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Do Supply Chain Characteristics Influence a Rival Firm's Responses to a Focal Firm's Product Preannouncements? A Competitive Dynamics Perspective
Abstract
This study investigates how supply chain characteristics influence a rival firm's response to a focal firm's product preannouncements from a competitive dynamics perspective. Indeed, many firms recognize that it is critical to leverage their supply chains to gain a competitive advantage. We propose that common suppliers enhance a rival firm's awareness of the focal firm's credibility, reducing competitive responses. In addition, a rival firm's strong supplier inventory performance will motivate rivals to respond more aggressively, while the rival's supply–chain partnerships enhance its capability to react to the focal firm. Using panel data from S&P 1500 firms between 2007 and 2015, our findings provide support for our hypotheses, illustrating that supply chain characteristics can significantly influence a rival firm's responses to the focal firm's preannouncements. This research contributes to the competitive dynamics and supply chain management literature by highlighting the strategic role of supply chain characteristics in interfirm competition, offering practical insights for managers on leveraging supply chain resources to effectively navigate competitive threats.
... These models offer supply chain managers a way to catch and address potential issues before they spread, reinforcing the system's resilience from within [6][7]. The ability to catch these "weak signals" early has proven especially valuable in complex networks where the cost of disruption can be substantial [8][9]. ...
Global supply chains face increasing complexity and vulnerability to disruptions, necessitating more robust management approaches. This study aims to evaluate the effectiveness of artificial intelligence (AI) technologies in enhancing supply chain resilience through improved prediction capabilities and automated response mechanisms. The research investigates the application of AI-based methods across three critical dimensions: predictive accuracy, disruption detection, and dynamic resource allocation. The proposed framework achieved a mean absolute percentage error (MAPE) of 4.5% in demand forecasting, supporting more stable inventory management and reducing the likelihood of stockouts and overstock. Anomaly detection was performed with an 88% sensitivity and a 7% false-positive rate, allowing early intervention in potential disruptions, which resulted in a 12% reduction in downtime and 9% cost savings in affected nodes. Furthermore, the dynamic resource allocation model yielded a 16% reduction in disruption-related costs and a 17-21% decrease in lead times during demand surges. These findings suggest that integrating AI in supply chain management provides a robust, adaptive approach to operational stability, equipping supply chains to better navigate demand volatility and unforeseen disruptions.
The supply base is increasingly recognized as a critical enabler of firm innovation. While existing research has linked direct collaboration with suppliers to superior innovation performance, it has largely overlooked the relational dynamics occurring further upstream in the supply chain. We introduce the concept of cross‐tier supplier collaboration —strategic alliances between first‐ and lower‐tier suppliers (i.e., suppliers' suppliers) within a focal firm's supply chain focused on sharing or co‐developing resources—and explore how this not‐so‐visible collaboration serves as a source of superior innovation for the buyer firm. Drawing on the extended resource‐based view (ERBV), we construct and analyze a large panel dataset compiled from multiple archival data sources of public manufacturers, their first‐tier suppliers, and lower‐tier suppliers. The empirical analysis reveals that cross‐tier supplier collaboration enhances buyer firm performance in terms of innovation efficiency. This positive relationship is strengthened when first‐ and lower‐tier suppliers have long‐term relationships but is weakened when these suppliers are geographically distant from each other. This study and its discoveries make a valuable contribution to the theories and literature on extended supply base and firm innovation while also providing practical guidance for managerial sourcing decisions.
The purpose of this study is to build and test theory regarding the effects of product recall timing on a firm's stock performance and sales. The impact on firm performance is assessed from moving first with a recall campaign in an industry sector, the time relative to a competitor's recall campaign of substitutable products, and the time between the day the defect notification was submitted to a federal agency by the manufacturer and the day when owners are notified that a solution is in place. Using National Highway Traffic Safety Administration (NHTSA) data for the period of 2010–2015, the study employs an event study methodology, which involves examining the changes in specific variables of interest around the time of an event. We find that delaying recall campaigns vis‐à‐vis your competitors, though advantageous, has a diminishing returns to impact on firm performance. In addition, we identify advantages of initiating the recall campaign first from a sales perspective. Finally, we also find a negative impact from delayed resolution to recalls.
In the context of slowing economic growth and increasing uncertainty, enhancing the financial flexibility of manufacturing enterprises is a critical foundation for promoting the high-quality development of the real economy. This study selects a sample of Chinese A-share-listed manufacturing firms from Shanghai and Shenzhen, spanning the years 2012 to 2022, and constructs a fixed-effects model to examine the impact of ESG performance on the financial flexibility of these firms and its underlying mechanisms. The study finds that: (1) ESG performance significantly enhances corporate financial flexibility. (2) ESG performance promotes financial flexibility primarily through mechanisms such as alleviating financing constraints, improving competitive advantages, and attracting analysts’ attention. (3) Heterogeneity analysis reveals that the positive effect of ESG performance on financial flexibility is more pronounced in high-tech firms and non-heavily-polluted firms. (4) Sub-dimensional analysis shows that corporate governance has a more significant impact on financial flexibility enhancement than social responsibility, while environmental investment exerts an inhibitory effect on financial flexibility. (5) The uncertainty associated with ESG ratings weakens the contribution of ESG practices to the financial flexibility of manufacturing firms. Based on these findings, this paper suggests that enterprises should be encouraged to actively adopt ESG practices, accelerate the improvement of their ESG disclosure systems, and support firms with strong ESG performance to foster high-quality development.
In the face of supply chain disruptions, firms are expected to swiftly recover and resume operations. Traditional strategies focus on restoring operations to pre‐disruption states while largely maintaining the existing supply network structure. Recent cases, however, highlight a different approach: supply chain plasticity, wherein firms undergo significant structural shifts in supply network design as a response to disruptions with the goal to improve performance. Drawing on the foundations of supply chain responsiveness and network theory, we investigate how (and if) firms redesign their supply chains against a backdrop of increased disruptions and the implications supply chain plasticity has on resilience. Rooted in network theory, this study not only theoretically compares, contrasts, and connects prior concepts with supply chain plasticity but also empirically investigates whether firms exhibit a plastic response by modifying their supply chain network structures—specifically focusing on structural holes, centrality, and clustering network dimensions. Furthermore, we hypothesize that network plasticity impacts firm performance in the form of time to recover from a disruption. The findings demonstrate that the existence and significance of network plasticity in shaping firm responses to disruptions are indeed present and can be beneficial. We also provide evidence that supply chain plasticity is an efficacious strategy to enhance resilience and recovery performance amidst heightened disruption frequency. As firms increasingly face dynamic and complex environments, understanding and leveraging network plasticity will be vital for sustaining competitive advantage and achieving long‐term success.
