Myung-Soo Jo and Emine Sarigollu awarded 2018 SSHRC Insight Grant
Congratulations to Myung-Soo Jo, and Emine Sarigollu,聽Professors in Marketing,聽on being awarded the 2018 SSHRC Insight Grant 鈥淭he Demand and Supply Sides of Corruption鈥�.聽
Supply Diagnostic Incentives under Endogenous Information Asymmetry
Authors:聽Mohammad E. Nikoofal,聽Mehmet Gumus
Publication: Production and Operations Management, Forthcoming
Abstract:
This paper develops a dyadic supply chain model with one buyer who contracts the manufacturing of a new product to a supplier. Due to the lack of experience in manufacturing, the extent of supply risk is unknown to both the buyer and supplier before the time of contract. However, after the contract is accepted, the supplier may invest in a diagnostic test to acquire information about his true reliability, and use this information when deciding on a process improvement effort. Using this setting, we identify both operational and strategic benefits and costs of diagnostic test. Operationally, it helps the supplier to take the first-best level of improvement effort, which would increase efficiency of the total supply chain. Strategically, it enables the buyer to reduce the agency costs associated with implementing process improvement on the supplier. Besides these benefits, diagnostic test increases the degree of information asymmetry along the supply chain. This in turn provides the supplier with proprietary information, whose rent would be demanded from the buyer in equilibrium. Benefit-cost analysis reveals two key factors in determining the value of diagnostic test: (i) degree of endogenous information asymmetry between supply chain firms, and (ii) the relative cost of diagnostic test with respect to process improvement cost. Our results indicate that when both are high, the mere presence of diagnostic test can result in less reliable supply chain. This implies that when incentives are not properly aligned, information asymmetry amplified due to diagnostic test neutralizes all its benefits.
Determinants of Climate Change Mitigation Technology Portfolio: An Empirical Study of Major U.S. Firms
Authors:聽Derek D. Wang, Shanling Li, Toshiyuki Sueyoshi
Publication: Journal of Cleaner Production, Vol. 196, September 2018
Abstract:
A Model of Two-Sided Costly Communication for Building New Product Category Demand
Authors: Michelle Y. Lu , Jiwoong Shin
Publication: Marketing Science, Vol. 37, No. 3, May-June 2018
Abstract:
When a firm introduces a radical innovation, consumers are unaware of the product鈥檚 uses and benefits. Moreover, consumers are unsure of whether they even need the product. In this situation, we consider the role of marketing communication as generating consumers鈥� need recognition and thus market demand for a novel product. In particular, we model marketing communication as a two-sided process that involves both firms鈥� and consumers鈥� costly efforts to transmit and assimilate a novel product concept. When the marketing communication takes on a two-sided process, we study a firm鈥檚 different information disclosure strategies for its radical innovation. We find that sharing innovation, instead of extracting a higher rent by keeping the idea secret, can be optimal. A firm may benefit from the presence of a competitor and its communication effort. The innovator can share its innovation so that competitors can also benefit, which encourages rivals to enter the market. The presence of such competition guarantees a higher surplus for consumers, which can induce greater consumer effort in a two-sided communication process. Moreover, the increased consumer effort, in turn, prompts complementarity in the communication process and lessens the potential free-riding effect in communication between firms. Additionally, it encourages the rival firm to exert more effort, especially when the role of consumers becomes more important. Sharing innovation with a rival serves as a mechanism to induce more efforts in a two-sided communication process.
Oversight and Efficiency in Public Projects: A Regression Discontinuity Analysis
Authors: Eduard Calvo, Ruomeng Cui and Juan Camilo Serpa
Publication: Management Science, Volume 65, Issue 12, December 2019, Pages 5651-5675.
Abstract:
In the U.S., four in ten public infrastructure projects report delays or cost overruns. To tackle this problem, regulators often scrutinize the project contractor鈥檚 operations. We investigate the causal effect of government oversight on project efficiency by gleaning 262,857 projects that span seventy-one U.S. federal agencies and 54,739 contractors. Our identification strategy exploits a regulatory bylaw: if a project鈥檚 anticipated budget exceeds a threshold value, the contractor鈥檚 operations are subject to surveillance from independent procurement officers; otherwise, these operational checks are waived. Using a regression discontinuity design, we find that oversight is obstructive to the project鈥檚 operations, especially when the contractor (i) has no prior experience in public projects, (ii) is paid with a fixed-price contract that includes performance-based incentives, and (iii) performs a labor-intensive task. In contrast, oversight is least obstructive 鈥� or beneficial 鈥� when the contractor (i) is experienced, (ii) is paid with a time-and-materials contract, and (iii) performs a machine-intensive task.
Karla Sayegh Receives Best Student Paper Award for her Thesis Work at OBHC Conference
Karla Sayegh, PhD Student in Strategy & Organization, received the best student paper award for her thesis work at the 11th International Organizational Behaviour in Health Care (OBHC) Conference held in Montreal from May 13 鈥�16, 2018. 聽
Supply Chain Proximity and Product Quality
Authors: Robert Bray, Juan Camilo Serpa and Ahmet Colak
Publication: Management Science, Volume 65, Issue 9, September 2019, Pages 4079-4099.
