Knowing the challenges of collaborating with a competitor in developing new technologies, firms sometimes still choose a competitor instead of a noncompeting technology provider. To explore why, this study adopts an inter-organizational trust view to explain the formation of a technology development outsourcing relationship. Using a vignette-based experiment with procurement managers, results show how three product- and competitor-related factors: product newness, competitor market size, and product substitutability, affect a purchasing manager's intention to choose a competitor. The post hoc analysis confirms the two sources of inter-organizational trust, competence and integrity, in explaining the influences of the three factors. Using results from two waves of interviews, a behavioral experiment and a rational agent math model, this study explains competitor selection behaviors in a triadic context with a noncompeting provider as the default option. Contributing to the interface of technology outsourcing, co-opetition in innovation, and supplier selection literature, these findings can help managers assess product and competitor attributes in deciding whether to collaborate with a competitor in a technology development outsourcing context.

In response to rising privacy concerns from potential data misuse fueled by digital development, policymakers have implemented various privacy regulation policies. These regulations are progressively enhancing consumers’ control over their personal data, making it commonplace for them to make informed decisions about data sharing. Using an analytical framework, we examine how consumers’ data control rights shape consumer-firm interactions and decisions. Interestingly, we find that the data rights regulation consistently motivates firms to set higher product prices. Moreover, we show that this regulation for consumers can confer benefits onto firms in both monopoly and duopoly settings. In a duopoly market, data rights regulation may counter the Matthew effect by redistributing competitive advantages from superior to inferior firms, reducing monopolization risks. Unfortunately, our findings indicate that granting consumers data control rights can reduce their surplus, as they may have to pay higher prices for the privacy security these rights provide.

Some suppliers adopt a single rollover strategy to periodically introduce new or updated products while phasing out the original versions; however, their retailers may strategically carry the discontinued old products after the launch of the new product. This paper demonstrates the interaction between product innovation and strategic inventory in a bilateral monopoly framework. We model a supplier that sequentially sells two product versions (original and updated) to a retailer in two periods. The supplier determines the innovation level of updated products, and the retailer may carry original products which are exclusively supplied in period 1 to period 2. We find that increased inventory holding costs, which reduce the retailer's incentive to stock the original product, may negatively impact innovation for the updated product but benefit the supply chain members. In addition, due to the supplier’s ability to innovate, the retailer's strategic inventory leads to an uncommon lose-lose situation for both the supplier and the retailer when the inventory holding cost is high, a result which deviates from the strategic inventory literature. Our research suggests that policymakers should use appropriate inventory taxes and subsidies to maintain moderate inventory holding costs in order to foster innovation. Moreover, suppliers should strategically manage retailer inventory costs through customized storage and subsidy contracts to maximize profitability. Lastly, to avoid the lose-lose scenario caused by strategic inventory, supply chain members should consider arranging prior commitments to not hold inventory or employ the use of Vendor Managed Inventory (VMI).

This paper investigates a new business phenomenon where platforms nurture contract manufacturers (CMs) by sharing market demand information. We consider a game-theoretical model that an original brand manufacturer (OBM) outsources the production to a CM, who encroaches the end-customer market with a competing product. The CM's production cost can benefit from economies of scale. Both the OBM and the CM sell their product through a common online platform. The platform has accurate market demand information and determines whether to share with the CM. When it does, a signaling game between the OBM and the CM arises. Unlike a typical signaling game, we show that each type of CM may have an incentive to mimic the other type. This is driven by the CM's two opposite drivers: wants the OBM to order more to achieve economies of scale, versus wants the OBM to order less to reduce competition at the end-customer market. We also find that information sharing may lead to lower demands and higher prices, and customers and social welfare may suffer as a result. Lastly, due to this information sharing option, we demonstrate how economies of scale can hurt the platform and the OBM.

When selling online, manufacturers can either sell directly to customers via the platform (agency channel), sell the platform their products (reselling channel), or engage in both channels simultaneously. Manufacturers typically operate with limited capacity, and this information is often not disclosed to platforms. Our study develops a screening game framework in which the online platform presents a menu of quantity-price pairs contracts to the manufacturer whose capacity information is private. The manufacturer then determines the quantity it will allocate to both channels, reselling and agency. We find the manufacturer prefers both agency and reselling channels under the asymmetric information game. We also show that a manufacturer with high capacity benefits from keeping its capacity information private, but a manufacturer with low capacity does not. Furthermore, the manufacturer and the platform may not benefit from more production capacity of the manufacturer and if capacity of the manufacturer is sufficiently low, then it may be advantageous for the platform not knowing the manufacturer's capacity. Lastly, asymmetric information on capacity could lead to higher consumer surplus. Our study offers insights for manufacturers and online platforms, assisting them in making strategic decisions and navigating the dynamics of information sharing within the online retail landscape.

