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Scheller College of Business

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Now showing 1 - 10 of 116
  • Item
    Evaluation of strategies for repeat procurement
    (Georgia Institute of Technology, 2011-12-12) Held, Christopher M.
    For the past several decades, there has been a fundamental dispute between the appropriate mechanism for repeat procurement. On one hand, the supporters of Porter (1979) advocate a competitive setting where short-term contracts are used to increase buyer power and lower supplier prices. On the other hand, the supporters of Deming (1986) advocate the idea of long-term contracts to align buyer and supplier incentives. This trade-off between long-term and short-term contracts has fundamentally affected the practice of procurement, with most suppliers opting for hybrid strategies such as Incumbent Biasing: a strategy characterized by short-term contracts with frequent rebidding with an advantage given to the incumbent. This work examines this hybrid strategy to determine its effectiveness. First, we create an empirical model that identifies and measures the trade-offs between the Porter and Deming strategies. Using this model, we find that Incumbent Biasing has an impact on procurement performance via two mechanisms: first, Incumbent Biasing decreases bidding competitiveness in repeat procurement bidding, which decreases performance; second, Incumbent Biasing has a moderating effect where it improves incentive alignment between the buyer and supplier and improves procurement performance. We show that depending on the current contract design, the net effect of Incumbent Biasing on overall procurement performance can be either positive or negative. This is first work to empirically test the impact of Incumbent Biasing on procurement performance and the first to identify the positive and negative mechanisms by which this impact occurs. Using this research, managers will be able to identify their firm's position with regards to incentive alignment with their supplier to determine if Incumbent Biasing has a net positive effect for their firm. After identifying the impact of Incumbent Biasing on procurement performance, we contribute to the literature by testing this analysis through two additional extensions. First, using secondary data analysis we show that our construct for procurement performance is correlated with firm performance. We do this by comparing the answers to our procurement performance construct items to the change in gross margin of the publicly traded respondents in our study over time. This shows that our construct is not only reliable, but that procurement performance has a positive impact on overall firm performance. This is the first work to provide an empirical construct for procurement performance that is validated via secondary data analysis of firm performance. Second, we test a competing theory to Incumbent Biasing which is Multi-Sourcing: the strategy of spreading a contract to multiple suppliers to maintain competitiveness in bidding. Approximately $46\%$ of our sample identify as using both strategies simultaneously and we test for an impact between the two. We show that the two strategies to not impact each other and can be viewed independently. Subsequently, we test two Multi-Sourcing constructs in our model and find that there is no significant impact on bidding competitiveness from Multi-Sourcing. Subsequently, we examine the impact of repeatedly awarding a contract to a pool of bidders. In our model, one contract is bid repeatedly over time, resulting in bidders gaining information about their competitors' cost. The academic literature is mixed on how a buyer should approach this type of contract bidding interaction. On one hand, it is argued that establishing an awarding structure that favors the incumbent decreases the frequency of switching, and thus cost. On the other hand, it is argued that an awarding structure that favors the non-incumbent (entrant) bidders places competitive pressure on the incumbent and generates low margin bids. This issue is further complicated by the practice cited in the academic literature of ``defection', where entrant firms either perceive a bias or believe that their cost is uncompetitive and will not bid in future stages. We create a framework that explores the apparent contradictions in these recommendations and gives conditions when biasing toward the incumbent or entrant should be implemented. We first characterize bidders based on their effort to bid and their cost to supply the contract. We then show that in the case of low effort to bid and high cost for the entrant, entrant biasing is optimal; when the reverse is true incumbent biasing is optimal. Using the results from our analysis, we provide guidance to buyers facing a repeated procurement
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    Essays in international capital markets
    (Georgia Institute of Technology, 2011-11-14) Lee, Kyuseok
    My dissertation consists of three essays in international capital markets. In Chapter I, we examine the herd trading behavior of institutional investors trading around the world. Using a new transaction-level trades database of 531 U.S. institutional investors trading across 37 countries for the period 2002-2009, we find robust evidence of intra- and inter-period herdings at the monthly frequency. We find no evidence that trades by institutions in our sample destabilize local stock markets. Further analysis shows that: (i) in the buy side, both intra- and inter-period herdings are more pronounced in countries with weaker information environments; and (ii) in the sell side, intra-period herding is more pronounced in countries with stronger information environments, whereas inter-period herding is not significantly related to information environments. In Chapter II, we document that the degree of co-movement between bilateral USD ex- change rates has increased substantially since the introduction of the euro in 1999 and investigate what drives the increased co-movement. For each of our 33 sampled bilateral USD exchange rates, we measure the degree of co-movement using the R-square from re- gressing weekly exchange rate changes on the weekly world exchange rate factor. Our results show that, for the majority of sample