Decision Sciences Journal
Welcome to DSJ Online. The Decision Sciences Journal (DSJ) strives to provide extraordinary customer service by delivering timely and constructive reviews and informative responses throughout a manuscript's life cycle. To offer this superior level of customer service, all new submissions must be submitted electronically to DSJ through Manuscript Central. Please see the Authors link on the left hand sidebar for details on how to submit a manuscript. DSJ strongly encourages both first-time and returning authors to review all author information before submitting a manuscript, as these areas are frequently updated. If you have not already done so, please also review DSJ's Editorial Statement.
Connections
Forthcoming
(issues 43-4 and later)
|
Author(s)
|
Title
|
|
Liang-Chieh (Victor) Cheng, David E. Cantor, Martin Dresner, and Curtis M. Grimm
|
The Impact of Contract Manufacturing on Inventory Performance: An Examination of US Manufacturing Industries (Managing Innovation in Supply Chains special issue paper)
Hide Abstract
In recent years, a growing number of original equipment manufacturers (OEMs) have transferred their manufacturing processes to specialized firms, known as contract manufacturers. In so doing, contract manufacturers can reduce an OEM's production costs and provide OEMs with flexibility in the production process. This paper examines another potential reason for the use of contract manufacturing – the potential for efficiency gains from inventory reductions. Employing econometric models and data representing manufacturing industries in the U.S., our paper provides statistical evidence that contract manufacturing can lead to lower industry-wide inventory levels, after controlling for other relevant factors. Key managerial implications are derived from the analysis.
|
|
Michael R. Galbreth and Bikram Ghosh
|
Competition and Sustainability: The Impact of Consumer Awareness
Hide Abstract
Sustainability, a broad concept that can include numerous environmental and social dimensions, has emerged as an important product evaluation criterion for consumers. We suggest that the impact of sustainability on consumer behavior depends on two factors—each individual consumer's unique level of concern about sustainability, and the general level of awareness regarding the sustainability of competing products—that together determine the level of heterogeneity among consumer attitudes toward sustainability. We incorporate sustainability concern and awareness into a model of horizontal competition in a duopoly, where one firm's product is more sustainable than the other's. Our results suggest that marginal increases in awareness can benefit all firms, including the less sustainable one, when awareness is sufficiently high (the explicit goal of recent sustainability labeling initiatives). In several model extensions we provide additional insights for cases where: the sustainable firm controls the extent of its sustainability advantage, the sustainable firm can directly influence the general level of awareness, and the distribution of sustainability concern across consumers is non-uniform. Our results enable us to suggest several new insights for managers, both those whose products enjoy a sustainability advantage and those whose products do not.
|
|
Ruey-Jer "Bryan" Jean, Daekwan Kim, and Rudolf R. Sinkovics
|
Drivers and Performance Outcomes of Supplier Innovation Generation in Customer-Supplier Relationships: The Role of Power-Dependence (Managing Innovation in Supply Chains special issue paper)
Hide Abstract
While innovations generated by supply channel relationships, as opposed to individual partners, are playing an increasingly important role in the success of all supply chain partners, there has been a dearth of research in the literature on how supply chain relationships cultivate the process of such innovation generation. This study explores supplier market knowledge acquisition, relationship learning, systems collaboration, and technological uncertainty, as antecedents of supplier innovation generation, which is, in turn, hypothesized to positively affect the relationship performance of the supplier. Furthermore, supplier dependence on the buyer is investigated as a moderator of the effects of such antecedents on supplier innovation generation. According to the empirical tests, which used a sample of 236 Taiwanese executives, most of the hypotheses in the study are supported. Some implications of the results are discussed at the end.
|
|
Nihat Kasap, Berna Tektas Sivrikaya, and Dursun Delen
|
Optimal Pricing Strategies for Capacity Leasing Based on Time and Volume Usage in Telecommunication Networks
Hide Abstract
In this study, we examined optimal pricing strategies for "pay-per-time", "pay-per-volume" and "pay-per both time and volume" based leasing of data networks in a monopoly environment. Conventionally, network capacity distribution includes short/long term bandwidth and/or usage time leasing. When customers choose connection-time based pricing, their rational behavior is to fully utilize the bandwidth capacity within a fixed time period, which may cause network to burst (or overload). Conversely, when customers choose volume-based strategies their rational behaviors is to send only enough bytes (even for time-fixed tasks for real time applications), causing quality of the task to decrease, which in turn creating an opportunity cost for the provider. Choosing pay-per time and volume hybridized pricing scheme allows customers to take advantages of both pricing strategies while lessening the disadvantages of each, since consumers generally have both time-fixed and size-fixed task such as batch data transactions. One of the key contributions of this study is to show that pay-per both time and volume pricing is a viable and often preferable alternative to the only time and/or only volume-based offerings for customers, and that, judicious use of such pricing policy is profitable to the network provider.
