ABSTRACT
Effectively implementing any dimension of a company's strategy requires a careful balance between ensuring a sufficient number of opportunities have been explored and the execution has taken ...place in a timely manner for a specific initiative. Naturally, the importance of specific characteristics of an initiative will vary according to the strategic objective. Alternatives vary in their likelihood of success, how sensitive their value is to time, and the resources required to explore additional options. Extant research has established optimal rules for what constitutes a sufficient degree of exploration, and how to go about exploring alternatives. Yet, how individuals vary their behavior according to the characteristics of an initiative is not well understood. We use a controlled experiment to study how individuals' decisions are impacted by these characteristics. As expected, individuals perform significantly worse than optimal behavior would predict. However, the underlying drivers of this performance deviation critically depend on the characteristics of the initiative. Individuals who face simple initiatives that lack sensitivity to time tend to evaluate far too many options. In contrast, when a simple initiative's value is sensitive to time, individuals tend to evaluate far too few options. When the individuals face more difficult initiatives, they do not exhibit such extreme tendencies in terms of how many alternatives they evaluate. Rather, for the most challenging initiatives, individuals exhibit near optimal behavior in terms of how many alternatives they evaluate. Our findings help to provide insight to managers on where they should focus their attention in terms of pushing for more or less exploration.
ABSTRACT
In this article, we introduce a game‐theoretic model to examine the impact of outsourcing knowledge, as well as firm‐ and market‐level factors, on a buyer's decision of whether to employ a ...supply chain intermediary or an agent to identify a manufacturer for her new product. The buyer faces two options: identify the manufacturer directly or explore outsourcing indirectly through an agent. In the case of direct outsourcing, the buyer evaluates, negotiates with, and identifies the manufacturers in‐house, whereas, under indirect outsourcing, the agent takes over these activities in exchange for a commission based on the transaction value between the buyer and the manufacturer. The model introduced in this article captures the buyer–agent incentive misalignment. Unexpectedly, we find that although attractiveness of indirect outsourcing increases as the buyer's outsourcing knowledge increases, it follows an inverse‐U shape as the agent gains more outsourcing knowledge. We further demonstrate that the observability of the buyer's outsourcing knowledge is another key driver of the outsourcing‐mode strategy. In addition, we show that the buyer's tendency to explore indirect outsourcing is greater if the sensitivity to the retail price or the commission rate is higher, or the base demand or cost of delayed time‐to‐market associated with the new product is lower. We extend our analysis to consider a contract form, whereby the agent's commission payment is driven by the expected savings generated for the buyer, and to consider the setting in which the buyer's outsourcing knowledge is private information.
It has become a ubiquitous practice for firms that sell new products, such as software, to offer consumers time-locked product trial periods free of charge. We identify trial length as a nuanced ...signaling instrument, which, together with the price signal, a firm can use to communicate proprietary information about its product quality. We show that a high-quality firm offers a longer trial period and sets a higher price, and is rewarded with a higher profit, relative to its low-quality counterpart. Our finding extends to cases where the firm faces ex ante heterogeneous consumers or when the firm competes with an incumbent product.
The electronic companion is available at
https://doi.org/10.1287/opre.2017.1675
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In this paper, we provide insights into the interplay among the organizational, job, and attitudinal factors and employees' intentions to resign during the third wave of the COVID-19 pandemic at a ...mental health hospital. We point out shortcomings in the relationship dynamics between executive administration and operational staff and propose a pathway to develop more effective leadership frameworks to increase job satisfaction. We integrate qualitative data from case information and open-ended questions posed to employees at a mental health hospital and quantitative data from a small-scale survey (
= 19). We highlight that the ability to achieve objectives, work autonomy, burnout, affective commitment, distributive and procedural justice, and job satisfaction are critical in determining individuals' intentions to resign. Individuals identified disconnectedness and moral distress as critical aspects, while highlighting empathy, compassion, satisfaction, and confidence as pivotal elements. Mental healthcare settings could benefit from enhancing the staff's ability to achieve objectives, work autonomy, affective commitment, and both distributive and procedural justice. Addressing burnout and implementing measures to increase job satisfaction are equally vital. Efficiently restructuring dynamics between various leadership levels and staff can significantly improve employee retention.
This paper investigates the optimal rate and timing of efforts for environmental and traditional quality to be pursued by a manager for a new product during a development project. It assumes that the ...manager's goal is to maximize the profits earned from a new product release and that the revenue is driven by the product's utility. Product utility is determined by the levels of both traditional quality (e.g., the performance and reliability dimensions), and environmental quality, which is higher when there are product attributes reducing the environmental impact of the product. Both the levels of environmental and traditional quality are directly affected by product development efforts to increase their quality levels and their mutual interactions. Four cases are presented where the timing and rates of efforts pursued for environmental and traditional quality show different trends, depending on the firm or industry characteristics. This study provides insights about how attribute complementarity and conflict affect environmental and traditional quality levels and how this influences managers' decisions to pursue higher quality levels of each. In addition to the attributes' complementarity and conflict, the nature of the quality advancement sought (i.e., incremental or radical advancement) is critical in determining the manager's quality optimization strategies.
