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Kini, Omesh; Lee, Sangho; Shen, Mo
doi: 10.1287/mnsc.2023.4830pmid: N/A
The common ownership of firms can have anticompetitive effects by incentivizing collusive outcomes that maximize joint surpluses of the commonly held firms or procompetitive effects through enhanced knowledge spillovers. Using a difference-in-differences regression methodology that exploits mergers between financial institutions as exogenous shocks to common ownership, our baseline results suggest that higher common ownership leads to greater product market fluidity (a text-based metric of competition) and generally leads to more product development and higher investments. These findings suggest that, on average, common ownership spurs dynamism in product spaces rather than tacit collusion between cross-held competitors. This is especially true in economic environments in which it is easier to take advantage of knowledge spillovers. However, common ownership can also inhibit product market competition and dynamism, especially in industries more prone to quasi-monopoly outcomes in product spaces. Implementing a one-size-fits-all regulatory policy limiting common ownership may be harmful in industries with strong spillover opportunities.This paper was accepted by Victoria Ivashina, finance.Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2023.4830.
Fangwa, Anicet A.; Flammer, Caroline; Huysentruyt, Marieke; Quélin, Bertrand V.
doi: 10.1287/mnsc.2023.4846pmid: N/A
Substantial funding is provided to the healthcare systems of low-income countries. However, an important challenge is to ensure that this funding is used efficiently. This challenge is complicated by the fact that a large share of healthcare services in low-income countries is provided by nonprofit health centers that often lack (i) effective governance structures and (ii) organizational know-how and adequate training. In this paper, we argue that the bundling of performance-based incentives with auditing and feedback (A&F) is a potential way to overcome these obstacles. First, the combination of feedback and performance-based incentives—that is, feedback joined with incentives to act on this feedback and achieve specific health outcomes—helps address the knowledge gap that may otherwise undermine performance-based incentives. Second, coupling feedback with auditing helps ensure that the information underlying the feedback is reliable—a prerequisite for effective feedback. To examine the effectiveness of this bundle, we use data from a randomized governance program conducted in the Democratic Republic of Congo. Within the program, a set of health centers was randomly assigned to a “governance treatment” that consisted of performance-based incentives combined with A&F, whereas others were not. Consistent with our prediction, we find that the governance treatment led to (i) higher operating efficiency and (ii) improvements in health outcomes. Furthermore, we find that funding is not a substitute for the governance treatment; health centers that only receive funding increase their scale but do not show improvements in operating efficiency or health outcomes.This paper was accepted by Lamar Pierce, organizations.Funding: This research was supported by the Agence Nationale de la Recherche [Grant Investissements d’Avenir (LabEx Ecodec)].Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2023.4846.
doi: 10.1287/mnsc.2023.4829pmid: N/A
In this paper, we explore an employee workaround widespread in K–12 schools: compensating for insufficient funding with partnerships to nonprofit organizations (NPOs). We take an equity perspective and ask the following questions. (i) How do partnering workarounds differ across schools with different levels of socioeconomic advantage? (ii) What can education and NPO leaders do to ensure these workarounds do not exacerbate educational inequities? To answer these questions, we use Little’s Law: a school’s long-run average number of resource-supplementing partnerships (L) is a function of its average annual partnership formation rate (λ) and partnership cycle time (W). We collect and analyze interview (n = 62) and survey (n = 140) data from six strategically sampled schools with different levels of socioeconomic advantage to compare differences in λ and W and understand the implications for educational equity. We find wealthier schools have higher λ, making them more productive. We also find schools have equal W independent of wealth, but this problematically amplifies differences in λ. The difference in partnering productivity translates to educational inequities. We find that poorer schools report about 35% greater utility per partnership, but that is not enough to offset the disadvantage of fewer partnerships. Moreover, we find that differences in partnering productivity are particularly large for curricular partnerships, which are harder for poorer schools to form because of the high demand for wrap-around partnerships. Our findings contribute new knowledge on workarounds which supplement organizational resources and on the relationship between workarounds and equity.This paper was accepted by Jay Swaminathan, operations management.Funding: This work was supported by the National Science Foundation [Grant 1344266].Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2023.4829.