|
|
Gensheng (Jason) Liu, Rachna Shah, and Emin Babakus
|
When to Mass Customize: The Impact of Environmental Uncertainty
Hide Abstract
Previous research on mass customization (MC) has focused on what it is and how it is implemented. In this study we examine when MC is an appropriate strategy for firms to follow by scrutinizing the effects of three environmental uncertainty variables (demand uncertainty, competitive intensity, and supply chain complexity) on the MC-performance relationship. Specifically, we distinguish the direct effect of environmental uncertainty on MC ability and the moderation effect of environmental uncertainty on MC ability's impact on customer satisfaction. We examine six competing hypotheses using data collected from 266 manufacturing plants. Our results show that competitive intensity has a direct positive impact on MC ability. However, demand uncertainty moderates the relationship between MC ability and customer satisfaction, and the direct and positive relationship between MC ability and customer satisfaction holds only when customer demand is highly uncertain. Supply chain complexity neither has a direct relationship with MC, nor moderates the MC-performance relationship. Implications of these research findings are discussed and future research directions are identified.
|
|
Srinivas Talluri, Hugo A. DeCampos and G. Tomas M. Hult
|
Supplier Rationalization: A Sourcing Decision Model
Hide Abstract
We draw on extant literature on strategic sourcing and supply base rationalization to anchor our argument that measuring supplier performance diversity is germane to executing an effective supply base rationalization strategy. We explicate how a novel approach to data envelopment analysis (DEA) efficiency assessment can be utilized to measure this performance diversity. More specifically, our methods are anchored in cross efficiency analysis in DEA that allows for evaluating the efficiency of a supplier with respect to the optimal weights (strengths) of its peers. This methodology is applied to an actual supplier dataset of a large multinational telecommunications company in categorizing their supply base into groups for effective supplier rationalization. We conclude that measuring and analyzing the performance diversity within the framework of DEA provides a mechanism for firms to better balance a rationalized and diversified supply base with unique skills.
|
|
Jihua Zhang, Jinxing Xie, and Bintong Chen
|
Technical Note: Cooperative Advertising with Bilateral Participation
Hide Abstract
This paper studies cooperative (co-op) advertising strategies in a two-tier distribution channel and extends the popular unilateral participation strategy to bilateral participations. It is shown that a properly designed bilateral participation has several advantages over the unilateral participation. It is capable of coordinating the distribution channel under a very general demand function. In addition, when participation parameters are determined endogenously by channel members, the bilateral participation improves the channel efficiency and leads to a Pareto improvement over the corresponding unilateral participation.
|
|
Xinxin Li
|
Group Buying, Buyer Heterogeneity and Seller’s Bargaining Power
Hide Abstract
Group buying enables collective bargaining opportunity that individual buyers lack to negotiate prices with sellers. This potential negotiation capability has two opposing effects. On the one hand, the prospect of the group being able to negotiate price with its rival forces each seller to lower its price offer, as too high a price will induce the group to give its rival an opportunity to undercut its price via negotiation likely taking away all the buyers. On the other hand, the potential negotiation opportunity may also discourage sellers from competing aggressively in their price offers, as the benefit of charging a low price could be offset by competitors in negotiation, thus yielding overall higher prices for the buyers. In this study, we find that compared to individual purchase, buyers benefit from collective bargaining opportunity by group buying only if sellers’ bargaining power relative to the buyer group is low and/or buyers’ preferences towards the sellers are sufficiently differentiated. Given buyers’ strategic choice of group purchase, sellers may be worse off with a further increase in bargaining power, and so may social welfare.
|
|
Yuliang Yao, Yan Dong, and Martin Dresner
|
Supply Chain Learning and Spillovers in Vendor Managed Inventory
Hide Abstract
Despite extensive literature on the value of supply chain collaboration programs, little research has examined the issue from the perspective of organizational learning. Using a unique, operational level dataset, we empirically examine the learning curves through which performance improvements are realized under Vendor Managed Inventory (VMI). Performance is measured at the downstream distributor locations by examining inventory levels after controlling for customer service performance (stockouts). We identify and assess three sources of learning – a supply chain dyad’s self-learning, learning spillovers from Electronic Data Interchange (EDI), and learning spillovers from other supply chain dyads. We find that self-learning, learning spillovers from EDI, and learning spillovers from other supply chain dyads, all have positive and significant impacts on a distributor’s inventory performance. In addition, we find that self-learning may exhibit a U-shaped learning curve (i.e., performance first improves and then plateaus or declines). These findings suggest that the various learning experiences with VMI and EDI can lead to improved performance over time, but the path to improvement may be complex.
