Other Business Commons^™

Dynamic Pricing With Fairness Concerns And A Capacity Constraint, Matthew Selove

Business Faculty Articles and Research

Although some firms use dynamic pricing to respond to demand fluctuations, other firms claim that fairness concerns prevent them from raising prices during periods when demand exceeds capacity. This paper explores conditions in which fairness concerns can or cannot cause shortages. In our model, a firm announces a price policy that states its prices during high and low demand, and customers must travel to a venue to learn the current price. We show that the interaction of fairness concerns with travel costs can cause the firm to set stable prices, which leads to shortages during high demand. However, if the …

Corporate Entrepreneurship In The Digital Era: The Cascading Effect Through Operations, Maheshkumar P. Joshi, Ravi Kathuria, Sidhartha Das

Business Faculty Articles and Research

This study examines a firm’s response to perceived changes in the environment, such as the growth of the digital era, at different levels of a firm—beginning with the adoption of corporate entrepreneurship (CE) down to process renewal (PR). We further explore if the technological intensity of a firm, high-tech or low-tech intensity, influences its choice of mode for organisational renewal (OR)—use of internal competence or outside acquisition—to exploit the opportunities created by the digital era. Using survey data from 170 firms, we test a sequential relationship among environmental changes (growth of the digital era), CE, OR and finally PR that …

Unrequited: Asymmetry In Interorganizational Trust, Melissa E. Graebner, Fabrice Lumineau, Darcy Fudge Kamal

Business Faculty Articles and Research

Many studies of interorganizational relationships assume that trust between organizations is symmetric. In this essay, we explore the origins of this assumption and examine relevant quantitative and qualitative evidence from the literatures on strategy, marketing, supply chain management, and information systems. We conclude that no systematic evidence currently exists to support the assumption that interorganizational trust is typically symmetric. We explore how the possibility of asymmetry complicates interpretation of previous research on the effects of interorganizational trust. We encourage further research to identify conditions under which symmetry is likely, and offer a variety of strategies that scholars may use to …

Unrequited: Asymmetry In Interorganizational Trust, Melissa E. Graebner, Fabrice Lumineau, Darcy Fudge Kamal

Business Faculty Articles and Research

Many studies of interorganizational relationships assume that trust between organizations is symmetric. In this essay, we explore the origins of this assumption and examine relevant quantitative and qualitative evidence from the literatures on strategy, marketing, supply chain management, and information systems. We conclude that no systematic evidence currently exists to support the assumption that interorganizational trust is typically symmetric. We explore how the possibility of asymmetry complicates interpretation of previous research on the effects of interorganizational trust. We encourage further research to identify conditions under which symmetry is likely, and offer a variety of strategies that scholars may use to …

Mutually Supportive Or Trade-Offs: An Analysis Of Competitive Priorities In The Emerging Economy Of India, Ravi Kathuria, Narinder Nath Kathuria, Abhishek Kathuria

Business Faculty Articles and Research

To refine the theories of operations strategy, we need research from all different situational contexts, including different countries—both developing and developed. There have been many studies, including some replications, done in various parts of the world to further the debate on whether competitive priorities are mutually supportive or if they present potential trade-offs, but hardly any from a rapidly growing economy, such as India. This study is a significant attempt in that direction. After a thorough review of the literature, a set of hypotheses is introduced to test whether Indian manufacturers view competitive priorities as mutually supportive or trade-offs. The …

The Case For Showrooming, Cristina Nistor, Prashanth Nyer

Business Faculty Articles and Research

Showrooming has deeply affected the retail market in the past decade. As consumers became able to easily compare prices on their mobile devices, they started using retail stores to try on and experience products and then they ordered online the lower priced versions they liked best to be delivered directly to their homes. As retailers are trying to adapt to the showrooming challenges and the shift to online purchases, stores are increasingly adopting showrooming as a new selling format. We present examples of successful showrooming and develop a framework for when the new selling format can be expected to be …