Sustainability literature has largely focused on business practices that result in environmental benefits that might not always be profitable to the firm, and thus, tend to be less appealing to the corporate board rooms. In this study, I examine if the rival firm’s sustainability behavior is driven by the focal firm’s behavior. Although a growing number of firms globally have voluntarily adopted and carried out a wide range of sustainability practices, there are firms that are driven by the position taken by industry competitors. Here, I examine such phenomena, to determine if a focal firm’s sustainability behavior is influenced by the rival’s sustainability behavior. In addition, I also examine how the competitive landscape of the focal firm, in the form of the focal firm’s size, the rival’s sustainability reputation, and industry concentration moderates the behavioral influence. I find a positive association between the rival firm’s sustainability performance and the focal firm’s sustainability performance. I also find that the focal firm’s size and industry concentration positively moderate the rivalry. Rival firms’ sustainability reputation does not have an impact on the rivalry.
Purpose - This study investigates the extent to which structural equivalence between acquiring and target firms is associated with post-merger and acquisition (M&A) performance-a relationship that is proposed to be moderated by industry-level vertical relatedness between acquiring and target firms.
Design/methodology/approach - Applying social network analysis and regression, this study analyzes a buyer-supplier relationship network dataset of 279 M&A deals completed between 2010 and 2017 to test the hypotheses. Structural equivalence is measured as the proportion of common customers and suppliers between an acquiring firm and a target firm.
Findings - Supporting a view about the importance of supply chains in explaining M&As outcomes, the results suggest that the structural equivalence in the supplier network is positively associated with post-M&A firm performance. The results also show that the effect of the structural equivalence in the customer network is moderated by vertical relatedness between two merging firms (i.e., structural equivalence contributes to post-M&A performance when vertical industry relatedness is high).
Originality/value - This study contributes to the M&A and supply network literature by investigating the performance implications of structural equivalence in supplier and customer networks, demonstrating the importance of taking a supply chain view when explaining M&As outcomes. Specifically, we suggest considering structural equivalence as a new type of relatedness between merging firms. It also indicates how industry-level vertical resource relatedness, which is about relatedness in internal resources between the two firms, could interact with firm-level network resource relatedness, which is about relatedness in external supply chain resources between the two firms, in affecting post-M&A performance.
The success of a firm’s supply chain strategy depends on resources in the political environment and the supply network in which it operates. If the political environment is not conducive to a firm’s supply chain strategy, a firm can either change its supply chain strategy or seek a political environment that is more favorable to its supply chain. This paper examines this second alternative. The structure‐conduct‐performance (SCP) paradigm and the competitive dynamics literature are used to explore the relationships between political actions that leverage supply network resources, supply chain strategies, and firm performance. We extend a well‐known typology of political actions from the strategic management literature and suggest that beyond influencing or complying with the political environment, firms may choose to moderate the political environment (circumvent or submit) or stay neutral (free ride). An integrated model is developed to explore the relationships between political actions and supply chain strategy, along with a series of propositions outlining how political actions can facilitate supply chain risk management strategies. Finally, suggestions are provided for future research.
Global disruptions can cause unprecedented variability in demand and supply, necessitating rapid repurposing of supply chains. This research investigates supply chain plasticity and a corresponding unique strategy – operational repurposing. Resource dependence theory and social network theory are used to assess the effects of firms’ network positions on firm engagement in operational repurposing. Social network analysis and econometric models are utilized to analyze 426,995 supply chain contractual relationships and 64,750 CEO network relationships embedded in 136 firms. The results show that in both supply chain and CEO networks, entrepreneurial network position increases a firm’s likelihood to repurpose existing operations, while prominent position reduces it. Furthermore, CEO entrepreneurial network position enhances the positive relationship between supply chain entrepreneurial network position and the likelihood of repurposing. This research provides a deeper understanding of how structural networks affect a firm’s supply chain plasticity. It helps industry and policy leaders identify suitable firms to prepare their supply chains in the event repurposing is required.
Keywords: disruption; supply chain plasticity; supply chain network; CEO network.
While social media has become an integral part of modern-day life, it is a largely overlooked topic in supply chain business-to-business setting. This study utilizes dyadic survey data collected from both supplier account managers and their customers to explore social media's impacts in the digitalized supply chain context. Drawing upon the knowledge-based view of the firm, the study proposes and tests a conceptual model. Results indicate that supplier account manager's social media use can increase his or her product and competitor knowledge, which can positively influence customer outcome. Further, the moderation test suggests that when perceived customer demandingness is high, the relationship between social media use and knowledge will be stronger. This study draws much-needed attention to social media as an emerging digital supply chain management too.
In this paper, we study the disruptive power of the mobile digital sharing economy to the road freight logistics industry. New information technologies, such as the mobile internet, mobile payment methods, and GPS, have enabled platforms to match freight shippers’ demand with carriers’ supply by utilizing the convenience and mobility of smartphones. We empirically study the influence of the emergence of mobile digital freight matching platforms in the U.S. on the profitability and stock performance of two types of incumbent road freight logistics companies: freight arrangement companies (freight forwarders and brokers) and trucking companies (freight carriers). Since the mobile digital freight matching platforms mainly match small and mid‐sized trucking companies with shipping demand, we expect the platforms to introduce interference (direct) competition to traditional freight arrangement companies and exploitation (indirect) competition to large trucking companies, which potentially raises operational challenges for both types of incumbents. We use Difference‐in‐Differences (DID) analyses to study the incumbents’ profitability and the event study method to evaluate their stock performance. We find that after the advent of the mobile digital freight matching platforms in the U.S., the profitability of the traditional freight arrangement companies counter‐intuitively remained unchanged. In contrast, the profitability of the large trucking companies increased. Further, we examine the changes in sales and costs behind these profitability changes. Our dynamic analyses suggest a time lag of the influence of the mobile digital freight matching platforms. Besides, we find that the stock value of the traditional freight arrangement companies received a significant negative shock, whereas the stock value of the large trucking companies showed no significant reaction. This study contributes to understanding the disruptive power of an emerging technology innovation of sharing economy to firm performances in an increasingly competitive and innovative business environment.