|
|
Yongbo Xiao and Jian Chen
|
Supply Chain Management of Fresh Products with Producer Transportation
Hide Abstract
This paper considers a class of fresh-product supply chains in which products need to be transported by the upstream producer from a production base to a distant retail market. Due to high perishability, a portion of the products being shipped may decay during transportation, and therefore become unsalable. We consider a supply chain consisting of a single producer and a single distributor, and investigate two commonly adopted business models: (i) In the \pull" model, the
distributor places an order, then the producer determines the shipping quantity, taking into account potential product decay during transportation, and transports the products to the destination market of the distributor; (ii) In the \push" model, the producer ships a batch of products to a distant wholesale market, and then the distributor purchases and resells to end customers. By considering a price-sensitive end-customer demand, we investigate the optimal decisions for supply chain members, including order quantity, shipping quantity, and retail price. Our research shows that both the producer and distributor (and thus the supply chain) will perform better if the pull model is adopted. To improve the supply chain performance, we propose a \¯fed inventory-plus factor" (FIPF) strategy, in which the producer announces a pre-determined inventory-plus factor and the distributor compensates the producer for any surplus inventory that would otherwise be wasted. We show that this strategy is a Pareto improvement over the pull and push models for both parties. Finally, numerical experiments are conducted, which reveal some interesting managerial insights on the comparison between different business models.
|
|
Oded Berman, Nima Sanajian, and Hossein Abouee-Mehrizi
|
Do Shareholders Really Prefer Their Executives to Maximize the Equity Value? A Newsvendor Case
Hide Abstract
In this paper, we study how the operational decisions of a firm manager depend on her own incentives, the capital structure, and financial decisions in the context of the newsvendor framework. We establish a relationship between the firm’s cost of raising funds and the riskiness of the inventory decisions of the manager. Initially we consider four types of managers, namely, profit, equity, firm value and profit-equity maximizers, and assume that they may raise funds to increase the inventory level only by issuing debt. We show that the shareholders are indifferent between the different types of managers when the coefficient of variation (CV) of demand is low. However, this is not the case when the CV of demand is high. Based on the demand and the firm’s specific characteristics such as profitability, leverage, and bankruptcy costs, the shareholders might be better off with the manager whose compensation package is tied to the firm value as opposed to the equity value. We, then, extend our model by allowing the manager to raise the required funds by issuing both debt and equity. For this case we focus on the equity and firm value maximizer managers and show that our earlier results (for the debt only case) still hold subject to the cost of issuing equity. However the benefit of the firm value maximizer manager over the equity maximizer manager for shareholders is considerably less in this case compared to the case where the manager can only issue debt. The Board of Directors can take these factors into consideration when establishing/modifying the right incentive package for the managers. We also incorporate the notion of the asymmetric information to capture its impact on the board of directors.decision about the managers.incentive package.
|
|
Gerard Campbell
|
On-call Overtime for Service Workforce Scheduling when Demand is Uncertain
Hide Abstract
This paper builds on prior research to develop shift scheduling models that include on-call overtime for service environments where demand is uncertain. The research is motivated by recent developments in nurse scheduling, such as laws prohibiting mandatory overtime and the popularity of self-scheduling systems. For single-period scenarios, models are developed, solution methods are described, and results are explored for a variety of environments. Results show that the use of on-call overtime can reduce costs slightly, with the amount of savings dependent on characteristics of the scheduling environment. The factor that most significantly affects cost savings is the cost of outside agency workers relative to overtime workers. In addition to lowering costs, on-call overtime greatly reduces reliance on outside agency workers, which can have important practical implications in terms of quality of service and workforce morale. Results based on single-period models motivate multi-period formulations for single-department and multi-department scenarios, and solution methods are outlined for those cases. The possibility of using multi-period models within a rolling horizon framework with forecast updating is discussed. This goes along with an extension of the traditional workforce management hierarchy that separates overtime and regular-time scheduling, as seen in practice with self-scheduling and shift-bidding systems.
