Browsing by Author "Nault, Barrie R"
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- ItemOpen AccessAdded Value and Pricing with Information Technology(MIS Quarterly, 1995-12) Nault, Barrie R; Dexter, Albert S.The extent to which the added value to customers from a supplier's application of information technology is manifested through premium prices of a traded good is evaluated. It is demonstrated that IT can add value to an otherwise undifferentiated good, and it is shown how these benefits accrue to customers from the adoption of IT. Analyzing a case in which the traded good is a homogeneous commodity - commercial fueling - it is shown that the critical impacts of IT are convenience and control - that is, convenience that provides improved access to fuel and control that reduces problems of delegating purchasing authority for the customer. The value of this additional service is exhibited in premium prices customers are willing to pay for the IT-enhanced traded good, relative to the same good without IT. Compared to the price without IT, statistical analysis of the supplier's pricing history demonstrates that the application of IT to commercial fuel yielded price premiums of between 5% and 12% of the retail fuel price.
- ItemOpen AccessAdoption, Transfers and Incentives in a Franchise Network with Positive Externalities(INFORMS, 1994) Nault, Barrie R; Dexter, Albert S.Franchising arrangements that allow franchisees with exclusive territories to own their customers are studied. This permits franchisees to benefit from positive externalities in the franchise network through inter-franchise transfers based on the purchases by their customers at other franchises on the network. Using the structure of a single franchisor and many franchisees, its is shown that interfranchise transfers between franchisees and incentives for franchisee investment in the expansion of their customer base are critical both to the size and to the benefits derived from the franchise network. Specifically, it is found that when individual franchisees make investments in marketing effort to increase their customer base, the franchisor's setting of the inter-franchise transfer trades off the positive effects on network size with the negative effects of removing franchisee incentive for investment. This result is due to the fact that inter-franchise transfers encourage investment, use of the royalty and inter-franchise transfer directly dissipates franchisee profits, and indirectly dissipates franchisee profits through less than universal adoption, thereby causing franchisees to under invest. As compared to traditional franchise systems, however, use of the inter-franchise transfer results in franchises making greater investments than they otherwise would.
- ItemOpen AccessAgent-Intermediated Electronic Markets in International Freight Transportation(Elsevier, 2006-05) Nault, Barrie R; Dexter, Albert S.In many industries, agent-intermediated markets are inefficient because information about latent demand and supply never gets to market. We demonstrate how information technology (IT) in the form of an agent-intermediated electronic market (EM) alleviates this problem by enhancing the agent-as-market-maker using the international freight transportation industry as an example. We find that an EM increases agent participation and investment thereby increasing demand and supply. Because of tradeoffs between incentives for investment, the EM chooses a profit allocation between agents resulting in limited agent participation. In addition, when price depends on demand and supply balances, price and volume in the market can increase simultaneously.
- ItemOpen AccessAre There Contagion Effects in IT Outsourcing?(Elsevier, 2011-11) Nault, Barrie R; Han, Kunsoo; Mann, Arti; Kauffman, Robert J.We model the diffusion of IT outsourcing using announcements about IT outsourcing deals. We estimate a lognormal diffusion curve to test whether IT outsourcing follows a pure diffusion process or there are contagion effects involved. The methodology permits us to study the consequences of outsourcing events, especially mega-deals with IT contract amounts that exceed US$1 billion. Mega-deals act, we theorize, as precipitating events that create a strong basis for contagion effects and are likely to affect decision-making by other firms in an industry. Then, we evaluate the role of different communication channels in the diffusion process of IT outsourcing by testing for the fit of the mixed influence model at the industry level. This helps us to evaluate the consistency of evidence at two different levels of analysis. We also evaluate two flexible diffusion models: the Gompertz and Weibull models. Our results show that the diffusion patterns of IT outsourcing do not appear to be lognormal, suggesting that IT outsourcing does not follow a pure diffusion process. Instead, we find the presence of contagion effects in the diffusion of IT outsourcing. During periods of the most rapid outsourcing growth – the contagion periods – the actions of the large and more visible firms may provide exemplars for smaller firms, reducing their inhibitions about committing to IT outsourcing. We also find that the results of the mixed influence and the Weibull models, which provide the best fit for overall IT outsourcing diffusion patterns, are potentially indicative of the existence of spillovers that might drive the observed contagion effects at the industry level.