The diversification of service portfolios is one of the key strategies employed by third-party logistics providers (3PLs) to remain competitive. Moving from traditional transportation and warehousing services, many 3PLs now offer a one-stop shopping experience to shippers by combining these services with customized offerings such as inventory management, integrated supply chain management, and consulting. Academic literature has identified key drivers of this phenomenon, such as the need to meet shippers’ increasing expectations, a 3PL’s strategic orientation, or to capitalize on existing resources and capabilities. Yet, work focused on the theoretical and empirical analysis of competitive drivers of 3PL diversification is scant. Grounded in competitive dynamics theory and the theory of strategic groups, we investigate the effects of the addition of new services by peer 3PLs on a focal 3PL’s diversification of service offerings. In particular, we hypothesize—and find based on the analysis of a large archival panel dataset—that a focal 3PL is more likely to expand its service portfolio when its peers introduce services that put them in direct competition with the focal 3PL. The same behavior is observed, though to a lesser extent and with longer time lags, when peers introduce services that the focal 3PL did not previously offer. The results also indicate that when there is greater similarity between the service portfolios of a focal firm and its peers, these relationships will be stronger. Collectively, these findings contribute to the logistics outsourcing and diversification literatures and offer refinements to competitive dynamics theory. Our work also offers managerial insights relevant to 3PL decision makers as they design their service portfolios.
This paper investigates the development of supplier-supplier innovations that occur when two firms that are part of the same supply network co-patent a new product. This study unravels how the structure of the supply network influences each firm’s ability to form supplier-supplier innovations with other network members. Specifically, we investigate how supplier degree centrality influences the generation of supplier-supplier innovations, and the extent to which this relationship is moderated by the structural embeddedness of firms in the supply network. Using data from the Toyota supply network, the results reveal that a firm’s ability to co-develop supplier-supplier innovations with other network members depends on its number of ties and their direction within the supply network. Although betweenness centrality has no significant moderating effect, closeness centrality and embeddedness in small world clusters negatively moderate the relationship between supplier degree centrality and supplier–supplier innovations. Additionally, the number of manufacturing plants a firm operates in Japan strengthens the positive effect supplier degree centrality has on the development of supplier–supplier innovations.
Hospital managers struggle with the day-to-day variability in patient admissions to different clinical services, each of which typically has a fixed allocation of hospital beds. In response, many hospitals engage in capacity pooling by assigning patients from a service whose designated beds are fully occupied to an available bed in a unit designated for a different service. This “off-service placement” occurs frequently, yet its impact on patient and operational measures has not been rigorously quantified. This is, in part, because of the challenge of properly accounting for the endogenous selection of off-service patients. We use an instrumental variable approach to quantify the causal effects of off-service placement of hospitalized medical/surgical patients, having accounted for the endogeneity issues. Using data from a large academic medical center with 19.6% of medical/surgical patients placed off service on average, we find that off-service placement is associated with a 22.8% increase in remaining hospital length of stay (LOS) and a 13.1% increase in the likelihood of hospital readmission within 30 days. We find no significant effect on in-hospital mortality or clinical trigger (rapid response) activation. We identify longer distances to the service’s home unit as a key mechanism that drives the effect on LOS. In contrast, a mismatch in nursing specialization does not seem to explain this effect. By quantifying the effects of off-service placement on patient and operational outcomes, we enable clinicians and hospital managers to make better-informed short-term decisions about off-service placement and longer-term decisions about capacity allocation.
This paper was accepted by Stefan Scholtes, healthcare management.
Research in competitive dynamics has primarily analyzed how characteristics of observable attacks influence firms’ competitive responses. Why and how firms take action in response to critical events that affect their rivals, without being attacked themselves, is less well understood. Focusing on negative earnings surprises, we argue that a focal firm is likely to view a rival’s negative earnings surprise as an opportunity to exploit its vulnerability. Therefore, such surprises are positively associated with the intensity of competitive actions initiated by a focal firm. Furthermore, the complexity and vagueness of a rival’s language in an earnings conference call strengthens the positive relationship between the negative earnings surprise and the focal firm’s intensity of competitive actions. We tested our arguments using data from 3,202 earnings releases and conferences calls of publicly listed firms between 2003 and 2014 in the United States. The results and robustness checks support our predictions.
Scholars in the field of supply chain management have started to embrace the idea of simultaneous cooperation and competition (“coopetition”) in supplier networks but have mainly looked at coopetition from a structural perspective. In this paper, we complement the structural view with a paradox perspective to investigate the competitive tensions that evolve when buying firms are trying to engage both forces simultaneously in their relations with core suppliers. Our comparative case study of four major carmakers reveals different strategies buying firms use to manage coopetition in their supplier networks, the responses they trigger from their suppliers, and the resulting paradoxical tensions. Our inductive analysis reveals that irrespective of the managing approach chosen, the “coopetition capabilities” of the buying firm determines whether negative tension dynamics can be avoided. At the core of such coopetition capabilities are “evaluative capabilities” allowing the buyer to provide cost improvement suggestions to suppliers for the sake of joint value creation, and to control the division of value appropriation through a deeper understanding of the supplier's cost structures. By highlighting the nature of coopetition capabilities as organizational capabilities, we also contribute to paradox research, going beyond its current focus on the individual cognitions of managers.
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Research summary : We investigate the impact of trade secret legal protection on firm market value in the context of acquisitions. On one hand, market value may increase because trade secret assets become better protected from rivals. On the other hand, market value may decrease because trade secret protection reduces information about the target and its competitors available to potential buyers, increasing uncertainty about its value. Buyers will discount their offers in expectation of being compensated for riskier deals. Using a sample of private equity investments in the U nited S tates, we find that trade secret protection has a positive effect in industries with high mobility of knowledge workers, but a negative effect in industries with (1) high resource–value uncertainty and (2) high poor‐investment risk.
Managerial summary : We argue that an increase in trade secret legal protection might not unequivocally benefit firm owners when selling their business. A stronger trade secret protection increases the market value of firms in industries with high workers' mobility, but it decreases the market value of firms in industries with uncertain resource value and/or high risk of poor‐acquisition investments. Based on the contingent effect of trade secret protection, companies may want to adjust their strategic decisions, including where to locate or relocate, based in part on whether they will derive benefits or suffer losses when trade secrets are better protected. Finally, our study should help policymakers understand more fully the economic impact of government policies associated with trade secrets. Copyright © 2016 John Wiley & Sons, Ltd.
Over the past 30 years managers have increasingly focused on improving inventory management both within their own firms and across the supply chain. To this end, inventory turns metrics have been adopted as a popular tool for measuring flow velocity through the inventory and the efficiency of inventory-related asset utilization. There are multiple computational methods thereof currently used by practitioners, but each has some flaws. In particular, consensus is lacking as to (1) how to measure inventory flow and (2) how to measure the inventory level. Clearly, high-quality accounting information is essential for an accurate assessment of all inventory performance metrics. Unfortunately, when comparing efficiencies across firms or diagnosing and correcting intra-firm inefficiencies, choices of specific accounting rules and distortions between fair market values and corresponding accounting book values can lead to potentially misleading results. This paper presents finite-horizon versions of Little’s Law and elucidates their connection to inventory turns and restricted sojourn times in inventory, defined as the portion of the full sojourn time that falls within a prescribed time period. In particular, it explains when the reciprocal of sample inventory turns coincides with the sample average of restricted sojourn times. As such, the paper provides a unified prescriptive model for correctly relating inventory turns to sojourn times through an inventory system, thereby facilitating more accurate intra-firm and cross-firm comparisons.
