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IN ACTION Thirteenth Edition | Summer 2022
INSIDE THIS ISSUE
Why Launch Strategy Matters More Than Going First Does Homeownership Limit Career Advancement Potential? Supplier vs Retailer: Who Has The Power? Research Abstracts
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Research Highlights
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Why Launch Strategy Matters More Than Going First by Keith Giles
Whether your organization is a first mover or a fast follower, the question of where to launch is often more perplexing than when or how quickly. Companies often wrestle with whether it’s better to be the first to enter a new market or to wait and learn from their competitor’s mistakes. But other key factors play into these decisions, such as whether it’s better to launch all at once, on a global scale or to start in your home market where conditions are more familiar. Others debate the advantages of trying to gain market share where the competition is most significant versus targeting markets with more sophisticated consumers.
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because they don’t have to invest in the To investigate, associate professor of strategy John R&D and incur fewer market risks.” Joseph of the UCI Paul Merage School of Business partnered with fellow researchers Ronald Klingebiel, In a previous paper, Joseph and professor of strategy at the Frankfurt School of Finance Klingebiel found that being first and Management and Valerie Machoba, doctoral or second made no difference to the overall student at Frankfurt School of performance of a company. Finance and Management. Their “Our research showed that findings, published in an article titled contingent on a firms innovation “Our research showed “Sequencing Innovation Rollout: strategy, a firm could be just as Learning Opportunity Versus Entry that contingent on a firms financially profitable as a secondSpeed” forthcoming from The mover into a market,” says Joseph. Strategic Management Journal innovation strategy, a firm “As an example, Samsung was a and covered in Harvard Business fast follower in the mobile device could be just as financially market for many years and was Review, reveal factors that play into a company’s decision-making profitable as a second-mover quite successful. So, there is no processes. advantage either way in that sense.”
Unconventional Wisdom
into a market.”
“There’s a lot of literature already out there about first-mover advantage,” says Joseph. “Many are of the opinion that being first is better because this allows you to establish brand recognition and build market position. But others suggest that second movers have more advantages
Global Reach
Joseph and his co-authors were most curious about the differences between a simultaneous versus a sequential product roll-out. But, as you might imagine, getting access to global launch data is not very easy. “One of the problems in our field is that you often have only a U.S.-based study or a European study where behaviors may vary,” Joseph says. “So, it’s not easy to draw conclusions about industries that involved launches and competition worldwide. Since Joseph and his co-authors needed access to global launch data, they decided to rely on their prior relationships within the mobile device industry. “Fortunately, my co-author and I had already collected plenty of data [in this industry], and we had both already developed prior relationships with several managers at multiple firms over time,” he says. “This made it much easier to conduct interviews and process the information for this study.” What they discovered about the success rate of companies in the mobile device industry was also more generalizable for other industries outside of the consumer electronics market.
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Sequential or Simultaneous? “What we needed to ensure was that we could nail which mobile devices were launched, with what features, at what time,” says Joseph, “and in which international markets.” Leveraging their prior relationships within the mobile industry and a small army of research assistants who could verify nuanced details within various markets, they slowly but surely began to see the answers emerge. “Going into the study, we had our hypothesis and a sense of what outcomes we expected to find,” says Joseph, “but ultimately, our paper comes down to this: When do companies launch in sequence, and when do they launch simultaneously?”
Two Key Findings Here’s what they found: “One, that companies really do want to be in markets where there’s more competition and, second, that they need to be where there are more sophisticated consumers,” says Joseph. “Looking at all of the firms in our study, on average, this is what we see. Companies thrive in competitive markets, and they prefer consumers who don’t give them a free pass; they want to tap into those early adopters. So, it’s all about those tough consumer, high competitive markets first and then rolling out to other markets after that.” Not surprisingly, managers care about these sorts of things. “You only have so many dollars to spend on distributing and marketing products,” says Joseph. “So, for managers of products in a global industry, these are practical questions to answer, with a lot riding on the outcomes.”
