Systems Collaboration and Strategic Collaboration: Their Impacts on Supply Chain Responsiveness and Market Performance*

Recognizing the importance of interfirm collaboration and recent advancement of information technology (IT) to enhance joint decision making between firms, this study conceptualizes systems collaboration and strategic collaboration as two essential types of interfirm collaboration. The study then simultaneously examines the multiple roles of systems collaboration and strategic collaboration, and how they directly and indirectly influence a firm's supply chain responsiveness and market performance. Hypotheses are tested on survey data collected from 184 firms. Results suggest that the sequential relationships among IT competency, interfirm collaboration, and supply chain responsiveness have significant market performance implications.     

Multichannels Strategy Implementation: The Role of Channel Alignment Capabilities*

A firm's distribution channels represent a key portfolio of resources that can be leveraged for competitive advantage. One approach to this portfolio that has become increasingly important in recent years is multichannel distribution (MCD). While this strategy has important benefits in terms of market coverage and firm performance, the use of multiple channels seriously affects downstream channel roles such as service delivery, as the financial rewards to channel members and the services they offer are separated. A channel member who offers poor or no service can free‐ride on the services offered to the same customer from a different channel. We draw on agency theory to explain these negative consequences. Additionally, the resource‐based view of the firm along with capabilities theory provides two key means of alleviating these consequences: channel tracking capabilities and reward alignment capabilities. The study, conducted in an industry facing serious MCD issues (the outdoor sporting goods industry), used key informant data matched to secondary data. Our results show that managers can reap the performance rewards of MCD strategies while minimizing its negative consequences. In particular, monitoring practices such as frequent site visits and phone contact with customers develop the firm's channel tracking capabilities, allowing managers to better monitor downstream activities. This becomes particularly important as the complexity from having multiple channels increases. Likewise, reward alignment capabilities such as retail price maintenance agreements and cooperative advertising enable the manager to minimize conflict among channel participants by ensuring sufficient profitability for all channel members.     

Supply Chain Conflict Due to Store Brands: The Value of Wholesale Price Commitment in a Retail Supply Chain*

Store brands are of increasing importance in retail supply chains, often causing channel conflict, as the retailer's product directly competes with the manufacturer's national brand. Extant research on the resulting channel interactions either assumes the national brand manufacturer can credibly commit to maintaining a wholesale price or that he lacks such ability. However, these two scenarios imply very different supply chain interactions, as only a national brand manufacturer with commitment ability can strategically adjust a national brand wholesale price to prevent a store brand introduction by the retailer. We specifically analyze the impact of this assumption on the manufacturer, the retailer, and the customers. We determine when long‐term contracts that provide the manufacturer with such commitment ability can improve supply chain profitability.     

The Decision of the Supply Chain Executive to Support or Impede Supply Chain Integration: A Multidisciplinary Behavioral Agency Perspective*

Applying the behavioral agency model developed by Wiseman and Gomez‐Mejia (1998) , this article analyzes human resource factors that induce supply chain executives (SCEs) to make decisions that foster or hinder supply chain integration. We examine two internal sources (compensation and employment risk) and one external source (environmental volatility) of risk bearing that can make SCEs more reluctant to make the decision to promote supply chain integration. We argue and empirically confirm the notion that an employment and compensation system that increases SCE risk bearing reduces the SCE's willingness to make risky decisions and thus discourages supply chain integration. We also reveal that this negative relationship becomes stronger under conditions of high environmental volatility. In addressing the “so what?” question, we found empirical support for the hypothesis that supply chain integration positively influences operational performance. Even though this decision has a positive value for the firm, we showed that SCEs discourage supply chain integration when they face higher risk bearing. Hypotheses are tested using a combination of primary survey data and archival measures in a sample of 133 Spanish firms.     

The Influence of Cost and Quality Priorities on the Propensity to Outsource Production*

Outsourcing of production has escalated over the past decade due to unprecedented competition and worldwide access to low‐cost labor markets. This article examines how cost and quality priorities—two key attributes of manufacturing strategy—influence a manufacturer's propensity to outsource. By doing so, we bridge the existing gap between research on manufacturing strategy and firm boundaries. We develop a theory‐based model that links a manufacturer's cost and quality priorities to its plans to outsource production. Our empirical analyses, based on survey data obtained from 867 manufacturing business units, control for firm‐specific factors previously shown to impact outsourcing, including asset specificity, uncertainty, and current capabilities in cost and quality. We found that the competitive priority placed on cost played an integral role in sourcing decisions, while, surprisingly, conformance quality priorities did not. The cost result is consistent with our expectations and observations in practice. The significant effect of cost priority on outsourcing shows that any theory of firm boundaries that fails to consider competitive priorities is incomplete. The finding regarding quality, which was counter to our expectations, may partially explain why there is an emergence of so many nonconforming products associated with outsourcing. Taken together, our results provide theoretical insights for future research into how manufacturing managers can improve their decision making on outsourcing production.     

