Executive Pay Matters: Looking Beyond the CEO to Explore Implications of Pay Disparity on Non‐CEO Executive Turnover and Firm Performance

Using a longitudinal data set covering a span of 10 years, we investigate the impact of vertical and horizontal pay disparity on non‐CEO executive turnover and subsequent firm performance. Hypothesizing differential responses to pay disparity depending on a non‐CEO executive's responsibilities, we first categorize non‐CEO executives based on their job demands and their role in the organization (e.g., oversight, divisional). We then explore how pay disparity influences the relationship between executive category and turnover, and how the level of pay disparity impacts the relationship between turnover and firm performance. We find that executive category significantly impacts the likelihood of turnover, and also influences firm performance. Theoretical and practical implications are discussed. © 2015 Wiley Periodicals, Inc.     

Vertical Foreclosure, Technological Choice, and Entry on the Intermediate Market

This paper analyzes the profitability of vertical integration for an upstream monopoly facing a potential competitor. We show that it depends on the technology used by the firm when it integrates. We distinguish two types of technologies: standard technologies, used by nonintegrated firms, and nonstandard technologies, reserved for integrated firms and implying the complete foreclosure of nonintegrated firms. Vertical integration with the adoption of a nonstandard technology dominates vertical integration with the adoption of a standard technology and is profitable, as long as the degree of competition in the downstream industry is sufficiently low.     

Vertical Foreclosure, Technological Choice, and Entry on the Intermediate Market

This paper analyzes the profitability of vertical integration for an upstream monopoly facing a potential competitor. We show that it depends on the technology used by the firm when it integrates. We distinguish two types of technologies: standard technologies, used by nonintegrated firms, and nonstandard technologies, reserved for integrated firms and implying the complete foreclosure of nonintegrated firms. Vertical integration with the adoption of a nonstandard technology dominates vertical integration with the adoption of a standard technology and is profitable, as long as the degree of competition in the downstream industry is sufficiently low.     

The effect of environmental dynamism on returns to inventory leanness

This paper adds to the empirical inventory management literature by examining the moderating effects of environmental dynamism on the relationship between inventory leanness and financial performance. While the financial implications of inventory management practices have been extensively studied in the literature, it is clear that lean inventory strategies may not have the same payoff for all firms in all industries. Grounded in inventory theory, this study explores how firm characteristics and environmental dynamism—measured in terms of innovative intensity, demand uncertainty and competitive intensity—moderate the inventory leanness–performance link. We use hierarchical linear modeling to analyze a data set of 5749 firm-year observations from 123 U.S. manufacturing industries. In line with the hypotheses set forth, the results indicate that innovative intensity in an industry increases the effect of inventory leanness on firm performance while competitive intensity has the opposite effect. The hypothesis with respect to the moderating role of demand uncertainty is not supported. Another interesting and important finding is that inventory leanness accounts for nearly one third of the variation in firm performance after controlling for firm size and growth, thus underlining the importance of efficient and effective inventory management for overall firm success.     

Vertical integration and innovative performance: The effects of external knowledge sourcing modes

We set out in this study to analyze the impact of vertical integration on the innovative performance of a firm and to explore the interaction between vertical integration and different modes of external knowledge sourcing. Our empirical results reveal an initial increase in the effect of vertical integration on innovative performance up to a certain level of integration, although this is subsequently followed by a decline; that is, the relationship is characterized by an inverted U-shape. The results further reveal that external knowledge sourcing is positively related to the innovative performance of a firm, albeit with a negative interaction with the level of vertical integration. In other words, firms with higher levels of vertical integration may be faced with barriers to the acquisition of external knowledge. Our findings suggest that firms should be cautious in their pursuit of a strategy of vertical integration, given the non-monotonic impact on innovative performance, whilst an increase in the level of vertical integration is also likely to diminish the effectiveness of the external knowledge sourcing.     

Vertical integration and disruptive cross‐market R&D

We study how vertical market structure affects the incentives of suppliers and customers to develop a new input that will enable the innovator to replace the incumbent supplier. In a vertical setting with an incumbent monopoly upstream supplier and two downstream firms, we show that vertical integration reduces the R&D incentives of the integrated parties, but increases that of the nonintegrated downstream rival. Strategic vertical integration may occur whereby the upstream incumbent integrates with a downstream firm to discourage or even preempt downstream disruptive R&D. Depending on the R&D costs, vertical integration may lower the social rate of innovation.     

垂直关系、效率原则与社会福利研究

企业之间的垂直关系主要包括垂直一体化和垂直分离,具体选择哪种垂直关系,企业需要在规模经济、交易成本和提高成员激励的各种得失中进行权衡。从社会福利和产业组织政策来看,处于不同市场结构中的企业,其进行垂直一体化和垂直分离的效率后果不尽相同,由此也导致了不同的社会福利水平。     

The impact of competition on vertical integration: The role of technological niche width

Despite there being numerous studies exploring the relationship between competition and vertical integration, the empirical findings regarding the nature of this relationship are still unclear. The current study suggests that technological niche width mediates the relationship between competition and vertical integration. It also suggests that technological niche width and vertical integration play a complementary role in enhancing firm performance. These arguments have found empirical support in the examination of the U.S. hybrid electric vehicle market from 2008 to 2016. In so doing, this study provides an opportunity to better understand the relationship between competition, vertical integration, and technological niche width. In addition, it explains how firms can effectively manage fierce competition and achieve the goal of superior performance through strategic decisions regarding vertical integration and technological niche width.     