Bottom Line The biggest takeaway from their research overall is in terms of how companies approach learning within the organization. “The reality is, every company wants to learn. They all want feedback on their products, and they all want a better understanding of how to improve quality and create more appealing products for their customers,” says Joseph. “It turns out that there isn’t one learning style that’s the right one. It all varies depending on the organization’s experience, the novelty of the product or technology, and, ultimately, where is the learning potential going to be the greatest.”
John Edward Joseph is an associate professor of strategy at The UCI Paul Merage School of Business. His research examines organizational designs for better technology development, strategic planning and growth, which is published or forthcoming in the Strategic Management Journal, Organization Science, Academy of Management Journal, Academy of Management Annals, Long Range Planning, Advances in Strategic Management, Academy of Management Proceedings and other peer-reviewed publications. Joseph is also a senior editor for Organization Science and co-editor of the Journal of Organization Design. He serves as an editorial board member of the Administrative Science Quarterly and Strategic Management Journal.
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Does Homeownership Limit Career Advancement Potential? by Keith Giles
Anyone thinking about buying a house has likely wondered: “Is this the right decision for me?” Job security and financial stability are key factors in moving from renting to buying a home. How does having mortgage debt alter opportunities for advancement? Homeowners may end up trapped in an unsatisfactory job to keep making payments. Renters may be better off thanks to their comparative flexibility to change careers and move.
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Professor Ed Coulson, Director of the Center for Real Estate of the UCI Paul Merage School of Business, wanted to examine real-world results to see if homeownership helps or harms a person’s opportunity to advance their career. “As a real estate economist, I’m naturally interested in homeownership and people’s personal experiences with real estate,” says Coulson. “But I also have a long-standing interest in the relationship between homeownership tendencies and labor market outcomes.” To examine the connections between people’s career paths and how it impacts their decisions to be a renter or a homeowner, Coulson teamed with fellow researchers Walter D’Lima of the College of Business at Florida International University and David Jinkins of the Copenhagen Business School, Denmark. The study’s results, now available in the article “Job Match and Housing Tenure” and published in Real Estate Economics, revealed more than a few surprises.
Good Advice “People always hear the advice—and it’s good advice— that you probably shouldn’t buy a house to live in unless you make sure that you stay in the house for an extended time,” says Coulson. “Because those fixed costs are very expensive, and it’s a good idea to give
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yourself the time to pay those off. That means you want to ensure you have a job that you stay in for the benchmark of at least five years.” As good as this advice might be, Coulson and his team wanted to know if owning a home limited job opportunities and, if so, how. “This study was a natural segue from my previous research in the relationship between people’s labor market experiences and the homeowner experience,” says Coulson.
Stuck at home? Roughly 15 years ago, there was some suggestion that homeowners do worse in the job market precisely because owning a home prevents, or limits, changing jobs outside a specific geographical range. “The thinking was that you’re stuck in one place, and your job searchability is quite limited,” says Coulson. “The theory goes that, because of these factors, homeowners would have lower-paying jobs and less opportunity for advancement. But this is not the case, and it turns out that homeowners are not more unemployed or have less job opportunity than renters.” Still, Coulson and his fellow researchers wanted to investigate the connection between homeownership and job stability—especially once they realized that no one else had done so academically. “Some research looked at military and college faculty who have a higher risk of moving in a short amount of time,” says Coulson. “But we felt that wasn’t relevant to the broad majority of people.”
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Does annual salary have the final say? Coulson’s team needed to determine if any previous research had asked how stable people are in their jobs.
“Bottom line, the better matched you are to your job, the more likely you are to
“We found a previous research become a article that suggested that people whose annual salary was close to the average annual salary for that classification were much less likely to change jobs over the next year,” he says. “We found that you’re more likely to change jobs if your salary was below the annual average.” The real surprise for Coulson’s team was that this volatility was similarly true for those whose average annual salary was above the average.
