To outsource or not: The impact of information leakage risk on information security strategy

Emerging studies advocate that firms shall completely outsource their information security for cost and technical advantages. However, the risk of information leakage in outsourcing to managed security service providers (MSSPs) is overlooked and poses a confidentiality threat. We develop analytical models to describe several strategies for firms to consider when they decide to outsource to MSSPs. Based on our results, we suggest partial outsourcing as an alternative strategy when the firm faces information leakage risk. Besides, we suggest that in-house information security strategy is the optimal solution when the risk of being attacked is low regardless of the risk of information leakage. We then extend scenarios to the competitive environment where firms that are in the same market are highly likely to choose the same strategy.     

基于Cournot-Bertrand 混合竞争的企业集团转移定价决策

研究多部门企业集团在最终产品市场面临Cournot-Bertrand 混合竞争时的转移定价决策问题. 由动态博弈的逆向归纳求解方法可知, 均衡转移定价策略将随着最终产品之间的关系而有所差异. 当竞争对手仅生产最终产品时, 最优转移价格高于边际成本, 且采用价格-产量竞争优于产量-价格竞争; 当竞争对手为垂直一体化企业时, 采用产量-价格竞争的最优转移价格高于边际成本, 采用价格-产量竞争则低于边际成本, 而且采用产量-价格竞争优于价格-产量竞争.

     

A study on the life of an innovative product using a Bayesian approach

In this paper, the life cycle of an innovative product is divided into three stages, where a nonhomogeneous Poisson process (NHPP) with a power law intensity function is employed to illustrate the entry process of rival firms in a competitive market. The effects of the competitors’ entry on the profits of the incumbent firm are taken into consideration, with an objective of deriving the optimal product life to maximize the incumbent’s profit. Furthermore, a case study of a new type of LCD (liquid–crystal display) TV is empirically investigated to examine the effectiveness of the proposed approach. The results of the posterior analysis suggest that the influence of the competitors’ entry on the optimal product life is overestimated in the prior analysis. The results of sensitivity analyses indicate that the effect of competition of the introduction and growth stages on the optimal product life is greater than that of the maturation stage on the optimal product life, which is subsequently greater than that of the decline stage on the optimal product life.     

Coordinating static and dynamic supply chains with advertising through two-part tariffs

Zaccour (2008) analyses a marketing channel where firms invest in advertising to increase brand equity, showing that an exogenous two-part tariff cannot replicate the vertically integrated performance. I revisit the model proving that a multiplicity of efficient franchising contracts exists. I characterise an optimal two-part tariff specified as a linear function of the upstream firm’s advertising effort, performing this task both in the static and in the dynamic games. An analogous result emerges both in the static game, writing the fixed component of the two-part tariff as a non-linear function of the manufacturer’s advertising effort, and in the dynamic game, using a contract which is linear in the brand equity.     

Information Technology Investments: Characteristics, Choices, Market Risk and Value

The decisions confronting information technology (IT) managers have changed a great deal since the early 1970s. The key decisions three decades ago were related to the management of application development projects and operations centers. Today, the key decisions are quite different. What level of service should the firm provide end-users? Should IT services, development projects and the ownership and management of operations centers be outsourced? IT investments attempt to satisfy specific needs. Because of environmental differences and differences in the cost structure and benefits of alternative ways in which these needs can be met, the answers to these questions may differ across firms. Modern financial analysis can provide insights to help managers deal with many of the problems they currently face. We use modern financial theory to show how the value of IT investments can be affected by some of the choices made by managers. We show how the market risk of demand and the market risk of costs affect the market risk and value of IT investments. We consider three types of investment decisions: outsourcing versus in-house services; investments in interorganizational systems; and determining the optimal level of IT services that should be provided. Our analysis indicates that: (1) as the market risk of demand for operations decreases, firms are less likely to outsource operations; (2) the value of an investment in an interorganizational system increases as the market risk of costs increases; and (3) the optimal level of user service is inversely related to service demand risk and is directly related to the market risk of service costs.     

基于R&D溢出的集中研发联盟合作行为

研究了在联盟合作R&D中R&D溢出、R&D溢出的抑制能力以及创新能力对联盟成员的R&D投资策略的影响, 确定了联盟获得最大期望投入的最优分配方式. 研究表明: 1) R&D溢出和创新能力对联盟成员增加R&D投入有正效应; 企业抑制R&D溢出的力量对R&D投入有负效应, 但影响力很弱. 2) 对于创新能力强的联盟, 平均分配为最优分配方式; 对于创新能力弱的联盟, 市场规模低时选择按投入比例分配方式, 市场规模高时选择平均分配方式.     