Models Of Intragroup Conflict In Management: A Literature Review, Matthew W. Mccarter, Kimberly A. Wade-Benzoni, Darcy Fudge Kamal, H. Min Bang, Steven J. Hyde, Reshma Maredia

Business Faculty Articles and Research

The study of intragroup dynamics in management studies views conflict as a contingency process that can benefit or harm a group based of characteristics of the group and context. We review five models of intragroup conflict in management studies. These models include diversity-conflict and behavioral negotiation models that focus primarily on conflict within a group of people; social exchange and transaction cost economics models that focus primarily on conflict within a group of firms; and social dilemma models that focus on conflict in collectives of people, organizations, communities, and generations. The review is constituted by summarizing the insights of each …

Financial Synergies And Systemic Risk In The Organization Of Bank Afþliates, Elisa Luciano, Clas Wihlborg

Business Faculty Articles and Research

We analyze theoretically banks’ choice of organizational structures in branches, subsidiaries or stand-alone banks, in the presence of public bailouts and default costs. These structures are characterized by different arrangements for internal rescue of affiliates against default. The cost of debt and leverage are endogenous. For moderate bailout probabilities, subsidiary structures, wherein the two entities provide mutual internal rescue under limited liability, have the highest group value, but also the highest risk taking as measured by leverage and expected loss. We explore the effect of constraints on leverage and policy implications. The conflict of interests between regulators, who minimize systemic …

Herding And Anchoring In Macroeconomic Forecasts: The Case Of The Pmi, John B. Broughton, Bento J. Lobo

Business Faculty Articles and Research

We test if analysts display multiple biases in forecasting the Institute for Supply Management’s (ISM) manufacturing Purchasing Manager’s Index (PMI). We adopt a test that does not require knowledge of the forecaster’s prior information set and is robust to rational clustering, correlated forecast errors and outliers. We find that analysts forecast the PMI poorly and display multiple biases when forecasting. In particular, forecasters anti-herd and anti-anchor. Anti-herding supports a reputation-based notion that forecasters are rewarded not only for forecast accuracy but also for being the best forecast at a single point in time. Anti-anchoring is consistent with forecasters overreacting to …

Mutual And Exclusive: Dyadic Sources Of Trust In Interorganizational Exchange, Bill Mcevily, Akbar Zaheer, Darcy Fudge Kamal

Business Faculty Articles and Research

Trust in interfirm exchange has traditionally been treated as mutually held and jointly determined by the two parties in a relationship. Yet, the expectations of exchange partners can, and routinely do, differ with respect to the goals, preferences, and vulnerabilities in their shared relationship. To account for such differences in expectations, we propose a broadened conceptualization of the sources of interorganizational trust as dyadic. Viewing the sources of trust as dyadic expands the conventional focus on mutual elements to further emphasize exclusive features of an exchange relationship. To substantiate our theory, we examine a key source of interorganizational trust, exchange …

The Financial Services Industry And Society: The Role Of Incentives/Punishments, Moral Hazard, And Conflicts Of Interests In The 2008 Financial Crisis, Noel Murray, Ajay K. Manrai, Lalita Ajay Manrai

Business Faculty Articles and Research

Purpose

This paper aims to present an analysis of the role of financial incentives, moral hazard and conflicts of interests leading up to the 2008 financial crisis.

Design/methodology/approach

The study’s analysis has identified common structural flaws throughout the securitization food chain. These structural flaws include inappropriate incentives, the absence of punishment, moral hazard and conflicts of interest. This research sees the full impact of these structural flaws when considering their co-occurrence throughout the financial system. The authors address systemic defects in the securitization food chain and examine the inter-relationships among homeowners, mortgage originators, investment banks and investors. The authors also …

Optimality Of The Fastest Available Server Policy, William P. Millhiser, Charu Sinha, Matthew J. Sobel

Business Faculty Articles and Research

We give sufficient conditions under which a policy that assigns customers to the Fastest Available Server, labelled FAS, is optimal in queueing models with multiple independent Poisson arrival processes and heterogeneous parallel exponential servers. The criterion is to minimize the long-run average cost per unit time. We obtain results for loss models and for queueing systems with a finite-capacity or infinite-capacity buffer under a head-of-the-line priority scheme. The results depend on cost assumptions, so we analyze the robustness of the cost structure and present counter-examples to illustrate when FAS is not optimal.