Prior studies have shown that a firm's violation of expectations might lead to less favorable evaluations of that firm by stakeholders. However, the literature has been silent on whether and how the process by which stakeholders evaluate a firm could change subsequent to the violation. Drawing from signaling and screening theory, we examine how evaluative processes might change in the context of financial restatements. We find that investors appear to shift their relative reliance on particular signals in determining a firm's stock price following an earnings restatement. These changes are at least partly reversed following the replacement of an incumbent CEO. We further find that these evaluative changes vary depending on the severity of the violation.
In their commentary, Bromiley and Rau criticized resource-based theory (RBT) generally, and challenged the appropriateness of its application in operations management (OM). But, Michael Hitt, Christina Matz Carnes and Kai Xu present their view on the subject. The authors believe that the definition of OM presented in Bromiley and Rau tends to be narrow, excluding some of current foci in the OM field. Bromiley and Rau highlighted their concern about sustained competitive advantage as the dependent variable in RBT. This is an important part of the theoretical underpinnings of RBT. recent research has used RBT to explain large differences in performance for firms, both individually and relative to the industry norms. In other words, explaining how firms achieve a sustained competitive advantage does not require limiting the discussion to only the top 10% of firms as suggested by Bromiley and Rau, rather, scholars can use RBT to explain how different firms, at varying levels of performance, can develop and sustain advantages over rivals.
Purpose
Despite the important role that suppliers have in enhancing the environmental performance of a buyer firm, previous research has not investigated the individual-level motivations of supplier employees (representatives) in supplier-to-supplier environmental knowledge sharing. Thus, we use insights from the coopetition literature to examine how buyer firms can encourage supplier-to-supplier environmental knowledge sharing with the aim of improving the buyer’s environmental performance.
Design/methodology/approach
We empirically test our model using an online vignette-based experiment administered to supply chain managers. We contextualized our results using insights from interviews with senior managers representing firms operating in a broad array of industries.
Findings
We find that a supplier representative’s personal environmental values influence their commitment to an environmental consortium with a rival firm, and they are subsequently willing to share proprietary environmental knowledge. In turn, these relationships are moderated by situational factors including competitive intensity and buyer power.
Originality/value
The study of coopetition is an emerging stream of research in operations management. Our findings improve the understanding on how a focal actor within a buyer–supplier coopetitive network can promote environmental knowledge sharing behavior.
Embedded in networks of relationships, firms are who they buy from and sell to. As a result, a firm’s corporate social responsibility (CSR) practices can be influenced by CSR practices of its customers and suppliers—known as CSR diffusion. This study examines how CSR diffuses in a supply chain that encompasses a focal firm, its suppliers, and customers. Adopting a relational view, this research hypothesizes that a firm’s CSR is influenced by its customer-base CSR differently than its supply-base CSR. By analyzing panel data consisting of 1,972 firm-year observations integrated from multiple data sources, the results offer evidence for a positive impact of customer-base CSR and a negative impact of supply-base CSR on firm CSR. Interestingly, when customers and suppliers of a focal firm establish direct business connections (i.e., customer-supplier closure), the positive follow-suit effect of customer-base CSR is enhanced. In contrast, the negative free-ride effect of supply-base CSR is diminished. This suggests that a focal firm is more likely to embrace CSR practices from CSR-active supply chain partners when embedded in closed triads. This research shows the need to consider the directionality and closure of relationships in understanding the diffusion of voluntary, ill-defined, costly operational practices within a supply chain.
Numerous studies on corporate social responsibility (CSR) indicate that firms adopt CSR practices for various reasons related to their supply chain. However, the necessity to conform to a firm's own industry CSR norm is overlooked. Conforming to one's industry CSR norm—a herding behavior known as CSR conformity —ensures firm in‐group legitimacy and preserves internal resources for core business activities. On the other hand, deviating from industry norms sets a firm apart from its peers, making the firm more appealing to supply chain partners. Motivated by this dilemma, this study draws on middle‐status conformity theory and explores how a firm's network prominence determines its CSR conformity. Panel data analyses of 1650 firm‐year observations reveal an inverse U‐shaped relationship between firm network prominence and its CSR conformity, indicating that firms with a mid‐level network prominence engage in higher CSR conformity. However, the inverse U is flattened when a firm's supply chain partners (and their respective industries) share similar CSR standards, suggesting that a firm can only prioritize its own industry CSR norms if its supply chain partners share a compatible CSR standard. These findings highlight the importance of understanding CSR from an organizational conformity perspective, especially in the context of supply chain network.
The escalating complexity of supply networks is undeniable, and organizations grapple with myriad globally dispersed suppliers spanning diverse industries and operating amid volatility and uncertainty while having multifaceted interactions. In line with this, scholars have been investigating supply network complexity (SNC) for over two decades, yet the domain is not converging; definitions and operationalizations are varied, a multiplicity of theoretical perspectives exists, performance implications are inconclusive, and supply chain managers are certainly still struggling with the complexity of their supply networks. To address this critical gap, we conducted a rigorous systematic review of 116 articles and synthesized the extant research in a comprehensive nomological network of SNC. Our synthesis encompasses the following key aspects: (i) defining (sub)dimensions of SNC by reconciling diverse conceptualizations, (ii) elaborating on the direct and contingent effects of SNC by highlighting underlying mechanisms and relevant theories, (iii) identifying antecedents of SNC, and (iv) introducing a detailed categorization of SNC management practices and illustrating SNC management capability as an antecedent of such practices. We conclude by presenting an extensive research agenda illustrating the gaps in the literature and charting a path forward in relation to different themes, theories, and methods.
While greater competitive activity is generally associated with competitive advantage, certain competitive actions by a supplier may have spillover effects that adversely impact buying firms, leading them to reduce future purchases from the supplier. We study the effects of competitive actions in the context of vertical buyer–supplier relationships. Specifically, leveraging insights from screening theory, we examine how a supplier firm's value‐diminishing competitive actions—moves that may negatively impact buyer firms—lead to subsequent reductions in the buyer's procurement allocations and how contextual factors moderate such adverse effects. We test the associated hypotheses using a panel dataset comprising 12,690 dyadic buyer–supplier observations. A series of econometric analyses provide consistent evidence that a supplier's value‐diminishing actions are associated with decreases in the buyer's purchases from the supplier, thus highlighting the “dark side” of competitive actions. Furthermore, we find that the supplier's downstream vertical relatedness and the degree to which rival suppliers pursue value‐diminishing actions moderate this effect. Our findings, thus, add to our understanding of factors that shape the success and continuity of supply chain relationships and help supplier firms evaluate the economic viability of their competitive actions.
