We analyze a model of vertical (dis)integration between manufacturing and design in a monopolistically competitive market. Specialized input manufacturers can serve multiple design firms and the manufacturer-designer pairs negotiate a non-binding contract to share input customization cost and production surplus. Hand-collected data on 387 product lines from 118 semiconductor firms are used to predict the firm's decision to outsource manufacturing. We find that, for instance, the use of design tools that facilitate collaboration and process technologies that facilitate learning are both positively associated with outsourcing, consistent with the model's prediction. (C) 2019 Elsevier B.V. All rights reserved.

Although the prior literature has examined the relationship between work schedule characteristics and worker mental health, establishing the causal effect of work schedule characteristics is challenging because of endogeneity issues. This paper investigates how various work schedule characteristics affect workers' mental health using employee surveys and actual working hours recorded over seventeen months in a Japanese manufacturing company. Our sample includes 1334 white-collar workers and 786 blue-collar workers observed from 2015 to 2016. Our major findings are as follows: long working hours cause the mental health of white-collar workers to deteriorate even after controlling for individual fixed effects. Furthermore, working on weekends is associated with mental ill health-the negative effect of an hour increase in weekend work is one and a half to two times larger than that of weekday overtime work for white-collar workers. On the other hand, short rest periods are not associated with mental health for them. Our results indicate that taking a relatively long rest period on weekends is more important for keeping white-collar workers healthy than ensuring a sufficient daily rest period. Regarding blue-collar workers, our analysis reveals that working after midnight is associated with mental ill health, whereas short rest periods are not associated with their mental health. This suggests that the strain of night work is a more important determinant of mental health for blue-collar workers. The differences in the relationship between work schedule characteristics and workers' mental health for white-collar and blue-collar workers can be explained in terms of different work styles, different expectations, and different degrees of selection. We conclude that working for long hours or irregular hours deteriorates the mental health of workers but its impact is likely to differ significantly across job types.

Past literature has shown that job segregation by gender is one major cause of the widely observed gender pay gap and that there are also gender differences in developmental job assignment for broader job experience. This paper examines how gender differences in job assignment are associated with the gender gap in pay and promotion using the personnel records of a Japanese manufacturing company. One of the major findings is that broader work experience through job transfers across establishments are associated with a higher promotion probability and future wages for employees of both genders, but this relationship is especially strong for women, which is consistent with the selection and signaling explanations based on statistical discrimination against women. Furthermore, according to our fixed effects model estimation of wage function, broader work experience leads to higher wages for men but not for women, implying that women accept promotions with smaller pay raises than men, which is consistent with the sticky floors model.

Purpose – Under a discontinuous and nonlinear compensation scheme, which is prevalent among car dealerships, the amount of a salesperson’s expected daily commission depends primarily on his position in the pay schedule on the day he makes a sale. Salespeople thus vary their efforts and adopt a different pricing strategy week by week, or even day by day. The purpose of this paper is to examine the incentive effect of such a nonlinear scheme and provide the evidence that salespeople’s behavior is consistent with the theory. Design/methodology/approach – The authors conduct regression analyses using the transaction data provided by two North American auto dealerships. The authors construct a daily measure of varying incentive intensity and evaluate its impact on the distribution of individual daily sales and the dealership’s gross profit rate. Findings – The authors find that the daily measure of varying incentive intensity has a positive effect on the distribution of individual daily sales and a negative impact on the dealership’s gross profit rate. The results suggest that: salespeople adjust their effort levels in response to the intensity of incentives
and they game the system by lowering the prices when the marginal return to doing so is high. Research limitations/implications – The study shows that there is a high cost associated with the discontinuous nonlinear pay scheme, raising the question of why many auto dealerships use it. Originality/value – This paper sheds light on the undesirable aspects of discontinuous and nonlinear incentive schemes, varied performance and gaming, by quantifying the effects of the worker’s behavior.

We combine class performance data from an undergraduate management course with students’ personal records to examine how group diversity affects group work performance and individual learning. Students are exogenously assigned to groups. We find that, on average, male-dominant groups performed worse in their group work and learned less (based on their grades in individually taken exams). This gender effect is highly significant in individual learning outcomes providing evidence that gender diversity is influential in the level and nature of knowledge transfers within groups. The results are robust to controlling for the team governance form, a unique feature in our study. Finally, racial diversity had no significant effect on group or individual performances.