|
|
John D’Arcy and Sarv Devaraj
|
Employee Misuse of Information Technology Resources: Testing a Contemporary Deterrence Model
Hide Abstract
Recent research in information systems and operations management has considered the positive impacts of information technology (IT). However, an undesirable side effect of firms’ increasing reliance on IT to support the distribution and delivery of goods and services to customers is a greater exposure to a diverse set of IT security risks. One such risk is intentional employee misuse of technology resources. In this paper, we draw upon modern deterrence frameworks to develop a predictive model of technology misuse intention that incorporates formal and informal sanctions as well as employment context factors. The model specifies previously untested relationships between formal and informal sanctions, thereby providing fresh insight into the role of sanctions in deterring technology misuse in organizations. Our results suggest that a predisposition toward the need for social approval and moral beliefs regarding the behavior are key determinants of technology misuse. Contrary to criminological research that has questioned the relative importance of formal sanctions in the deterrence process, we also found that the threat of formal sanctions has both direct and indirect influences on technology misuse intention. Further, from an employment context standpoint, employees who spend more working days in “virtual” mode appear more inclined to misuse their organization’s technology resources. The findings have implications for the research and practice of technology management.
|
|
B. Elango, Srinivas (Sri) Talluri, and G. Tomas M. Hult
|
Understanding Drivers of Risk-Adjusted Performance for Service Firms with International Operations
Hide Abstract
This paper investigates whether international operations of service firms increase performance while reducing risk. The paper draws on a longitudinal dataset of 584 internationally operating service firms from the United States. Analysis indicates that international diversification is negatively related to risk-adjusted performance. However, it is established that international diversification interacts with internationalization and positively influences risk-adjusted performance. This finding offers significant promise for firms, as it indicates that international operations (if managed well), through exposure to varied foreign markets coupled with adequate global scope, can lead to firms’ increased risk-adjusted performance. The results provide a mechanism for decision-makers to better understand international operations of service firms and present a strategy for achieving success in international markets by effectively managing two important levers, i.e., internationalization and international market diversification.
|
|
Karolina Glowacka, Timothy Lowe, and Richard Wendell
|
Research Note: The Impact of Non-Agility on Service Level and Project Duration
Hide Abstract
“Why projects are late” is a fundamental issue in theory and in practice. One well known result is that a project’s network structure can be a significant factor – in that the “fatter” or more parallel the project, the later the project completion. Herein we show that a lack of agility, which may frequently arise in projects when there are external resources, can also be a significant factor in project delays – both in more serial-like projects as well as more parallel ones. Specifically, this paper formally characterizes the concept of agility in projects, shows how a lack of agility can have a significant impact on a project, and gives some general properties on agility with respect to a project’s structure.
|
|
Jack Shih-Chieh Hsu, Tung-Chin Lin, Kuang-Ting Cheng, and Lars P. Linden
|
Reducing Requirement Incorrectness and Coping with its Negative Impact in Information System Development Projects
Hide Abstract
The negative impact of incorrect requirements on information system development (ISD) project performance has long been acknowledged. This study addresses the problem of incorrect requirements by proposing a model that combines the error reduction and coping concepts proposed by Field et al. (Field, Ritzman, Safizadeh, & Downing, 2006) with the view that information systems development is a knowledge-intensive process. The model hypothesizes that when developers and users possess an understanding of each other’s primary domain of knowledge, the prevention of incorrect requirements and the mitigation of the negative consequences of incorrect requirements tend to improve project performance. Data collected from 250 ISD professionals on the basis of their experiences of recently completed ISD projects confirmed all of our hypotheses. The results demonstrate that the eliciting of incorrect requirements can be reduced when users and developers possess cross-domain understanding and when requirement analysis methodologies and techniques are available. Furthermore, the negative impact of incorrect requirements on project performance can be mitigated when developers have sufficient ISD knowledge and behavioral knowledge.
