Week3_Ray et al(2009)_Xue Guo
Competitive Environment and the Relationship Between IT and Vertical Integration
In this paper, authors mainly discussed two questions: 1. How does the competitive environment moderate the relationship between IT and VI (vertical integration)? 2. How does the level of VI in different competitive environments influence firms’ performance (coordination and production cost)? Basically, this paper examines the relationship of four constructs: IT, VI, competitive environment and firm performance.
Previous literature showed that IT is associated with a decrease in VI. However, this paper examines that different competitive environments have various impacts on the relationship between IT and VI. Moreover, the authors found that the level of VI may affect the firms’ performance based on diverse competitive environment.
The paper empirically examines the model using firm-level IT spending data from 1995 to 1997. Two measures of the competitive environment are demand uncertainty and industry concentration that complement each other and the measures of firm performance are coordination cost and production cost. The paper uses 2-equation model, which run both directions (from IT to VI and VI to IT) to examine the first question, which can address the endogeneity problem between IT and VI.
The results suggest that in uncertain demand and in unstable competitive environment, IT is associated with decreased VI. And in more predictable and concentrated environment, IT is associated with increased VI. Also, the paper found that firms made rational strategies about VI and IT in different competitive environments to decrease the coordination and production cost. Compared with the previous literature, this paper provides a more refined understanding of the relationship between IT and VI.
Week3_Ada
Contractibility and Asset Ownership: On-Board Computers and Governance in U.S. Trucking
Key concepts:
On-board computers (OBCs) appeared on the market during the mid-to-late 1980s.There are two classes of OBCs: trip recorders and electronic vehicle management systems (EVMS). Both classes of OBCs provide carriers better measures of how drivers operate trucks.
Incentives for driver ownership of trucks: scope for good driving and scope for rent-seeking[1]
Incentives for carrier ownership of trucks: bargaining power
Research questions:
This paper examines relationships between trucks ownership and the contracting environment, when an important new technology became available that fundamentally changed contractibility in the industry.
Main findings:
Driver ownership of trucks has declined with increases in the contractibility of drivers’ actions. Specifically, 1) driver ownership of trucks decreases with OBC adoption; 2) driver ownership decreases with OBC adoption more for longer than shorter hauls; 3) driver ownership decreases with OBC adoption less for hauls that use trailers for which demands tend to be unidirectional than bidirectional.
Contributions:
Exploration of relationships between OBC adoption and ownership changes constitutes the main empirical contribution of the paper. The analysis in this paper may explain relationships between contractibility and firms’ boundaries in other contexts, especially those in which the care of valuable assets is important. The results in this paper suggest that changes in monitoring technology could change the industry structure in this sector. Such changes could similarly affect the professions.
[1] Rent-seeking is an attempt to obtain economic rent (i.e., the portion of income paid to a factor of production in excess of what is needed to keep it employed in its current use) by manipulating the social or political environment in which economic activities occur, rather than by creating new wealth. Rent-seeking implies extraction of uncompensated value from others without making any contribution to productivity. The classic example of rent-seeking, according to Robert Shiller, is that of a feudal lord who installs a chain across a river that flows through his land and then hires a collector to charge passing boats a fee (or rent of the section of the river for a few minutes) to lower the chain. There is nothing productive about the chain or the collector. The lord has made no improvements to the river and is helping nobody in any way, directly or indirectly, except himself. All he is doing is finding a way to make money from something that used to be free.
Why there are PhD programs in business schools?
Introduction:
Why do business schools offer PhD programs? Unlike science and engineering schools, which usually require a certain amount of labor to conduct experiments and efficiently operate labs, most business schools don’t have labs and thus don’t need students to perform lab work. This is why some top-tier business schools do not have Ph.D. programs. In addition, running a PhD program is expensive. Schools spend a lot of money on PhD students, including tuition, insurance, coursework and support for living expenses.
So what do business schools expect to take away from PhD programs? This’s an important question for PhD students. As a PhD student, you need to understand what the school expects from you and try your best to meet that expectation.
Student 1: I agree that extra labor in business schools is not as much needed as in engineering schools. But I would say we still provide labors to professors, being as a TA or a RA.
Student 2: I think PhD programs could benefit business schools in two ways. First, PhD students help business schools maintain their reputation by presenting at conferences or publishing papers. This benefit could continue even after they graduate. Second, having a PhD program contributes to sustaining the academic community as a whole; if no school offers Ph.D. degrees, there is no next generation of academics.
Student 3: Based on previous discussions, I think investing in a PhD program could be profitable to some extent.