Operations and Supply Chain Management (OSCM) has continually evolved, incorporating a broad array of strategies, frameworks, and technologies to address complex challenges across industries. This encyclopedic article provides a comprehensive overview of contemporary strategies, tools, methods, principles, and best practices that define the field's cutting-edge advancements. It also explores the diverse environments where OSCM principles have been effectively implemented. The article is meant to be read in a nonlinear fashion. It should be used as a point of reference or first-port-of-call for a diverse pool of readers: academics, researchers, students, and practitioners.

Counterfeits are a persistent problem in online marketplaces, in particular regarding credence goods (e.g., nutritional supplements), as their qualities are difficult or impossible to evaluate even after consumption. Concerned about product quality, customers frequently rely on external signals, such as product badges based on ratings. However, even product ratings are not foolproof as unethical sellers may acquire fake positive reviews to exploit product ratings and badge systems. To analyze the impact fake reviews have on credence goods, we consider a two-stage competition between an authentic seller and a deceptive counterfeiter. The market consists of two types of consumers: savvy customers, who understand that endorsement badges are product-dependent and not seller-dependent, and novice customers, who mistakenly believe product badges testify to a seller's authenticity. In the first stage, both sellers simultaneously decide on whether to acquire fake reviews, which partially influences if the product receives an endorsement badge. In the second stage, both sellers simultaneously set their prices and customers make purchasing decisions. Our results indicate that, in equilibrium, the authentic seller does not acquire fake reviews, while the counterfeiter may do so to mislead customers. Moreover, the amount of fake reviews is decreasing in the fraction of savvy consumers, suggesting that online platforms can combat fake reviews by, for instance, clearly highlighting that badges are product-dependent. We also find that having the option to acquire fake reviews may benefit both sellers but always hurts consumers, emphasizing the need for regulation to protect consumers.

Cap-and-trade, a widely used carbon regulation policy, encourages firms to adopt carbon abatement technologies to reduce emissions. Traditional supply-chain literature on this policy assumes symmetrical information, overlooking the fact that carbon abatement efforts and costs are often private and vary significantly across geographies, industries, and pollutants. In this paper we explore a dual-channel setting involving a manufacturer and a retailer, where the manufacturer, subject to cap-and-trade regulations, has undisclosed information about its carbon abatement costs. Our findings reveal that high abatement costs can paradoxically benefit the manufacturer, the environment, consumers, and overall social welfare. Our result also cautions that a higher carbon trading price (e.g., due to more ambitious emission reduction targets) can disincentivize the manufacturer from investing in carbon abatement. Moreover, a higher production cost, while resulting in lower market output, can increase pollution generation. We contribute the following to the practitioner debate about the impact of carbon policies: for an industry with a large market size, our findings lend support to governments to implement a cap-and-trade policy, because the manufacturer, customers and social welfare can be better off under a cap-and-trade policy than under a tax policy or no carbon policy. Additionally, we suggest that in such industries, governments need not enforce information transparency within the supply chain.

It is well established that a manufacturer generally benefits from encroachment with a profitable direct channel and may also benefit from using encroachment as a threat (i.e., without sales in the direct channel); the retailer may also benefit from both encroachment strategies. Our study provides new insights into the manufacturer encroachment literature by considering the upstream manufacturer's production economies of scale. Contrary to conventional wisdom, we show that an increasing level of economies of scale may reduce the manufacturer's profit if the manufacturer encroaches. Furthermore, we find that under strong economies of scale, refraining from encroachment may be the optimal strategy, even if encroachment could increase the manufacturer's wholesale profit. This finding suggests that a manufacturer may choose not to encroach solely due to profit losses in direct selling. Interestingly, we also find that the manufacturer can benefit from encroachment by maintaining an unprofitable direct channel with sales, provided that the level of economies of scale is below a threshold. Moreover, our findings reveal that the retailer can benefit from manufacturer encroachment only when the level of economies of scale remains below this threshold, and that an increasing level of economies of scale reduces the likelihood that the retailer can benefit.

Purpose The purpose of this study is to investigate supply chain transparency in the context of remanufactured consumer goods. Supply chain transparency (SCT) is increasingly gaining importance for the relationship between firms and their final customers. Applied to a remanufacturing context, SCT may entail providing detailed information regarding the remanufacturing and return process, which can then be shared with consumers to alleviate potential quality concerns, decrease perceived disgust and ultimately increase consumers’ intention to purchase remanufactured goods. Design/methodology/approach Leveraging supply chain transparency embedded in signaling theory as well as the marketing framework of the hierarchy of effects model, this study employs a vignette-based experiment to investigate how process information, who performed the remanufacturing (remanufacturing firm: original manufacturer or a third party), and product information, the timeframe between the original purchase and return (length of return: short vs long), impact consumers’ intention to purchase remanufactured goods. Findings We find that information about the length of return has a significant impact on consumers’ intention to purchase the remanufactured good, while who performs the remanufacturing does not impact their decision-making. Originality/value Our results provide an overview of the externalities of providing supply chain transparency through the means of blockchain information on consumer purchasing behavior for remanufactured goods. Using SCT to engage with end customers in consumer goods is in its infancy and our work provides a basis for firms to invest in this in the B2C context.

