Logistics, Business & Public Policy

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    Essays on investor preferences and corporate strategies
    (2024) Nguyen, Huu Loc; Sampson, Rachelle; Business and Management: Logistics, Business & Public Policy; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    Time horizon, an investment’s expected payback period, is a consequential investor preference and a crucial determinant of corporate strategy as it can constrain firms’ investment options. However, a gap exists between research focusing on investor temporal preferences and on corporate intertemporal strategy. Therefore, my dissertation offers a multi-level analysis to examine the dynamic relationship between investor temporal preferences and firm strategy. In the first essay, I construct a real-options signaling game model in which time horizon serves as a key determinant of firm strategic responses to shifts in investor temporal preferences. I test my predictions using the emergence of low-carbon energy innovation in the U.S. Oil and Gas industry during 1980-2018. I find that firms adjust their strategies in response to changes in investor time horizons. When faced with a lengthened investor time horizon, firms are more inclined to prioritize long-term inventive innovation, whereas a shortened investor time horizon prompts a greater focus on short-term adoptive innovation. Furthermore, I find suggestive evidence that such commitments when firms align their strategies to investor temporal preferences enhance firms' innovation performance. The second essay extends my investigation in the first chapter to explore the impacts of the inherent information asymmetry between firms and investors on investor-induced firm strategies. I find that, in high information asymmetry contexts, firms overshoot their investor-induced responses to effectively signal their alignment to shifts in investor temporal preferences. In the third (co-authored) essay, we explore the interplay between investor temporal preferences and firm strategies via top management teams. We study how the career experience of top management influences firm strategies and investor temporal preferences. We construct a novel metric to capture, standardize, and compare executives’ career paths across different functional roles, firms, and industries. Our findings indicate that executives with heightened diversity of experience across various functional roles tend to support longer-term strategies, such as income smoothing over time, aligning with the interests of long-term investors. In contrast, executives with more transitions between firms and industries often exhibit more short-term actions, namely cuts in R&D investments, rendering their firms more appealing to short-term investors.
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    Competition, Firm Financial Pressure, and Location Strategy: 3 Essays on Firm Domestic and International Expansion
    (2022) Jaffe, Roxanne L; Chung, Wilbur; Business and Management: Logistics, Business & Public Policy; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    This dissertation examines the relationship between firm capabilities, including firm financial condition, and expansion strategy in a competitive environment. In Essay 1, I build a formal model of firm geographical expansion and entry timing based on Cournot competition that is driven by heterogeneity in firm, location, and competition traits. Using Monte-Carlo simulation, I identify firm best responses and Nash Equilibrium which serve as predictions for empirical inquiry in Essay 2 and Essay 3. Variation in firm traits and location traits lead to different expansion outcomes including whether firms expand at all, whether firms enter a market early or later, and which geographical location firms choose. While similar firms choose similar expansion behavior, as firms’ relative capabilities and revenue pressure differ, staggered entry becomes more appealing, resulting in differential firm profits. Additionally, expansion strategy becomes more nuanced when considering the interaction between firm, competitor, and location traits, both domestically and internationally. I focus on two key mechanisms of interest and test these empirically: revenue pressure in Essay 2, and liability of foreignness in Essay 3. I focus on a subset of propositions that map to my empirical setting: expansion into cities by firms in the micro-mobility industry (scooter, bike, and moped share companies). In Essay 2, the empirical results for US expansion activity support model predictions that more capable firms expand before less capable firms, but that revenue pressure pushes firms to expand earlier than they would prefer. Extending the model to capture international expansion in Essay 3, I find that liability foreignness helps explain the entry timing of firms at the country level, as well as a subset of entry decisions at the city level. This final essay highlights the nuances of various measures of liability of foreignness, as well as the importance of separating out different levels of analysis (e.g., at the city and country level) when examining firm entry decisions.