Neilson, Jed J.; Wang, K. Philip; Williams, Christopher D.; Xie, Biqin
doi: 10.1287/mnsc.2023.4831pmid: N/A
U.S. generally accepted accounting principles (GAAP) allows banks to offset derivative assets against derivative liabilities with the same counterparty and report only the net amount on the balance sheet. Derivative offsetting under international financial reporting standards (IFRS) is much more restrictive, resulting in the single largest difference in balance sheet presentation between U.S. GAAP and IFRS. Two important factors dominate the standard-setting discussion on this issue: (1) whether these derivatives are informative about bank risk and (2) whether disclosing them substitutes for recognition on the balance sheet. Using a hand-collected global sample of banks, we first show that offsetable derivatives are positively associated with bank risk, based on multiple risk measures, suggesting that these derivatives are informative about bank risk. Next, exploiting the differential accounting treatment across U.S. GAAP and IFRS banks, we find that disclosure versus recognition of offsetable derivatives matters for the risk assessment of equity investors but not for that of (more sophisticated) credit default swap investors. Additional tests corroborate the inference that investor sophistication helps explain the differential investor assessment of recognized versus disclosed offsetable derivatives. Collectively, our findings suggest that offsetable derivatives convey information about bank risk and that, for less sophisticated investors, disclosing them may not substitute for recognizing them.This paper was accepted by Eric So, accounting.Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2023.4831.
Kerimov, Süleyman; Ashlagi, Itai; Gurvich, Itai
doi: 10.1287/mnsc.2021.01215pmid: N/A
We study how to optimally match agents in a dynamic matching market with heterogeneous match cardinalities and values. A network topology determines the feasible matches in the market. In general, a fundamental tradeoff exists between short-term value—which calls for performing matches frequently—and long-term value—which calls, sometimes, for delaying match decisions in order to perform better matches. We find that in networks that satisfy a general position condition, the tension between short- and long-term value is limited, and a simple periodic clearing policy (nearly) maximizes the total match value simultaneously at all times. Central to our results is the general position gap ϵ; a proxy for capacity slack in the market. With the exception of trivial cases, no policy can achieve an all-time regret that is smaller, in terms of order, than ϵ−1. We achieve this lower bound with a policy, which periodically resolves a natural matching integer linear program, provided that the delay between resolving periods is of the order of ϵ−1. Examples illustrate the necessity of some delay to alleviate the tension between short- and long-term value.This paper was accepted by David Simchi-Levi, revenue management and market analytics.Funding: This work was supported by the National Science Foundation [Grant CMM-2010940] and the U.S. Department of Defense [Grant STTR A18B-T007].
Xu, Zhou; Li, Feng; Chen, Zhi-Long
doi: 10.1287/mnsc.2023.4835pmid: N/A
We study a shipment consolidation problem commonly faced by companies that outsource logistics operations and operate in a commit-to-delivery mode. It involves delivering a given set of orders to their destinations by their committed due times using multiple shipping methods at the minimum total shipping and inventory cost. The shipping cost is generally nonlinear in shipping quantity and can be represented by a subadditive piecewise linear function. We investigate two shipping scenarios, one involving long-haul shipping only and the other involving joint long-haul and short-haul shipping. We develop analytical results and solution algorithms for the shipment consolidation problem under each shipping scenario. The problem under the first shipping scenario is shown to be strongly NP-hard. We find that a simple policy, called the First-Due-First-Delivered (FDFD) policy, which assigns orders with earlier delivery due times to shipping methods with earlier destination arrival times, is very effective. This policy enables us to develop a polynomial time algorithm, which not only solves the problem under the concave shipping cost structure optimally but also achieves a performance guarantee of 2 for the problem under the general subadditive shipping cost structure. For the problem under the second shipping scenario, we extend the FDFD policy for long-haul shipping and derive another policy, called the No-Wait policy, for short-haul shipping. We use these policies to develop a polynomial time algorithm and analyze its performance guarantee. Our computational experiments show that the algorithm significantly outperforms a commercial optimization solver, and its performance is robust across different parameter settings that reflect various practical situations.This paper was accepted by Jeannette Song, operations management.Supplemental Material: The data and e-companion are available at https://doi.org/10.1287/mnsc.2023.4835.
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