

Participation in a value chain involves costs, sacrifices of other opportunities, risks, benefits and rewards. A critical question for each partner is whether the benefits and rewards are fair in relation to these costs, foregone opportunities and risks. A related question is whether successful proposals for revenue-enhancing innovation are fairly rewarded.

These issues are particularly important when an enterprise makes a substantial investment in specialist facilities. This may restrict future options and bargaining power; hence, there needs assurance that this commitment will be rewarded fairly.

Questions for developing a value chain

• Is each participant in the value chain fairly rewarded for the costs, foregone opportunities and risks they incur?

• How does the value chain reward partners who develop successful proposals for revenue-enhancing innovation?

• How does the value chain provide assurance to partners who invest in specialist facilities that they will be rewarded fairly for this investment?