It is not uncommon for customers who intend to buy a used product in the secondary market to end up with a counterfeit because they have imperfect information about product authenticity. Blockchain is being piloted as a cutting-edge solution to this challenge. We use a two-period game to study the impact of utilizing blockchain to combat counterfeit products in the secondary market. We show that, even when the cost of implementing blockchain is negligible, the manufacturer can be better off incurring reputation damage than adopting blockchain. Further, the used goods reseller can be worse off from blockchain, even though that seller is not responsible for the implementation cost and benefits from blockchain's signaling capability. We also demonstrate that the counterfeiter can benefit as a result of blockchain. When the quality of a fake product is sufficiently low, blockchain lowers consumer surplus. The winning situation of blockchain between the manufacturer, reseller, and customers is achieved only when the fake product is of intermediate quality. Blockchain can be powerful in situations when used products have a low perceived quality; otherwise, blockchain may not be ideal.

Governmental and industry standards enforce responsibility in supply chains. However, supplier violations often impose costs on buyers, leading to misaligned incentives. Buyer audits act as proactive measures to ensure supplier compliance, while reactive measures hold non-compliant suppliers accountable for damages. We examine the interaction between buyer audits and supplier safety compliance when reputable buyers and a supplier share damages from noncompliance. Buyers and the supplier set their audit and safety levels, respectively, with the supplier bearing a fraction of the damage cost for under-compliance. Our findings indicate that stricter audits enhance supplier safety when damage costs are low but not when costs are high. Likewise, joint audits can compromise supplier safety at high damage costs but enhance it at lower costs. However, shared audits can result in better supplier safety than joint audits. Finally, with high damage costs, suppliers profit more from joint audits than independent audits, while buyers achieve maximum profits in audit scheme that has audit level sufficiently higher than the others.

It has become increasingly typical for the upstream suppliers to invest in direct sales channels and compete with the downstream manufacturer. The oft-called phenomenon of supplier encroachment allows the supplier to benefit from both the wholesale to the manufacturer and the sale to end customers. However, from the manufacturer's perspective, encroachment may suggest the supplier's lack of reliability, which can contribute to the breakdown of supplier-manufacturer collaboration. In response to the supplier's encroachment, the manufacturer can change its supplier(s); while the encroaching supplier might face consequences (e.g., the manufacturer dropping the supplier to seek new partnerships). The existence of future outsourcing alternatives for the manufacturer and the future consequences for the supplier has not been studied in the extant literature. In this paper we propose a two-period game-theoretic approach to supplier encroachment; where the downstream manufacturer outsources the production to a group of suppliers that are characterized by a low- quality supplier without encroachment capabilities, and a high-quality supplier with encroachment capabilities, i.e., capable of launching its own independent product. We show that (a) an increase in the quality of the encroaching supplier's independent product can convince the manufacturer to redirect its wholesale order from the non-encroaching supplier to the encroaching supplier and simultaneously boost the manufacturer's profits, (b) as the quality of the non-encroaching supplier is improved, the manufacturer may opt to drop the non-encroaching supplier and redirect its wholesale order to the encroaching supplier instead, and (c) an improvement in the qualities of the encroaching and non-encroaching suppliers might decrease their corresponding profits. Accordingly, we offer actionable guidelines for practitioners; in particular, we help practitioners navigate the competitive outsourcing landscape under threat of encroachment and advise them on the counter-productive impacts of quality improvements.

We consider a manufacturer that has a capacity constraint and allocates capacity according to the lexico-graphic mechanism, which involves assigning different priority levels to different retailers. The manufac-turer sells products to two competing retailers: a high-priority one and a low-priority one. The manufac-turer's capacity information is either public or private, which makes our paper the first to examine the impact of capacity information on the capacity allocation problem of a manufacturer. We investigate two contract types: wholesale-price and wholesale-price-and-quantity. Our results show that when capacity information is public, the manufacturer will always prefer a wholesale-price contract. Moreover, it can benefit from a lower capacity limit (capacity scarcity) due to the retailer's capacity-withholding behav-ior. Interestingly, the high-priority retailer may prefer that the manufacturer use a wholesale-price-and-quantity contract to limit how many items the retailer can order. When capacity information is private, the retailer can order more than the capacity of a low-type manufacturer to reveal the manufacturer's capacity level under the wholesale-price contract. At the same time, under a wholesale-price contract, the manufacturer may not want to supply all the order quantities to the retailers to avoid disclosing its capacity level. We find that pooling equilibrium can survive the Intuitive Criterion, and the manufacturer cannot benefit from capacity scarcity and withholding no longer occurs. Lastly, contrary to the case where capacity information is public, the manufacturer may prefer the wholesale-price-and-quantity contract when capacity information is private. Therefore, it is possible to achieve a win-win situation between supply chain partners with the right contract type, which is not possible when capacity information is public. (c) 2022 Elsevier B.V. All rights reserved.