Purpose
The purpose of our study is to investigate how a manufacturing plant’s internal operations along with its network of connections (upstream and downstream) can have an impact on its recovery time from a disruption. The authors also examine the inverse-U impact of complexity. Finally, the authors test the moderating role that business continuity management plans (BCP) at the plant level have on recovery time.
Design/methodology/approach
To test our hypotheses, the authors partnered with Resilinc Corporation, a Silicon Valley-based provider of supply chain risk management solutions to identify focal firms’ suppliers, customers and plant-level data including information on parts, manufacturing activities, bill of materials, alternate sites and formal business continuity plans. The authors employed censored data regression technique (Tobit).
Findings
Several important findings reveal that the plant’s internal operations and network connections impact recovery time. Specifically, the number of parts manufactured at the plant as well as the number of internal plant processes significantly increase disruption recovery time. In addition, the number of supply chains (upstream and downstream) involving the plant as well as the echelon distance of the plant from its original equipment manufacturer significantly increase recovery time. The authors also find that there exists an inverted-U relationship between complexity and recovery time. Finally, the authors find partial support that BCP will have a negative moderating effect between complexity and recovery time.
Originality/value
This research highlights gaps in the literature related to supply chain disruption and recovery. There is a need for more accurate methods to measure recovery time, more research on recovery at the supply chain site level and further analysis of the impact of supply chain complexity on recovery time.
One of the critical challenges of technology management for a firm is managing technological knowledge. This study focuses on available technological knowledge in a firm's global supplier network and examines factors that accrue innovation benefits from such knowledge for a buyer firm. Using absorptive capacity as a theoretical lens, we specifically examine technological distance, technological breadth, and extent of global sourcing, and how these factors interrelate in influencing a firm's innovation performance. The panel data is drawn from various sources (Bloomberg SPLC, PATSTAT Global, and Compustat). Our sample spans four years from 2011 through 2014 and comprises an unbalanced panel of 878 firm‐year observations derived from buyer–supplier relationship data of 246 unique buyer firms. Embedded in this data are 846 unique supplier firms and 9291 dyads (buyer–supplier pairs). The findings confirm the negative association between technological distance and innovation performance, and the positive association between technological breadth and innovation performance. Contrary to expectations, technological distance plays a negative moderating role in the relationship between technological breadth and innovation performance. The results also show that while the extent of a firm's global sourcing has a positive relationship with its innovation performance, the relationship changes with technological distance. To tap innovation or leverage knowledge spillovers from its supply base, a buyer firm should incorporate technology considerations in its sourcing decisions. Three factors that make a buyer firm more (or less) likely to leverage spillovers to improve its innovation performance are technological distance, technological breadth, and the extent of global sourcing. These factors foster the development of both potential absorptive capacity and realized absorptive capacity.
This paper uses unconditional quantile regression analysis to interrogate the effects of institutional quality on innovation outcomes. We assess important determinants of innovation such as property rights (including enforcement of intellectual property rights), human resources within R&D and high-technology exports. Regarding intellectual property rights, while most previous research focuses on patent strength (de jure or book law), we focus on de facto patent enforcement. Using data from the World Bank, the Heritage Foundation and a new patent enforcement index, we construct a panel of fifty countries covering 1998–2017. Our analysis reveals important new insights including the strongly negative impact of patent enforcement and human resources within R&D on less innovative economies, and the varying impacts across quantiles for key variables such as high-technology exports. We find that both stronger institutions and patent enforcement are not necessarily the best route to boosting innovation, especially in economies where existing innovative capacity is weak.
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Numerous studies have examined the relationship between inventory management and financial performance. However, the focus of such empirical work has primarily been on how a firm's own inventory characteristics affect its performance. Our objective is to extend this body of literature beyond the firm‐level. We draw on inventory theory and resource‐based theories to hypothesize about the effect of supplier inventory leanness on a focal firm's financial performance and how supplier and focal firm inventory leanness interact to affect such outcomes. We test our hypotheses using a large panel dataset of supplier‐focal firm relationships obtained from Compustat's Customer Segment database and aggregated to the focal firm‐quarter level, as well as firm financial information from Compustat's Fundamentals Quarterly database. The econometric analyses provide evidence that supplier inventory leanness influences focal firm financial performance indirectly through the interaction with the firm's own inventory leanness. In particular, our estimation results detail how supplier inventory leanness affects the non‐linearity of the focal firm's inventory leanness‐financial performance relationship and its optimal inventory leanness level. The findings broaden the scope of empirical inventory literature and highlight supplier inventory leanness as an important consideration in firm‐level inventory decision making.
Supply chain relationships—both within and between firms—can have significant implications on the firm’s ability to successfully compete. Thus, it is increasingly important for supply chain managers to skillfully navigate multiplex relationships to coordinate and manage resources across functions and firms in today’s competitive environment. In this work, we describe, in a supply chain context, how the prevalence of multiplex relationships, which exist when multiple, potentially incongruous relationships are present between firms and among individuals within these firms, is an important basis for individual behaviors that influence firm competitiveness. Drawing on recent advances in the relational multiplexity theoretical perspective, we identify and discuss several research opportunities for enriching our understanding of interpersonal level antecedents of firm competitiveness. Specifically, we present research opportunities related to supply chain behavioral implications of individual differences and socio‐structural adaptation, informal relationship capitalization and creation, temporal orientation and transience, contemporary multi‐team structures, and cross‐level relational valence (a)symmetries. Throughout, we emphasize the importance of the informal, interpersonal relationships that overlay formally specified roles and develop representative research questions to spur further exploration in each area.
In their pursuit of greater performance, firms invariably compete with their rivals for customer demand or scarce resources in factor markets. Firms’ competitive behavior—the series of competitive actions taken to create or maintain competitive advantage—thus, is a key predictor of profitability and has received much attention in the strategic management literature. The central tenet of this article is that supply networks and the relationships among firms in these networks fundamentally shape the nature of interfirm competition and, ultimately, firm performance. While prior research has amply studied the competitive dynamics among (horizontal) rival firms as well as the linkages between supply network characteristics and firm performance, there remain important opportunities to examine how supply networks enable and shape firms’ competitive behavior and the effectiveness of their rivalrous activity. The goal of this article, therefore, is to take stock of the advances made in prior literature and to outline topics for future study at the intersection of competition and supply chain management. Collectively, we lay out a comprehensive perspective on the role that supply networks can play in affecting competition that, we hope, will inform and guide efforts to enhance our understanding of firm‐level competitive behavior and associated performance outcomes.