Organizational Integration for Product Development: The Effects on Glitches,On‐Time Execution of Engineering Change Orders,and Market Success

Deviations from requirements during the product development process can be considered as glitches. Fixing glitches, or problems, during the product development process consumes valuable resources, which may adversely affect product development time and hamper the firm's goal to pursue a first‐mover advantage. It is posited that an integrated organizational response can diminish incidences of glitches and improve the ability of the firm to respond to engineering changes, subsequently leading to improved market success. This organizational response frequently includes heavyweight product development managers who are seen as essential catalysts for internal integration. Though internal integration is vital, it is equally important to integrate with customers and suppliers alike because such network partners can provide access to information, knowledge, and unique and complementary resources that are otherwise unavailable to the firm. Findings, which are based on a sample of 191 product development projects in the automotive industry, suggest that some integration routines have a positive impact on product development outcomes and market success, while other routines can in fact hamper the collective effort.     

Flexibility or Cost Saving? Sourcing Decisions with Two Suppliers

This article studies a decentralized supply chain in which there are two suppliers and a single buyer. One supplier offers the quantity flexibility (QF) contract to the buyer, while the other offers the cheaper price. Under the QF contract, the buyer does not assume full responsibility for the forecast, yet the supplier guarantees the availability of the forecasted quantity with additional buffer inventory. On the other hand, the price‐only contract places full inventory burden on the buyer, but with a cheaper price. We study this problem from the buyer's perspective and solve for the buyer's optimal procurement and forecasting decisions. We identify areas where flexibility and cheaper price have an advantage, one over the other. Our results indicate that the buyer significantly benefits from having multiple sources of supply. We also find that, from the system's standpoint, a multisupplier system may outperform a single‐supplier supply chain under certain conditions. Interestingly, we observe that providing too much flexibility may benefit the low‐price supplier rather than benefiting the QF supplier. We discuss the managerial implications and provide directions for future research opportunities.     

Invisible Whispering: Restructuring Collaborative Decision Making with Instant Messaging

Organizational decision making is dominated by teams. When an important decision is required, a team is often formed to make it or to advise the individual decision maker, because a team has more resources, knowledge, and political insight than any one individual working alone. As teams have become geographically distributed, collaboration technology has come to play an important role in such collective decision making efforts. Instant messaging (IM) is an increasingly prevalent workplace collaboration technology that enables near‐synchronous text exchanges on a variety of devices. We examined the use of IM during face‐to‐face, telephone, and computer‐mediated team meetings, a practice we call “invisible whispering.” We introduce Goffman's characterization of social interaction as dramatic performance, differentiable into “front stage” and “backstage” exchanges, to analyze how invisible whispering alters the socio‐spatial and temporal boundaries of team decision making. Using IM, workers were able to influence front stage decision making through backstage conversations, often participating in multiple backstage conversations simultaneously. This type of interaction would be either physically impossible or socially constrained without the use of IM. We examine how invisible whispering changes the processes of collaborative decision making and how these new processes may affect the efficiency and effectiveness of collaborative decision making, as well as participation, satisfaction, relationships among team members, and individual attention.     

The Roles of Supply Chain Intelligence and Adaptability in New Product Launch Success

Many new product introductions continue to be unsuccessful, and while researchers have studied product development processes, relatively few studies directly address new product launch. We do so in the present research and posit that supply chain intelligence, defined as technological and competitive knowledge sourced and integrated from suppliers, customers, and competitors, plays an important role in explaining new product launch success. We further employ the knowledge‐based view to theorize that both supply chain adaptability and product innovation capability act as important mediators of the effects of supply chain intelligence on new product launch success and firm financial performance. While the former capability refers to a firm's ability to quickly adjust its supply chain to react to market and product design changes, the latter refers to the firm's proficiency in developing innovative new products. We test hypothesized relationships among these factors utilizing data collected in a survey of 229 U.S. manufacturing firms. Results point to the central role of supply chain adaptability in capturing the benefits of supplier technological intelligence for enhanced product innovation capability, new product launch success, and firm financial performance. In contrast, product innovation capability serves as the generative means by which customer and competitor intelligence is translated into more successful new product launches, which, in turn, produce superior firm financial performance. Overall, these findings contribute to a better understanding of factors that can explain why certain product launches are more successful than others, and offer practical insights for appropriate investments in the development of related knowledge resources.     