Student 4: In my opinion, it’s not about profit or reputation. It’s about new ideas those students could bring in. Students may not be as productive as professors in terms of doing research. But students with different backgrounds usually have different thoughts. These different thoughts could potentially lead to new ideas and creative research topics. Cooperation between students and professors is beneficial for students as well as for professors and schools.
Student 5: Actually, having a PhD program is a good way to build research networks. Professors will have PhD students, each of whom could have their own students in the future. These mentoring relationships would help business school establish a broad network in academia field.
Comments from the professor:
I agree with most of the opinions. To be clear, we need Ph.D. students, but for a different reason. In my perspective, faculty members do not necessarily need PhD students to do data collection or basic research work. We could hire masters or senior undergraduate students to do such work.
Actually, what is expected from Ph.D. students is fresh idea,s new energy, and enthusiasm, all of which are more important to build a successful research program! New students could bring in new energy, new ideas, and new perspectives. They could lead our attention from academic fields to what’s going on in the outside world. From this view of point, PhD students are not expected to grow as a research assistant or a teaching assistant, but intellectual contributors and independent researchers. This is why we treat Ph.D. students as colleagues.
Another reason could be about the reputation. A good way for a business school to build reputation is to produce good Ph.D. graduates who are placed in top-tier research schools. We understand not all of you would end up in research schools or academic career. But our target is to train you as an independent researcher who can collaborate with faculty members, do your own high-quality research and publish in top journal in the future.
Week 03 – Firm Boundary – paper assignment
| Paper | Student | Background |
| Baker and Hubbard (2004) | Ada | |
| Ray et al. (2009) | Xue | Hitt (1999) |
| Ray et al. (2009) | Yiran | Gurbaxani and Whang (1991) |
| Dewan and Ren (2011) | Xinyu | Dewan et al. (1998) |
| Dewan and Ren (2011) | Yae Eun | Measurement of vertical integration and diversification |
| Rawley and Simcoe (2013) | Aaron | Transaction cost economics, Asset specificity |
| Rawley and Simcoe (2013) | JK | Contract incompleteness, Non-contractibility |
| Rai et al. (2015) | Vicky | will be emailed |
Advanced IT in Logistics industry
Integrated TMS Platform
http://markets.on.nytimes.com/research/stocks/news/press_release.asp?docTag=201601110900PRIMZONEFULLFEED6118312&feedID=600&press_symbol=28288804
The Industrial IoT
http://www.forbes.com/sites/stevebanker/2016/01/11/robots-in-the-warehouse-its-not-just-amazon/#2715e4857a0b6b38ed142f80
Robot
http://www.mbtmag.com/article/2016/01/industrial-iot-manufacturing-and-supply-chain-visibility-better
Week2_Rai et al. (2012)_Xinyu
While much of the literature has studied the the business value of IT within a firm, limited knowledge has been explored on the cocreation of relational value between collaborative firms using interfirm relationship as a unit of analysis. Based on the relational view, Rai et al. (2012) sought to theorize interfirm IT capability and examine how this capability as well as interfirm communication help cocreate relational value.
This paper proposed that higher relational value is associated with more sophisticated interfirm IT capability profiles and more interfirm communications. The paper used the share of wallet and loyalty to represent the construct of relational value. To develop interfirm IT capability profiles, four IT functionalities were firstly distinguished in logistics industry, which is the investigative context in the paper—Single-location Shipping, Multilocation Shipping, Supply Chain Visibility and Financial Settlement. From low to high, these four IT functionalities represent different sophistication levels of interfirm IT implementation and usage to manage interdependencies in interfirm business processes. Drawn upon the four functionalities, four interfirm IT capability profiles were developed to characterize different generics of interfirm relationships, namely Logistics Automation, Logistics Coordination, Logistics Integration and Logistics Synchronization. Interfirm communications were also classified into communication for business development and communication for IT development, which were measured respectively by how frequent buyers’ executives talk to logistics firms’ account executives and IT executives.
The key results of the paper is that both interfirm IT capability profiles and interfirm communications individually and jointly support the cocreation of interfirm relational value. Meanwhile, it theorized IT capability profiles which can be formed by implementing and using sets of progressively more advanced IT functionalities. It also introduced and justified share of wallet and loyalty as two measurements of interfirm relational value cocreation.
