Thesis Defense Presentation: Zhexiong Tao

Mr. Zhexiong TAO, a doctoral student at McGill University in the Operations Management area will be presenting his thesis defence entitled:

MANUFACTURER’S RESPONSES TO EXTERNAL PRESSURES: POWER AND CORRUPTION

Date: Friday, October 6, 2017
Time: 2:15 pm
Location: Room 310 (Samuel Bronfman Building – 1001 Sherbrooke Street West)

All are cordially invited to attend the presentation

Student Committee Chair:  Professor Saibal Ray and Professor Shanling Li

Abstract

This thesis consists of three essays which focus on how manufacturing firms respond to external pressures: supply chain power and corruption.

The first essay examines how weaker manufacturers respond to the dominance of stronger suppliers and/or customers within supply chain relationships. The extant literature on power in supply chains has focused on the dominant players who control and influence the behavior of weaker actors. These weaker actors have been portrayed as passive targets, their roles as decision-makers being largely left unexamined. In contrast, we take the perspective of the weaker manufacturers and find that they counteract the dominance of more powerful partners by using distinctive strategies dependent on the source of the power (suppliers or customers). Specifically, we find that weaker manufacturers often adopt exploration strategies to countervail the power dominance of suppliers, and use exploitation strategies to deal with more powerful customers. In dealing with both dominant suppliers and customers, weaker manufacturers are prone to pursue exploration and exploitation strategies simultaneously, and hence become ambidextrous. We also determine exactly how manufacturers’ responses to powerful chain partners are moderated by external competitive intensity and their own internal resources.

The second essay investigates the influences of exploration and exploitation strategies on supply chain integration which, in turn, affects operational and business performance. Using survey-based data gathered from 788 manufacturers in 22 economies with a wide coverage of Europe, North America, South America, and Asia, we find that manufacturers which pursue exploitation strategies are more likely to gain explicit knowledge from suppliers, customers, and internal sales units, whereas those that pursue exploration strategies often acquire tacit knowledge from suppliers, customers, internal sales units, and internal new product development units. The results of our analysis suggest that manufacturers pursuing exploration strategies are more likely to search a wider scope of inside and outside firms than do manufacturers pursuing exploitation strategies. We reveal that design–manufacturing integration is effective in improving operational and business performance, and customer integration is positively related to operational performance.

The third essay investigates manufacturing firms’ responses to corruption. Specifically, this study examines the effect of home country bribery on firms’ international sourcing by developing two competing hypotheses. On the one hand, home country bribery enables a firm to lower import barriers, thus promoting international sourcing. On the other hand, bribery helps the firm build political connections with local government officials which strengthens the firm’s position within the domestic country and thus decreases the incentive of exploring foreign supply sources. Adopting the instrument variable two-stage least squares method, we test these two competing arguments using a sample of 36,069 firms across 113 countries from the World Bank’s Enterprise Surveys. We find that home country bribery decreases, rather than increases, international sourcing. This suggests that firms that pay more bribes to home country government officials are more likely to choose domestic than foreign suppliers. In general, this dissertation finds that manufacturing firms develop distinctive strategies to deal with different types of external pressures (i.e., supply chain power and corruption). Specifically, we provide empirical evidence that these firms create tailored strategies dependent on whether they are facing powerful suppliers, powerful customers, or both. Further, we find that manufacturers actually reduce their international sourcing intensity in order to respond to home country bribery.