Competitive dynamics (CD) and the resource-based view (RBV) emerged simultaneously from the study of strategy more than three decades ago. The two subfields have advanced since then to occupy established positions in strategic management. Generally, CD is outward-focused and interested in a firm’s moves and countermoves in the marketplace. The RBV looks inward, examining a firm’s internal organizational capabilities, its tangible and intangible resources. They have mostly been investigated independently; rarely have researchers put together the two pieces of internal capabilities and external competitive profile. Consequently, we have only a fragmented snapshot of the firm’s core strategic elements and behaviors. Here, we compare and contrast the two perspectives along a number of dimensions such as focus of attention and conception of competitive advantage. Based on this understanding, we explore the CD-RBV interface, specifically how central elements of these research streams may be considered jointly to expand our understanding of firm behaviors and outcomes. We highlight limitations and lapses in the literature and suggest directions for future researchers interested in developing new theories connecting the intellectual boundaries of these two important strategy subfields.
The rise of Augmented Reality (AR) technology presents marketers with promising opportunities to engage customers and transform their brand experience. While firms are keen to invest in AR, research documenting its tangible impact in real-world contexts is sparse. In this article, the authors outline four broad uses of the technology in retail settings. Next, they focus specifically on the use of AR to facilitate product evaluation prior to purchase, and empirically investigate its impact on sales in online retail. Using data obtained from an international cosmetics retailer, they find that AR usage on the retailer’s mobile app is associated with higher sales for brands that are less popular, products with narrower appeal, and products that are more expensive. In addition, the effect of AR is stronger for customers who are new to the online channel or product category, suggesting that the sales increase is coming from online channel adoption and category expansion. These findings provide converging evidence that AR is most effective when product-related uncertainty is high, demonstrating the technology’s potential to increase sales by reducing uncertainty and instilling purchase confidence. To encourage more impactful research in this area, the authors conclude with a research agenda for AR in marketing.
With human brands or individual celebrities in fields ranging from sports to politics increasingly using social media platforms to engage with their audience, it is important to understand the key drivers of online engagement. Using Twitter data from the political domain, we show that positive and negative-toned content receive higher engagement, as measured by retweets, than mixed or neutral toned tweets. However, less popular human brands generate higher social media engagement from positive-toned content compared with more popular human brands. Therefore, we recommend that popular human brands (e.g., popular politicians or chief executive officers) keep their content objective rather than emotional. Furthermore, the tone of related brands (i.e., human brands who belong to the same political party) has a strong reinforcement effect; that is, social media engagement is higher when the tone of the focal human brand and related brands are the same and lower when the tones are different. Therefore, we prescribe that human brands actively coordinate their social media content with related brands to generate higher engagement. From human brands’ perspective, our findings recommend a comprehensive social media strategy, which takes into account the tone of content, tone of related brands’ content, and human brands’ popularity.
Focal firms are struggling to improve their environmental performance for several reasons, including a scarcity of internal and external environmental resources. This study suggests that coopetition provides a boost to a focal firm’s environmental performance. In particular, this research theorizes that a coopetitor firm’s environmental performance has a spillover effect on a focal firm’s environmental performance. This study also investigates the moderating role of a focal firm’s financial slack, financial leverage, and inventory leanness on this relationship. The empirical analysis indicates that coopetitor firms’ environmental performance significantly influences a focal firm’s environmental performance. This relationship is weaker for firms with higher financial slack, and stronger for firms that have lower financial leverage and higher leanness. Collectively, these findings provide important managerial and research implications regarding the consequences of coopetition on a focal firm’s environmental performance.
Stakeholders increasingly put pressure on firms to ensure their suppliers' adherence to corporate social responsibility principles and standards. A firm's supplier monitoring activities (SMA) are, thus, central to achieving supply chain transparency. In an effort to help build a business case for SMA, this research explores the effect of SMA disclosures on consumers' attitude toward the firm and purchase intention. In so doing, we also examine how consumer attitude and purchase intention vary as a function of SMA disclosure characteristics. The results of three behavioral studies reveal more positive consumer attitude and higher purchase intention when a firm discloses that its supplier monitoring extends to lower‐tier suppliers (SMA depth) and the firm monitors its lower‐tier suppliers directly rather than relying on its first‐tier suppliers or third parties to do so (lower‐tier supplier monitoring mechanism). Greater SMA breadth—monitoring both suppliers' social and environmental activities—in turn, is not associated with more positive consumer attitude and higher purchase intention. Further, attitude toward the firm mediates the relationship between SMA disclosure characteristics and purchase intention. Collectively, these findings underline that consumers value firms' SMA and point toward an economic rationale for a firm's transparency regarding its supplier monitoring efforts.
Using a multitier mapping of supply-chain relationships constructed from granular global, firm-to-firm supplier–customer linkages data, we quantify the degree of financial risk propagation from the supply network beyond firms’ direct supply-chain connections and isolate structural network properties serving as significant moderators of risk propagation. We first document a baseline fact: a significant proportion of tier-2 suppliers are shared by tier-1 suppliers. We then construct two simple metrics to capture the degree of tier-2 sharing and disentangle its effect from tier-2 suppliers’ own risks. We show that the focal firms’ risk levels are significantly related to the proportion of shared tier-2 suppliers in their supply network, and the effect becomes monotonically stronger as their tier-2 suppliers become more highly shared. Finally, we uncover causal relationships behind these associations using a new source of exogenous, idiosyncratic risk events in an event study setting. We show that, as tier-2 suppliers are impacted by these events, focal firms experience negative abnormal returns, the magnitude of which is significantly larger when the impacted tier-2 suppliers are more heavily shared. Overall, our study uncovers the subtier network structure as an important risk source for the focal firm, with the degree of tier-2 sharing as the main moderator. Our results also provide the microfoundation for a common structure in idiosyncratic risks and suggest the importance of incorporating the effect of subtier supply network structure in the portfolio-optimization process.
This paper was accepted by Vishal Gaur, operations management.
Stakeholders expect focal firms to improve their environmental performance. While firms may be able to accumulate the environmental expertise needed to achieve this goal internally, doing so may require significant time and resource commitments. Alternatively, buyer firms can leverage their suppliers’ existing environmental expertise and gain access to such expertise when they purchase products and services from these suppliers. The purpose of this study was to develop and test theory regarding under what conditions suppliers’ environmental expertise influences a buying firms’ procurement spend with these suppliers. We ground our study in transaction cost economics and agency theories and empirically test our hypotheses using a unique buyer–supplier dyadic data set. We find that buyer firms are willing to increase their overall business spend with suppliers that have strong environmental expertise, particularly when the buyer firms are more profitable and have higher levels of absorptive capacity. However, we find the opposite effect when the buyer firm’s executive compensation is linked to the firm’s environmental, social, and governance (ESG) performance. Likewise, we also find that the buyer firm’s environmental concern ratings negatively moderate the relationship between the supplier’s environmental expertise and the buyer’s procurement spend with the supplier.