Executive Compensation Incentives Contingent On Long-Term Accounting Performance, Zhi Li, Lingling Wang

Business Faculty Articles and Research

The percentage of S&P 500 firms using multiyear accounting-based performance (MAP) incentives for CEOs increased from 16.5% in 1996 to 43.3% in 2008. The use and design of MAP incentives depend on the signal quality of accounting versus stock performance, shareholder horizons, strategic imperatives, and board independence. After the technology bubble, option expensing, and the publicity of option backdating, firms increasingly use stock-based MAP plans to replace options, resulting in changes in pay structure, but not in pay level. While firms respond to the evolving contracting environment, they consider firm characteristics and shareholder preferences and do not blindly follow the …

A Dynamic Model Of Competitive Entry Response, Matthew Selove

Business Faculty Articles and Research

I develop a dynamic investment game with a “memoryless” research and development process in which an incumbent and an entrant can invest in a new technology, and the entrant can also invest in the old technology. I show that an increase in the probability of successfully implementing a technology can cause the incumbent to reduce its investment. Under certain conditions, if the success probability is high, the incumbent allows the entrant to win the new technology so that firms reach an equilibrium in which they use different technologies, and threats of retaliation prevent attacks; but if the success probability is …

How Do Firms Become Different? A Dynamic Model, Matthew Selove

Business Faculty Articles and Research

This paper presents a dynamic investment game in which firms that are initially identical develop assets that are specialized to different market segments. The model assumes that there are increasing returns to investment in a segment, for example, as a result of word-of-mouth or learning curve effects. I derive three key results: (1) Under certain conditions there is a unique equilibrium in which firms that are only slightly different focus all of their investment in different segments, causing small random differences to expand into large permanent differences. (2) If, on the other hand, sufficiently large random shocks are possible, firms …

Sectoral Changes And The Increase In Women's Labor Force Participation, Rahşan Akbulut

Business Faculty Articles and Research

Throughout the second half of the 20th century, women in the United States decided to move increasingly into the labor market. This paper investigates the growth of the service sector as an explanation for the increase in women's employment. It develops an economic model that can account for the increase in women's employment and the growth of the service sector at the same time. A growth model with two sectors and a home production technology is constructed in order to quantitatively assess the contribution of sectoral productivity differences to the change in women's employment decision. The sectoral productivities are taken …

International Comparisons Of Bank Regulation, Liberalization, And Banking Crises, Puspa Amri, Apanard P. Angkinand, Clas Wihlborg

Business Faculty Articles and Research

Purpose: The recurrence of banking crises throughout the 1980s and 1990s, and in the more recent 2008-09 global financial crisis, has led to an expanding empirical literature on crisis explanation and prediction. This paper provides an analytical review of proxies for and important determinants of banking crises − credit growth, financial liberalization, bank regulation and supervision.

Design/Methodology/Approach: The study surveys the banking crisis literature by comparing proxies for and measures of banking crises and policy-related variables in the literature. Advantages and disadvantages of different proxies are discussed.

Findings: Disagreements about determinants of banking crises are in part …

The Effects Of The Attacks Of 9/11 On Organizational Policies, Employee Attitudes And Workers’ Psychological States, Amy E. Hurley-Hanson, Cristina M. Giannantonio, Heidi Carlos, Jessica Harnett, Melanie Jetta, Madeline Mercier

Business Faculty Articles and Research

Problem statement: The attacks of September 11, 2001 (9/11) on the United States have had a profound effect on organizations and their employees. These effects occurred in the days and weeks immediately following the attacks, as well as in the years since the attacks occurred. In commemoration of the tenth anniversary of 9/11, this study focuses on the impact that the attacks of September 11, 2001 have had on organizational policies, employee attitudes and workers’ psychological states. Approach: Managers were surveyed regarding the effects of 9/11 on these issues. Results: The results of the study indicate that …

