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Academic Journal
Supply Chain

“The Effects of Ecolabels and Environmental Regulations on Green Product Development”

Problem definition: We develop a framework for studying the impact of voluntary ecolabels and mandatory environmental regulation on green product development among competing firms. Academic/practical relevance: We contribute to the academic literature on environmental quality competition by explicitly accounting for the credibility of environmental claims made by firms, and by exploring the implications for society of two mechanisms used to remedy credibility-related consumer discounting of firms’ self-declared environmental qualities. We draw parallels between our findings and instances of environmental labeling and regulation from industry to highlight the practical implications of our study. Methodology: We use a game-theoretic framework to analyze a consumer-driven model of green product development. Results: Credibility asymmetry drives product differentiation between two competing firms. The less credible firm always adopts external certification, while the more credible firm does so only if its credibility is sufficiently low. Credibility may also determine whether or not the government should intervene. In the absence of an external certifier, the regulator should intervene by imposing a mandatory environmental standard that is decreasing in stringency as the credibility of the more credible firm increases. In the presence of a certifier, the regulator should intervene if neither firm is sufficiently credible, or if consumers do not value environmental stewardship highly. Managerial implications: We identify how and when government should (and should not) intervene to stimulate green product development when competing firms can use self-labels or external certifications to communicate their environmental performance to consumers. We also determine the optimal strategies for the competing firms and external certifiers.
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519-535 pages 2019 INFORMS Karthik Murali Michael Lim Nicholas Petruzzi View on: Google Scholar

Academic Journal
Supply Chain

“The Impact of heterogeneity in consumer characteristics on the design of optimal time-of-use tariffs”

Unlike commercial and industrial sectors where they have been successfully deployed, the rollout of voluntary Time-of-Use (TOU) tariffs in the residential sector has been tepid. One cause for this limited penetration of TOU tariffs in the residential sector is the difficulty in offering appropriate price incentives to a consumer class that is heterogeneous in its demographics and preferences. In this paper, we develop a parsimonious game-theoretic model to shed light on the optimal pricing problem from the utility's perspective when its consumers vary in their electricity consumption scheduling preferences as well as their willingness or flexibility to shift consumption in response to price incentives offered by the utility. Using this model, we generate structural insights into the role of the two types of consumer heterogeneity on the design and potential of voluntary TOU tariffs. We also show how our model and insights can be used to evaluate the current state and potential of TOU tariffs in two U.S. states.
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2022 Elsevier Karthik Murali Dong Gu Choi View on: Google Scholar

Academic Journal
Supply Chain

“The magnet effect of price limits: a logit approach”

We investigate the magnet effect of price limits using transaction data from the Taiwan Stock Exchange. A logit model incorporates explanatory variables from microstructure literature and reveals that the conditional probability of a price increase (decrease) increases significantly when the price approaches the upper (lower) price limit, in support of the magnet effect. Our approach recognizes when the magnet effect starts to emerge and identifies possible determinants of magnet effect. The probability of information-based trading has a significant impact on the magnet effect for lower price limits.

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830-837 pages 2009 Ping-Hung Hsieh Yong Kim Jimmy Yang View on: Google Scholar

Academic Journal
Supply Chain

“The Return on R&D Versus Capital Expenditures in the Pharmaceutical and Chemistry Industies”

The impact of research and development (R&D) on firm performance is generally agreed to be positive, but the nature and extent of this impact share little agreement in the previous research. Using an improved, time series, cross-sectional regression model that accounts for both contemporaneous and firm-specific serial correlation, as well as the feedback between firm profitability and investments, our study compares the rate of return from a dollar investment on R&D to a dollar investment on fixed assets in pharmaceutical and chemical industries. We find positive associations of R&D intensity and all variables of firm performance (net margin, operating margin, sales growth, and market value). We find that an investment in R&D earns an operating margin return much higher than the industry cost of capital. We also find that the effect of an investment in R&D on the firm's market value is about twice as much the effect of an investment in fixed assets. These findings have implications for corporate investment strategies, indicating that additional R&D investment is more likely to provide a firm with a unique and sustainable competitive advantage.
Details

