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Wang, Wenming; Haw, In‐Mu; Swink, Morgan; Chen, Jun
doi: 10.1002/joom.70036pmid: N/A
This study offers a new application of signaling theory to better understand the role of equity linkages and political influence on buyer–supplier relationships (BSRs). We examine the signaling effects of a politician's personal equity investment in a buyer firm on the financial performance of the supplier firms located in the politician's constituency, that is, “constituent suppliers.” Our results show that constituent suppliers' financial performance increases with the home politician ownership of their principal buyers, consistent with home politicians' incentives to benefit their constituencies and gain the support of local voters through promoting supplier–buyer relationships. Interestingly, such positive signaling effects on the financial performances of constituent suppliers vary with interdependence relationships between the home politician, investee buyer, and constituent supplier. The positive performance effect is stronger when investee buyers have greater political engagement, when politician owners hold more powerful congressional positions, and when the economic condition of the politician's constituency is poorer. In contrast, the positive performance effect is attenuated when buyers have higher economic dependence and switching costs vis‐à‐vis their suppliers. Our mechanism analyses reveal that the likelihood of increased sales as well as lowered operating and sales support costs partially mediate the relationship between supplier financial performance and home politician ownership in buyers, representing investee buyers' munificence. The investee buyers are also more likely to select firms located in their politician shareholders' constituencies as new suppliers, another mechanism of promoting business relationships with constituent firms. We further find that buyers with politician shareholders from their suppliers' constituencies receive more valuable government contract awards, and smaller firms exhibit significant performance gains. A series of endogeneity checks based on exogenous shocks and alternative measures highlight the robustness of our results. Our findings suggest that politicians' stock ownership in buyer firms signals secondary stakeholder influence and information sharing that shapes BSRs, promoting profitable business relationships for constituent suppliers.
Moder, Patrick; Hoberg, Kai; Papier, Felix
doi: 10.1002/joom.70040pmid: N/A
When binary classification models are wrong, managers face misclassification costs. Although false positive outcomes imply unnecessary mitigation efforts, false negative outcomes imply overlooking the class of interest. Humans calibrate these ai models supporting operational systems by adjusting the decision threshold that translates prediction probability into either class. Results of our controlled laboratory experiment show that, despite all relevant information being available, decision makers systematically deviate from the optimal cost‐efficient threshold. We observe a significant interaction effect of class and cost imbalance on this deviation, which increases in high‐stakes settings where more extreme thresholds are optimal. When unit costs are different, we find that participants anchor on the threshold where expected misclassification costs for false alarms and missed hits are equal, whereas mean anchoring cannot explain the pull‐to‐center behavior sufficiently. Surprisingly, we confirm that this impulse balance equilibrium also serves as attractive anchor in our setting, where decisions are made ex ante without loss aversion. To debias decision makers, simulated responses with behavior‐aware costs show that subjects are nudged to make choices closer to the optimum. Managers should be aware of this boundedly rational behavior and complementary debiasing techniques, as sub‐optimal threshold setting results in 53% higher misclassification costs, on average.
Sunder M, Vijaya; Linderman, Kevin
doi: 10.1002/joom.70038pmid: N/A
Continuous Improvement (CI) initiatives are central to operational excellence, emphasizing bottom‐up, team‐based problem‐solving. In practice, however, they are embedded within hierarchical systems that require managerial oversight. This duality introduces a structural tension between empowerment and control, giving rise to a behavioral dynamic that we conceptualize as the façade of conformity (FC) in CI, a defensive impression‐management behavior where team members outwardly express agreement with CI decisions while privately withholding dissent. We argue that FC in CI affects operational performance. We further theorize that collective team identification (CTI), a shared sense of belonging and commitment to goals, moderates this negative relationship. We test our theory in two complementary studies: a laboratory experiment involving 71 teams (284 participants) simulating ad‐hoc CI, and a field study of 330 structured CI projects within a large financial services firm. Across both settings, we find that FC has a negative impact on operational performance, while a strong CTI mitigates this effect. We conduct extensive robustness and supplementary analyses to validate our results. This research contributes to behavioral operations and continuous improvement bodies of knowledge by introducing FC in CI as a distinct behavioral failure mode and identifying CTI as a boundary condition, providing managers with guidance on recognizing and addressing FC to safeguard CI efforts and investments.
Kim, Seongtae; Chae, Sangho; Oh, Han Kyul
doi: 10.1002/joom.70044pmid: N/A
Supplier exploitation, including financial squeezing, payment delays, and non‐contractual demands, is a pervasive form of corporate misconduct. This multi‐method study examines how investors interpret supplier exploitation amid competing ethical and financial considerations. Using an event study of 233 enforcement actions by the Korea Fair Trade Commission (KFTC), we find a significant negative investor reaction, with firms losing an average of 1.24% in market value. This negative market reaction is stronger for firms receiving greater media attention but weaker for more profitable buyers. To explore the underlying behavioral mechanisms, we conduct an incentivized vignette experiment with experienced investors. The experiment reveals that anticipated public moral judgment (viewing exploitation as wrongful) and profit‐driven considerations (viewing exploitation as rational misconduct) jointly shape investor reactions. Specifically, buyer profitability tips the balance by reducing the weight placed on moral concerns while increasing the emphasis on financial considerations. Supplemented by practitioner interviews, this study provides novel evidence on the overall negative, yet complex economic consequences of supplier exploitation.
Barker, Jordan M.; Falcone, Ellie C.; Yang‐Sun, Yang Sophie; Yan, Tingting
doi: 10.1002/joom.70030pmid: N/A
Modern supply chains are experiencing more disturbances due to regulatory shifts, rising sustainability standards, emerging or declining markets, and disruption to critical inputs. Some firms react by strengthening existing supplier partnerships to resist changes, while others reconfigure relationships with suppliers to embrace changes. Implicitly assuming structural changes are generally undesirable, research has traditionally supported the former approach to resist structural changes. However, the literature is not conclusive about the validity of this assumption. This study examines how supply base changes, captured as growth, contraction, and turnover, create opportunities and challenges for firm innovation. The results suggest that supply base growth positively impacts innovation performance, while supply base contraction has no significant statistical association. Supply base turnover has a nonlinear effect: it initially boosts innovation performance but negatively impacts it at high levels. This study contributes to theory by highlighting how supply base instability can bring innovation opportunities and risks to a firm. Specifically, supply base instability is broken down into distinct aspects, which are shown to affect firm innovation in distinctive manners. The findings not only urge supply managers to embrace supply base changes as an opportunity conducive to firm innovation but also caution against the disruptiveness of excessive changes.
Dong, Yan; Zou, Fan; Song, Sining; Peng, Yuqi; Xu, Kefeng
doi: 10.1002/joom.70037pmid: N/A
The increasing availability of secondary data on supply chain relationships has created new opportunities for empirical research in supply chain management. Datasets from sources including Bloomberg SPLC, FactSet, and CompuStat may support empirical analyses of decision‐making, strategic behaviors, governance mechanisms, and dynamics of inter‐organizational relationships of supply chains. However, the complexity and interconnectedness of supply chains and the inconsistent quality and coverage of supply chain data sources present empirical challenges, which have limited the scope and depth of current empirical research on supply chains. To address these challenges, this study investigates and compares the three commonly used supply chain databases and introduces a data‐focused roadmap for supply chain research using secondary data sources. This roadmap presents a process featuring data source selection, unit‐of‐analysis decisions, and appropriate econometric treatments, for example, endogeneity, selection bias, and correlated errors in supply chains, which contributes to the supply chain management literature by improving consistency, generalizability, and reliability in empirical supply chain research.
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