Match Makers Coulson and his team found that homeowners were also more likely to be better matched to their job—they were earning the average annual salary of someone else in their same market. Conversely, if they were a renter, they were more likely to be poorly matched. “Looking at a cross-section of people, if they were a homeowner, they were a better match for their jobs, while renters were a relatively poor match for theirs,” he says. “More importantly, we looked at renters and asked, ‘If you change jobs or in some way become better matched to your job in the sense that your wage was near the average, did that impel you to cease being a renter to become a homeowner in the next year?’, and that turned out to be the case. Bottom line, the
homeowner.”
better matched you are to your job, the more likely you are to become a homeowner.”
They Can, But They Won’t What’s the big takeaway? For Coulson, the answer is simple: “I think it’s just confirmation that people are not idiots,” he says. “Which is always a helpful thing.”
This research speaks to whether homeowners are stuck in their roles. Coulson and his team discovered that the answer is “no,” as he explains it: “We know that homeowners have greater seniority in their current jobs. Previously we might have assumed that this was true because they’re stuck and to search for a new job and move away would be too expensive. But that’s not the reason at all. Our research shows that homeowners have greater seniority because they’re well-matched to their jobs, and they want to stay where they are. So, it’s not that they can’t change jobs— they don’t want to.” “When it comes to practical applications, I believe our research shows us two things. First, people aren’t stupid. It also suggests that homeownership is a very expensive proposition, and people don’t enter into it lightly.”
Edward Coulson Professor of Economics and Public Policy in the Paul Merage School of Business at UC Irvine, where he is also director of the UCI Center for Real Estate. Prior to his arrival at UCI in 2017, he was Professor of Economics and King Faculty Fellow in Real Estate at Penn State, and then Director of the Lied Institute for Real Estate Studies at UNLV. He is co-editor of Journal of Regional Science, and in 2016 served as president of the American Real Estate and Urban Economics Association. His co-edited book, Energy Efficiency and the Future of Real Estate was published by Palgrave Press in 2017.
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Supplier vs Retailer:
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Who Has The Power? by Keith Giles
Large retail chains are a blessing and a curse. Although these big-name chains help manufacturers score large quarterly sales, market dominance comes with a hefty price tag, especially when negotiating wholesale prices. So, should suppliers continue to allow retailers to demand more significant profit share in exchange for shelf space? Or is there a better way to maintain market share without sacrificing revenue? Professor Shuya Yin of the UCI Paul Merage School of Business wanted to find out.
“As an economist, I’m always inspired to try to understand, from the supplier’s perspective, what factors influence their decisions,” says Yin. “Having those larger retailer partners may be good for suppliers. But in pricing negotiation, larger retailers—like Target or Walmart—can be very aggressive.” To fully explore these influencing factors, Yin and her co-researchers, Yuhong He of CSU Fullerton, and Saibal Ray of McGill University, teamed up to create an analytical study titled “Retail Power in Distribution Channels: A Double-Edged Sword for Upstream Suppliers.” It was recently published in Production and Operations Management’s Journal on Financial Times.
Learning From Giants
other potential carriers like LG or Sony down the line.”
When Downstream Retailers Have the Upper Hand Considering Walmart and Google inspired Yin and her team to dig deeper. From the supplier’s perspective, they wanted to comprehend how concerned they should be about the bargaining power of dominant downstream retailers, and how that dominance might threaten their profit share. “What we really wanted to understand,” says Yin, “was under what conditions would suppliers actually prefer to work with those dominant retailers compared to what conditions would be better off providing incentives to smaller retailers to offset losses from the dominant ones.”
