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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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Karthik Murali, Michael Lim and Nicholas Petruzzi "The Effects of Ecolabels and Environmental Regulations on Green Product Development" Manufacturing and Service Operations Management INFORMS 519-535 pages 2019 View on: Google Scholar

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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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Karthik Murali and Dong Gu Choi "The Impact of heterogeneity in consumer characteristics on the design of optimal time-of-use tariffs" Energy Elsevier 2022 View on: Google Scholar

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Academic Journal
Supply Chain

“The Impact of Shared Sourcing on Knowledge Transfers and Quality Improvement”

We investigate the problem of a buyer's investment in quality-related knowledge to improve the quality of product sourced from a shared supplier who also supplies the same product to other buyers. Knowledge gained via the buyer's investment in the shared supplier can spill over to other buyers who are potentially competing on quality for higher market share. Motivated by an empirical case study detailing the supplier investment practices of an automotive firm, we build and analyze a model informed by observations and theory to explore how (i.e., under what market and economic conditions) firms can gain from investing in quality-related knowledge at shared suppliers. Our analysis suggests that competition and spillovers moderate the buyers' incentives to invest in a shared supplier, and affect investments in quality improvement made by the shared supplier. We further examine the impact of relationship specific characteristics on knowledge investments and quality outcomes, and find that asymmetric profit margins for the shared supplier are a significant driver of asymmetric investment efforts and quality outcomes for the buyers. Our results enrich the observations in the existing literature, highlight the complexity underlying buyer-supplier relationships, and suggest the need for careful attention to a firm's policies for investing in shared suppliers.
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Karthik Murali and Youngsoo Kim "The Impact of Shared Sourcing on Knowledge Transfers and Quality Improvement" Decision Sciences

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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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Ping-Hung Hsieh, Yong Kim and Jimmy Yang "The magnet effect of price limits: a logit approach" Journal of Empirical Finance 830-837 pages 2009 View on: Google Scholar

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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.
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Ping-Hung Hsieh and C. Mishra "The Return on R&D Versus Capital Expenditures in the Pharmaceutical and Chemistry Industies" IEEE Transactions on Engineering Management IEEE Transactions on Engineering Management 141 -150 pages 2003

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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 and Ariel Rava "The role of corporate board diversity in mitigating supply chain disruptions: The impact of foreign nationals"

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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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Mark Pagell, Zhaohui Wu and Nagesh Murthy "The supply chain implications of recycling" Business Horizons Business Horizons 133-143 pages 2007 View on: Google Scholar

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