基于数据包络分析的汽车行业库存绩效评价研究--以某汽车公司为例

文中利用DEA模型方法,结合某汽车公司汽车零部件库存数据对企业的库存控制绩效进行评价研究。研究证明,某汽车公司库存管理中高投入低产出现象较明显,库存控制效率水平较低。企业应该减少安全库存持有量,降低仓储成本,提高库存资金周转率。对于汽车行业这种大型生产企业来,应该创立新的库存管理方式---虚拟联合库存管理,提高企业库存控制效率。     

The impacts of benefit plans on employee turnover: a firm-level analysis approach on Taiwanese manufacturing industry

Employee turnover is a serious problem and the question of how to retain highly talented and valued people is very important. Previous employee turnover studies were mostly focused on the individual level but rarely from the standpoint of the business or firm. This study examines the impacts of four kinds of benefit plans on firm-level employee turnover issues, namely, retirement fund, pension, severance pay and fringe benefit. The present study uses the Census Bureau Employment Movement Survey of the Directorate General of Budget, Accounting and Statistics in Taiwan. The two models used to examine the overall manufacturing industry were: (1) the inducement model which tests the ‘with or without’ effect; and (2) the investment model which tests the ‘the more the better’ effect. Results reveal that, with respect to the firm's employee turnover rate, retirement fund and fringe benefits are negative while severance plans are significantly positive. These results are consistent with the transaction costs theory that total expenditure on these plans to retain employees (bureaucratic cost) is less than the market arrangements (transaction cost). In addition, the impact of pension plans is negative in respect of employee turnover in larger or more highly educated firms, but positive in firms with a lower educational level. Moreover, the firm size is negative while the firm's average employees' educational level is positive with respect to the workforce leaving their jobs. These results are consistent with the perspective of resource-based theory and human capital theory. Incidentally, this study also reveals insignificant differences between the ‘with or without’ effect and the ‘the more the better’ effect existing as a sub-group industry rather than across the entire industry.     

The impact of green supplier integration on firm performance: The mediating role of social capital accumulation

Although green supplier integration has received widespread attention, how it impacts various types of firm performance remains unclear. Based on social capital theory, this study explores the influence of green supplier integration on three dimensions of social capital accumulation, which further affect economic and environmental performances. To verify the hypotheses, we collect two-wave survey data from 206 Chinese manufacturers. Results show that green supplier integration significantly affects social capital accumulation. Relational and structural capital accumulations have positive effects on both economic and environmental performances, while cognitive capital accumulation only has a positive impact on environmental performance. Additionally, relational and structural capital accumulations partially mediate the effects of green supplier integration on economic and environmental performances, whereas cognitive capital accumulation only partially mediates the impact of green supplier integration on environmental performance. This research deepens the understanding of how green supplier integration influences firm performance via social capital accumulation, and provides a theoretical basis for firms attempting to enhance their performance.     

The effects of internal versus external integration practices on time-based performance and overall firm performance

This paper examines the effects of integration practices on time-based performance and on overall firm performance (financial and market share). Integration practices are grouped into two categories: (1) external strategic design integration, which reaches across firm boundaries to involve suppliers and customers and (2) internal design-process integration, which comprises more tactically oriented, integration practices that match design requirements and process capabilities. First, regression results show that both internal and external integration are related to time-based performance, which in turn is related to firm performance. Thus, two indirect routes to firm performance are identified. Second, hierarchical regression reveals that integration directly affects firm performance even after time-based performance is accounted for. Finally, we found that the interaction of internal and external integration is significantly related to both market share and financial performance (after controlling for all other effects). This latter result suggests that the joint use of external and internal integration practices has a synergistic effect on firm performance.     

Vertical Integration and Firm Productivity

This paper uses three cross‐industry datasets from China and other developing countries to study the effect of vertical integration on firm productivity. Our findings suggest that vertical integration has a negative impact on productivity, in contrast to recent studies based on U.S. firms. We argue that in settings with poor corporate governance, vertical integration reduces firm productivity because it enables inefficient rent‐seeking by insiders.     