This article examines the information acquisition strategy of a dual‐channel supply chain, in which a manufacturer sells a product both through a retailer and through its own direct channel. Either the manufacturer or the retailer can acquire demand information from a third‐party marketing research company. The manufacturer first decides whether or not to acquire such information, and then the retailer decides whether or not to acquire information. This setup implies a signaling game (either the manufacturer or the retailer may have private demand information) with an endogenous information structure. We identify conditions under which neither of the firms will acquire demand information, even when the cost of implementation is negligible. We also show that information acquisition can have a negative impact on the retailer, the supply chain, customers, and society. The manufacturer who acquires information always prefers to share information with the retailer, which benefits the retailer. The retailer who acquires information, however, may not want to share information with the manufacturer. The managerial insight of our paper is that firms that have more accurate demand data must develop strategies for the appropriate use of that information, both in their own planning and within the context of their dual‐channel supply chain.

Firms often must procure inventory/capacity before knowing what the demand will be, so there is a potential for a mismatch between inventory and demand, the “inventory risk.” We show that, because of inventory risk, an increase in the number of competitors can lead to an increasing trend in market prices. Furthermore, we show that, ceteris paribus, because of how inventory risk impacts competitive behavior, firms may prefer to incur inventory risk rather than to avoid it. To illustrate the robustness of our results, we establish these findings using three complementary methodologies: (i) using data from a classroom experiment, (ii) using a quantal response equilibrium simulation to capture realistic irrationalities in managerial decisions under competition, and (iii) using a fully rational Nash equilibrium model to capture the impact of the competition per se. That all three methods lead to identical qualitative findings reinforces the main message of our paper: Inventory risk reverses the standard intuition for how an increase in the number of competitors impacts prices.

When ordering food from online platforms, consumers often specify a tip that they will give to delivery workers, in hopes of receiving a fast delivery. Upon completion of the delivery, consumers may be able to reduce their tip if the platform implements an adjustable tipping policy (e.g., Uber Eats). In this case, some consumers may trick workers by promising a large tip before delivery but deliberately reducing the tip to zero once the delivery is completed; a practice termed "tip baiting." By contrast, consumers are not allowed to ex post reduce the tip in the presence of a non-adjustable tipping policy (e.g., DoorDash). In this paper, we develop a multi-stage duopoly model to examine the impacts of different tipping policies (adjustable or not) on platforms’ profits, consumers’ tipping behavior, and workers’ delivery performance. There are two types of consumers: selfish consumers, who engage in tip baiting, and fair consumers, who do not. We find that regardless of the fraction of selfish consumers, both platforms prefer the adjustable tipping policy over the non-adjustable one. This result has managerial implications that platforms with the non-adjustable policy can further enhance their profits by switching to the adjustable policy. Further, we show that platforms only have incentives to keep the fraction of selfish consumers sufficiently low, but not lower. However, the existence of selfish consumers always hurts those honest fair consumers and workers. Hence, we advocate that third-party regulators need to intervene to safeguard fair consumers’ and workers’ rights, as platforms may lack the incentive to do so beyond a certain point. Interestingly, we also find that platforms' price and wage can be negative under certain conditions.

In today's complex business environment, conflicting relationships among firms are becoming the norm. Firms can be supply chain partners, but at the same time, they can be competitors. Moreover, capacity is often limited. Prior research has examined this problem in a perfect information setting, but in reality, a supplier often has private information in its own capacity. We consider a signaling game in which the supplier has private information in its own capacity. The supplier first sets the wholesale price. The buyer then decides on the order quantity, and the supplier decides whether or not to encroach on the end-customer market. We find that the supplier can be worse off while the buyer can be better off from the supplier's private information on capacity. Moreover, when the capacity information is private, it is more likely for a supplier to encroach on the end-customer market. Our paper also shows that capacity withholding is less likely when information is asymmetrical. Finally, we find that both firms can simultaneously benefit from the supplier's capacity constraint. Our paper demonstrates that keeping information on the capacity level private can be harmful, so the supplier should find ways to disclose its capacity information credibly (e.g., by using Electronic Data Interchange (EDI) or linking its database with the buyer). However, the buyer should be cautious about adopting these technologies. Furthermore, not having information about supplier capacity not only increases the possibility of supplier encroachment, but also makes strategic inventory (capacity withholding) less important. & COPY; 2022 Elsevier Ltd. All rights reserved.