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    Greenwashing, Firm ESG Strategy, and Employee Impact
    (2022) Barrymore, Nathan; Sampson, Rachelle C; Business and Management: Logistics, Business & Public Policy; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    This dissertation studies the causes and consequences of firms’ environmental and social (ESG) actions, with a specific focus on employees. Essay 1 examines greenwashing: when firms present an overly positive view of their environmental and social outcomes. I ask how top managers and investors’ ESG preferences influence companies’ self-reported environmental and social policies, and their independently reported environmental and social outcomes. I find that managers’ ESG preferences, as proxied using their language on earnings calls, correlate with both ESG policies and outcomes. However, investors’ ESG preferences correlate with only policies and not outcomes, suggestive of greenwashing. I conclude that agency issues explain these divergent results.Essays 2 and 3 ask how employees respond to firms’ ESG outcomes and to firms’ pay policies. Essay 2 explores the relationship between a firm’s ESG outcomes and labor productivity. In two contexts, we find that ESG outcomes predict higher labor productivity, but only when there is sufficient information about firm behavior. In one study, the positive impact on labor productivity only exists for large firms. In another study, the positive relationship appears only after a government regulation requiring that firms disclose their carbon emissions. Essay 3 provides large scale evidence on the relationship between wages and employee attrition. We find that paying above median wages for a specific role decreases attrition rates, but only among low and middle wage workers in the US. If stakeholder capitalism is to sustain and integrate into the US corporate system, the movement needs to be based on accurate assessments of environmental and social outcomes. These essays provide an advance in that direction, by using independently reported ESG data to examine how ESG issues impact firm strategy.
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    The Impact of Omnichannel Operations on Firm Performance
    (2020) Ren, Xinyi; Evers, Philip T; Business and Management: Logistics, Business & Public Policy; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    This dissertation examines the impact of two different omnichannel strategies that firms can undertake to maintain and expand their competitive positions. These strategies range from the integration of information provided across different channels to the establishment of a new brick-and-mortar (B&M) retail format. Specifically, my research questions center on how firms can benefit from omnichannel operations and the potential costs that come with these strategies. The underlying mechanisms between customer demand, order fulfillment, and inventory management are studied using econometric analysis and data analytics based on a large proprietary dataset collected from the retail industry. The first essay empirically examines the value of pop-up stores with respect to their ability to drive customer demand and fulfill orders. A comparison is also made between pop-up retailing and traditional “permanent” B&M retailing. Building on a quasi-field experiment, I find that having pop-up stores leads to an increase in the overall demand both during and after operations, indicating a spillover effect on demand that goes beyond the pop-up store's limited operational window. From a fulfillment perspective, customers shift from the online channel to pop-up stores when they have urgency in acquiring the purchase. Finally, the results reveal that pop-up stores are not as effective as permanent stores in generating demand; however, the trade-off between revenue and cost still makes pop-up stores an attractive retail format, especially when exploring markets with modest potential. The second essay demonstrates the impact of sharing B&M store product availability on a firm’s website. Specific attention is given to the scenario where a product assortment discrepancy exists across channels, which aligns with the trend of B&M stores getting smaller in order to reduce operational costs. Using a difference-in-differences approach, I find that this information integration strategy leads to an increase in overall sales. At a channel level, customers shift from the B&M channel to the online channel for a wider product selection, except when purchasing products that are associated with high uncertainty. I further evaluate whether the above effects are sensitive to customer-related characteristics and find that both customer distance to store and customer basket size affect the way one responds to the information about in-store product availability and the product assortment gap between channels.
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    THE IMPACT OF PRODUCT VARIETY ON RETAILER OPERATIONAL PERFORMANCE AND SALES: EVIDENCE FROM CHINA.