The impact of supply-side electronic integration on customer service performance

Although information technologies have been expected to directly enhance firm performance in specific value chain activities (e.g., supplier performance or customer service performance), their advanced capabilities offer the promise of organizational integration and spill-over benefits. Enterprise systems provide firms with platforms for electronically integrating their supplier and demand chain activities. Spill-over benefits refer to the impacts that occur when IT investments in one organizational domain benefit performance in a different value chain side of the firm. Supply-side electronic integration (SEI) refers to the use of electronic means to integrate the exchange of information and transactions with suppliers through enterprise systems. In our research, we examine whether SEI generates spill-over effects on customer service performance, over and beyond firms’ direct investments in customer-side digitization. We also examine whether structural attributes of the firm (e.g., vertical integration, diversification, and centralization) moderate the effects of supply-side electronic integration on customer service performance. Our analysis of a secondary dataset of InformationWeek 500 firms shows that SEI helps firms realize cost-savings in their customer service performance, especially if they are less vertically integrated. In addition, SEI investments help diversified and centralized firms achieve cross-selling with their customers. We also find that SEI is more likely to help decentralized and diversified firms achieve customization in their customer service activities. These results suggest that SEI helps firms achieve twin goals in customer service: cost reduction and revenue expansion. Overall, our research reveals how supply-side electronic integration could generate benefits in customer service performance in firms.     

Improving performance through vertical disintegration: evidence from UK manufacturing firms

Unlike previous work on the vertical integration–performance relationship, we investigate the performance consequences of vertical disintegration. We offer a theoretical justification for the disintegration decision and we condition the disintegration effect on performance on the initial degree of firm integration, the timing and the direction of disintegration. Using a sample of UK manufacturing firms and controlling for disintegration endogeneity, we find that disintegration eventually results in improved operating performance, particularly when disintegration occurs as a reaction to poor performance and in cases of forward between‐sector disintegration. However, being highly integrated does not guarantee gains from disintegration. The implications of these findings are discussed. Copyright © 2008 John Wiley & Sons, Ltd.     

Using integrated information systems in supply chain management

The aim of this paper is to empirically test not only the direct effects of information and communication technology (ICT) capabilities and integrated information systems (IS) on firm performance, but also the moderating role of IS integration along the supply chain in the relationship between ICT external and capabilities and business performance. Data collected from 102 large Iberian firms from Spain and Portugal are used to test the research model. The hierarchical multiple regression analysis is employed to test the direct effects and the moderating relationships proposed. Results show that external and internal ICT capabilities are important drivers of firm performance, while merely having integrated IS do not lead to better firm performance. In addition, a moderating effect of IS integration in the relationship between ICT capabilities and business performance is found, although this integration only contributes to firm performance when it is directed to connect with suppliers or customers rather than when integrating the whole supply chain.     

Mixed Duopoly with Subcontracting

Existing literature on mixed oligopoly focuses on competition among different types of firms but ignores their possible cooperation. We allow cooperation between a public firm and a private firm through subcontracting in a Hotelling mixed‐duopoly model. We find that when subcontracting is possible, the equilibrium without subcontracting is not socially optimal because subcontracting can lower total production costs. And if both firms engage in subcontracting, the existence of a public firm can guarantee the first best equilibrium, whether it is the low‐cost firm or not. But when a private firm is the low‐cost firm, it is more profitable for it to choose vertical foreclosure. And the consequent equilibrium is not socially desirable anymore. Copyright © 2014 John Wiley & Sons, Ltd.     

The impact of bullwhip on supply chains: Performance pathways,control mechanisms,and managerial levers

Even though few empirical studies have tried to actually explicate the relationship between the bullwhip effect and performance of the supplier firm, there exists a common perception for over 30 years among both practitioners and academics that the bullwhip effect naturally results in decreased firm profitability. Anecdotal evidence further suggests that this decline in profitability arises from a decline in operational performance. However, the results of our study, which empirically examines the bullwhip effect across supply chain partners through an analysis of 383 actual customer base-supplier dyads, challenge this commonly held position by suggesting that while traditional bullwhip often yields reduced ROA, it ultimately has no relationship with the firm's operating margin. Additionally, our results also call into question whether or not production coordination between customers and suppliers can minimize the need for inventory and capacity buffers, which are the two commonly utilized methods for battling the bullwhip effect. Thus the relationship between bullwhip and firm performance is far more nuanced and complicated than previously believed. We also show how the managerial bullwhip levers of coordinating production across supply chain partners, or deploying inventory and capacity buffer control mechanisms, can help maximize a firm's performance along different dimensions.     

Avoiding the loss of a gain: Retaining top managers in an acquisition

The turnover of management following a merger or acquisition is a significant, yet understudied, human resource issue. We propose that the relevant HR question is not merely how to retain top managers, but of equal importance, whether or not top management retention should be an objective. We present a model that integrates the retention process with the overall integration strategy being pursued by the acquiring firm. The model prompts a discussion of those factors that influence the decision as to whether the top management of the acquired firm should be retained. We conclude by identifying appropriate HR tactics for managing the retention process.     

CEO duality,information costs,and firm performance

This study investigates the effects of CEO duality on firm performance and the moderating effect of information costs on the relationship between CEO duality and firm performance in Taiwan. By analyzing listed companies during the period from 2000 to 2012, our empirical results show that a lack of evidence for the links between leadership style and firm performance; however, this relationship is associated with information costs estimated by analysts’ earnings forecasts. Specifically, we find that CEO duality has statistically significant negative impacts on firm performance when information costs are high. This result provides evidence for the coexistence of the agency hypothesis and stewardship hypothesis as determined by the extent of the information costs, and it tends to underscore the importance of corporate governance on the relationship between CEO duality and firm performance.