Knowledge that Transforms

AbstractThe vast majority of the supplier innovation literature has focused on how buying firms can effectively “pull” innovations from their suppliers. Yet, we know remarkably little about the factors that contribute to a supplier voluntarily “pushing” innovations to its customers. The present study addresses this research gap in the context of industrial buyer–supplier relationships and with a specific focus on relationship‐specific investments. Drawing on theory from the relationship‐marketing literature and on transaction cost theory, we devise and test a proposed theoretical model that links the level of a supplier's relationship‐specific investments to its sharing of innovative ideas regarding products and processes with customers. The model also considers the role of contract length, relationship age, and buyer–supplier cooperation as possible safeguards. The empirical results suggest that a supplier's relationship‐specific investments encourage a supplier to suggest ideas of process innovations but to refrain from suggestions about product innovations. The latter effect, however, can be attenuated by appropriate formal and informal safeguards.

AbstractWhen it becomes publicly known that products are associated with suppliers that engage in unsustainable behaviors, consumers protest, as Nestlé, Zara, and Kimberly Clark, among others, have learned. The phenomenon by which consumers hold firms responsible for the unsustainable behavior of their upstream partners suggests the notion of “chain liability.” This study aims to generate insights into the antecedents and consequences of such consumer responsibility attributions. Using data from four vignette‐based survey experiments, the authors find that the chain liability effect increases if an environmental degradation incident (1) results from supplier behavior rather thanforce majeure, (2) results from a company decision rather than the decision of an individual employee, and (3) is more severe. Responsibility attributions do not differ with varying organizational distance from the supplier, firm size, strategic importance of the supplied product, or the existence of environmental management systems. The chain liability effect also creates strong risks for the focal firm; higher responsibility attributions increase consumers’ anger and propensity to boycott. Therefore, firms should work to ensure sustainable behavior throughout the supply chain, to protect them from chain liability.

AbstractWe elucidate the important, though complex, relationship between strategic flexibility and operational efficiency. We incorporate insights from the dynamic resource‐based view, ambidexterity literature and managerial practice to explain how two ambidextrous operational capabilities, i.e., mass customization capability and innovative ambidexterity, fully mediate the relationship between strategic flexibility and operational efficiency. Using top‐level executive data in India and the United States of America, our structural equation models show that ambidextrous operational capabilities link strategic flexibility and operational efficiency. While informing the debate on developing sustainable competitive advantage, we derive important theoretical and managerial implications for both operations management and strategic management.

AbstractManufacturing firms operating in rapidly changing and highly competitive markets have embraced the continuous process improvement mindset. They have worked to improve quality, flexibility, and customer response time using the principles ofLean thinking. To reach its potential, lean must be adopted as a holistic business strategy, rather than an activity isolated in operations. The lean enterprise calls for the integration of lean practices across operations and other business functions. As a critical component for achieving financial control, management accounting practices (MAP) need to be adjusted to meet the demands and objectives of lean organizations. Our aim is to help both researchers and practitioners better understand how lean MAP can support operations personnel with their internal decision making, and operations executives and business leaders in their objective of increasing lean operations performance as part of a holistic lean enterprise strategy. We use survey data from 244 U.S. manufacturing firms to construct a structural equation model. We document that the extent of lean manufacturing implementation is associated with the use of lean MAP, and further that the lean MAP are related in a systematic way: simplified and strategically aligned MAP positively influences the use of value stream costing, which in turn positively influences the use of visual performance measures. We also find that the extent of lean manufacturing practices is directly related to operations performance. More importantly, lean manufacturing practices also indirectly affect operations performancethroughlean MAP. These findings are consistent with the notion that lean thinking is a holistic business strategy. In order to derive the greatest impact on performance, our results indicate that operations management cannot operate in a vacuum. Instead, operations and accounting personnel must partner with each other to ensure that lean MAP are strategically integrated into the lean culture. In sum, lean MAP provide essential financial control that integrates with and supports operations to achieve desired benefits.

AbstractUnderstanding and dealing with the unknown is a major challenge in project management. An extensive body of knowledge—theory and technique—exists on the “known unknowns,” i.e., uncertainties which can be described probabilistically and addressed through the conventional techniques of risk management. Although some recent studies have addressed projects where the existence of unknown unknowns (unk unks) is readily apparent or may be assumed given the type of project—e.g., new product development or new process implementation—very little work has been reported with respect to projects in general on how a project manager might assess its vulnerability to unk unks. In this paper, we present a conceptual framework to deal with (i.e., recognize and reduce) knowable unk unks in project management. The framework is supported by insights from a variety of theories, case analyses, and experiences. In this framework, we first present a model of the key factors—relating to both project design and behavioral issues—that increase the likelihood of unk unks and a set of propositions linking these factors to unk unks. We then present a set of design and behavioral approaches that project managers could adopt to reduce knowable unk unks. Our framework fills a gap in the project management literature and makes a significant practical contribution: it helps project managers diagnose a project to recognize and reduce the likelihood of unk unks and thus deal more effectively with the otherwise unrecognized risks and opportunities.

