Knowledge that Transforms

When facing heterogeneous customers, how should a service firm make its pricing decision to maximize revenue? If discrimination is allowed, then priority schemes and differentiated pricing are often used to achieve that. In many applications, however, the firm cannot or is not allowed to set discriminatory prices, for example, list price in retail stores, online shopping, and gas stations; thus a uniform price must be applied to all customers. This study addresses the optimal uniform pricing problem of a service firm using a queueing system with two classes of customers. Our result shows that the potential pool of customers plays a central role in the firm's optimal decision. Depending on the range of system parameters, which are determined explicitly by the primitive data, the firm's optimal strategy may choose to serve only one class of customers, a subset of a class of customers, or a combination of different classes of customers. In addition, the optimal price is in general not monotonic with respect to the potential market sizes because their changes may lead to a major shift in the firm's decision on which customer class to serve. However, unless such a shift occurs, the optimal price is weakly decreasing in the potential market sizes.

Design rework is a core phenomenon in new product development (NPD). Yet carrying out design rework presupposes recognizing the need for it. I characterize the types of interpersonal knowledge transfer that help developers realize the need for design rework in NPD. As predicted by the NPD literature, I find that individuals who interact frequently with colleagues to address their task interdependences are more likely to realize the need for rework. I also learn that interacting with colleagues who have different expertise in process‐related knowledge (as opposed to product‐related knowledge) facilitates realizing the need for rework. However, to develop a deeper understanding of how individuals recognize the need for rework when interacting with others, we must expand our views beyond task interdependence and expertise‐related factors. In particular, organizational variables—both formal and informal—play a significant role. With respect to formal hierarchical structures, actors of superior rank are less likely to realize the need for rework regardless of whether or not their interacting partner is of superior rank; however, actors of superior rank are more likely to trigger realizing the need for rework when interacting with partners of subordinate rank. By examining an organization's informal structure, I discover that the social “embeddedness” of developers (i.e., the energy and attention invested in a dyadic relationship) significantly influences their propensity to realize the need for rework. Several hypotheses are tested in a sociometric study conducted within the development department of a software company, and I discuss the implications for behavioral operations in NPD.

In contrast to the Pollution Haven Hypothesis, the Trade‐Up Hypothesis holds that international integration helps improve firms' environmental performance in developing countries. Using firm‐level data from Shanghai, this article examines how international linkages, in the form of foreign direct investment or international trade, affect firms' environmental compliance and performance. We find that firms with international linkage via ownership exhibit better compliance with environmental regulation and emit less pollution than firms with no international linkage. We also find that firms with international linkage via market exposure are more likely to exhibit better compliance with environmental regulation than firms with no international linkage, but find no evidence that the former emit less pollution than the latter. This provides a piece of empirical evidence for the Trade‐Up Hypothesis.

To achieve technology innovation and commercialization (TIC) success under complex, protracted, and uncertain product development cycles, entrepreneurial firms engage in downstream alliance partnerships with mainstream industry players. In this study, we examine two specific characteristics of the entrepreneurial firm's downstream alliance portfolio (depth and scope) and their impact on TIC success. Employing a sample of 728 biotech firms and their partnerships with pharmaceutical companies, we find that while portfolio depth and scope separately have positive impact on success, the relationship between portfolio scope and success is additionally moderated by portfolio depth. Further, insights from post hoc interviews also suggest that though it is challenging for entrepreneurial firms to incorporate both depth and scope in alliance partnerships, those that optimally combine both can achieve higher TIC success.

Consider a supply chain with one supplier and multiple retailers. The supplier produces a single product and sells it to the retailers, who in turn sell the product to consumers. The supplier has limited production capacity, and the retailers are engaged in a Cournot competition at the consumer/market level. When the sum of the retailer orders exceeds the capacity, the supplier allocates her capacity according to a pre‐announced allocation mechanism. Two mechanisms are considered: proportional allocation and lexicographic allocation. An extensive study of the two allocation mechanisms shows that the lexicographic mechanism has the ability to dampen the competition at the retail level, increasing the profits for both the supplier and the supply chain.