The impact of perceived risk on the capital market’s reaction to outsourcing announcements

Outsourcing is a widely accepted option in strategic management, which, like every business venture, bears opportunities and risks. Supplementing the popular area of research on the merits of outsourcing, this paper examines how stockholders rate corporate sourcing decisions with regard to the risk they associate with this transaction. Using event study methodology and multivariate cross-sectional OLS-regression, we analyze a sample of 182 outsourcing transactions in the global financial services industry between 1998 and 2004 in order to investigate the risk-specific drivers of excess returns to shareholders. The analysis studies the impact of risk-specific independent variables, including transaction size, length, outsourced business functionality, and experience with outsourcing. Our findings indicate that risk-mitigating strategies have significant explanatory power, indicating that the capital market’s reaction to an outsourcing announcement might at least partly be forecast. Results show a positive correlation between market reaction and business process outsourcing by financial services companies. We also find strong evidence indicating that capital markets react positively to relatively large transactions compared to the market capitalization of the outsourcing firm. For service providers our results show that traditional IT-related sourcing projects or the insourcing of administrative processes have a significant positive correlation with market reaction.     

Optimal dynamic advertising with an adverse exogenous effect on brand goodwill

We propose the model of a firm that advertises a product in a homogeneous market, where a constant exogenous interference is present. Using the framework of Nerlove and Arrow’s advertising model, we assume that the interference acts additively on goodwill production as a negative term. Hence, we allow that the goodwill may become negative and we associate a zero demand with negative goodwill values. We consider a piecewise linear demand function and formulate a nonsmooth optimal-control problem with an infinite horizon. We obtain that an optimal advertising policy exists and takes one of two forms: either a positive and constant advertising effort, or a decreasing effort starting from a positive level and eventually reaching the zero value at a finite exit time. In the former scenario, the demand is always positive and the firm stays in the market in the long run; in the latter, the demand becomes zero in the short run, and afterward, the firm goes out of business. In both cases we have an explicit representation of the optimal control, which is obtained through the study of an auxiliary smooth optimal-control problem. It is interesting that the fundamental choice between staying in the market and going out of business at some time depends both on the interference level and on the initial goodwill level.     

Coordinated Logistics Scheduling for In-House Production and Outsourcing

In this paper, we address a new scheduling model for a firm with an option of outsourcing. A job can be processed by either in-house production or outsourcing. All outsourced jobs have to be transported back to the firm in batches, and the transportation costs have to be taken into account. We model the situation as a scheduling problem with transportation considerations. We discuss four commonly used objective functions, and solve them by dynamic programming algorithms. Note to Practitioners-An efficient supply chain management needs the coordination of production and transportation. Such problems exist in many different scenarios. This research considers a particular problem for a firm that has an option of using a subcontractor to fulfill part of its orders. The production schedule has to be coordinated with logistics issues for the transportation from the subcontractor to the firm. The purposes of this paper are twofold. First, we build models and provide optimal solutions for the specific cases discussed in this paper. Second, we hope to raise the issue of coordinated logistics scheduling, and motivate future research on more complicated models.     

供应链间上游核心企业竞争与结构选择

考虑两条供应链间相互竞争的上游核心企业,分别决定是否将产品销售外包给各自的下游零售商,从而形成向下分散式的供应链结构。第三方无成本优势的前提下,制造商和零售商间引入收益共享契约,利用Hotelling模型探讨向下分散式结构对核心企业间博弈均衡结构及供应链利润的影响。结论表明：与集中式相比,分散式供应链本身具有结构优势,在提升自身供应链利润的同时也会促进另一条竞争供应链的利润水平,有悖于通常认为的“双重边际化效应”,从结构优势的视角解释了第三方外包,并且收益共享比例决定了供应链竞争的均衡结构及其演化。     

The impact of risk attitude in new product development under dual information asymmetry

This paper investigates the impact of risk attitude on incentives and performances in a two-stage (research stage and development stage) new product development setting with one senior executive (she) and one project manager (he). The senior executive offers a wage contract to the project manager in the presence of dual information asymmetry including his unknown idea value of a new product in early research stage and unobservable effort to convert the idea into a product in later development stage. Due to the variability of technology and market, the subjective assessments about the idea value and the revenue generated by the product are characterized as uncertain variables. Within the framework of uncertainty theory, we first present four classes of uncertain principal agent models, and then derive their respective optimal wage contract mechanisms. We find that the structures of the senior executive’s optimal mechanisms depend on the project manager’s risk attitude. If the project manager becomes more conservative, the senior executive should set a low incentive term to avert risk. Otherwise, she should do the opposite. Moreover, we identify two values: the information value of the idea—how much the senior executive is willing to pay to acquire information regarding the project manager’s idea value, and the information value of the effort—how much the senior executive ensures to win when she can contract on the project manager’s effort. Our results show that acquiring the project manager’s idea information yields the highest potential when the project manager is aggressive, but in the case of contracting on his effort, the opposite appears to be true. The results also indicate that acquiring more information on an aggressive project manager’s idea always has higher impact on the senior executive’s profits than contracting on his effort. We also provide several interesting managerial insights in new product development through our analytical and simulation results.     

