Designing the Supply Chain for Success at the Bottom of the Pyramid

The bottom of the pyramid—that is, the world's four billion consumers who live on $5 or less per day—is one of the last untapped markets for multinational companies (MNCs) to drive revenue and profit growth. However, most MNCs have found it difficult to make money “solving the pressing needs of low‐income communities.” We explore why the bottom of the pyramid has become a strategic focal point. We also identify and discuss fundamental differences and trade‐offs MNCs encounter in meeting the demands of the world's lowest‐income consumers. Drawing on the experience of exemplar case studies, we describe how MNCs can leverage resources to build the infrastructures needed to think differently about how to measure financial performance, design products differently to leverage both customization and standardization, and deliver differently to compensate for infrastructural deficiencies. Finally, given much of the product acceptance‐and‐profitability challenge falls under the purview of supply chain decision makers, we call for research in specific operational and relational domains to help companies design supply chain networks and processes for success at the bottom of the pyramid.     

Inductive research in last-mile delivery routing: Introducing the Re-Gifting heuristic

The last-mile problem presents a daunting challenge for many logistics service providers, especially some 7000 small, localized operations for whom the cost of complex software solutions is often prohibitive. As a result, last-mile dispatchers rely on simple heuristics to ensure adequate customer service at an acceptable cost. This research effort extends prior qualitative work by developing and testing a simple vehicle routing heuristic, based on behaviors observed in practice, that prioritizes customer service over cost against other simple vehicle routing heuristics across a variety of environments using simulation. The results support the inclusion of a customer service focus in vehicle routing and the addition of such heuristics to existing algorithm portfolios, specifically in urban areas with well-developed highway systems.     

Director and officer liability and corporate tax avoidance

We use the unique nature of the director and officer liability protection law applicable to Nevada incorporated firms to study how liability protection is related to corporate tax avoidance. We find that firms incorporated in Nevada avoid 32% more federal corporate tax as a fraction of total assets than firms incorporated in Delaware, and 40% more than firms incorporated in other states. Nevada-incorporated firms have a 15% lower cash effective tax rate and an 8% lower GAAP ETR. The results are robust to various specifications including instrumental variable and matching approaches. Greater tax avoidance is also associated with lower payouts to shareholders for Nevada-incorporated firms. The findings are consistent with theories about the complementarity of managerial diversion and tax avoidance for firms with poor monitoring, and they demonstrate how increases in liability protection lead to the unintended consequence of greater firm tax avoidance.