Because mothers remain disproportionately responsible for childcare, the daily requirement for physical presence at work disadvantages them compared with otherwise equivalent men and childless women. Relaxing this requirement may therefore enhance the well-being and productivity of working mothers. I tested this idea with a randomized field experiment, using a within-subjects analysis from a repeated crossover design. The 187 participants in the experiment, which ran for four weeks and yielded 748 person-week observations, revealed a preference for about two remote working days per week. I observed no significant differences in the uptake of remote working days between men, women, parents, nonparents, fathers, and mothers. Mothers reported meaningfully reduced family–work conflict during remote working weeks, but fathers did not. Remote working generally increased job performance, but the effect was greatest for mothers. The coordination costs of remote working, with respect to coworker helping and job interdependence, did not appear prohibitive. Interviews with study participants corroborate and contextualize these findings.
This paper was accepted by Olav Sorenson, organizations.
Problem definition: This paper provides empirical evidence on the effect of the 2011 Great East Japan Earthquake (GEJE) on the financial performance of firms. Academic/practical relevance: The GEJE was characterized as the most significant disruption ever for global supply chains. In its aftermath, there was a great deal of debate about the risks and vulnerabilities of global supply chains, and there were calls to redesign and restructure supply chains. Methodology: We empirically estimate the effect of the GEJE on the stock prices of firms. Our analyses are based on a global sample of 470 firms collected from articles and announcements in the business press that identify affected firms, as well as 382 firms that are not mentioned in the business press but are in industries potentially subject to contagion or competitive effects. Results: We estimate that firms experiencing supply chain disruptions as a result of the GEJE lost on average 5.21% of their shareholder value during the one-month period after the GEJE. For Japanese firms, the effect was much more severe with an average 9.32% loss in shareholder value. Non-Japanese firms averaged a 3.73% loss in shareholder value. We also find that upstream and downstream supply chain propagation effects from the GEJE are negative, and the contagion effect on firms related to the nuclear industry is very negative. For firms in the rebuilding industries or competitors to firms affected by the GEJE, the competitive effect from the GEJE is positive. Managerial implications: The loss suffered by both Japanese firms and non-Japanese firms experiencing supply chain disruptions as a result of the GEJE is economically significant. Although the loss is more severe for firms whose operations were directly affected by the GEJE, it is also significant for firms who experienced indirect effects from their upstream and downstream supply chain partners, further confirming the importance of supply chain risk mitigation strategies.
The mere preannouncement of a new product can affect consumer choice, thus complicating preannouncement strategy. This is because a preannounced product that is unavailable immediately can still be one of the alternatives in a consumer’s mind at the time of choice. Such unavailable products, also known as phantom products, influence the reference point that consumers compare alternatives to when making a choice, as has been widely demonstrated in experimental studies. Thus, in addition to encouraging consumers to postpone purchase in favor of a future product, preannouncement also changes their preference for the currently available products when consumers do not prefer to postpone. In this paper we explore preannouncement strategy by analyzing a model that incorporates the effect of new product preannouncement (NPP) on consumer preferences and compare the results with a benchmark case in which consumer preferences across the existing products are not influenced by preannouncement. We find that when we take into account the effect of NPP on consumer preferences across the existing products, although postponement of purchase by some consumers remains beneficial, the preference for the current product offering with a lower quality can suffer so much that the significant lowering of current profits is not offset by future gains. Thus, preannouncement may no longer be the optimal strategy for the firm with a lower-quality product, which in turn explains the “Osborne effect.” Our results also challenge the conventional wisdom in new product preannouncement literature.
This paper was accepted by Juanjuan Zhang, marketing.
The authors focus on NPA signals, which they define as new product announcements in advance of market introduction. They develop a set of hypotheses regarding incumbent reactions to NPA signals and test them in a field study among managers in the United States and the United Kingdom. The authors’ findings provide a characterization of the factors affecting the likelihood of competitive response to NPA signals and suggest a set of managerial implications.
We study a manufacturer's product preannouncement decision in a setting where there is uncertainty about when an innovative new product design will be finalized for production, and a key component supplier needs to reserve the capacity before the realization of the final product design. The marketing literature has shown that product preannouncement changes the product demand: it may create buzz about the new product so the demand increases; or it may induce stronger competition from rivals so the demand decreases. We characterize the supplier's optimal response in reserving capacity given the uncertainty in the product design timing and the changing demand. Furthermore, we characterize the conditions under which the manufacturer may benefit from preannouncing her product release date. We show that even when preannouncement leads to a shorter sales window of the product, the manufacturer may still be better off in preannouncing her new product release date because the supplier's response of reserving the capacity earlier improves the manufacturer's profit. For a similar reason, we find that the manufacturer's expected profit may increase in the wholesale price that she pays to the supplier for the key component. In addition, we show that the supplier trusts the manufacturer's preannounced product release date only when this date is sufficiently late; otherwise, he ignores the preannounced product release date. Finally, we demonstrate that the supplier reserves less capacity, but reserves earlier when the competitive response is stronger, the market potential is smaller, and the sales window is shorter.
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Economists have long held that bringing firms under the umbrella of a common ownership structure creates monopolistic conditions that reduce competition. We challenge this view by investigating competition between firms in a nuanced manner. We examine the competitive and performance implications of “common institutional ownership,” which occurs when an institutional investor owns a sizeable number of shares in two publicly traded firms. We argue that rival firms with common ownership structures will engage in dissimilar competitive action repertoires to avoid direct competition with each other. Competing aggressively, but with dissimilar action repertoires, allows rivals to maintain high levels of performance. Competing with dissimilar action repertoires also helps ensure that performance disparity between the two firms remains low. In other words, competitive aggressiveness with dissimilar action repertoires yields an optimal competitive solution for rival firms and their common owners.
