Abstract The dynamic business environment today requires organizations to effectively use all available resources to remain competitive. The quality and cost of a product or service offered in the market is a function, not only of the capabilities of the firm, but also the supplier network providing inputs to the enterprise. To remain competitive, organizations are increasingly implementing supplier development programs to maintain capable and high performance supply bases. This paper presents a conceptual model of an organization's efforts to improve supplier performance. Then latent variable structural equation modeling (LVSEM) is used to test the model with data for 215 supplier development experiences from US manufacturing firms. The results suggest that evaluation and certification efforts are the most important supplier development prerequisites before undertaking operational knowledge transfer activities such as site visits and supplier training. Furthermore, collaborative inter‐organizational communication is identified as important supporting factor in transforming an organization's efforts to develop suppliers into supplier performance improvements.

Abstract Extant research in operations management has revealed divergent insights into the value potential of resource efficiency. While one view relates efficiency with good operations management and asserts that slack resources are a form of waste that should be minimized, the other view suggests that limited resource slack can impose heavy costs on firms by making them brittle. In this research, the authors build on these views to investigate the relationship of inventory, production, and marketing resource efficiency of firms with three metrics of financial performance (i.e., Stock‐Returns, Tobin's Q, and Returns‐on‐Assets). The authors evaluate the theoretical framework using secondary information on all U.S. based publicly‐owned manufacturing firms across the 16‐year time period of 1991–2006. Analysis utilizing a mixed‐model approach reveals that a focus on resource efficiency is positively associated with firm financial performance. However, findings also support the arguments favoring slack, indicating that the financial gains from resource efficiency exhibit diminishing returns.

Abstract Recent advances in manufacturing and communication technology have made it possible for firms to offer products that are personalized to individual customers’ specifications. While personalizing products leads to benefits for firms, it also requires significant resources, calling into question the financial efficacy of this practice. This situation is especially salient in the pharmaceutical industry, where drugs are personalized to individuals. This type of medicine is expected to account for approximately 50% of drug spending in the U.S. market by 2022; however, the rising costs of producing and delivering such medications make their viability uncertain. In this study, we present a framework that conceptualizes a nonlinear inverted U‐shaped relationship between product personalization and financial performance. We further investigate the role of supply‐chain disintermediation in enhancing the benefits of personalization. Analysis of data from the pharmaceutical industry confirms that product personalization improves financial performance only up to a point, beyond which firms experience negative performance effects. Furthermore, supply‐chain disintermediation moderates this relationship such that the inverted U‐shape is steeper with increasing disintermediation levels. Together, these findings provide important guidelines for managers formulating their firms’ product personalization strategies.

Abstract This study investigates the influence of hospitals' physician contracting emphasis on patient care effectiveness and financial outcomes. It utilizes secondary data for a comprehensive set of hospitals in the United States over a 21‐year period (1996–2016). Analysis confirms that hospitals with a greater emphasis on physician contracting have higher operating margins but also tend to have longer patient length of stay—indicating lower patient care effectiveness. Lower patient care effectiveness, in turn, is observed to attenuate some of the financial gains from physician contracting. Further, post hoc analysis with other measures of patient care, including experiential quality, conformance quality, readmissions, and mortality provide additional insights into the effect of physician contracting on patient care. Theory and results also highlight teaching intensity and capacity utilization of hospitals as key boundary conditions in these relationships, revealing a complex set of findings related to these variables. Together, the findings yield practical insights for hospital managers regarding their operations strategy.

Abstract Inventories represent an important strategic resource for firms, with implications for shareholder wealth. As such, firms expend considerable effort in managing their inventories efficiently. Among other factors, information technology (IT) capability can play an important role in enabling inventory efficiency and financial performance. However, insight into the chain‐of‐effects linking IT capability, inventory efficiency, and stock market returns and risk remains limited. In this paper, we provide a conceptual model outlining the relationships between these constructs. Next, we evaluate the model using secondary information on firms from multiple industries across the 10‐year time period of 2000–2009. Our analysis confirms that firms’ IT capability plays a significant role in enhancing their inventory efficiency, which, in turn, is observed to increase stock market returns. Our results also reveal that firms’ IT capability directly reduces their stock market risk and enhances their stock market returns. Taken together, these findings, along with the conceptual model that we advance, have important research and managerial implications.

Abstract The rise in front‐end service outsourcing in recent years, despite its advantages, has also exposed buyer firms to unique challenges. One of the most salient risks for buyer firms in service triads is service failure due to the service provider. Indeed such service failures may be more costly for firms due to the greater relational and operational costs that may arise from the presence of the third‐party provider. Yet, neither the services literature nor extant operations literature on service triads has paid much attention to the financial consequences to the buyer firm – i.e., service risks – of such service failures in triads. To fill this gap, we investigate the financial penalty of service failures due to the service provider using the event study methodology and a sample of 146 customer information security breaches as our empirical context. Analysis of the abnormal returns reveals that service failures due to the front‐end service provider lead to greater shareholder losses than such failures due to the buyer firm. This provides important new insight into the financial risks arising from outsourcing front‐end services. Further, we investigate the ability of the buyer firm's employee and financial resources to temper these shareholder losses. We find that buyer firm employee productivity can moderate the greater financial penalty associated with such triadic service failures but that buyer firm leverage tends to not have such a mitigating effect. This provides new guidance for theory and practice regarding how buyer firms can position themselves to buffer the financial risks arising from service failures due to front‐end service providers.