Risk Uncertainty and Supply Chain Decisions: A Real Options Perspective

Supply chain risk uncertainty can create severe repercussions, thus it is not surprising that research interest in supply chain risk has been growing. While extant inquiry is informative, there is a lack of investigations that center on supply chain investment decisions when facing high levels of risk uncertainty. Given the potential dollar value involved in these decisions, an understanding of how these supply chain decisions are made is of significant theoretical and practical importance. Real options theory, with its focus on decision making under conditions of uncertainty, is an appealing theoretical lens for this endeavor. In essence, real options theory asserts that managerial decisions center on creating and then exercising or not exercising certain opportunities. To date, theorizing about and investigations of real options have used firms as their focus. Not yet examined are real options within supply chains that cross firm boundaries and drive much of the competitive activity in the modern economy. Accordingly, we extend real options theory to the supply chain context by examining how different types of options are approached relative to supply chain project investments. Specifically, we theorize how the options will be related to perceived value under conditions of high supply chain risk uncertainty. Overall, our investigation builds knowledge by extending real options theory to the supply chain context and by providing evidence suggesting some options operate differently in supply chains than they do in firms.     

Formal Infrastructure and Ethical Decision Making: An Empirical Investigation and Implications for Supply Management

Building on Rest's (1986) conceptual model of ethical decision making, we derive and empirically test a model that links an organization's formal ethical infrastructure to individuals’ moral awareness of ethical situations, moral judgment, and moral intention. We contribute to the literature by shedding light on the importance of a multifaceted formal ethical infrastructure—consisting of formal communication, recurrent communication, formal surveillance, and formal sanctions—as a crucial antecedent of moral awareness. In so doing, we discern how these four elements of a formal ethical infrastructure combine to collectively influence moral awareness based on a second‐order factor structure using structural equation modeling. We test our model based on survey data from 805 respondents with significant work experience across three separate ethical scenarios. Our results across the three scenarios provide overall support for our model. We found that a second‐order factor structure for the formal ethical infrastructure explains the variance among the four infrastructure elements and that a multifaceted formal ethical infrastructure significantly increases moral awareness. Our results further suggest a strong positive effect of moral awareness on moral judgment, which in turn was found to have a positive impact on moral intention. These results were substantiated when taking several individual and contextual control variables into account, such as gender, age, religiosity, work satisfaction, and a de facto ethical climate. Implications for theory, practice, and supply management are discussed.     

Supply Chain Strategy,Product Characteristics,and Performance Impact: Evidence from Chinese Manufacturers*

Supply chain management has become one of the most popular approaches to enhance the global competitiveness of business corporations today. Firms must have clear strategic thinking in order to effectively organize such complicated activities, resources, communications, and processes. An emerging body of literature offers a framework that identifies three kinds of supply chain strategies: lean strategy, agile strategy, and lean/agile strategy based on in‐depth case studies. Extant research also suggests that supply chain strategies must be matched with product characteristics in order for firms to achieve better performance. This article investigates supply chain strategies and empirically tests the supply chain strategy model that posits lean, agile, and lean/agile approaches using data collected from 604 manufacturing firms in China. Cluster analyses of the data indicate that Chinese firms are adopting a variation of lean, agile, and lean/agile supply chain strategies identified in the western literature. However, the data reveal that some firms have a traditional strategy that does not emphasize either lean or agile principles. These firms perform worse than firms that have a strategy focused on lean, agile, or lean/agile supply chain. The strategies are examined with respect to product characteristics and financial and operational performance. The article makes significant contributions to the supply chain management literature by examining the supply chain strategies used by Chinese firms. In addition, this work empirically tests the applicability of supply chain strategy models that have not been rigorously tested empirically or in the fast‐growing Chinese economy.     

Market Orientation,Ownership Type,and E‐Business Assimilation: Evidence from Chinese Firms

While more and more firms have implemented e‐business in business operations, a better understanding of the factors that successfully drive the assimilation of e‐business will provide insights for firm executives and practitioners to develop effective strategies for e‐business. Different from previous studies that focus on individual‐level factors related to business executives and top management teams, this study examines how firm‐level strategic and cultural factors shape e‐business assimilation. Based on the strategy and marketing literature on market orientation and firm ownership, we developed a research model to describe how a firm's market orientation impacts e‐business assimilation. The model also describes the moderating effect of firm ownership type on the relationship between market orientation and e‐business assimilation. Based on data from 301 Chinese international trade firms, we found that two dimensions of market orientation (i.e., customer orientation, competitor orientation) had significant effects on e‐business assimilation. However, the third dimension, interfunctional coordination, was only partially significant. In addition, ownership type was a significant moderator of the effects of customer orientation and competitor orientation on e‐business assimilation, although ownership type was not a moderator of interfunctional coordination. Being one of the first studies of the impact of market orientation and firm ownership type on e‐business assimilation, we conclude with a discussion of the implications for future research and practice.     