In this article, we empirically analyze the effect of team characteristics on a team's choice of group contract type (its governance structure) and examine the combined impact of team characteristics and the group contract choice on group and individual performance in a classroom setting. We utilize endogenous dummy variable models in both group-level and individual-level analyses due to the expected endogeneity of the contract choice. The estimation results confirm a statistically significant positive effect of a governance structure, democratic contract that includes a mechanism to punish free-riders on both group and individual performance. We also estimate switching regression models to account for the possible heterogeneous treatment effects but do not find any significant difference between the treated and the nontreated in the effect of the democratic contract option implying that the contract choice is not necessarily motivated by its performance-enhancing effect.

This paper begins by constructing a team-theoretical model of organizational adaptation and coordination with three distinct task coordination modes: vertical control, horizontal coordination, and hybrid coordination. The model is then used to provide fresh insights on complementarities involving team work organization, communication channels, training and hiring, and other human resource management practices, and illustrate how such choice of practices is affected by the firm's output market conditions. Our econometric analysis of new data from japan which provide up-to-date information on the adoption of new team-based instruments for a horizontal coordination system (cross-functional problem solving project teams and Self-Managed Teams) yields results that are broadly consistent with the theory. First, new team-based instruments are more likely to be adopted by firms with well-established formal shop-floor-based communication channels (such as shopfloor committees), while they are much less likely to be adopted by firms with well-established information sharing institutions such as joint labor-management committees, which presumably enhance the efficiency of the vertical control system by minimizing labor-management communication errors. Finally, firms in more competitive markets and those with a higher concentration of sales among a small number of customers are more likely to adopt both types of team, whereas firms facing more erratic price movement tend not to adopt Self-Managed Teams. (C) 2011 Elsevier B.V. All rights reserved.

The theoretical literature on managing R&D pipelines is largely based on real option theory making decisions about undertaking, continuing, or terminating projects. The theory typically assumes that each project or causally related set of projects is independent. However, casual observation suggests that firms expend much effort on managing and balancing their R&D pipelines, where managing appears to be related to the choice of R&D selection thresholds, project risk, and whether to buy or sell projects to fill the pipeline. Not only do these policies appear to differ across firms, they also appear to vary over time for the same firm. Changes in management policies suggest that the choice of R&D selection thresholds is a time-varying strategic decision and there may be some type of vertical interdependency among R&D projects in different stages. In this paper we develop a model using dynamic-programming techniques that explain why firms vary in their R&D project-management policies. The novelty and value of our model derives from the central insight that some firms invest in downstream cospecialized activities that would incur substantial adjustment costs if R&D efforts are unsuccessful whereas other firms have no such investment. If transaction costs in technology markets are positive, which implies that accessing the market for projects is costly, these investments lead to state-contingent project-selection rules that create a dynamic and vertical interdependency among R&D activities and product mix. We describe how choices of R&D selection thresholds, preferences over project risk, and use of technology markets for the buying and selling of projects differ by the state of the firm's pipeline, the magnitude of transaction costs in the adjustment market, and the magnitude of technology costs. These results yield interesting managerial and public policy implications.

I develop a model in which different technological conditions lead to distinct equilibria with different patterns in labor mobility, promotion, earning distribution, and provision of firm-sponsored training. Key is the asymmetric learning of workers' characteristics. Because of the information that is conveyed to the market by promotion, firms have incentives to adopt strategic promotion policies, which result in different patterns in the use of internal labor market. The theory explains well the differences between the Japanese and the United States labor markets.

This paper theoretically and empirically examines the conventional wisdom in procurement management that often portrays supply inspections and supplier plant inspections as substitutes. We develop a theoretical model that focuses on potential internal spillover costs of the buyer receiving low-quality inputs and external spillover costs should low-quality inputs go undetected. Key to our analysis is the condition of whether a buyer can commit to the intensity of supply inspection. If a buyer cannot commit, supply inspections and plant inspections are substitutes, as widely believed. The two types of inspections, however, may become complements when a buyer is able to commit to the intensity of supply inspection. Complementarity is especially likely when (a) external spillovers are smaller than expected internal spillovers, which depends on the level of buffer inventory, (b) when knowledge sharing between buyer and supplier becomes more effective as the supplier allocates more resources to learning for quality improvement, or (c) when hiding aspects of the production processes is easier for suppliers. We empirically evaluate our model with a new data set drawn from a large biotechnology manufacturer. Empirical results provide broad support for theory, which, we argue, might help to explain variation in inspection practices across industries. Our theory and empirical analysis contribute to the literatures on strategic management, organizational economics, and procurement management by highlighting the organizational and strategic use of inspection practices.