exchange rates, the R-square has increased substan- tially over the period 1999-2010. Specifically, the average R-square was 0.15 in 1999, but it increased to 0.47 by more than 200% in 2010. Further analysis reveals that the rising influence of the euro relative to USD over a third currency can explain most of the increase in the measured co-movement over time. In Chapter III, we examine the level and trend of U.S. domestic market integration. For each of our sample states, we construct the state (market) portfolio comprising public firms headquartered within the state and compute R-square, our measure of integration, from regressing state portfolio returns on national stock market factors. Using weekly returns, we estimate the regression for each year of our sample period 1963-2008. The key findings are: (i) For the majority of sample states, the R-square exhibits a statistically significant upward trend, implying that U.S. domestic stock markets were not fully integrated and have been integrating during the sample period; (ii) consistent with the previous result, the explanatory power of the state factor over individual stock returns has been decreasing for the majority of states; and (iii) the increasing integration of U.S. domestic stock markets is associated with the decreasing home state bias, suggesting that investors' pursuit of nation- wide investment opportunities may be a significant driver of domestic financial integration.
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    Resource allocation, incentives and organizational structure for collaborative, cross-functional new product development
    (Georgia Institute of Technology, 2011-11-02) Hutchison-Krupat, Jeremy
    This thesis addresses important operational aspects relating to fundamental components of any successfully executed NPD strategy: the processes, incentives and structure of decision rights that should be implemented given the objectives and capabilities of the firm. The first chapter outlines when a firm might prefer to compensate members of a NPD project team either, as individuals (e.g. based on their functional contribution to overall value) or as a team (e.g. based on the overall profit generated). We find that neither team nor individual based compensation is preferred for all types of projects. Specifically, when there is higher uncertainty, the firm can benefit by employing team-based compensation. We discuss the implications of our findings towards the firm's ability to pursue different types of projects. In Chapter 3, we look at the strategic resource allocation processes that are employed by firms in order to decide whether NPD initiatives get funded or not. We find that there is not a "one size fits all" resource allocation process that all firms should employ. Furthermore,we extend this finding by further by providing a rationale explaining why even a single firm could benefit by employing multiple processes internal to the firm. Finally, in Chapter 4, we empirically explore how key managerial levers of the firm (i.e. incentives, tolerance for failure, and project management structure) affect an individual's propensity to invest in a project. Our analysis brings forth several under-explored and novel aspects. We examine how multiple managerial levers work in concert with one another (revealing interactions that, to our knowledge, have not been exposed). We also recognize an important aspect of most (if not all) NPD contexts: the probability of success is strongly tied to the level of resources that are invested.
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    Predicting individual creativity in organizations: why do adults engage in creative activities?
    (Georgia Institute of Technology, 2011-10-05) Bowers Schoen, Jeremy L.
    Amabile (1983a) presented the most prominent theory currently used for studying individual creativity in organizations, the componential model, over 25 years ago. This model moved the study of creativity away from an individual differences-based paradigm to one taking into account the situation. The centerpiece of this model, the intrinsic motivation principle, suggests that situational factors influence individual creativity via an individual's intrinsic motivation (Amabile, 1996: 115). My review identifies anomalies in current research using Amabile's model that I use for new theory development. I then test that theory in a laboratory study. New theory I developed and tested explores factors that affect individual creative performance at work. This theory focuses on the effects environmental variables, dispositional traits, and psychological mediators have on creative performance. The trait of achievement motivation is used to directly predict creative performance and also how individuals differentially react to environmental factors. The psychological mediator utilized here is regulatory focus, which is a concept related to the ways individuals frame and engage situations. I describe and test how the facets of regulatory focus (promotion and prevention) account for the ways that environmental factors, achievement motivation, and the interaction of environmental factors and achievement motivation affect creative performance of adults in work-like environments (e.g. behavioral laboratory with adults). Results from this study were significant. First, achievement motivation significantly predicted creative performance. Second, there were no significant effects for regulatory focus, although this was mostly likely a result of limited scale development. Third, achievement motivation interacted with the experimental manipulations (expectations of controlling or informational expected evaluations), as the environmental variable, to predict creativity. This suggests theories of creativity that do not consider personality (c.f. Amabile, 1983a, 1983b, 1996) leave out a potentially important and significant portion of what leads to differences in individual creative performance. Finally, many variables reported to predict creative performance in the literature were used as control variables. In no model tested did any of these control variables reach significance or moderate the effects of achievement motivation, as it was measured in this study, on creative performance. These results suggest the finding here for achievement motivation is robust.