- ItemOpen AccessBalancing Business and Technical Objectives for Supporting Software Evolution(Serials Publications, 2010-12) Nault, Barrie R; Ullah, Muhammad Irfan; Wei, Xuequi (David); Ruhe, GuentherContext: Successful software systems continuously evolve to accommodate feature requests of a diverse customer-base. At some point during this evolution, the variety of customer needs and increased system complexity suggests the consideration of a software product line (SPL). Aim: The goal of this research is to support the decision maker facing the enhancement of an evolving software system (ESS) to determine the most appropriate product line design (out of a given set of candidate SPL portfolios) to minimize the technical risk and maximize the business value. Method: The proposed method called OPTESS is aimed at finding an evolution plan for the ESS which optimizes both the given technical and business objectives. Business analysis using a value-based pricing mechanism is applied to a set of initially proposed SPL portfolios (for enhancing the ESS) such that profit is maximized. Technical analysis is applied to the same initially proposed SPL portfolios to minimize the risk of failure of ESS due to implementation of new features. Business and technical analyses improve the performance of solutions for their respective objectives by modifying the feature sets of candidate SPL portfolios. OPTESS helps the decision maker to select a plan for enhancement of ESS by performing trade-off analysis on the economic and technical objectives. Results: The method was initially evaluated by a case study for a set of 9 new candidate features to be added to an open source text editing system called jEdit. OPTESS helped the decision maker to identify 3 non-dominated solutions considered to be of highest preference for decision-making when looking at both technical and economic criteria.
- ItemOpen AccessConverting Technology to Mitigate Environmental Damage(INFORMS, 2004-08) Nault, Barrie R; Levi, Maurice D.There are many situations where policy makers would like to induce firms to make a major discrete conversion in production technology to help the environment. This paper examines how heterogeneity in the operating condition of firms’ plant and equipment, which cannot be observed by policy makers, can affect the choice between incentives to encourage conversion to a cleaner technology. By relating different conditions of firms’ plant and equipment to production costs, extent of environmental damage, and cost of conversion to a cleaner technology, we show when a perfectly discriminating incentive to encourage conversion is not feasible. In addition, we show that firms with plant and equipment in better condition will convert their technology to mitigate their environmental damage, and firms with plant and equipment in poorer condition will not. This and a series of additional results lead to conditions under which an administratively simple uniform lump-sum incentive to switch to cleaner technology is preferable to one based on output. These results and conditions extend to cases where there are network externalities in conversion, and where there is strategic timing in firms’ choice of when to convert.
- ItemOpen AccessCooperative Planning, Uncertainty, and Managerial Control in Concurrent Design(Informs, 2007-03) Nault, Barrie R; Mitchell, Victoria L.We examine whether cooperative planning and uncertainty affect the magnitude of rework in concurrent engineering projects with upstream and downstream operations, and explore the impact of such rework on project delays. Using survey data from a sample of 120 business process (BP) redesign and related information technology (IT) development projects in healthcare and telecommunications, our results indicate that upstream (BP) rework and downstream (IT) rework is mediated and mitigated by cooperative planning through upstream/downstream strategy coupling and cross-functional involvement. In addition, uncertainty related to a lack of firm or industry experience with such projects increases the magnitude of upstream rework but not downstream rework or the amount of cooperative planning. After accounting for project scope, implementation horizon and whether delays are anticipated, we find that project delay is primarily influenced by the magnitude of downstream rework and downstream delay: the magnitude of both upstream and downstream rework significantly increases downstream delay, which significantly increases project delay. However, the magnitude of upstream rework does not directly affect project delay. These results suggest that project delay is under managerial control as cooperative planning is a managerial function that reduces downstream rework, while uncertainty from a lack of experience with the design affecting upstream rework is not directly under managerial control.
