Strategic risk in supply chain contract design

Supply chains facing asymmetric information can either operate in a cooperative mode with information and benefit sharing or can choose a non-cooperative form of interaction and align their incentives via screening contracts. In the cooperative mode, supply chain efficiency can be achieved, but high levels of trust and trustworthiness are required. In the non-cooperative mode, the contract mechanism guarantees a second best supply chain performance, but only if all parties choose their equilibrium strategies without trembles. Experimental evidence, however, shows that both operating modes often fail due to strategic risk. Cooperation is disrupted by deceptive signals and the lack of trust, whereas non-cooperative strategies suffer from persistent out-of-equilibrium behavior. We present two means to reduce strategic risk. First, a punishment mechanism leads to a better matching of trust and trustworthiness and supports the cooperative operating mode. Second, an enforcement of self-selection supports the non-cooperative equilibrium by increasing the attractiveness of screening contracts. We find that supply chain performance can benefit from reduced strategic risk in either operating mode.     

Cans and cants: Computational potentials for multimodality with a case study in head position

As the study of embodiment and multimodality in interaction grows in importance, there is a need for novel methodological approaches to understand how multimodal variables pattern together along social and contextual lines, and how they systematically coalesce in communicative meanings. In this work, we propose to adopt computational tools to generate replicable annotations of bodily variables: these can be examined statistically to understand their patterning with other variables across diverse speakers and interactional contexts, and can help organize qualitative analyses of large datasets. We demonstrate the possibilities thereby with a case study in head cant (side‐to‐side tilt of the head) in a dataset of video blogs and laboratory‐collected interactions, computationally extracting cant and prosody from video and audio and analyzing their interactions, looking at gender in particular. We find that head cant indexes an orientation towards the interlocutor and a sense of shared understanding, can serve a ‘bracketing’ function in interaction (for speakers to create parentheticals or asides), and has gendered associations with prosodic markers and interactional discourse particles.     

The role of absorptive capacity and innovation strategy in the design of industry 4.0 business Models - A comparison between SMEs and large enterprises

Technological innovations often lead to redesigns in the business models of established companies, requiring them to incorporate new external knowledge into internal activities. Against this background, this study integrates the concepts of business model design, absorptive capacity, and innovation strategy into a novel research model, which analyzes the redesign of established business models in response to the emergence of Industry 4.0. Industry 4.0, also known as the Industrial Internet of Things, constitutes a contemporary research context that is highly relevant for corporate practice but scarcely regarded in management literature until now. The article contains an analysis of data from 221 German industrial enterprises, conducted through structural equation modeling, with separate data for small and medium-sized enterprises (SMEs) and large enterprises. First, the results indicate that the acquisition, assimilation, transformation, and exploitation of knowledge from the environment enable companies to engage in both exploratory and exploitative innovation strategies. Furthermore, the paper includes an evaluation of the role of exploratory and exploitative innovation strategies that reflects in efficiency-centered and novelty-centered business model designs. The distinct characteristics differentiating SMEs from large enterprises are also explained. The implications of absorptive capacity on innovation strategies, which influence the redesign of extant business models, are discussed from a research and managerial perspective.     

Strategic Inventory and Supply Chain Behavior

Based on a serial supply chain model with two periods and price‐sensitive demand, we present the first experimental test of the effect of strategic inventories on supply chain performance. In theory, if holding costs are sufficiently low, the buyer builds up a strategic inventory (even if no operational reasons for stock‐holding exist) to limit the supplier's market power, and to increase the own profit share. As it turns out, this enhances the overall supply chain performance. The supplier anticipates the effect of the strategic inventory and differentiates prices to capture a part of the increased supply chain profits. Our results show that the positive effects of strategic inventories are even more pronounced than theoretically predicted, because strategic inventories empower buyers by shifting the perception of the fair split. Overall, strategic inventories have a double positive effect, a strategic and a behavioral, both reducing the average wholesale prices and dampening the double marginalization effect. The latter effect leads to more equitable payoffs.     

The Impact of Information Sharing on Supply Chain Performance under Asymmetric Information

The use of screening contracts is a common approach to solve supply chain coordination problems under asymmetric information. One main assumption in this context is that managers without specific incentives would rather use their private information strategically than reveal it truthfully. This harms supply chain performance. This study investigates the impact of information sharing in a principal‐agent setting that is typical for many supply chain transactions. We conduct a laboratory experiment to test whether information sharing has an influence on supply chain coordination. We find that information sharing within the supply chain has two positive effects. First, information sharing reduces the inefficiencies resulting from information deficits if there is a certain amount of trust in the supply chain. Second, communication can limit out‐of‐equilibrium behavior with a small impact on the firm's own payoff, but a large impact on the supply chain partner. Furthermore, we find that both effects are amplified when communication takes place in an environment that allows the less informed supply chain party to punish or to reward the better informed party. Although our extended mechanisms substantially enhance the poor performance of the theoretically optimal coordination contract menu, we find no mechanism that implements supply chain performance superior to the theoretically predicted second‐best level.