School feeding is an established development aid intervention with multiple objectives including education, nutrition, and value transfer. Traditionally run by international organizations in low‐income settings, school feeding programs have had a substantial impact in many less‐developed countries. However, recent rethinking by the World Bank and the World Food Programme has prompted a shift toward long‐term, sustainable solutions that rely more upon local resources, local capacity, and community participation. Supply chain management, which is critical to program delivery, is vital to developing a sustainable approach to school feeding. We propose a theoretical framework that identifies the internal and external factors that shape the supply chain and connects them to the objectives and performance measures of sustainable programs. Drawing upon supply chain management theory, current school feeding practices, and expert feedback, this article contributes to development aid logistics and program transitioning with a focus on sustainable program design. It aims to provide a comprehensive introduction to school feeding and relevant supply chain issues, a framework to identify sustainability problems in school feeding supply chains, and a starting point for further research on program design.

Supply chain integration is increasingly seen as a method to obtain flexibility and, consequently, to provide competitive advantage for firms within a supply chain. Product modularity, either in concert with or independent of such integration, can also produce flexibility for firms within a supply chain. In this proof‐of‐concept research, we explore whether the supply chain network affects each constituent firm's market valuation and how decisions regarding the level of supply chain integration and the usage of product modularity are associated with the value of the supply chain. We develop a method to identify and measure the supply chain's effect on each constituent firm's market valuation. Results indicate that greater integration is associated with a higher supply chain valuation, whereas increasing aggregated product modularity across the supply chain relates to a lower supply chain value. However, when combined, the interaction of aggregated product modularity and supply chain integration is positively associated with the supply chain's valuation.

A lead time that is short, predictable, and reliable is an increasingly important criterion in supplier selection. Although many companies may achieve this through lean implementation, high‐variety manufacturers, for example, small and medium‐sized make‐to‐order companies, have found that lean's planning and control techniques do not apply. This article outlines a planning and control concept known as workload control (WLC) that integrates customer enquiry management, including a due‐date setting rule, with order release control. Simulation is then used to assess its impact on shop performance. Results demonstrate that an integrated WLC concept can reduce the percentage of tardy jobs—so short lead times can be realistically quoted—while also reducing and stabilizing workloads. WLC can level demand and production over time when work is not standardized and it is not possible to synchronize flows on the shop floor. Results are shown to be robust to changes in routing characteristics, the mix of orders with due dates specified by the customer and proposed internally, and the strike rate (or order‐winning probability). Hence, an integrated approach to WLC represents an important step toward achieving lean in make‐to‐order companies.

We consider firms that feature their products on the Internet but take orders offline. Click and order data are disjoint on such non‐transactional websites, and their matching is error‐prone. Yet, their time separation may allow the firm to react and improve its tactical planning. We introduce a dynamic decision support model that augments the classic inventory planning model with additional clickstream state variables. Using a novel data set of matched online clickstream and offline purchasing data, we identify statistically significant clickstream variables and empirically investigate the value of clickstream tracking on non‐transactional websites to improve inventory management. We show that the noisy clickstream data is statistically significant to predict the propensity, amount, and timing of offline orders. A counterfactual analysis shows that using the demand information extracted from the clickstream data can reduce the inventory holding and backordering cost by 3% to 5% in our data set.

The bullwhip effect describes the tendency for the variance of orders in supply chains to increase as one moves upstream from consumer demand. We report on a set of laboratory experiments with a serial supply chain that tests behavioral causes of this phenomenon, in particular the possible influence of coordination risk. Coordination risk exists when individuals' decisions contribute to a collective outcome and the decision rules followed by each individual are not known with certainty, for example, where managers cannot be sure how their supply chain partners will behave. We conjecture that the existence of coordination risk may contribute to bullwhip behavior. We test this conjecture by controlling for environmental factors that lead to coordination risk and find these controls lead to a significant reduction in order oscillations and amplification. Next, we investigate a managerial intervention to reduce the bullwhip effect, inspired by our conjecture that coordination risk contributes to bullwhip behavior. Although the intervention, holding additional on‐hand inventory, does not change the existence of coordination risk, it reduces order oscillation and amplification by providing a buffer against the endogenous risk of coordination failure. We conclude that the magnitude of the bullwhip can be mitigated, but that its behavioral causes appear robust.