The acquisition, assimilation, and exploitation of heterogeneous, valuable knowledge-based resources contribute critically to a firm’s competitive advantage and superior performance. Research in supply chain and strategic management further indicates that abnormal returns derive not only from resources within a firm but also from those outside of the firm’s boundaries. Attaining such external resources often involves acquiring knowledge from external ties.  In supply chain management area, researchers have highlighted the positive role of relational ties in fostering performance and knowledge acquisition. Increased socialization between the buyer and supplier contributes to the creation of relational capital that leads to deeper interfirm communication and knowledge sharing. However, recent supply chain management research cautions about the potential dark side of highly embedded ties, which may become a source of blindness that restrict information flows and even bring in the risk of opportunistic exploitation that hurts knowledge flows. Thus it remains unclear whether relational ties facilitate or inhibit knowledge flows between embedded parties.

Dr. Simon Sheng and his colleagues address this controversy by studying the following questions:

What is the real relationship between inter-firm relational ties and knowledge sharing between the two firms? Does the shape of the relationship depend on the strength of the ties?

As an informal governance mechanism, how do relational ties interact with formal governance mechanism, i.e., inter-organizational contracts, to influence knowledge acquisition between two firms?

How does the industrial context surrounding the inter-firm exchanges ( i.e., industrial competitive intensity) influence the impact of relational ties on knowledge acquisition?

As the business landscape becomes more global, managers must navigate cross-cultural relationships with an increasingly diverse set of partners. These relationships are built on economic as well as social considerations. Parties to a business relationship may consider qualities such as financial outcomes, convenience, interpersonal relationships, fairness, trust and other aspects of potential partners as they manage their network of business partnerships.

Given a diversity of cultural backgrounds, it seems that some managers may favor more communal interactions within relationships than would be desirable by the typical American firm. With the drastic increase in global business, it is important to understand that our expectations for relationships may not apply to business partners from other cultures.

In a nutshell, Dr. Lund and his colleagues found that fairness is most important in cultures that are highly avoidant to uncertainty. Of five different cultural dimensions, uncertainty avoidance accounted for the majority of variation across countries in the importance of fairness. Findings also show that increased exposure to diverse cultures through business relationships enhances the importance of fairness.

A new study from the University of Alabama at Birmingham uncovers the critical influence of formal and informal agreements on buyer-supplier opportunism in the marketplace, as well as the need for a moderating government to support businesses in agreements.

“Without agreements in place, buyers and suppliers find ways to take advantage of vulnerable opportunities, or opportunism,” said Simon Sheng, Ph.D., professor in the UAB Collat School of Business. “Our study looks at how different cultures effectively use formal and informal agreements to influence how business is conducted in the marketplace and how the government supports or alters the way business partnerships are managed.”

Imagine sitting in an investment broker’s office with the intent of getting information about investment products that you had been putting off, until now. With retirement looming in the not too distant future, you want to make sure you and your wife can settle into the easy life. You soon notice the agent pulling some papers out of her drawer and anticipating the worst, you brace yourself for the impending sales pitch with a mental reminder to be wary of the “hard sell” that is soon to come. Unfortunately, this is all too common an occurrence in the financial services industry, which has been criticized for a lack of transparency with regard to risks, fees, and the general opaqueness of the information supplied to customers. At issue is the asymmetric information imbalance between the financial agent and the customer. Agents know their products well, but many individual consumers may find it difficult, costly and confusing to obtain information on the thousands of financial products available. Such an information imbalance may encourage divergent risk-seeking behaviors by commission-based agents, particularly when recommending no-load and load mutual funds.  A no-load mutual fund is one in which the agent does not make a commission on the “sale;” whereas a mutual fund that carries a load, is one in which a consumer pays an upfront fee, or commission, upon purchase.

Dr. DeCarlo

1. What factors trigger consumer suspicion when interacting with financial agents?
2. How does consumer product knowledge affect the way financial agents should interact with consumers?
3. Does the agent’s compensation on a financial recommendation, if disclosed, affect consumers in some way? If so, how?  

Increased pressure from large online retailers is reducing brick-and-mortar retailers’ sales and profits, causing numerous store closings on both local and national levels. But community engagement may be an answer for local retailers.

According to a recent study from the University of Alabama at Birmingham’s Collat School of Business, community engagement brings positive outcomes for retailers in two ways: by directly building consumer trust in, and commitment to, the retailer; and by lessening the importance of the retailer’s economic value proposition, or the perceived value of products and services sold.