Week2 Summary_Bharadwaj et al. (2007)_ Vicky Xu
Since the prior literature on coordination and manufacturing performance has been limited to focusing on a firm’s information systems capability and its integration with supply chain capabilities, the increased role of IT in manufacturing performance and dynamically changing business need require manufacturing and information systems (IS) functions to evaluate IT’s support of business goals and develop new capabilities to support a new dimension of inerfunctional coordination. Bharadwaj et al. (2007) develop an integrative model of manufacturing performance that includes an integrated information systems construct and manufacturing-IS (Mfr-IS) coordination in conjunction with manufacturing-marketing (Mfr-Mkt) and manufacturing-supply chain (Mfr-SC) coordination, providing a more complete picture of the true drivers of manufacturing performance which simultaneously considers the effects of a firm’s integrated IS capability in conjunction with interfunctional and interorganzational coordination mechanisms.
Bharadwaj et al. (2007) also develop a conceptual framework as the following:
Bharadwaj et al. (2007) tests the model by using data collected from a national survey of manufacturers (about 169 firms) and archival manufacturing performance data from COMPUSTAT (about 126 firms). And they use the general system-form of the model to test the hypotheses. In the first step, the responding firms were separated into two groups: firms with scores greater than the mean of the sum of the three coordination variables (coded as one) and firms with scores lesser than the mean of the sum of the three coordination variables (coded as zero). After using a three-stage least-squares analysis, a hierarchical regression analysis and moderated regression analysis, all the hypothesized relationships were statistically significant.
The significant contributions of this study include: (1). Exploring the role of Mfr-Is coordination and integrated IS capability in conjunction with the traditional coordination drivers in explaining manufacturing performance. (2). Presenting an examination of the role of manufacturing-IS coordination in contemporary manufacturing firms.
Rai et al.2012 – Yiran
This paper examine the relationship between interfirm IT capability, interfirm communications and relational value. Interfirm communications is defined as the exchange of knowledge, ideas, and opinions driven by goals among senior executives in the interfirm relationships. In this study, the interfirm communications for business development and IT development are measured by total number of visits and phone calls in past year between the supplier’s account executives with the buyers on each aspect. Building on the marketing literature, relational value is operationalized as share of wallet and loyalty.
To conduct the empirical study, they use the active relationships between a Fortune 100 logistics supplier and its buyers in the United States. The findings reveal that IT functionalities, when implemented and used in combination with other resources in the interfirm logistics process (e.g., physical goods, information, and finances across locations), increase relational value. Moreover, higher sophistication of interfirm IT capability profiles would leads to higher relational value. The study also finds interfirm communications for business development can only create relational value with the facilitation of IT capability profiles, whereas interfirm communication for IT development is not found to be contingent on IT capability profiles. As a result, interfirm IT capability profiles have a more substantial role in relational value when relying on interfirm communications for business development.
The contributions of this study include that it theorizes interfirm IT capability profiles as the implementation and use of a set of IT functionalities that combine with other resources to execute interfirm business processes and as a major means for cocreating relational value. Second, this study stresses the importance of the level of sophistication in implicating the IT capability profiles. The sophisticated IT capability profiles accompanied by interfirm communications for business development can significantly enhance the relationship value.
Week2 Summary_Tambe et al. (2012)_ Yaeeun Kim
This paper is meaningful to add the third value, external focus, based on the prior work. This 3-way model explains the productivity of the firm at the best. External focus is a set of practices that firms use to detect changes in their external operating environment.
Findings suggest that firms can more successfully leverage IT investments if they effectively capture external information through networks of customers, suppliers, partners, and new employees.
This paper contributes to a literature on IT value, supporting the argument that organizational complements lead to higher IT returns.
They also build upon prior work that addresses complementarities between IT and internal practices such as decentralized decision making but add the external orientation dimension which has been shown to be important in technology-intensive firms.
The survey questions was conducted by telephone and includes a new set of measurements, which include external and internal information practices, human capital mix such as occupational and educational distributions.
For its econometric method, organizational inhibitors were used as instrumental variables because they reflect the cost faced by firms in adopting new organizational practices.
In their correlation tests, external focus measure is correlated with IT measure and decentralization measure. The correlation between workplace organization and external focus suggests that the decentralization leads external information practices (although the correlation does not explain the causality, it can be interpreted as above when we bring our common knowledge).
By adding individual inhibitors of organizational transformation and location variables as instruments, decentralization was more associated with effective management of the product line. This finding suggests that capturing external information is important, but at the same time, governing internal information processing boosts product leadership by managing products in a timely manner.
Week2_Bresnahan et al. (2002)_Aaron
Information technology, workplace organization and the demand for skilled labor: firm-level evidence
A significant shift in labor demand towards skilled workers in the late 20th century have been attributed to skill-biased technical changes (SBTC). Quantitative research has made it clear the important role of information technology in SBTC and its direct correlation with skill at the worker, firm and industry level.