Buy,Keep, or Sell: Economic Growth and the Market for Ideas

An endogenous growth model is developed where each period firms invest in researching and developing new ideas. An idea increases a firm's productivity. By how much depends on the technological propinquity between an idea and the firm's line of business. Ideas can be bought and sold on a market for patents. A firm can sell an idea that is not relevant to its business or buy one if it fails to innovate. The developed model is matched up with stylized facts about the market for patents in the United States. The analysis gauges how efficiency in the patent market affects growth.     

Elite Recruitment and Political Stability: The Impact of the Abolition of China's Civil Service Exam

This paper studies how the abolition of an elite recruitment system—China's civil exam system that lasted over 1,300 years—affects political stability. Employing a panel data set across 262 prefectures and exploring the variations in the quotas on the entry‐level exam candidates, we find that higher quotas per capita were associated with a higher probability of revolution participation after the abolition and a higher incidence of uprisings in 1911 that marked the end of the 2,000 years of imperial rule. This finding is robust to various checks including using the number of small rivers and short‐run exam performance before the quota system as instruments. The patterns in the data appear most consistent with the interpretation that in regions with higher quotas per capita under the exam system, more would‐be elites were negatively affected by the abolition. In addition, we document that modern human capital in the form of those studying in Japan also contributed to the revolution and that social capital strengthened the effect of quotas on revolution participation.     

Relationship between Intellectual Capital and Knowledge Management: An Empirical Investigation

Two important streams of the literature have examined intellectual capital (IC) and knowledge management (KM). Surprisingly, they have developed in parallel, without any empirical research on the relationship between them. This article empirically examines how IC and KM affect each other, and also investigates their consequences, viewing three intermediate consequences (dynamic capabilities, efficiency, and innovativeness) to mediate their effects on firm performance. In addition, this article examines the effects of the organization's culture on IC and KM. To address these issues, a comprehensive model is developed and tested using a combination of survey and secondary data of 533 companies in Taiwan. The results support the theoretical model. Major findings include the following: IC affects KM and dynamic capabilities; KM facilitates innovation but not dynamic capabilities or IC; a learning culture facilitates IC and innovation but not KM; firm performance depends on efficiency and innovation, but not directly on dynamic capabilities; and efficiency does not depend on any of the other constructs in the study. The article's implications for research and practice are examined.     

Value of Persistent Information

We develop a theory of how the value of an agent's information advantage depends on the persistence of information. We focus on strategic situations with strict conflict of interest, formalized as stochastic zero‐sum games where only one of the players observes the state that evolves according to a Markov operator. Operator Q is said to be better for the informed player than operator P if the value of the game under Q is higher than under P regardless of the stage game. We show that this defines a convex partial order on the space of ergodic Markov operators. Our main result is a full characterization of this partial order, intepretable as an ordinal notion of persistence relevant for games. The analysis relies on a novel characterization of the value of a stochastic game with incomplete information.     

Capability,Quality, and Performance of Offshore IS Vendors: A Theoretical Framework and Empirical Investigation

Information systems (IS) offshoring has become a widespread practice and a strategic sourcing choice for many firms. While much has been written by researchers about the factors that lead to successful offshoring arrangements from the client's viewpoint, the vendor's perspective has been largely scarce. The vendor perspective is equally important as offshore IS vendors need to make important decisions in terms of delivering operational and strategic performance and aligning their resources and processes in order to meet or exceed targeted outcomes. In this article, we propose and test a three‐level capability–quality–performance (CQP) theoretical framework to understand vendor outcomes and their antecedents. The first level of the framework represents three vendor capabilities: relationship management, contract management, and information technology management. The second level has three mediating variables representing process quality: partnership, service, and deliverable quality. The third level has three dependent variables representing vendor outcomes: operational performance, strategic performance, and satisfaction. The model was tested with 188 vendor firms from India and China, the two most popular destinations for IS offshoring. Results support the CQP framework; vendor capabilities are significant predictors of intermediate quality measures, which in turn affect vendor outcomes. Implications of the study findings to both theory development and IS offshore vendor strategic decision making are discussed.     

Search With Adverse Selection

This paper analyzes a sequential search model with adverse selection. We study information aggregation by the price—how close the equilibrium prices are to the full‐information prices—when search frictions are small. We identify circumstances under which prices fail to aggregate information well even when search frictions are small. We trace this to a strong form of the winner's curse that is present in the sequential search model. The failure of information aggregation may result in inefficient allocations.