“One of the motivations for our research was a case study one of my co-authors did in the MBA class we were both in,” says Yin. “That study was about Proctor Yin and her team used economic and analytical and Gamble [P&G] and how Walmart—their largest modeling to find answers, also known as game theory. retailer—might become too “Our paper was about powerful in the sense that determining suppliers’ supply they could demand a much “Having those larger retailer partners chain preferences based on lower wholesale price. So, downstream retailer structure. P&G tried to provide an may be good for suppliers. But in pricing For example, when does it incentive program to their make sense to choose more negotiation, larger retailers—like Target smaller retailers like Dollar symmetrical retailers, and General, for example, and when is it better to go with or Walmart—can be very aggressive.” an asymmetrical option?” offer downsized packaging to those suppliers to “Those answers depended counterbalance any profit losses they might experience on a variety of factors,” explains Yin. “We looked at from larger suppliers like Walmart or Target.” customer types, product differentiation, retailer symmetry Having more prominent retailer partners is suitable for suppliers, providing them with a more significant market share. Still, in pricing negotiation, larger retailers can be aggressive regarding how much profit they want the suppliers to share. Around the same time, Yin and her colleagues read their fair share of articles about how Google approached launching its new Android OS. “Google’s first major adopter was Samsung,” says Yin. “We wondered how Google might counterbalance Samsung’s dominance in the smartphone market to get better profit share from 12
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and other factors to analyze different scenarios and determine which actions provide suppliers with the best possible outcomes.”
There’s More Than One Side of Every Story As the team considered, their analytical model included several control factors. “We know there’s always more than one side of the story,” says Yin. “It’s not as if suppliers always prefer the larger retailers in favor of the smaller ones. We wanted to learn which factors would help the supplier determine which structures would benefit the suppliers the most.”
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Yin found that one key factor was product differentiation. “Given the competitiveness of the product offered by the supplier,” she says, “we had to consider how product substitutability impacts the supplier’s decision. So, once we understand how the product characteristics influence the supplier’s decisions, we can see how this impacts the mix of retailers they choose.” They found that, depending on the market, it all boils down to a few simple factors. “The bottom line is that it comes down to product characteristics and whether you’re in a market that sells competitive or differentiated goods,” says Yin. “For suppliers of consumer goods, when you have substitutable products, you shouldn’t worry too much about those dominant retailers. That was quite surprising because it’s contradictory to the P&G incentive case study we mentioned earlier. In reality, Walmart didn’t care about that at all.” Their research told a different story for suppliers in other markets, where products are highly differentiated. “For suppliers of electronic goods, like cell phones or software, they should actually prefer to have two symmetric retailers,” says Yin. “If the products are very similar, the supplier should prefer an asymmetric market. Those dominant retailers are better for the supplier. But, if the products themselves are very different, then the dominant retailers are not good for the suppliers. It’s all about product characterization.”
Finding Your Place in the Supply Chain Yin and her team took a closer look at how outside competitors influenced supplier preferences. “Depending on how strong that external competitor brand is in the market, the supplier may prefer to favor those dominant
retailers,” says Yin. “Even if it means negotiating on profit share. Coca-Cola is a good example of this. A few years ago, they decided not to sell their products through Walmart because they didn’t want to give up any more margins. But they quickly realized this was a mistake. They had to come back and agree to Walmart’s terms. What Coca-Cola found out was that they cannot lose Walmart.” Overall, they were quite pleased by the results of their study. “I was surprised that, relative to the conventional wisdom, we discovered something new,” she says. “In our model, we realized that the P&Gs of the world shouldn’t worry much about the Walmart’s and Targets, given the product market they’re in.”
When to Proceed With Caution The biggest takeaway seems to be the importance of asking the right questions. “From a supplier’s perspective, there a few things you need to ask yourself,” says Yin, “like ‘What kind of product do we offer? Is our market competitive? Is there high differentiation in our product?’ The answers help you know whether you should sell exclusively into the larger retailers or sell through multiple retailers in the supply chain.” Suppliers can also consider whether the retailer controls market share. If this is the case, proceed with caution. In some cases, market share may not make as much difference. In others, it could make all the difference in the world.
