Assessing supply chain risks with the analytic hierarchy process: Providing decision support for the offshoring decision by a US manufacturing company

This paper reports the process used by a US manufacturing company to assess supply chain risks within the context of an offshore sourcing decision. The case study company was faced with the objective of finding a new supplier for two of its major product lines. Five alternatives were considered: (1) sourcing finished goods from Mexico; (2) sourcing finished goods from China; (3) sourcing parts from China and assembly in the US; (4) sourcing parts from China, assembly in a Maquiladora in Mexico with investment; and (5) sourcing parts from China, assembly in a Maquiladora in Mexico with no investment in the venture. To find the best solution, action research methodology was combined with the application of the analytic hierarchy process (AHP). Through iterative and structured discussions, 17 risk factors were identified, which were subsequently grouped into main and sub objectives. AHP was then used to evaluate the importance of each risk factor, and to determine the best alternative. This study makes several contributions to the field of purchasing and supply management. First, it provides a comprehensive framework of empirically derived risk factors to be considered in an international sourcing context. Second, it shows how AHP can be used to assess these risk factors and alternatives as part of the framework to facilitate and support the final offshoring decision. And third, it illustrates the successful application of the approach by a US manufacturing company. As such, this paper contributes to the research streams of offshoring and risk management in purchasing and supply, as well as to decision-making under uncertainty and AHP. In addition, it serves as a practical methodology for firms in similar situations.     

Promise and peril in implementing pay‐for‐performance

Why would managers abandon pay‐for‐performance plans they initiated with great hopes? Why would employees celebrate this decision? This article explores why managers made their decisions in 12 of 13 pay‐for‐performance “experiments” at Hewlett‐Packard in the mid‐1990s. We find that managers thought the costs of these programs to be higher than the benefits. Alternative managerial practices such as effective leadership, clear objectives, coaching, or training were thought a better investment. Despite the undisputed instrumentality of pay‐for‐performance to motivate, little attention has been given to whether the benefits outweigh the costs or the “fit” of these programs with high‐commitment cultures like Hewlett‐Packard was at the time. © 2004 Wiley Periodicals, Inc.     

Residential Asking Rents and Time on the Market

Landlords offering a house in the rental market face a difficult strategic pricing decision. The revenue maximizing decision for the landlord involves a tradeoff between the rental rate and time on the market. Because the turnover of renters is higher than owners, and because the landlord must bear some carrying costs on a vacant house, pricing the rent too high may decrease revenue due to a higher vacancy period and pricing it too low may reduce the revenue when occupied. While there is substantial research on the relationship between listed prices and time on the market for freehold interests, this is the first study to provide empirical evidence on the relationship between asking rent, contract rent and time on the market for single family residential rental (leasehold) property interests. We present two models; a rental price model and a duration model for time-on-the market. Using data from the Dallas–Fort Worth area we find that landlords who set a lower asking rent relative to predicted rent can expect a shorter marketing period for their properties. The results also indicate that overpricing the asking rent and then lowering it at a later date leads to a longer marketing time (after the reset) and often a lower rent. These finding are reasonably robust for low-, mid-, and higher-valued rental properties.

MAINTAINING MARKET POSITION: TEAM PERFORMANCE,REVENUE AND WAGE EXPENDITURE IN THE ENGLISH PREMIER LEAGUE

This paper investigates the relationship between playing success and commercial success in team sports. Utilizing a data set relating to the English Premier League that combines both financial measures and indicators of playing skills and performances, our empirical analysis is based on three behavioural equations. Our analysis indicates that on‐field success can be directly related to players’ skills and abilities and that revenue is positively related to on‐field success. Wage expenditure is also shown to systematically reflect player skills and performances. One interpretation of this evidence is that investment in players’ skills and ability buys on‐field success, with richer teams becoming ever richer and able to maintain or even build upon success by spending more on players than less successful clubs. To the extent that richer clubs are successful in their objective there is a causal link between revenue earned and competitive imbalance via investments in players. The implications of this tendency within a league are discussed in our conclusion, which also considers the potentially wider implications of our study as they relate to the evolution of firm size and issues of market share.     

Directional heterogeneity of environmental disamenities: the impact of crematory operations on adjacent residential values

A hedonic study of residential house sales in Rawlins, Wyoming, was conducted to estimate the impact of an environmental shock from a new point source upon adjacent residential property values. We use a unique data base of house sale prices and associated house attributes, including structural and neighbourhood characteristics and geographic distances and directions from the source of the shock, atmospheric emissions from a new crematory. Our data spans 27 months of house sales: 7 months before, and 20 months after the startup of crematory operations. Results indicate that proximity, measured both in terms of direction and distance from the crematory, imparts a statistically significant negative impact on average house sale prices–an increase of 0.3 to 3.6% of average sale price for every one-tenth mile increase up to one-half mile in distance away from the crematory, but depending on direction from the crematory. This distance benefit increases somewhat with calendar time only for houses located west of the crematory.     

The nature of Austrian macroeconomic time series unit root tests

It is still an open question in economic and econometric modelling whether the non-stationarity in a time series is captured by detrending or by differencing. We test thirrteen Austrian macroenconomic time series for difference versus trend stationarity using informal methods and formal procedures developed by Dickey-Fuller and Phillips-Perron. To eliminate the effects of seasonal adjustment on the tests we apply a third procedure to the unadjusted data, recently developed by Hylleberg-Engle-Granger-Yoo. Independent of the seasonal adjustment the empirical results indicate that these series are integrated of order 1.     

Cooperative and noncooperative protection against transferable and filterable externalities

Given self-protection from an undesirable environmental externality, we examine, under several conditions, the efficiency properties of cooperative and noncooperative behavior. We demonstrate that if self-protection can transfer the externality to another agent, then noncooperative behavior will lead to overprotection. If self-protection filters or dilutes the externality, then noncooperation leads to underprotection. In addition, overprotection will worsen if an agent with more relative power is allowed a first-mover advantage or if the damage function is elastic and transferability is uncertain. Finally, a reduction in uncertainty about transferability will accentuate overprotection if the damage function is inelastic. Our results suggest that coordination of protection activities among agents will enhance the overall gains from environmental policy in the European Single Internal Market of 1992. Coordination minimizes the costs of environmental protection, thereby reducing the public credibility of its foes.     

Intergenerational Correlations of Extreme Right‐Wing Party Preferences and Attitudes toward Immigration

In this paper, we analyze the importance of parental socialization on the development of children's far right‐wing preferences and attitudes toward immigration. Using longitudinal data from Germany, our intergenerational estimates suggest that the strongest and most important predictor for young people's right‐wing extremism are their parents' right‐wing extremist attitudes. While intergenerational associations in attitudes toward immigration are equally high for sons and daughters, we find a positive intergenerational transmission of right‐wing extremist party affinity for sons, but not for daughters. Compared to the intergenerational correlation of other party affinities, the high association between fathers' and sons' right‐wing extremist attitudes is particularly striking.     

Defending free trade after physiocracy: On Dugald Stewart's architectonic of passions,reason and Providence

Abstract

Dugald Stewart (1753–1828) defended free trade in light of a providential account of Nature, according to which there would be an “identity of interests” (Halévy 1901–1904). He thereby tried to rid economic thought of references to conflicts and thus pursued the physiocrats’ programme rather than Adam Smith's. In fact, Stewart claimed that (i) self-love depends on an accommodation to Providence, by which individuals restrain their passions; (ii) self-love fosters actions that lead to a direct increase of public happiness; (iii) the perfectibility of mind allows to dismiss “legal despotism”, which can be replaced by religious education.