- ItemOpen AccessDisruptive Technologies: Explaining Entry in Next Generation Information Technology Markets(INFORMS, 2000-09) Nault, Barrie R; Vandenbosch, Mark B.The most difficult challenge facing a market leader is maintaining its leading position. This is especially true in information technology and telecommunications industries, where multiple product generations and rapid technological evolution continually test the ability of the incumbent to stay ahead of potential entrants. In these industries, an incumbent often protects its position by launching prematurely to retain its leadership. Entry, however, happens relatively frequently. We identify conditions under which an entrant will launch a next generation product thereby preventing the incumbent from employing a protection strategy. We define a capabilities advantage as the ability to develop and launch a next generation product at a lower cost than a competitor, and a product with a greater market response is one with greater profit flows. Using these definitions, we find that an incumbent with a capabilities advantage in one next generation product can be overtaken by an entrant with a capabilities advantage in another next generation product only if the entrant’s capabilities advantage is in a disruptive technology that yields a product with a greater market response. This can occur even though both next generation products are available to both firms. We also show that the competition may require the launching firm to lose money at the margin on the next generation product.
- ItemOpen AccessDynamic Price Quotation in a Responsive Supply Chain for One-of-a-Kind Production(Elsevier, 2012-09) Nault, Barrie R; Zhang, Jian (Ray); Yonag, Wensheng; Tu, YiliuThis paper studies the setting in which a one-of-a-kind production (OKP) firm offers two types of orders (due-date guaranteed and due-date unguaranteed) at different prices to the sequentially arriving customers, who are also OKP production firms. The prices for two types of orders are quoted to each customer on its arrival. We study two problems in this setting. First, we model a dynamic pricing strategy (DPS) and compare our DPS with a constant pricing strategy (CPS). Through a numerical test, we show that both the firm and its customers are better off when our DPS is employed, so that the DPS improves overall performance of the supply chain. Through an industry case, a custom window production firm, we show how to apply the proposed DPS when products are complex. We also develop a method to adaptively estimate the firm's available capacity, the number of future arrivals and the distributions of the customers' willingness to pay and impatience factor. The simulation result shows that, when multiple distribution parameters are unknown, the proposed parameter estimating method results in estimates close to the true values.
- ItemOpen AccessEating Your Own Lunch: Protection Through Preemption(INFORMS, 1996-06) Nault, Barrie R; Vandenbosch, Mark B.Recent discussions of management practices among successful high-technology companies suggest that one key strategy for success is to ''eat your own lunch before someone else does." The implication is that in intensely competitive. or hyper competitive, markets, firm' with a leading position should aggressively cannibalize their own current advantages with next-generation advantages before competitors step in to steal the market. Given the pace of technological and other types of change. such strategy often requires creating next-generation advantages while the current advantages are still profitable- that 1s, trading current profits for future market leadership. We capture the tradeoff between a market leader's willingness to reap profits with its current set of advantage;, and its desire to maintain market leadership by investing in the next generation. Using a competitive model that determines the equilibrium launch time of a next generation advantage. we find that, in absence of lower launch costs for an entrant, the incumbent will be first to launch to maintain its market leadership. That is, regardless of the severity of penalties for being a follower in the next generation, it is optimal for the incumbent to preempt the entrant by launching early -even if the incumbent consequently loses money at the margin. We derive a straightforward condition to determine when an incumbent will make negative incremental profits from its investment in the next-generation advantage. The fact that the condition does not depend on the size of the incumbent\ investment costs indicates that the severity of competition. Rather than the costs of developing and introducing a next generation advantage, is what forces firms to cannibalize at a loss.
- ItemOpen AccessAn efficient heuristic for adaptive production scheduling and control in one-of-a-kind production(Elsevier, 2011) Nault, Barrie R; Li, Wei; Xue, Deyi; Tu, YiliuEven though research in flow shop production scheduling has been carried out for many decades,there is still a gap between research and application especially in manufacturing paradigms such as one-of-a-kind production(OKP) that intensely challenges realtime adaptive production scheduling and control.Indeed,many of the most popular heuristics continue to use Johnson’s algorithm(1954) as their core. This paper presents a state space(SS)heuristic,integrated with a closed-loop feedback control structure,to achieve adaptive production scheduling and control in OKP. Our (SS) heuristic,because of its simplicity and computational efficiency,has the potential to become a core heuristic.Through a series of case studies,including an industrial implementation in OKP,our SS-based production scheduling and control system demonstrates significant potential to improve production efficiency.