Abstract:
We explore the effect of supply chain proximity on product quality by merging four independent data sources from the automotive industry, collecting: (i) auto component defect rates, (ii) upstream component factory locations, (iii) downstream assembly plant locations, and (iv) product-level links connecting the upstream and downstream factories. Combining these four datasets allows us to trace the flow of 27,807 products through 529 supplier factories and 275 assembly plants. We estimate that increasing the distance between an upstream component factory and a downstream plant by an order of magnitude increases the component鈥檚 expected defect rate by 3.9%. We also find that shorter inter-factory spans are associated with more rapid product quality improvements, and that supply chain distance is more detrimental to quality when automakers: (i) produce early generation models or (ii) high-end products, (iii) when they buy components with more complex configurations, or (iv) when they source from suppliers who invest relatively little in research and development
Patient-centric design of long-term care networks
Authors: Paul聽Intrevado,聽 Vedat聽Verter and Lucie聽Tremblay
Publication: Health Care Management Science, Forthcoming
Abstract:
Low birth weight is associated with increased fat intake in school-aged boys
Authors: Adrianne R. Bischoff, Andr茅 K. Portella, Catherine Paquet, Roberta Dalle Molle, Aida Faber, Narendra Arora, Robert D. Levitan, Patr铆cia P. Silveira and Laurette Dub茅
Publication: British Journal of Nutrition, Vol. 119, No. 11, June 2018
Abstract:
The prediction of oil price turning points with log-periodic power law and multi-population genetic algorithm
Authors: Fangzheng Cheng, Tijun Fan, Dandan Fan and Shanling Li
Publication: Energy Economics, Vol. 72, May 2018
Abstract:
Cutting the Cord: Mutual Respect, Organizational Autonomy, and Independence in Organizational Separation Processes
Authors: Rene Wiedner and Saku Mantere
Publication: Administrative Science Quarterly, Forthcoming
Abstract:
Based on a longitudinal, qualitative analysis of developments in the English National Health Service, we develop a process model of how organizations divest or spin off units with the aim of establishing two or more autonomous organizational entities while simultaneously managing their continued interdependencies. We find that effective organizational separation depends on generating two types of respect鈥攁ppraisal and recognition respect鈥攂etween the divesting and divested units. Appraisal respect involves showing appreciation for competence or the effort to achieve it, while recognition respect requires considering what someone cares about鈥攕uch as values or concerns鈥攁nd acknowledging that they matter. The process model we develop shows that open communication is crucial to the development of both. We also find that certain attempts to gain organizational independence and respect may unintentionally undermine the development of autonomy. Counterintuitively, we find that increasing or maintaining interorganizational links via communication may facilitate organizational separation, while attempts by units to distance themselves from one another may unintentionally inhibit it. By linking organizational separation, autonomy, independence, and respect, this paper develops theory on organizational separation processes and more generally enhances our understanding of organizational autonomy and its relations with mutual respect.
Professor Kartik Ganju's paper selected as Featured Article in Management Science
Assistant Professor in Information Systems Kartik Ganju's paper "The Spillover Effects of Health IT Investments on Regional Healthcare Costs," with co-authors Hilal Atasoy and Pei-yu Chen was selected by the Managing Editor of Management Science as one of the Featured Articles for the June 2018 issue.
Professor Emmanuelle Vaast received Best Paper Award in Academy of Management Annals
Professor Emmanuelle Vaast's paper published in the Academy of Management Annals, "Social Media and Their Affordances for Organizing: A Review and Agenda for Research," with Paul M. Leonardi were co-winners for the Best Paper Award for Volume 11 (2017).
The mission of Annals is to publish up-to-date, in-depth and integrative reviews of research advances in management.
Professor Patrick Augustin wins 2018 Arthur Warga Award for Best Paper in Fixed Income
Assistant Professor in Finance, Patrick Augustin, recently received the 2018 Arthur Warga Award for Best Paper in Fixed Income at the Society for Financial Studies (SFS) Calvalcade North America 2018 with co-authors Mikhail Chernov and Dongho Song.
Informed Options Trading Prior to Takeover Announcements: Insider Trading?
Authors: Patrick Augustin, Menachem Brenner, Marti G. Subrahmanyam
Publication: Management Science, May 21, 2019
Abstract:
We quantify the pervasiveness of informed trading activity in target companies' equity options before the announcements of 1,859 U.S. takeovers between 1996 and 2012. About 25% of all takeovers have positive abnormal volumes, which are greater for short-dated out-of-the-money calls, consistent with bullish directional trading before the announcement. Over half of this abnormal activity is unlikely due to speculation, news and rumors, trading by corporate insiders, leakage in the stock market, deal predictability, or beneficial ownership filings by activist investors. We also examine the characteristics of option trades litigated by the SEC for alleged illegal insider trading. While the characteristics of such trades closely resemble the patterns of abnormal option volume in the U.S. takeover sample, we find that the SEC litigates only about 8% of all deals in it.