    (2015) Sweeney, Kevin Donald; Windle, Robert J; Business and Management: Logistics, Business & Public Policy; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    Providing higher levels of product variety has long been shown to generate increased revenues for both retail and manufacturing firms. However, recent research has also shown that higher levels of product variety can have a negative impact on firm operational performance. This dissertation is a two essay study using archival data provided by a single retail firm based in Shanghai, China, on the effects of product variety on retailer inventory levels, stock out rates, and sales. The first essay examines how product variety, as measured by the number of SKUs carried in the retailer’s product category assortment, affects inventory levels, stock out rates, and sales. The second essay investigates whether different types of product variety (namely brands, sizes, and product lines) impacts store inventory levels, stock out rates, and sales differently. The first essay investigates how the size of the product assortment impacts inventory levels, stock out rates, and sales. Greater product variety has the potential to generate higher revenue for the retailer, but also brings the potential for more complications in inventory and supply chain management processes. While previous research has examined this relationship within a manufacturing context, no research has investigated the tradeoff in a retail context. Also, this research is the first to consider the impact of product variety on a firm’s inventory levels. This is an important inclusion as inventory levels directly impact the stock out rate of a retailer. Furthermore, this paper investigates whether characteristics of a product category, such as the hedonic or utilitarian nature of the product category, moderate the relationship between product variety, operational performance, and sales. Using simultaneous equations and a three stage least squares regression methodology, results suggest that product variety has a positive relationship with inventory levels, stock out rates, and sales. Finally, the relationship between a product categories’ stock out rate and sales is stronger for hedonic product categories than utilitarian product categories. In the second essay, this dissertation examines whether the relationship between product variety, inventory levels, stock out rates and sales differs between different types of product variety. In particular, this essay investigates whether brand variety has a larger impact on retailer inventory levels, stock out rates, and sales than do size variety or product line variety. Again, using a simultaneous equation model and a three stage least squares methodology, the results suggest that brand variety is associated with higher inventory levels, lower stock out rates and higher sales than size or product line variety in the retail context.
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    Green Rivalry and Performance
    (2014) Kumar, Anupam; Grimm, Curtis M; Business and Management: Logistics, Business & Public Policy; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    This study analyzes the competitive interactions between focal and rival firms in the domain of environmental management (EM) practices and the associated impacts on environmental performance and financial performance. Using competitive dynamics and institutional theory as a basis, the study contends that firm performance is impacted by behavior of both focal and rival firms, and perceptions of legitimacy. Our findings indicate that firms competing aggressively do benefit from their proactive approach, but significant dissimilarity of behavior from their rivals tends to negatively impact firm performance bringing issues of legitimacy to the forefront. Subsequently, the study expands the work outlined above with a larger set of performance measures to look at the impact of rivalry on growth and long term shareholder value. Furthermore, this section also looks into the joint impact of environmental behavior and environmental performance on financial performance via a mediating model using various environmental performance measures. The findings indicate a partial mediation between EM behavior and financial performance from EM reputation and EM policy. In the final part of the dissertation, the study presents exploratory work on two future research topics. The first topic expands the work from focal-rival dyads to include supplier networks as well. The second topic lays out a roadmap for future work in the area of credible EM signaling. This topic takes on issues surrounding greenwashing that has been reported in the popular media. Given the visibility on sustainable activities across the entire spectrum, and the burden of green on firms, it is important to understand how firms are responding and if the returns justify their investments. This study contributes to this discourse by tying theory with behavior and adds additional clarity to firm behavior vis-à-vis green. From a methodological perspective, this study uses an original panel dataset using secondary data sources, which adds to the credibility of the results. The study has important managerial relevance at both the firm level and for policy making.