Rather than only investing IT for quality improvement and efficiency gains, successful firms reveal preferences to a combination of three related innovation, a) increased use of IT, b) changes in organization practices and c) changes in products and services. Bresnahan et al. (2002) extend the SBTC theory through the rational that decline in price of IT will increase firms’ use of the complementary system of abovementioned three innovation, thereby increasing the relative demand for skilled labor.
Their rational is supported by evidence from archive data, survey and interviews with managers from 300 large U.S firms. Bresnahan and his collegues examine the correlations across firms in the use of hypothesized complements, test a short-run conditional input or technology choice equations and analyze simple production functions. Alternative explanations, such as managerial fad, demand shocks and aggregation error, are shown to be inconsistent with all the empirical results, making their hypothesized rational more reliable and validated.
Their analysis has implications for understanding SBTC. First, it provides new firm-level evidence to show that IT is a source of increased demand for skilled labor and rising wage inequality. Second, it identifies a set of mechanisms by which labor demand is influenced through organizational redesign that calls for complementary investment in IT, work organization and product innovation.
Week 2_Im and Rai (2014)_Jung Kwan Kim
Im and Rai (2014) examine the IOS (interorganizational systems) regarding the impact on relationship performance and quality mediating through contextual ambidexterity. The authors support that the enhancement of contextual ambidexterity leads to better relationship performance and quality. The rationale is that contextual ambidexterity helps partners align resources and actions and that it leads them to adapt the relationship to broader changes.
This positive association is manifested through 3 sets of findings. First, OSS use cultivates contextual ambidexterity on the customer side while the vendor sides enjoy more positive benefits with longer duration of relationship. This is possibly because OSS places a greater resource burden and hold-up risk on the vender.
Second, ISS use fosters the benefits to both of the sides while the benefit of the customer is not significant as the relationship ages. This finding seems to support the contextual knowledge that accumulated over time becomes more valuable for the vendor.
Third, interdependent decision making facilitate the benefits on both of the sides, but the duration does not moderate the effect, implying that the synergies between alignment and adaption show up even from the early period.
In conclusion, contextual ambidexterity enables IORs (interorganizational relationships) to achieve performance benefits and enhances relationship quality from the perspectives of both customers and vendors; IT-enabled coordination mechanisms and interdependent decision making promote contextual ambidexterity on the side of customers. IORs accumulate relationship-specific resources that are instrumental in leveraging OSSs and ISSs to achieve synergies between alignment and adaptation for the vendor. All in all, IS use at both the operations and sensemaking levels plays a major role in enabling contextual ambidexterity and increasing the value derived from IORs for both the vendor and the customer.
Week2 Summary_Tambe et al. (2012)_ Xue Guo
The Extroverted Firm: How External Information Practices affect innovation and productivity
This paper proposes that IT are most productive when they allow firms to quickly respond to external information, such as customer interaction, benchmarking and using inter-organizational project teams. And it empirically proves that external focus, decentralization, and IT intensity are associated with productivity in modern firms.
The paper uses survey-based data from 253 firms to examine the hypothesis. At first, authors calculate correlations between organizational practices and IT measurements and gives the preliminary results that external focus, internal workplace organization and IT usage are complements in the production process. Then the paper tests the relationship between Innovation and various stage of the product development and found that firms’ ability to capture information from its environment is positively associated with product leadership and effective management of the product line. Then, the paper uses the full-sample data to test the complementarities in production. The OLS model contains the three-way interaction term of external focus, IT, and decentralization. The results show that the effect of IT on firm productivity is significant when the external focus and decentralization are matched in the either direction.
Another important point in this paper is the robustness check. The paper uses organization inhibitors as instrumental variables in the innovation and product development regressions because these variables may affect the costs firms face in adopting new organizational firms, as well as they are not directly correlated with firm performance. The results still hold when the models include instrumental variables and use other measures of the organizational practices.
This paper has rich implications. The firms that can better utilize their environment may outperform their competitors and external focus is distinct from organizational decentralization. It also helps to explain the fact that firms operated in information rich environments tend to have higher returns of IT investments.
Week2_Ada
Week 02 – Organizational Capabilities – paper assignment
| Paper | Student | Background |
| Bresnahan et al. (2002) | Aaron | Skill-based technical change |
| Bharadwaj et al. (2007) | Vicky | Inverse Mill’s ratio |
| Tambe et al. (2012) | Xue | Test of instrument variable validity (Hansen J, Anderson CC) |
| Tambe et al. (2012) | Yae Eun | Test of complementarity (Brynjolfsson and Milgrom 2009) |
| Rai et al. (2012) | Xinyu | Relational view |
| Rai et al. (2012) | Yiran | Example of advanced IT use in the logistics industry (with a few news/magazine articles) |
| Im and Rai (2014) | JK | Ambidexterity |
| Im and Rai (2014) | Ada | Multicollinearity in testing interaction effects (why mean-centered variables?) |
Week 1_how to give a good job talk?