Emerging Issues Of Management Education In The 21st Century, Amy E. Hurley-Hanson, Cristina M. Giannantonio, Bruce Dehning

Business Faculty Articles and Research

There is a need for the development of international course material studying corporations outside of the United States. The development of these materials is going to require new forms of cooperation between universities and corporations. Little research exists which examines whether practitioners read, understand, or use the material contained in academic journals. This paper examines the relationship between universities and corporations by reporting the results of a study which surveyed executives about their relationship with academic research. The paper then discusses methodologies for improving collaboration between the two constituencies and offers suggestions for the development of international course materials.

Fairness-Trust-Loyalty Relationship Under Varying Conditions Of Supplier-Buyer Interdependence, Thani Jambulingam, Ravi Kathuria, John R. Nevin

Business Faculty Articles and Research

Relationship marketing plays a significant role in supply chain practice and academic studies. Using the resource advantage theory within the relationship marketing framework, we studied the mediating role of trust as a governance mechanism in the fairness-loyalty relationship under different types of interdependence structure between suppliers (wholesalers) and buyers (retailers). Our findings, based on data from retail pharmacies, demonstrate that only under conditions of symmetric independence, trust, as a governance mechanism, completely mediate the relationship between fairness and loyalty. Under conditions of both perceived independence (i.e., lack of interdependence) and asymmetric buyer dependence, however, trust does not mediate but fairness …

Competitive Priorities And Strategic Consensus In Emerging Economies: Evidence From India, Ravi Kathuria, Stephen J. Porth, N. N. Kathuria, T. K. Kohli

Business Faculty Articles and Research

Purpose

– The purpose of this paper is to understand the competitive priorities of manufacturers in India, and examine the level of agreement or strategic consensus between senior executives and manufacturing managers on manufacturing competitive priorities in light of the prevalent culture.

Design/methodology/approach

– Survey data collected from 156 respondents from 78 manufacturing units based on a national sample in India are used to test the hypotheses using the paired samples t‐tests and multivariate analysis of variance.

Findings

– A relatively high emphasis by both levels of managers on quality, compared to the other three competitive priorities, is noteworthy and …

Deposit Insurance Coverage, Ownership, And Banks' Risk-Taking In Emerging Markets, Apanard P. Angkinand, Clas Wihlborg

Business Faculty Articles and Research

We ask how deposit insurance systems and ownership of banks affect the degree of market discipline on banks' risk-taking. Market discipline is determined by the extent of explicit deposit insurance, as well as by the credibility of non-insurance of groups of depositors and other creditors. Furthermore, market discipline depends on the ownership structure of banks and the responsiveness of bank managers to market incentives. An expected U-shaped relationship between explicit deposit insurance coverage and banks' risk-taking is influenced by country specific institutional factors, including bank ownership. We analyze specifically how government ownership, foreign ownership and shareholder rights affect the disciplinary …

How Fairness Garners Loyalty In The Pharmaceutical Supply Chain: Role Of Trust In The Wholesaler-Pharmacy Relationship, Thani Jambulingam, Ravi Kathuria, John R. Nevin

Business Faculty Articles and Research

Purpose

– The purpose of this paper is to understand how fairness garners loyalty by breeding trust in the pharmaceutical wholesaler‐pharmacy relationship. Specifically, the paper seeks to understand if the two dimensions of fairness – procedural and distributive – contribute differently in fostering the two types of trust – credibility and benevolence. The paper further aims to examine how the two dimensions of trust mediate the fairness‐loyalty relationship.

Design/methodology/approach

– Data from 156 retail pharmacies on their relationship with the pharmaceutical wholesalers are used to test the hypotheses. The mediation models are tested using the Barron and Kenny procedure.