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    Essays on technology entrepreneurship
    (Georgia Institute of Technology, 2011-04-06) Anak Agung Istri, Shanti Dewi
    This dissertation attempts to contribute to extant discussions on how one utilizes knowledge for economic gain. The first essay is a response to the controversy on whether the interactions divert academic scientists research agenda toward industry interests at the expense of fundamental science. This essay considers how an academic scientist chooses the level of difficulty of a research project and its level of relevance to industry interests. A simple game-theoretic model between research sponsors, a government agency and a firm, and an academic scientist is constructed. The shows that the funding decisions of research sponsors are strategic substitutes. It also shows that the academic scientists choices of project characteristics are strategic complements. The second essay provides insights on scientific entrepreneurs. It is argued that the nature of scientists research, specifically the level of its commercial applicability, is an important predictor of entrepreneurial actions of academic scientists. Using data from 395 academic scientists at five top US research universities, it is observed that there is a non-linear relationship between the nature of research and entrepreneurial actions. The third essay offers insights on entrepreneurial teams. This essay investigates mechanisms that give rise to entrepreneurial teams. The model shows that an entrepreneur obtains less expected value from a project if the entrepreneur chooses to work solo at latter stage than working in a team. It is also explained how asymmetry of importance between tasks in a commercialization project influences the decision of team formation and its optimal size. An extended model is constructed to analyze two benefits of team work: specialization and diversity.
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    Cognitive diversity and team performance: the roles of team mental models and information processing mechanisms
    (Georgia Institute of Technology, 2010-11-15) Schilpzand, Maria Catharine
    There are two important trends in organizations today: 1) the increasing use of teams and 2) the increasing diversity in the workforce. The literature is in tune with these organizational trends, evidenced by a dramatic increase in research on team performance and the effects of diversity. However, there are still contradictory findings of the effects of team diversity on team processes and outcomes. To shed light on these inconsistencies, the cognitive construct of team mental model is introduced as a mediator of the relationship between team cognitive diversity and team performance. Team mental model is an emergent cognitive state that represents team members' organized understanding of their task environment (e.g., Klimoski&Mohammed, 1994) and has been shown to improve team performance (e.g., Edwards, Day, Arthur,&Bell, 2006; Mathieu, Heffner, Goodwin, Salas,&Cannon-Bowers, 2000). Specifically, with a sample of 94 student teams I investigated how team cognitive diversity affects team mental model similarity and accuracy, and through them, team performance. In addition, I examined team information processing mechanisms as moderators of the relationships between team cognitive diversity and team mental model similarity and accuracy. The results suggest that cognition at the team level plays an important role in the effective functioning of decision making teams. Specifically, the combination of team mental model similarity and accuracy predicts levels of team performance and information integration is an important moderator linking cognitive style diversity to task mental models, team processes, and team performance. The research model developed and tested seeks to advance understanding of the "black box" linking team diversity to team outcomes (Lawrence, 1997) and to provide guidance to managers leading cognitively diverse teams.
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    Essays on innovation ecosystems in the enterprise software industry
    (Georgia Institute of Technology, 2010-08-05) Huang, Peng
    Innovation ecosystem strategy is often adopted by platform technology owners to seek complementary innovation from resources located outside the firm to exploit indirect network effect. In this dissertation I aim to address the issues that are related to the formation and business value of platform innovation ecosystems in the enterprise software industry. The first study explores the role of three factors - increased payoff from access to platform owner's installed base, risk of misappropriation due to knowledge transfer, and the extent of competition - in shaping the decisions of third-party complementors to join a platform ecosystem. The second study evaluates the effect of participation in a platform ecosystem on small independent software vendors' business performances, and how their appropriability strategies, such as ownership of intellectual property rights or downstream complementary capabilities, affect the returns from such partnerships. Built upon resource based view and theory of dynamic capabilities, the third study reveals that users' co-innovation in enterprise information systems, measured by their participation in online professional community networks, constitute a source of intangible organizational asset that helps to enhance firm level IT productivity.