AbstractEmpirical research in Supply Chain Management is increasingly interested in complex models involving mediation effects. We support these endeavors by directing attention to the practices for the theorizing of, the testing for, and the drawing of conclusions about mediation effects. Our paper synthesizes diverse literature in other disciplines to provide an accessible tutorial as to the mathematical foundation of mediation effects and the various methods available to test for these effects. We also provide guidance to SCM scholars in the form of eight recommendations aimed at improving the theorizing of, the testing for, and the drawing of conclusions about mediation effects. Recommendations pertaining to how mediation effects are hypothesized and stated and how to select among methods to test for mediation effects are novel contributions for and beyond the Supply Chain Management discipline.

AbstractIn this study, we examine the structural characteristics of supply networks and investigate the relationship between a firm's supply network accessibility and interconnectedness and its innovation output. We also examine potential moderating effects of absorptive capacity and supply network partner innovativeness on innovation output. We hypothesize that firms will experience greater innovation output from (1) higher levels of supply network accessibility and supply network interconnectedness, (2) the interaction between the levels of these two structural characteristics, (3) the moderating role of absorptive capacity on supply network accessibility and the moderating role of supply network partner innovativeness on supply network interconnectedness. Supply network partner relationships are drawn in the context of the electronics industry using data from multiple sources. We use social network analysis to create measures for each supply network structural characteristic. Using regression techniques to test the relationship between these structural characteristics and firm innovation for a sample of 390 firms, our findings suggest that supply network accessibility has a significant association with a firm's innovation output. The results also indicate that interconnected supply networks strengthen the association between supply network accessibility and innovation output. Moreover, the influence of the two structural characteristics on innovation output can be enhanced by a firm's absorptive capacity and level of supply network partner innovativeness. By addressing the need for deeper structural analysis, this study contributes to supply chain research by accounting for the embedded nature of ties in supply networks, and showing how these structural characteristics influence the knowledge and information flows residing within a firm's supply network.

AbstractPrevious research describes supplier integration as a competitive resource that manufacturers use to create economic rents. Considering the mixed results obtained from linking supplier integration with performance outcomes, a ‘dynamic’ component – or the ability to reconfigure the supply chain to adapt to changing environments – appears critical to creating a sustainable competitive advantage. This study identifies integration sensing, seizing and transforming as sub‐capabilities that together form a dynamic capability, referred to herein as supplier integrative capability (SIC). That is, SIC enables buyers to sense changes in the supply environment by sharing information with suppliers, seize opportunities presented by establishing procedures to analyse this information and make long‐term changes to existing processes. A global sample from the industrial sector reveals that the three capabilities exhibit complementarity and must exist simultaneously for the capability to be effective, which then enhances both process flexibility and cost efficiency and helps firms avoid the traditional trade‐off of cost and flexibility. In addition, market and technological dynamics strengthen the effect of SIC on operational performance; supply base complexity attenuates this link.

AbstractWhile previous studies have focused on the benefits, risks and outcomes of buy–sell relationships, little is known about the dynamics of these relationships. Our study takes an initial step in this direction by examining how firms develop successful relationships. We review the literature and analyze multiple buyer–supplier relationships to explore developments over time, identify triggers for change, and identify effective management practices for long‐term inter‐organizational relationships. We employ retrospective data to compare six long‐standing buyer–supplier relationships. Our data suggest a recurring pattern of integration initiatives in the evolution towards a successful buy–sell relationship. Specifically, our field data indicate that this pattern starts with initiatives for logistics responsiveness, followed by knowledge exchange initiatives and finally initiatives to increase the use of common resources. Each of these initiatives are triggered by specific opportunities and are emergent in nature. By examining the triggers in the development and maintenance of buy–sell relationships, our study adds to the integration of existing life‐cycle frameworks, which increases our understanding of a life‐cycle theory for inter‐organizational relationships.

AbstractAn organization's ability to exploit extreme events—such as exceptional opportunities—depends on its capacity strategy. The venture capital industry illustrates the interplay of expensive capacity and negative externalities from high utilization. The cost of adding a venture capitalist provides a strong incentive to run lean, but such leanness may make it impossible to evaluate all interesting investment opportunities. Using concepts from extreme‐value theory, we analyze the trade‐off between the costs and benefits arising from an increase in the number of evaluated deals. We ground our analysis in 11 years of archival data from a venture capital firm, representing 3631 deals, the decisions made, the reasons for those decisions, and the decision lead times. The firm identified 20% of arriving deals as worth evaluating during the screening process, but was not able to evaluate approximately 9% of those interesting deals due to a lack of capacity. We show that the value of increasing the number of deals evaluated increases with the tail weight of the distribution of deal values. When the right tail is light, increasing the number of deals evaluated may provide too modest a benefit to justify the cost. When, however, the right tail is heavy, the value of increasing the number of deals is likely to more than compensate for the cost of capacity. Our results provide new insight into the relative value of a chase capacity strategy that emphasizes responsiveness versus a high‐utilization heuristic that emphasizes productivity. Our approach can be applied to other search operations such as personnel selection, quality circles seeking to identify root causes, and making employee capacity available for innovation.