Pricing and introductory scarcity strategies based on consumers' response

In industries such as electronics, automobiles, and luxury goods, we have observed numerous cases of intentional undersupply when a new product is introduced. Previous research has shown that introductory scarcity has a positive effect on consumers' willingness to pay, but this effect has yet to be quantified. This paper investigates how scarcity strategies affect product pricing and a firm's profits. We consider two types of scarcity strategies, a real and a fake scarcity strategy, and propose a two‐period model in both markdown and markup scenarios. We find that an introductory scarcity strategy is profitable in a markup scenario only if the discount factor is greater than a critical value and payoffs are compartmentalized. Moreover, an introductory scarcity strategy could result in profits in a markdown scenario if consumers are sensitive to scarcity. However, a scarcity strategy is always detrimental to a firm with low‐quality products in both scenarios. If there are uninformed consumers in the market, a fake scarcity strategy is beneficial for firms in the short term but not in the long term.     

考虑平台营销努力的直播电商服务供应链质量努力策略

直播电商作为电商市场的新趋势日益受到人们的关注,鉴于此,研究一个品牌服务提供商、一个主播和一个直播服务平台所组成的直播电商服务供应链质量努力策略问题.考虑主播不签约和主播签约两种情形,分别构建直播电商服务供应链成员的利润函数,以利润最大化为目标,运用博弈理论优化得到两种情形下直播电商服务供应链成员最优质量努力策略和利润.通过算例分析,探讨主播佣金比例和直播服务平台抽成比例对服务供应链最优策略和最优利润的影响.研究结果表明:两种情形下主播服务质量努力随主播佣金比例的增加而增大,随直播服务平台抽成比例的增加而减少,而直播服务平台质量努力均随主播佣金比例和直播服务平台抽成比例的增加而增大.     

Manufacturer warranty service outsourcing strategies in a dual‐channel supply chain

Warranty management for durable products has received increasing attention in recent years. In addition to conventionally keeping warranty in‐house, more manufacturers choose to outsource warranty service to agents. This paper explores outsourcing strategies for manufacturer warranty services in a dual‐channel supply chain by which the demand‐enhancing service can be undertaken by different supply chain parties. We show the results of three alternative outsourcing strategies for manufacturers whereby (a) the retailer undertakes the service, (b) a third party undertakes the service, and (c) both the retailer and a third party undertake the service simultaneously. According to Stackelberg game theory, we build a two‐echelon supply chain model and discuss the corresponding expressions for supply chain members' equilibrium decisions. Additionally, we compare the profits of each supply chain member and derive interesting managerial insights. When the base market size is relatively large, Scenario R helps the manufacturer and the retailer reach a “win‐win” situation.     

Competitive Pricing Strategies for Software and SaaS Products

We study the pricing strategies for a software firm and an entrant software-as-a-service (SaaS) firm in two customer markets: the market composed of the incumbent’s past customers and the market of new customers. We build a game theoretical model to investigate how user costs and the quality differential between products affect firms’ pricing in different customer markets. Our findings show that it is not always optimal for the software firm to price discriminate between its old users and the new customers. The entrant firm would be better off acquiring only the new customers when the SaaS quality is sufficiently low.     

Understanding the outsourcing learning curve: A longitudinal analysis of a large Australian company

Outsourcing continues to capture the attention of researchers as more companies move to outsourcing models as part of their business practice. Two areas frequently researched and reported in the literature are the reasons why a company decides to outsource, and outsourcing success factors. This paper describes an in-depth, longitudinal case study that explores both the reasons why the company decided to outsource and factors that impact on success. The paper describes how Alpha, a very large Australian communications company, approached outsourcing and how its approach matured over a period of 9 years. The paper concludes that although a number of reasons are proposed for a company's decision to outsource, lowering costs was the predominant driver in this case. We also describe other factors identified as important for outsourcing success such as how contracts are implemented, the type of outsourcing partner arrangement, and outsourcing vendor capabilities.

基于提前支付的非瞬时变质产品批量订货定价策略

当供应商处于供应链节点的买方市场时,通常要求零售商提前支付一定比例购置成本作为订金.针对该问题研究零售商促销努力下存在随机需求的非瞬时变质产品批量订货定价策略,考虑零售商提前支付策略,允许部分缺货.在一定条件下可得零售商最优补货周期和局部最优定价策略,随之提出相应的求解算法.数值计算结果表明:若提前支付购置成本占比或利率增大,则零售商利润将显著减少;提前支付期限和期数均对最优利润产生消极影响;零售商采取积极促销策略可有效提升自身利润.     

Outsourcing or capacity expansions: Application of activity-based costing model on joint products decisions

Because of capacity constraints, the companies who produce joint products have to assess the desirability of further processing joint products beyond the split-off point. Especially in a situation in which market demands exceed the company's production capacity. In order to satisfy customer's orders and maximize total profits, these companies must study the feasibility of expanding capacity or outsourcing the production of parts. The aim of this paper is to develop an ABC joint products decision model which incorporates capacity expansions and outsourcing features, by using a mathematical programming approach. With the model presented in this paper, we can evaluate the comparative benefits of expanding the various kinds of capacity and outsourcing simultaneously. By applying this model, the companies who produce joint products can derive an optimal decision about further processing, capacity expansions or outsourcing.