Supply chains have become increasingly complex in the last decade, which makes their structural characteristics important determinants of firm performance. Prior studies on supply chain structure have largely emphasized network-level attributes but ignored supply-base level characteristics. However, in many cases it is the 1st tier suppliers, not those “deep in the network,“ that have most immediate influence on the buyer. In addition, some structural characteristics, such as direct links between the buyer's suppliers and its customers, are not-so-visible to the buyer, yet can impact its financial performance dramatically. The existing literature has overlooked these not-so-visible structural links. Using objective supply chain data collected from Mergent Online and Compustat, we map the supply base structure of 867 public firms. We construct three visible (horizontal, vertical and spatial) and two not-so-visible (eliminative and cooperative) structural complexity metrics, and examine their impacts on buyer firms' financial performance as measured by Return on Assets and Tobin's Q. Our empirical analysis shows that the five dimensions have differential effects: some have negligible impacts while others appear to strongly affect financial performance. Contrary to the common belief that complexity hurts performance, we find that an individual complexity dimension may have both positive and negative effects, and the overall effect may be non-linear.
The mobile application (app) industry has grown tremendously over the past ten years, primarily fueled by small app development businesses. Lacking advertising budgets, these small and relatively unknown businesses often offer free versions of their paid apps to be noticed in the crowded app industry and to reduce customer uncertainty about app quality and fit. The authors build on the existing marketing and information systems literature on sampling and versioning to investigate the implications of offering free versions for the adoption speed of paid apps. Using a unique data set of 7.7 million observations from 12,315 paid apps, and accounting for endogeneity, the authors find that although the practice of offering free versions of paid apps is popular, it is negatively associated with paid app adoption speed. They also find that this negative association between free version presence and paid app adoption speed is stronger both for hedonic apps and in the later life stages of paid apps. The authors hope that the study's results will encourage app developers to reevaluate their current strategy of offering free versions of paid apps and prompt academics to produce more work focusing on this industry.
Endogeneity bias represents a critical issue for the analysis of cause and effect relationships. Although the existence of endogeneity can produce severely biased results, it has hitherto received only limited attention from researchers in marketing and related disciplines. Thus, this article aims to sensitize researchers intending to publish in the Industrial Marketing Management (IMM) journal to the topic of endogeneity. It outlines the problem of endogeneity bias, and provides an overview of potential sources, i.e. omission of variables, errors-in-variables, and simultaneous causality. Furthermore, the article shows ways to deal with endogeneity, including techniques based on instrumental variables as well as instrument-free approaches. Our methodological contribution relates to providing researchers aiming to publish in IMM with an initial overview of the causes of and remedies for endogeneity bias, which should be considered in designing research projects as well as when analysing data to obtain insights into cause and effect relationships (causal models).
A large auditing literature concludes that Big N auditors provide higher audit quality than non-Big N auditors. Recently, however, a high-profile study suggests that propensity score matching (PSM) on client characteristics eliminates the Big N effect [Lawrence A, Minutti-Meza M, Zhang P (2011) Can Big 4 versus non-Big 4 differences in audit-quality proxies be attributed to client characteristics? Accounting Rev. 86(1):259–286]. We conjecture that this finding may be affected by PSM’s sensitivity to its design choices and/or by the validity of the audit quality measures used in the analysis. To investigate, we examine random combinations of PSM design choices that achieve covariate balance, and four commonly used audit quality measures. We find that the majority of these design choices support a Big N effect for most of the audit quality measures. Overall, our findings show that it is premature to suggest that PSM eliminates the Big N effect.
This paper was accepted by Suraj Srinivasan, accounting.
This paper uses Red Queen competition theory to examine competitive imitation. We conceptualize imitative actions by a focal firm and their rivals along two dimensions: imitation scope, which describes the extent to which a firm imitates a wide range (as opposed to a narrow range) of new product technologies introduced by rivals, and imitation speed, namely the pace at which it imitates these technologies. We argue that focal firm imitation scope and imitation speed drive performance, as well as imitation scope and speed decisions by rivals, which in turn influence the focal firm performance. We also argue that the impact of this self-reinforcing Red Queen process on firms' actions and performance is contingent on levels of product technology heterogeneity - defined as the extent to which the industry has multiple designs resulting in product variety. We test our hypotheses using imitative actions by mobile phone vendors and their sales performance in the UK from 1997 to 2008.
In this study, we consider the issue of preannouncing or not preannouncing the development of a new product. Our research is motivated by contrasting views in the literature and varying actions observed in practice. We develop and analyze a game theoretic model that examines the effect of a firm's preannouncement of its product development. Our model is based on a durable goods duopoly market with profit-maximizing firms. The first firm is an innovator who initially begins developing the product; the second firm is an imitator that begins developing a competing product as soon as it becomes aware of the innovator's product. We assume that consumers are rationally expectant and purchase at most one unit of the product when they have maximum positive utility surplus that is determined by the characteristics of the product, the consumer's marginal utility, and the consumer's discounted utility for future expected products. The innovator firm can release information about its product when it begins developing the product or can guard information about its product until it introduces the product into the market. Our analysis and numerical tests show that, under some conditions, the innovator firm can benefit by preannouncing its product and giving the imitator firm additional time to differentiate its product. We discuss these conditions and their implications for new product development efforts.
Research summary: Past inquiry has found that implementing complex competitive repertoires (i.e., diverse and dynamic arrays of actions) is challenging, but firms benefit from doing so. Our examination of the antecedents and outcomes of complex competitive repertoires develops a more nuanced perspective. Data from 1,168 firms in 204 industries reveal that complexity initially harms performance, but then becomes a positive factor, except at high levels. We use agency and tournament theories, respectively, to examine how key governance mechanisms-ownership structure and executive compensation-help shape firms' competitive repertoires. We find that the principals of agency theory and the pay gap of tournament theory are both important antecedents of competitive complexity, and an interaction exists wherein firms build especially complex repertoires when both influences are strong. Managerial summary: In boxing, the fight does not always go to the bigger or stronger person, or even to whomever throws the most punches-the fight is sometimes won by the boxer who is unpredictable, such as throwing an uppercut when the opponent expected a right hook. Similarly, when companies compete in the marketplace, advantage is afforded not only to those with more resources or who engage in more competitive activity, but also to those whose actions are unpredictable. In this study, we develop the notion of "competitive complexity," which describes the diversity and changing nature of a company's competitive moves. Implementing complex competitive repertoires can be painful in the short term but, if done correctly, can help company performance in the long run.
We discuss a method for improving causal inferences called ‘‘Coarsened Exact Matching’’ (CEM), and the new ‘‘Monotonic Imbalance Bounding’’ (MIB) class of matching methods from which CEM is derived. We summarize what is known about CEM and MIB, derive and illustrate several new desirable statistical properties of CEM, and then propose a variety of useful extensions. We show that CEM possesses a wide range of statistical properties not available in most other matching methods but is at the same time exceptionally easy to comprehend and use. We focus on the connection between theoretical properties and practical applications. We also make available easy-to-use open source software for R, Stata, and SPSS that implement all our suggestions.