Shuya Yin, faculty at the UCI Paul Merage School of Business since 2005, primarily researches issues in decentralized supply chains, using non-cooperative and cooperative game theory. Yin also takes special interest in product-return policies among channel members, secondary market for durable products, alliances of players in selling and buying and management of information flow on uncertain demand. Yin has taught undergraduate, MBA, and PhD level courses, including game theory in supply chain management, management science, and analytical decision-making models for management. Her work has been published Operations Research Letters, Manufacturing and Service Operations Management and Marketing Science. RESEARCH IN ACTION
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Research Abstracts Latest Published Work by Merage School Faculty Members
Accounting Abstracts Professor Terry Shevlin Title: “A Tale of Two Forecasts: An Analysis of Mandatory and Voluntary Effective Tax Rate Forecasts” Co-authors: Novia X. Chen (Ph.D. alumna) and Sabrina Chi (Ph.D. alumna) Accepted at: The Accounting Review (Journal on Financial Times Top 50 list) Disclosure theory predicts that the likelihood of voluntary disclosures increases with the level of noise in mandatory disclosures. We test this prediction by exploiting a unique setting where firms simultaneously provide two forecasts of the same metric – annual effective tax rates (ETRs). We find that managers are more likely to issue voluntary ETR forecasts when mandatory ETR forecasts contain more noise due to tax complexity, suggesting that managers resort to voluntary disclosure when mandatory disclosure constrains their ability to convey private information. Using analysts’ ETR forecast revisions to assess the informativeness of the two ETR forecasts, we find that both forecasts are incrementally informative. In addition, analysts weight voluntary ETR forecasts more heavily, especially when voluntary ETR forecasts are non-GAAP based and when discrete items are present. Overall, we provide evidence on the relation between and the informativeness of voluntary and mandatory disclosures by examining two competing forecasts issued simultaneously.
Information Systems Abstracts Professor Sanjeev Dewan Title: Personalized Ranking at a Mobile App Distribution Platform Co-authors: Shengjun Mao (PhD alumna) and Ian Ho (PhD alumnus) Accepted at: Information Systems Research (Journal on Financial Times Top 50 list) The ease of customer data capture online has enabled widespread personalization of content and services in digital platforms. We examine personalization in a hitherto unaddressed context, that of mobile app distribution. Specifically, we develop a comprehensive framework for the personalized ranking of app impressions, leveraging revealed preferences embedded in consumer clickstream data. To improve platform revenues, the framework jointly accounts for consumer utilities and cost per action (CPA) margins, which is the revenue earned by the platform per app installation. To this end, we specify a structural model of click and installation choices, jointly estimated as a function of a comprehensive set of quantitative (screen rank, quality, and popularity)
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and qualitative (textual data of app titles, descriptions, and reviews) covariates. Our novel data set is at the granular user-impression level and uniquely includes app CPA margins paid to the platform. We conduct a series of policy experiments to quantify the value of personalization. Specifically, we show that a personalized hybrid margin and utility-margin ranking scheme outperforms other personalized methods, including those based on utilities alone or a combination of utilities and margins. Overall, our analysis demonstrates how platforms could leverage routine consumer clickstream data to personalize the ranking of app impressions, thereby more effectively monetizing mobile app distribution.
Professor Sanjeev Dewan Title: Self-Regulation and External Influence: The Relative Efficacy of Mobile Apps and Offline Channels for Personal Weight Management Co-authors: Hyeokkoo Eric Kwon, Tae Kim, and Wonseok Oh Accepted at: Information Systems Research (Journal on Financial Times Top 50 list) This study contributes to the IS literatures on mobile health interventions and omnichannel management by examining the relative effectiveness of mobile and offline channels in facilitating personal weight management. Drawing on the social cognitive theory of self-regulation, our empirical analysis utilizes a System GMM approach applied to panel data on customers enrolled in a weight loss program that delivers services through multiple channels, including a mobile app and offline office visits. Our results show that the use of the mobile app is positively associated with weight management by both free and paid users. For paid users, who have access to the mobile app and office visits, usage of both channels is associated with short-term weight loss. Furthermore, the two channels function as substitutes for one another, with users able to compensate for infrequent offline store visits through more intense mobile app usage. In the long term, however, only mobile app usage (and not offline store visits) contributes to the sustainability of weight loss, as reflected in reduced weight variability and lower overall failure rate. Qualitative evidence gleaned from interviews with actual customers substantiated the self-regulation mechanism enabled by mobile app usage. Additional empirical analyses further reveal that frequency and granularity of mobile app usage are positively associated with weight loss. We also found that individuals exposed to low performance pressure benefit more fully from mobile app usage. The results are robust to endogeneity concerns and alternative measures of the key variables. Overall, our analysis sheds light on the important role of a self-regulatory mobile app in a multichannel setting of personal weight management, with useful implications for research and practice.