Professor: Let us talk about who do you think is the best job candidate and how to give a good job talk.
Student #1: First of all, the choice of paper or project to present is very important to the success of job talk. The key is to bring the best or most satisfied work to present. Second, handling the process of presentation should be another necessary skill. Audience may ask all kinds of questions, some challenging and some difficult. So it is always useful to prepare ahead of time in case some dynamic issues that would ruin the whole process of presentation
Student #2: Good presenter in the job talk can well prepare his work so that he or she could self-defend with confidence.
Student #3: Good presenters usually show good communication skills, confidence in what he or she is presenting and can clearly explain what has been done and what has been thought about even though not shown in the presentation.
Student #4: Job talk is the time to show the best of you. So one should choose the best paper to give a job talk.
Student #5: Good job talk is about confidence. And I would like to share a tip related to it, that is, whenever someone ask you a question, the first sentence you should always say is “It is a good question. I have thought about this.” If you are not confident and say something like “I am not quite sure. Could you give me some feedback?” etc, that is not a good interaction with audience.
Professor: What about you three? Any merits you could find from good job talkers presented in your department?
Student #6: I think confidence and self-defense is always important. If I were a committee member to hire someone, I would focus on the research topic too. Is it a good topic? Has it got some potential to publish in the A level journal? So a good job candidate should be capable to show future publication opportunities.
Student #7: Normally in our department after job talk, we doctoral student and professors get together to discuss the performance of the presenter. It is an intuitive and practical way to let doctoral student know what is good and bad about job talk and what should be done or not be done in such talk. So we get a sense that good job seekers can show your own research idea, which is not from your advisor. That is a good way to tell others that you are able to conduct research independently.
Student #8: Good job presenters give impressive talk with confidence. He or she could be tolerant and open to any kinds of questions in a manner without arrogant and over-confidence. Also he or she could manage the time well.
Professor: First of all, a good job talker could manage the conversation with audience. Often times you would encounter challenging and difficult questions, but only if you know some tips and tricks to go through it even if you do not have a confirmative answer, your talk would not become a chaos. If there is a disagreement between his or her opinion and yours, you could say “Maybe you are right, well, but I think…, and we could always talk about it after this.” More of such tips and tricks can be obtained by observing how a good job talker communicates with audience. I heard that a job seeker who had to stay on the first page of slides for 45 min due to mismanage the conversation with the audiences.
Second, it is a useful to show descriptions of other projects in your job talk. Top research universities implicitly require candidates to have pipeline papers that are potentially published in the future 5 or 6 years to ensure tenure. But review circle is uncertain and this requirement may not be met if you do not have a considerate stock of papers. But the problem that has been seen times and times is that some cannot publish beyond dissertation, which means, it is almost impossible to get tenure in a good business school. Doctoral time is the best time to do research, not only research for dissertation but for your future 5 or 6 years being an assistant professor. Thus, to present and propose research agenda is a good way to show the working papers beyond the dissertation to show potential to survive in the process to tenure.
Third, confidence is important. But more important is you should know what and how to make you confident. As my personal experience, before my job talk, I have presented the same projects 7 or 8 times in workshops, seminars and conferences, and before each presentation I practice up to 10 times ahead of time. This means that I memorize everything, and means I am confident about what I am going to present and about what questions would be most likely to be asked. Besides a lot of practices in other academic activities, the choice of paper you present is also a key to keep you confident. You had better to present a paper that has already passed the 1st round review because reviewers and audiences usually give you the same comments, which could help you prepare ahead of time.
Last but not least, please remind that those siting in front of you when you give a job talk are hiring a professor, not a student. So you should act like a professor. As a student, it could be freaky to hear from sharp critics, comments or questions from senior professors. But when you present as a job seeker, you should be professional and accumulate experience to handle those questions. As mentioned before, you could say “That is different from what I know, let us discuss it after this talk.”
In summary, to give a good job talk or to be a good job seeker, you should prepare ahead of time, practice and experience more to keep you confident, show your potential to publish paper in tenure-track, and behave as a professor with professional manner when you interacts with the senior professors who consider hiring you.
(Scribed by Aaron Cheng, 1/13/2016)
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