- ItemOpen AccessElectronic Communication Innovations: Overcoming Adoption Resistance(Springer, 1998-04) Nault, Barrie R; Dexter, Albert S.; Wolfe, RichardCustomers often resist the adoption of electronic communication innovations offered by suppliers because of customer adoption costs. In addition to tangible adoption costs, for example the purchase of new technology, there are intangible costs, often related to organizational inertia and behavioral resistance. We study electronic communication innovations that aid transactions of a marketed good between suppliers and customers, and show how suppliers can encourage innovation adoption. This encouragement includes not only the price of the marketed good but also the design of the innovation and innovation support given to customers. We argue that, first, innovation support given to customers by suppliers to facili- tate adoption compensates for customers’ adoption costs. Second, because customers tradeoff adoption benefits with the price of the marketed good, the impact of innovation design on adoption benefits counterbalances changes in the price of the marketed good.
- ItemOpen AccessEquivalence of Taxes and Subsidies in the Control of Production Externalities(INFORMS, 1996-03) Nault, Barrie RWe are always better off having many policies that can achieve a given objective because it extends the criteria that can be included in policy selection. This paper studies the equivalence between taxes and subsidies in the control of negative production externalities. In our models, under the tax regime, firms that take no treatment action to mitigate the damage caused by their negative externalities are punished, whereas under the subsidy regime, firms are rewarded for externality treatment activities. We employ a formulation where firms differ in the vintage of their production technology and as a result differ in profitability, negative externality generation,·and the cost of treatment. We consider three measures as policy objectives: total output, total damage from negative externalities, and social welfare. We find reason able conditions where, with an appropriate setting of uniform lump-sum and unit subsidies, the policy maker can achieve a pair of policy objectives equivalent to those obtained using unit taxes. Thus, either tax or subsidy regimes can be used to achieve desired levels of one or two policy objectives, allowing other factors such as fairness, equity, or international trade issues to be considered in policy selection.
- ItemMetadata onlyAn Evaluation of Empirical Research in Managerial Support Systems(Elsevier, 1990) Nault, Barrie R; Benbasat, IzakThis paper describes, summarizes and comments on the empirical studies in the use of three information technologies to support managerial activities: decision support systems (DSS), group decision support systems (GDSS), and expert systems (ES). These are collectively labelled as managerial support systems (MSS). A classification scheme to organize empirical research in MSS is proposed. An overview of empirical work on two major research themes, namely MSS “design” and “effects of use” of MSS, is then presented for the years 1981–1988. Following this overview, the research strategies suitable for empirical research in MSS are discussed. The paper concludes with suggestions about future research directions in the field.
- ItemOpen AccessAn Evaluation of Empirical Research in Managerial Support Systems - ABSTRACT(Elsevier Science Publishers B.V. (North-Holland), 1990-09-06) Nault, Barrie RThis paper describes, summarizes and comments on the empirical studies in the use of three information technologies to support managerial activities: decision support systems (DSS), group decision support systems (GDSS), and expert systems (ES). These are collectively labeled as managerial support systems (MSS). A classification scheme to organize empirical research in MSS is proposed. An overview of empirical work on two major research themes, namely MSS “design” and “effects of use” of MSS, is then presented for the years 1981-1988. Following this overview, the research strategies suitable for empirical research in MSS are discussed. The paper concludes with suggestions about future research directions in the field.
- ItemOpen AccessExperience information goods: “Version-to-upgrade”(Elsevier, 2013) Nault, Barrie R; Wei, Xueqi (David)In contrast to “search goods” whose true quality can be determined before inspection, we examine information goods that are “experience goods” — goods whose true quality can only be determined through use. We analyze a “version-to-upgrade” strategy where a monopolist generates vertically differentiated versions as bridges that lead consumers to experience the goods so that they can assess their true quality, and then provide upgrades to consumers that initially purchase lower quality versions. Adopting a two-stage model, we find that if consumers have homogeneous expectations about quality before experience, then the version-to-upgrade strategy involves upgrading all the consumers that in the first stage purchased the low quality version. In this way, consumers that upgrade effectively pay a tax for learning. When consumers have heterogeneous expectations about quality before experience, if consumers are pessimistic, then the version-to-upgrade strategy still drives all consumers to upgrade. However, if consumers are optimistic, then, the version-to-upgrade strategy may induce only some of the consumers that initially purchased the low quality version to upgrade. As profits from upgrades increase, the monopolist sets the quality of the low quality version to the lowest quality that can feasibly reveal the true quality, justifying the use of trial or demonstration versions.