Findings …

Optimizing Product Line Designs: Efficient Methods And Comparisons, Alexandre Belloni, Robert Freund, Matthew Selove, Duncan Simester

Business Faculty Articles and Research

We take advantage of recent advances in optimization methods and computer hardware to identify globally optimal solutions of product line design problems that are too large for complete enumeration. We then use this guarantee of global optimality to benchmark the performance of more practical heuristic methods. We use two sources of data: (1) a conjoint study previously conducted for a real product line design problem, and (2) simulated problems of various sizes. For both data sources, several of the heuristic methods consistently find optimal or near-optimal solutions, including simulated annealing, divide-and-conquer, product-swapping, and genetic algorithms.

International Growth Strategies Of Service And Manufacturing Firms: The Case Of Banking And Chemical Industries, Ravi Kathuria, Maheshkumar P. Joshi, Stephanie Dellande

Business Faculty Articles and Research

Purpose

– The purpose of this paper is to examine the differences in growth strategies – domestic and international – of manufacturing and service firms. Hardly any literature exists that empirically investigates the differences on account of the distinctive characteristics of goods and services, and such studies rarely draw from the operations management field.

Design/methodology/approach

– Multiple analysis of variance is used to analyze longitudinal data from multiple secondary sources.

Findings

– Mixed services, such as banks, focus more on domestic growth and less on international growth. Manufacturers, such as chemical firms, focus more on international activities as compared to …

Organizational Alignment And Performance: Past, Present And Future, Ravi Kathuria, Maheshkumar P. Joshi, Stephen J. Porth

Business Faculty Articles and Research

Purpose

– The purpose of this paper is to identify and define the types of organizational alignment – vertical and horizontal; to examine the evidence for the alignment‐performance relationship, and propose research questions and practical implications to advance the theory and practice of managing alignment.

Design/methodology/approach

– The study is a conceptual examination based on a thorough review of both theoretical and empirical research.

Findings

– The paper finds that vertical alignment has received considerably more attention in the literature. Studies of horizontal alignment within organizations are less common. When horizontal alignment is studied, the focus tends to be dyadic …

Image Norms: A Model Of Formation And Operation, Amy E. Hurley-Hanson, Cristina M. Giannantonio

Business Faculty Articles and Research

This paper presents a model describing the formation and operation of image norms. Image norms are discussed from both the individual and the organizational perspective. This is followed by a discussion of the implications of image norms for individuals’ career choice decisions. The implications of image norms for organizations are also presented. Suggestions for future research on image norms are provided.

Competitive Priorities As Trade-Offs Or Mutually Supportive: Can We Call The Question Yet?, Ravi Kathuria

Business Faculty Articles and Research

As the field of operations strategy matures, we need to refine the theories and abandon weak models through cumulative research. This study contributes to the debate on whether competitive priorities present potential trade-offs or are mutually supportive.

Entrepreneurial Orientation As A Basis For Classification Within A Service Industry: The Case Of Retail Pharmacy Industry, Thanigavelan Jambulingam, Ravi Kathuria, William R. Doucette

Business Faculty Articles and Research

To date, service classification research has primarily taken a macro view, creating service typologies or taxonomies by using dimensions such as customer contact or degree of labor intensity. Such classification schemes, though helpful in deciphering critical management issues and positioning strategies between service industries, tend to treat an entire industry, such as airlines, as a single homogenous entity. However, organizations in the same industry often use intangible resources, such as entrepreneurial orientation processes, to compete with one another. Resource-advantage theory suggests that organizations utilize intangible resources to build long-term strategies and a sustainable competitive advantage leading to superior performance. We …

Competitive Priorities And Managerial Performance: A Taxonomy Of Small Manufacturers, Ravi Kathuria

Business Faculty Articles and Research

Much of the research in manufacturing strategy has focused on specific relationships between a few constructs, with relatively little emphasis on typologies and taxonomies (Bozarth and McDermott, 1998). Using data from 196 respondents in 98 manufacturing units, this study develops a taxonomy of small manufacturers based on their emphasis on several competitive priorities. The annual sales for sixty-four percent of the participating units in this study are below US $50 million, which is on the lower side as compared to other studies in this area (cf., Miller & Roth, 1994). The study findings indicate that different groups of manufacturers – …