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Marketing Abstracts Professor Eric Spangenberg Title: “Collect them all! Increasing product category cross-selling using the incompleteness effect” Co-authors: Christoph Bauer, Katie Spangenberg, and Andreas Herrmann Accepted at: Journal of the Academy of Marketing Science (Journal on Financial Times Top 50 list) The familiar state of tension associated with an incomplete collection or an unfinished jigsaw puzzle is predicted by Lewin’s (1926; 1935) field theory. This feeling evokes a drive to completion—a phenomenon we label the incompleteness effect—which is useful to marketers endeavoring to cross-sell products and services. In three studies using online product configurators, we find that consumers faced with visual representations of incomplete product category collections, such as an evening drinks menu or a puzzle with its pieces representing services, are significantly more likely to complete the collection or finish the puzzle by cross-purchasing from a greater number of product or service categories as compared to those using a conventional online shopping format. We identify theoretical mechanisms through which the incompleteness effect works and potential moderators for the effect. Findings suggest that managers offering products or services across several categories can increase cross-selling by eliciting people’s drive toward completion.
Operations and Decision Technologies Abstracts Professor Zvi Drezner Title: “An Extension of the Gravity Model” Co-authors: Tammy Drezner and Dawit Zerom Accepted at: Journal of the Operational Research Society We introduce a practically useful extension of the gravity model. When specifying the distance decay function, the basic gravity model and its variants use actual distance or travel time. But, in reality, travel time to a retail outlet is only a fraction of the time spent on shopping trips. Hence, ignoring “time spent in facilities” may bias market share estimates in a competitive environment. To address this issue and by-passing the need to know time spent on facilities, we propose a simple extension of the gravity model by introducing an extra distance/travel time parameter. For its implementation, zip code (or neighborhood) information of intercepted patrons at facilities is sufficient to determine the extra distance making it practically appealing. To illustrate the estimation and also empirically validate the proposed approach, we analyze a shopping malls application.
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Professor Zvi Drezner Title: “Extensions to The Weber Problem” Co-authors: Richard L. Church and Arie Tamir Accepted at: Computers and Operations Research One of the classics in the field of Location Science is the book on the theory of industrial location by Weber (1909). Weber used a simple construct comprised of a 3-point triangle to describe important issues, including where raw materials for manufacturing are sourced. Virtually all of the research conducted in the last 50 years related to Weber’s construct has overlooked major elements of his work. This includes the issue of sourcing needed raw materials, which can be limited, as an integral part the location problem. This paper explores one form of raw material sourcing first described by Weber in which each raw material source is limited by a fixed capacity. We show that most instances of this location problem are non-convex as well as propose a solution procedure. We also explore a related problem where the facility itself can be of limited capacity and not all demands can be served. These two models can serve as building blocks for a greater exploration of many of the important problem facets proposed by Weber in his seminal work.
Professor Zvi Drezner Title: “Extremely Non-Convex Optimization Problems: The Case of the Multiple Obnoxious Facilities Location” Co-author: Pawel Kalczynski Accepted at: Optimization Letters The multiple obnoxious facilities location problem is an extremely non-convex optimization problem with millions of local optima. It is a very challenging problem. We improved the best known solution for 33 out of 76 test instances. We believe that the results of many instances reported here are still not optimal and thus better objective function values exist. We challenge the optimization community to design procedures that will further improve some of the results reported here. Optimality can be proven for a small number of new facilities. Proving optimality for a large number of facilities would be an achievement.