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    Experience, episodic knowledge and judgment in an audit committee member task: experimental evidence
    (Georgia Institute of Technology, 2010-07-07) Singtokul, Ong-Ard
    I conduct experiments to investigate how episodic knowledge obtained from prior experience as an auditor or a manager affects audit committee members' judgment in supporting the auditor in a disagreement with management. This paper sheds light on the advantage of first-hand accounting-related experience in the important oversight task. It also brings to bear the potential benefit from direct manager experience as claimed by researchers and regulators. I find that the episodic knowledge obtained from prior experience as an auditor, especially the experience of having been a diligent auditor, strengthens the degree of auditor support of participants in the role of an audit committee member. By contrast, the effect of episodic knowledge from first-hand experience as a manager on the likelihood of auditor support varies with the manager type. While the episodic knowledge acquired from direct experience as an aggressive manager augments the level of auditor support, such knowledge attained by prior experience as a conservative manager has no significant effect.
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    Essays on cooperation and/or competition within R&D communities
    (Georgia Institute of Technology, 2010-07-01) Jiang, Lin
    This dissertation attempts to contribute to our understanding of how firms can manage and benefit from its research and development (R&D) communities. In the first essay, we examine how established firms can leverage a broad R&D community to invent successfully during the early stage of a technological change. We find significant inventions by incumbents outside the existing dominant designs and relate their success to their willingness to search novel areas, explore scientific knowledge in the public domain, and form alliances with a balanced portfolio of partners. We find support for the hypotheses using data from the global semiconductor industry between 1989 and 2002. In the second essay, we examine a classical choice within an R&D community: cooperation or competition with other firms along a technology supply chain. We find that the answer depends not just on the transaction costs, strength of intellectual property protection rights, and asset cospecialization in the buyers' industries, but also the supplier's knowledge transfer capability and a typical buyer's productivity in developing licensed inventions. For instance, the effect of asset cospecialization on licensing is moderated by the factors that affect the buyers' productivity in developing external technology. Additionally, factors that reduce the buyers' development productivity can be mitigated by the supplier's knowledge transfer capability. We find empirical supports for these predictions using a cross-industry panel dataset of a sample of 345 U.S. small technology-based firms for the 1996-2007 period. In the third essay, I develop two game theoretical models to address how research competition from academic researchers affects firms' openness in disclosing intermediate R&D outcomes. Both models predict that such competition increases the firm's incentive to publish research findings, even though the firm would not have had such an incentive without the presence of the competition. The models also suggest several conditions under which the effect takes place. I further discuss the implications of ownership fragmentation for research materials within the scientific community and academic researchers' engagement in entrepreneurial activities. As implied by my models, these phenomena might instigate withholding of research findings by firms.
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    Essays on consumer decision-making in interactive and information rich environments
    (Georgia Institute of Technology, 2010-06-28) Wen, Na
    This dissertation consists of two central parts. Part one of the dissertation examines the impact of interactive restructuring on decision processes and outcomes. Five experimental studies show that consumers examine less information and engage in more compensatory decision processes when interactive restructuring tools are available. Consumers also increase their use of restructuring tools in cognitively challenging choice environments. The availability of a sorting tool improves objective and subjective decision quality when attributes are positively correlated, or when the number of alternatives in a choice set is large, but not when attributes are negatively correlated or choice sets are small. Greater use of interactive restructuring tools has deleterious effects on decision quality when attributes are negatively correlated. Under time pressure the availability of an interactive restructuring tool improves decision quality, even when attributes are negatively correlated, since time pressure limits tool overuse. Finally, the effects of multiple interactive restructuring tools on decision making vary by the types of tools that marketers make available to consumers. Part two of the dissertation explores the effects of visual design on consumer preferences and choice. Experiment 1 demonstrates preference reversals when visual separators are between product alternatives versus between product attributes. Experiment 2 shows that when product attributes are negatively correlated, visually separating alternatives improves decision quality but visually separating attributes hurts decision quality. Visual separators do not affect decision quality when attributes are positively correlated. Experiment 3 extends experiment 2 to show that visual separators enhance decision-making efficiency and can limit the extent to which consumers adapt to contextual changes in choice environments. Finally, experiment 4 shows that, under time pressure, both visual separators between attributes as well as visual separators between alternatives improve decision quality when attributes are negatively correlated.