141 -150 pages 2003 IEEE Transactions on Engineering Management Ping-Hung Hsieh C. Mishra

Academic Journal
Supply Chain

“The role of corporate board diversity in mitigating supply chain disruptions: The impact of foreign nationals”

We explore the role of director nationality in mitigating the effects of supply chain disruptions caused by economic policy uncertainty (EPU). EPU spikes in a supplier's country are associated with significantly lower sales and firm value for its US buyers; however, these effects are mitigated when the buyer has a foreign national from that country on its board of directors. Our cross-sectional tests suggest that foreign nationals have a more pronounced impact in mitigating the effects of supply chain disruptions for firms that are smaller in size, highly leveraged, financially distressed, and with lower cash holdings. Taken together, our results highlight the benefits of foreign national members of corporate boards particularly for firms with significant dependence on foreign suppliers.
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Rohan D'Lima Musa Subasi Ariel Rava

Academic Journal
Supply Chain

“The supply chain implications of recycling”

Until recently, end-of-life (EOL) product management was the purview of a small number of firms that could make money out of recycling and/or remanufacturing. Now, changing customer expectations and stringent product take-back regulations are forcing many goods producing organizations to confront EOL product management, even in cases in which there is no clear economic incentive for doing so. This article presents a framework that highlights the supply chain implications for firms forced into EOL product management where recycling is the only viable option. Discussed are the various recycling options available to managers, as well as the strategic implications of each of these choices.
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133-143 pages 2007 Business Horizons Mark Pagell Zhaohui Wu Nagesh Murthy View on: Google Scholar

Academic Journal
Supply Chain

“The value of strategic management of residential energy storage using a two-threshold control policy”

While the deployment of renewable energy sources as an alternative to fossil fuels has garnered global attention, the intermittent and unpredictable nature of renewables has spurred a growing interest in energy storage. However, effective management of energy storage is far from trivial for residential consumers owing to various compensation and pricing structures, as well as uncertainties in electricity demand and generation. In this paper, we consider a grid-connected residental consumer facing two-part time-of-use tariffs and sellback compensation. We propose an effective battery operating policy utilizing two thresholds --- a ``purchase up-to'' threshold in the off-peak period and a ``sell down-to'' threshold in the peak period. Through a full-factorial numerical experiment, we show that this simple control policy can substantially increase the value of home energy storage while performing nearly as well as battery optimization under certainty, thus leaving little room for improvement from more complex, forecast-driven approaches. From a policy perspective, our results indicate that imposing restrictions on the purchase of electricity from the grid to charge the battery is counter-productive to the adoption of this technology and the health of the grid and environment. In addition, through case studies of U.S. cities, we show that strategically managing home energy storage makes this technology significantly more attractive even in communities where it would add no value when managed passively. Furthermore, real-world implementation in a community setting validates the effectiveness and robustness of the battery management policy established in this paper, highlighting its resilience to changes in billing and compensation plans. Our findings provide valuable insights into the effective utilization of residential energy storage systems under evolving regulatory and market conditions.
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Na Rea Cho Youngsoo Kim Karthik Murali Mesut Yavuz

Academic Journal
Supply Chain

“Thinking Differently About Purchasing Portfolios: An Assessment of Sustainable Sourcing”

Purchasing portfolios are a well accepted part of the supply chain literature. Yet during a recent data collection effort we observed that a number of leaders in sustainable supply chain management were not organizing their purchasing portfolios in the manner suggested by Kraljic (1983). Specifically, we found evidence of organizations buying what would traditionally be leveraged commodities in a manner more suited to strategic suppliers. This manuscript describes the observed phenomena and then uses theory to try and explain our observations. The end result is a modified sustainable purchasing portfolio model.
Details

57-73 pages 2010 Mark Pagell Zhaohui Wu M. Wasserman View on: Google Scholar