|
|
Antoinette L. Smith, Randy V. Bradley, Bogdan C. Bichescu, Monica Chiarini Tremblay
|
IT Governance Characteristics, Electronic Medical Records Sophistication, and Financial Performance In U.S. Hospitals: An Empirical Investigation
Hide Abstract
As a result of a recent federal government mandate, an increasing number of hospitals have decided to adopt electronic medical record (EMR) systems. This initiative is expected to lead toward more efficient and higher quality health care; however, little is known about IT governance characteristics and organizational performance for EMR adopters. Our goal is to inform theory and practice by examining hospitals with a sophisticated EMR and comparing those hospitals to similar hospitals (with a less sophisticated EMR) to understand the association between IT governance characteristics and financial performance. Leveraging the power and politics perspective and elements of upper echelon theory, we posit that hospitals in which the CIO reports to the CEO and CIO turnover is low are more likely to be associated with EMR sophistication. Further, we argue that hospitals that disband their IT steering committee are less likely to be associated with EMR sophistication. We also purport that EMR sophistication is associated with improved financial performance. Our results underscore the importance of continuity in the CIO position on successful EMR implementations. Our results indicate that a sophisticated EMR appears to be a fundamental element in improving hospitals’ revenue cycle management. Moreover, we find that hospitals with a sophisticated EMR appear to be more profitable. Finally, we observe that total payroll expense adjusted by total discharges drops among the sophisticated hospitals, potentially due to an increase in employee productivity. These insights can serve as a basis for tempering expectations relative to the financial impact of EMR adoption.
|
|
Pankaj C. Patel, Arash Azadegan, and Lisa M. Ellram
|
The Effects of Strategic and Structural Supply Chain Orientation on Operational and Customer-Focused Performance
Hide Abstract
Supply chain orientation (SCO), or the implementation of a supply chain management philosophy, consists of two distinct, yet interdependent elements, namely strategic SCO and structural SCO. Strategic SCO involves integrating a SCM philosophy into the firm’s strategy development, while structural SCO encompasses operational-level behaviors and actions that reflect such a philosophy. This study extends the research on SCO by developing hypotheses on the contingent effects of strategic SCO and structural SCO on a firm’s operational and customer-focused performance. Drawing on the Strategy-Structure-Performance framework, the study proposes that strategic SCO and structural SCO positively affect different dimensions of performance and that structural SCO plays a mediating role in the relationship between strategic SCO and performance. These relationships are tested using primary survey data and archival data from 183 manufacturers in the Midwestern US. Results confirm that strategic SCO is associated with both operational performance and customer-focused performance, but structural SCO is only related to operational performance. Structural SCO acts as a mediator in linking strategic SCO with operational performance and customer-focused performance and mediation effects are strengthened at higher levels of environmental dynamism.
|
|
Bobby Martens, Kevin P. Scheibe, and Paul K. Bergey
|
Supply chains in sub-Saharan Africa: A decision support system for small-scale seed entrepreneurs
Hide Abstract
It is necessary to infuse a consistent supply of improved seed varieties into local sub-Saharan African crop production to improve low crop yields. The best distribution channel for the improved seed varieties may be small scale commercial seed companies, but local entrepreneurs struggle to determine whether such businesses are viable. Using a multi-echelon supply chain approach, a DSS was designed to help African seed entrepreneurs make informed decisions about small-scale seed chain businesses. Specifically, entrepreneurs make decisions about where to locate seed enterprises, with which farmers to contract, and where to store seed. Optimization and simulation modeling are used to evaluate infrastructure variables such as distance, transportation cost, and storage loss and cost in three development level areas. Currently, the decision tool is used in Mozambique, Malawi, Kenya, and Tanzania. The model has supported the start-up of at least seventeen small seed companies that are now introducing improved seed varieties into villages and farms. The DSS applies decision science research in a humanitarian application and offers important managerial implications about supply chain infrastructure to NGOs and humanitarian groups. Such applications are vital as groups such as USAID, the Gates Foundation, and the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT) continue to move toward micro-enterprise, value chain, and market-oriented development programs.
|
|
Ming-Hui Huang and Eric T.G. Wang
|
Marketing is from Mars, IT is From Venus: Aligning the Worldviews for Firm Performance
Hide Abstract
A typical firm is operated by multiple functional managers, who may collaborate as well as compete, to achieve firm performance. In the digital age, firm performance is essentially customer-dependent and technology-dependent, with both marketing and information technology (IT) playing key roles. Unfortunately the two functions often have very different worldviews. We show how these differences can damage firm performance, and suggest ways to mitigate this damage. We build a worldview difference model, synthesized from multiple disciplines. The model is tested using both matched and non-matched observations from marketing and IT managers, and is analyzed with hierarchical linear models using both perceptual and objective firm performance data over a four-year period. We find that differences between the beliefs and perceptions of marketing managers and IT managers generate a negative impact on firm performance, and suggest appropriate technology-culture associations to effectively align their worldviews for firm performance. To improve firm performance, a cross-functional appreciation for market and technology drivers can be achieved by making marketing managers more learning-oriented and by providing IT managers a culture that is congruent with technology.
|
|