- ItemOpen AccessFreely Determined Versus Regulated Prices: Implications for the Link Between Money and Inflation(Wiley, 1993-05) Nault, Barrie R; Dexter, Albert S.; Levi, Maurice D.This paper explores the importance for the measured link between money and inflation of measuring inflation from indices that include prices that, by virtue of being regulated, are unlikely to respond systematically to the forces of supply and demand. 1 The inclusion of regulated prices for such items as property taxes, telephone and postal charges, vehicle registration, and public transportation means that even if supply and demand are systematically related to money, the measured overall rate of inflation may not be. Certainly, it would seem reasonable to believe that the nature of the setting and subsequent maintenance of regulated prices would result in them responding differently market forces that might themselves be affected by money, than would relatively unfettered prices such as those of many food items, furniture, insurance, household repairs, and automobile servicing. Indeed, it would seem reasonable to believe that the link between money and freely determined market prices would be more systematic than that between money and regulated prices, a belief that our results strongly confirm.
- ItemOpen AccessImplementable Mechanisms to Coordinate Horizontal Alliances(INFORMS, 2001-06) Nault, Barrie R; Tyagi, Rajeev K.Unprecedented changes in the economics of interaction, mainlyas a result of advances in information and telecommunication technologies such as the Internet, are causing a shift toward more networked forms of organizations such as horizontal alliances—that is, alliances among firms in similar businesses that have positive externalities between them. Because the success of such horizontal alliances depends cruciallyon aligning individual alliance member incentives with those of the alliance as a whole, it is important to find coordination mechanisms that achieve this alignment and are simple-to-implement. In this paper, we examine two simple coordination mechanisms for a horizontal alliance characterized by the following features: (i) firms in the alliance can exert effort onlyin their “local” markets to increase customer demand for the alliance; (ii) customers are mobile and a customer living in a given alliance member’s local area mayhave a need to buyfr om some other alliance member; and (iii) the coordination rules followed bythe alliance determine which firms from a large pool of potential member-firms join the alliance, and how much effort each firm joining the alliance exerts in its local market. In this horizontal alliance setup, we consider the use of two coordination mechanisms: (i) a linear transfer of fees between members if demand from one member’s local customer is served byanother member, and (ii) ownership of an equal share of the alliance profits generated from a royalty on each member’s sales. We derive conditions on the distribution of demand externalities among alliance members to determine when each coordination mechanism should be used separately, and when the mechanisms should be used together.
- ItemOpen AccessIndustry Level Supplier-Driven IT Spillovers(Informs, 2007-08) Nault, Barrie R; Cheng, Zhuo (June)We model and estimate the effects to downstream productivity from information technology (IT) investments made upstream. Specifically, we examine how an industry’s productivity is affected by the IT capital stock of its suppliers. These supplier-driven IT spillovers occur because, due to competition in the supplying industry, quality benefits from suppliers’ IT investments can pass downstream. If the output deflators of supplying industries (consequently the intermediate input deflator of the using industries) do not capture the quality improvement from IT, then the output productivity of the supplying industries is mismeasured or misassigned. We develop and empirically test a model capturing these supplier-driven effects using data on 85 manufacturing industries at the three-digit SIC code level. We find that for a 10.5% increase in suppliers’ IT capital, the suppliers’ output increases by 0.63%–0.70%, which is more than covering the cost of the increase in suppliers’ IT capital. In addition, this increase in suppliers’ IT capital increases the average downstream industry’s output by $66–$72 million, thereby confirming substantial supplier-driven IT spillovers downstream. We also infer the magnitude of the measurement error of the price deflator of the intermediate input resulting from the failure to account for IT-related quality improvement, finding that the measured price deflator overestimates the true deflator by approximately 30% at the mean level of IT capital.
- ItemOpen AccessInformation Exploitation and Interorganizational Systems Ownership(M.E. Sharpe, Inc. - Part of Routledge, 2004) Nault, Barrie R; Han, Kunsoo; Kauffman, Robert J.