Professor Zvi Drezner Title: “Finding Optimal Solutions to Several Gray Pattern Instances” Co-authors: Pawel Kalczynski, Alfonsas Misevičius, and Gintaras Palubeckis Accepted at: Optimization Letters In this paper we compare two new binary linear formulations to a standard quadratic binary program for the gray pattern problem and solved all three by the Gurobi solver. One formulation performed significantly better and obtained seven optimal solutions that were not proven optimal before. It is interesting that the formulation that performed best is based on significantly more variables and constraints. RESEARCH IN ACTION
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Professor Zvi Drezner Title: “Less is more: Discrete starting solutions in the planar p-median problem” Co-authors: Pawel Kalczynski and Jack Brimberg Accepted at: TOP This paper examines the performance of improvement search as a function of the quality of the starting solution in the planar (or continuous) p-median problem. We show that using optimal solutions of the analogue discrete p-median problem as the starting solution for heuristic improvement algorithms, as recommended in the literature, can actually lead to inferior performance. That is, good starting solutions obtained in the discrete space with a fraction of the effort can actually be better, a counter-intuitive result that illustrates in a different context the less is more principle recently advocated in the literature.
Professor Zvi Drezner Title: “Less is more: Simple algorithms for the Minimum Sum of Squares Clustering Problem” Co-authors: Pawel Kalczynski and Jack Brimberg Accepted at: IMA Journal of Management Mathematics The clustering problem has many applications in machine learning, operations research and statistics. We propose three algorithms to create starting solutions for improvement algorithms for the minimum sum of squares clustering problem. We test the algorithms on 72 instances that were investigated in the literature. We found five new best known solutions and matched the best known solution for 66 of the remaining 67 instances. Thus, we are able to demonstrate that good starting solutions combined with a simple local search get results comparable with, and sometimes even better than, more sophisticated algorithms used in the literature.
Professor Zvi Drezner Title: “Multiple Obnoxious Facilities with Weighted Demand Points” Co-authors: Pawel Kalczynski and Atsuo Suzuki Accepted at: Journal of the Operational Research Society In this paper we define and heuristically solve the multiple weighted obnoxious facilities location problem maximizing the minimum weighted distance between facilities and a given set of communities. Each community may have a different weight because different communities may be affected differently by a facility. The distance between pairs of facilities must exceed a given minimum distance. Solving the problem by the
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multi-purpose non-linear solver SNOPT from random starting locations performed poorly. Three approaches are proposed to generate “good” starting solutions. The best known solutions were established by these approaches.
Professor Zvi Drezner Title: “Review of Obnoxious Facilities Location Problems” Co-author: Richard L. Church Accepted at: Computers and Operations Research In this paper we review research on the location of facilities that have a negative impact on surrounding communities which are defined in the literature, for example, as obnoxious, undesirable, or noxious facilities. Overall, the literature on obnoxious facility location is quite large, and because of this we have even been somewhat selective in that we emphasize here the types of problems that have emerged in the literature but not all of the algorithms and specialized heuristics that have been developed to solve these problems. We do, however, give details as to how specific problems have been approached as optimization problems. We have also attempted to cover the historical roots of this research field.
Professor Zvi Drezner Title: “The Obnoxious Facilities Planar p-Median Problem with Variable Sizes” Co-author: Pawel Kalczynski Accepted at: OMEGA The obnoxious facility location problem is to locate facilities that have a negative impact on communities (being “obnoxious”) and being farther from communities is preferred. For example, noisy or polluting factories, garbage dumps, airports, should not be located close to communities. Such facilities also serve the communities, otherwise they are not needed. Our goal is to minimize the system’s operating cost subject to a minimum distance requirement from communities. The multiple obnoxious facility problem is usually defined as locating several facilities maximizing the minimum distance between facilities and communities. However, not all facilities have the same impact on communities. In this paper we assume that the size of a facility depends on the volume of service provided by it. Larger garbage dumps, for example, should be located farther away from communities. The problem is extremely non-convex and available non-linear solvers are not performing well. We designed a special starting solution for non-linear solvers that provides better objective values, in a shorter run time.