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    SUPPLY CHAIN STRUCTURE, PRODUCT RECALLS AND FIRM PERFORMANCE: INVESTIGATING RECALL DRIVERS AND RECALL FINANCIAL PERFORMANCE RELATIONSHIPS
    (2013) Steven, Adams Brima; Corsi, Thomas; Business and Management: Logistics, Business & Public Policy; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    This dissertation is a two-essay study on globalization, sourcing structure and product quality and firm performance in global supply chain management. In the first essay, using a unique archival dataset on firms and their suppliers, the role of supply chain strategies in contributing to product safety and quality, as assessed through product recalls are investigated. The second essay investigates the relationship between product recalls and firm performance. Moreover, the moderating effects on the recall-profitability relationship of supply chain as well as recall management strategies are investigated . Essay 1 investigates how a number of supply chain strategies contribute to product recalls. In particular, I examine how the make or buy decision (i.e., outsourcing), the decision to concentrate the supply base (i.e., use few vs. several suppliers), the use of foreign suppliers (i.e., offshoring), and the extent of global operations, contribute to product recalls. The subject area of product quality and safety failures leading to product recalls is important because product recalls can have a major, negative impact on firm performance. For example, in the event of a product recall, replacement orders may need to be shipped, new suppliers may need to be found and vetted, and marketing expenditures may need to be made to counter negative publicity from the recall. Applying key theories in operations and supply chain management, I find that firms vary greatly in recall propensity and that these variations are related to heterogeneity in outsourcing, offshoring, and supply base concentration. In the second essay, I revisit the recall-performance relationship. First, I investigate the relationship between product recalls and profitability. Firms may choose to try to avoid product recalls by increasing their expenditures on product quality and inspection services. Or, on the other hand, they may emphasize short term profitability by reducing production and inspection costs, thereby increasing the risk of incurring a product recall. Since firms are expected to balance production and quality inspection costs against the costs associated with product recalls in order to maximize profit performance, the recall-profitability relationship is not clear, a priori. I further investigate the moderating effect of global operations, supply base structure and recall strategies on the relationship between product recalls and profit margins. My theory-based research suggests a curvilinear recall-profit relationship and that this relationship depends on key global supply chain practices and recall management strategies.
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    Transport Modal Selection and Inventory Levels in the Context of Global Supply Chains
    (2012) Ke, Jian-yu; Windle, Robert J.; Business and Management: Logistics, Business & Public Policy; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    In this dissertation, I study the transport modal selection in global supply chains and its effects on operational performance. First, I examine the factors that affect the transport modal selection and propose that revenue drivers and cost drivers of decision makers determine their transport modal selection in pursuit of profit maximization. Then, I study the effects of the use of air shipping in export on shippers' operational performance in terms of inventory levels. In the first essay, this study examines the macro and micro factors that affect the decision of transport modal choice in global supply chains. The factors affecting modal decision are classified as the characteristics of industry, mode, shipment, and region. This study proposes that the decision maker of the modal choice aims to maximize its own profit, taking the revenue drivers and cost drivers into account. The results show that both importers and exporters use more air shipping for high-value products and when there is a positive sales surprise. Large importers and exporters have a smaller proportion of air shipping compared with small ones. While an importer's modal decision is highly associated with demand dynamics, an exporter's decision is more determined by gross margin and cost of capital but less by demand variation. In the second essay, this study examines the effects of air share on manufacturing inventories. As globalization expands a firm's geographic coverage of business, the literature indicates that globalization has led to higher inventory levels due to longer supply chains. The experience in the U.S. domestic market showing that air transport plays a more important role in the practice of JIT after the deregulation in 1978 could be applicable to global markets. This study finds that the usage of air shipping in export can effectively reduce manufacturers' inventory levels at a diminishing rate. In addition, transportation modal selection is associated with profit maximization. It is found that the demand variation contributes to more use of air shipping. In addition, higher gross margins, cost of capital, and the relevance to timeliness facilitate firms to use air shipping to capture the demand and shorten the cash cycle. Furthermore, the industries with larger major players have higher shares of ocean shipping because of risk pooling advantage. For practioners, the results are used to develop guidelines for transport modal decision including the breakeven point of carrying costs based on total cost minimization and optimal air shares based on profit maximization. This study reiterates that a firm should pursue profit maximization rather than total cost minimization only.