This paper investigates how dual-purpose firms—organizations that pursue both profit and social objectives—strategically design their product lines in markets where traditional profit-maximizing firms may imitate their behavior. We find that consumer heterogeneity plays a non-monotonic effect on the ability of dual-purpose firms to differentiate themselves from profit maximizers, which, in turn, influences firms’ product offering strategies and consumer welfare. When consumer heterogeneity is moderate, dual-purpose firms can credibly signal their social commitment without incurring additional signaling costs, leading to costless separation and efficient product differentiation. However, when consumer heterogeneity is either sufficiently low or sufficiently high, dual-purpose firms may exert additional efforts to provide consumers with their preferred (efficient) qualities or come closely approaching them, effectively distinguishing themselves from profit maximizers. This results in a positive surplus even for low-valuation consumers, which further increases as consumer heterogeneity becomes even lower or higher. The driving force is the stronger incentive for profit maximizers to mimic dual-purpose firms. Yet, these signaling efforts come at a cost, diminishing the firm’s overall utility and making differentiation harder to sustain in highly prosocial markets. Our findings also highlight that the societal value of publicly disclosing a firm’s social orientation is context-dependent. In some cases, mandated transparency may actually diminish consumer welfare relative to market-based self-signaling mechanisms. These insights offer strategic guidance for dual-purpose firms and inform policy decisions on when to support disclosure versus letting market forces facilitate differentiation.

This paper investigates the effect of management-level professional ties between suppliers and customers on the sustainability of business partnerships. We find that the presence of cross-firm professional ties between directors and senior executives along the supply chain significantly reduces the probability of relationship termination around customers’ industry negative shocks and during financial crises. The results are robust using professional-tie strength as an alternative measure. Exploring contingency effects, we find that, for suppliers who lack R&D, face high competition, are smaller in size, or are less important to customers in terms of sales, such professional ties are more helpful in sustaining such relationships. Furthermore, we find that professional ties also significantly reduce firm risk during periods of market turbulence. Taken together, our results suggest that professional ties along the supply chain can facilitate information flow and build mutual trust, which can lead to healthy long-term relationships and can help firms survive economic and industry downturns.

Using data involving customer–supplier relationships and a large sample of US publicly listed firms, our study documents a negative and statistically significant relationship between economic policy uncertainty and firms’ customer‐base concentration. The negative relation is predominant in firms with higher inventory efficiency and those operating in competitive, high‐R&D, and nondurable industries. Customer‐base diversification is further shown to enhance firm performance during periods of increasing policy uncertainty, but not when policy uncertainty decreases. Overall, our evidence suggests that firms respond to increasing policy uncertainty by diversifying their customer base and such behavior contributes positively to firm performance.

Firms sometimes acquire partial ownership of their upstream suppliers. Such ownership entails no direct control over the target firm's decision‐making; however, both firms might change their pricing strategies after forming a partial ownership relationship. This paper studies the economic impacts of partial vertical ownership (PVO) in a market with downstream competition, where a manufacturer supplies two competing retailers. We find that dividend payments between firms can alter firms’ incentives in their operational decisions and, hence, serve as an “invisible hand” to downstream competition and vertical interaction. We show that a higher PVO percentage can have both positive and negative effects because the acquiring retailer's gain from PVO depends on not only its own sales but also the competitor's sales. Thus, the PVO decision (i.e., the percentage of ownership to acquire) has an inverted U‐shaped effect on the resulting profit for both the acquiring retailer and the manufacturer, which implies an intermediate PVO percentage in equilibrium. Second, the relative strength of the positive and negative effects depends on the acquiring retailer's competitive position. We show that the manufacturer prefers establishing PVO with the retailer with a valuation disadvantage because the disadvantaged retailer can obtain more benefits from PVO and is willing to pay higher than the competitor. Last, we find that consumers benefit from PVO when the acquiring retailer is the retailer with a valuation advantage but may become worse off when the disadvantaged retailer acquires PVO. Our research provides managers with guidance on the optimal PVO percentage and policymakers with insights on regulating PVOs for consumer protection.

Technology transfer to low-cost locations offers global firms an opportunity to reduce their variable costs involved in serving emerging markets. However, such moves may also make imitation by local competitors easier. As a consequence, technology transfer may create competition in the local market. We introduce component-based technology transfer for the global firm as a means to deter or accommodate the imitators' entry, recognizing that components may differ in technological complexity. By choosing a subset of components to transfer, the global firm's decision has an impact not only on the imitators' fixed entry costs, but also on postentry competition based on variable costs. Our research identifies two different types of deterrence strategies—the barrier-erecting strategy and the market-grabbing strategy. In the former deterrence strategy, the global firm retains enough component technology in the home country to make the potential imitator's fixed entry costs so high that it is not worthwhile entering. In the latter deterrence strategy, the global firm transfers enough component technology to the emerging market, reducing the global firm's variable cost to make the potential imitator's revenues so low that it is not worthwhile entering. Which deterrence strategy the global firm should employ depends on the degree to which geographical proximity reduces imitation costs and the degree of differentiation between the local firm's and the global firm's products. Some other interesting and counterintuitive results arise. For example, it may benefit a global firm to transfer less technology for products with a higher emerging market potential.