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Organization and Management Abstracts Professor Patrick Bergemann Title: “Manufacturing Productivity with Worker Turnover” Co-authors: Ken Moon, Dan Brown, Andrew Chen, James Chu, Ellen Eisen, Greg Fischer, Prashant Loyalka, Sungmin Rho, and Joshua Cohen Accepted at: Management Science (Journal on Financial Times Top 50 list) Abstract: To maximize productivity, manufacturers must organize and equip their workforces to efficiently dispatch variable workloads. Their success depends on their ability to assign experienced and skilled workers to specialized tasks and coordinate work on production lines. Worker turnover may disrupt such productivity. We use staffing, productivity, and pay data from within a major consumer electronics manufacturer’s supply chain to study how firms should manage worker turnover and its effects using production decisions, wages, and inventory. We find that worker turnover impedes coordination between assembly line co-workers by weakening knowledge sharing and relationships. Publicly available unit-cost estimates imply that worker turnover accounts for $206–274 million in added direct expenses alone from defectively assembled units failing the firm’s stringent quality control. To evaluate managerial alternatives, we structurally estimate a dynamic equilibrium model (Experience-Based Equilibrium, Fershtman and Pakes 2012) encompassing (1) workers’ endogenous turnover decisions and (2) the firm’s weekly planning of its production scheduling and staffing in response. In counterfactual analyses, a less turnover-prone, hence more productive, workforce significantly benefits the firm, reducing its variable production costs by 4.5%, or an estimated $928 million for the studied product. Such benefits justify paying higher efficiency wages even to less skilled workforces; further, interestingly, rational inventory management policies incentivize self-interested firms to reduce, rather than tolerate, turnover.
PhD Student Florencio Portocarrero Title: Disposition activation during organizational change: A meta-analysis Co-author: Katerina Gonzalez and Michael Luma Ekema Accepted at: Personnel Psychology Abstract: How do dispositions affect an individual’s attitudes and behaviors during organizational change? In this systematic and meta-analytic investigation, using data from 154 articles (168 independent samples), we classify a broad set of dispositions into a previously validated two-factor dispositional model. This model distinguishes between two dispositional factors that shed light on individuals’ adaptation to
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change: positive self-concept and risk tolerance. Drawing from trait activation theory, we examine the magnitude of effects between each dispositional factor and various groups of outcomes: explicit change responses (e.g., resistance), well-being (e.g., stress), work attitudes (e.g., job satisfaction), and work behaviors (e.g., job performance). We also evaluate the moderating effects of the change context (its stage, dimensions, and types), national context (cultural dimensions), and study design. To this end, we conducted multi-level meta-analyses using samples of employees who experienced organizational change. Our findings support the notion that during organizational change, positive self-concept and risk tolerance are valid predictors across outcome categories and demonstrate that positive self-concept is more strongly associated with several employees’ change responses and work attitudes than risk tolerance. These associations vary depending on the type of outcome, the stage of change, the national cultural dimension, and the study design, and to a lesser degree, the dimension and type of change. Finally, we offer theoretical and empirical research directions for organizational change and personality scholars.
Strategy Abstracts Professor John Joseph Title: “Sequencing Innovation Rollout: Learning Opportunity versus Entry Speed” Co-authors: Ronald Klingebiel and Valerie Machoba Accepted at: Strategic Management Journal (Journal on Financial Times Top 50 list) Abstract: Our article examines the deliberate creation of learning opportunities in the global rollout of innovations. Some firms launch in only a subset of markets at first, with later launches being conditional on debut-market performance. Such sequencing decreases the downside of potential innovation failure but increases the downside of potential competitive preemption. Consistent with this trade-off, handset makers during the feature-phone era sequence rollout more often when innovations are novel. Also consistent is that sequencing seems to respond to firms’ past experience with failure and preemption, and that it begins in markets offering strong signals of success and failure—markets with competing innovations and sophisticated consumers, respectively. Our findings contribute to the understanding of entry strategy and opens avenues for researching intentional organizational experimentation.
RESEARCH IN ACTION
SUMMER 2022
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Illustrations by Emily Young ’20