What drives financial performance-resource efficiency or resource slack?: Evidence from U.S. based manufacturing firms from 1991 to 2006

Journal of Operations Management

Volumn 29, Issue 3, 2011, Pages 254-273

  Modi, Sachin B ^a   Mishra, Saurabh ^b  

^a UNIVERSITY OF TOLEDO   (United States)

^b MCGILL UNIVERSITY   (Canada)

Author keywords

Finance operations interface; Inventory; Marketing; Mixed Models; Production; Secondary Data

Indexed keywords

FINANCE/OPERATIONS INTERFACE; FINANCIAL GAINS; FINANCIAL PERFORMANCE; INVENTORY; MANUFACTURING FIRMS; MIXED MODELS; MODEL APPROACH; OPERATIONS MANAGEMENT; RESOURCE EFFICIENCIES; RESOURCE SLACK; SECONDARY DATA; THEORETICAL FRAMEWORK; TIME-PERIODS;

FINANCE; MANUFACTURE; MARKETING; WASTE MANAGEMENT;

INDUSTRY;

EID: 79951704490     PISSN: 02726963     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.jom.2011.01.002     Document Type: Article

References (110)

1. W.J. Abernathy The Productivity Dilemma Roadblock to Innovation in the Automobile Industry 1978 Johns Hopkins University Press Baltimore
2. P.S. Adler, M. Benner, D.J. Brunner, J.P. MacDuffie, E. Osono, B.R. Staats, H. Takeuchi, M.L. Tushman, and S.G. Winter Perspectives on the productivity dilemma Journal of Operations Management 27 2 2009 99 113
3. K.L. Ailawadi, D.R. Lehmann, and S.A. Neslin Revenue premium as an outcome measure of brand equity Journal of Marketing 67 October 2003 1 17 (Pubitemid 37353105)
4. E.A. Anderson, C. Fornell, and R.T. Rust Customer satisfaction, productivity, and profitability: differences between goods and services Marketing Science 16 2 1997 129 145
5. E.T. Anderson, G.J. Fitzsimons, and D. Simester Measuring and mitigating the cost of stockouts Management Science 52 11 2006 1751 1763
6. S.C. Bahadir, S.G. Bharadwaj, and R.K. Srivastava Financial value of brands in mergers and acquisitions: is value in the eye of the beholder? Journal of Marketing 72 November 2008 49 64
7. R.H. Ballou Evaluating inventory management performance using a turnover curve International Journal of Physical Distribution and Logistics Management 30 1 2000 72 85
8. D. Barnes-Schuster, Y. Bassok, and R. Anupindi Coordination and flexibility in supply contracts with options Manufacturing & Service Operations Management 4 2002 171 207
9. M.E. Barth, D.P. Cram, and K.K. Nelson Accruals and the prediction of future cash flows Accounting Review 76 1 2001 27 56
10. H. Berkman, V. Dimitov, P.C. Jain, P.D. Koch, and S. Tice Sell on the news: differences of opinion, short-sales constraints, and returns around earnings announcements Journal of Financial Economics 92 2009 376 399
11. A. Bharadwaj, S.G. Bharadwaj, and B.R. Konsynski Information technology effects on firm performance as measured by Tobin's Q Management Science 45 6 1999 1008 1024
12. L.J. Bourgeois III On measurement of organizational slack Academy of Management Review 6 1981 29 39
13. M.J. Brennan A perspective on accounting and stock prices Accounting Review 66 1 1991 67 79
14. G. Brown, and N. Kapadia Firm-specific risk and equity market development Journal of Financial Economics 84 3 2007 358 388
15. T.R. Browning, and R.D. Heath Reconceptualizing the effects of lean on production costs with evidence from the F-22 program Journal of Operations Management 27 1 2009 23 44
16. A.S. Bryk, and S.W. Raudenbush Hierarchical linear Models: Application and Data Analysis Methods 1992 Sage Publications Newbury Park, CA
17. G.P. Cachon, and M.L. Fisher Supply chain inventory management and the value of shared information Management Science 46 2000 1032 1048
18. A.C. Cameron, and P.K. Trivedi Microeconometrics: Methods and Applications 2005 Cambridge University Press Cambridge, UK
19. V. Capkun, A. Hameri, and L.A. Weiss On the relationship between inventory and financial performance in manufacturing companies International Journal of Operations and Production Management 29 8 2000 789 806
20. M.M. Carhart On persistence in mutual fund performance Journal of Finance 52 March 1997 57 82
21. R.B. Chase, R.F. Jacobs, and N.J. Aquilano Operations Management for Competitive Advantage 11th ed. 2006 McGraw-Hill Irwin New York, NY
22. H. Chen, M.Z. Frank, and O.Q. Wu What actually happened to the inventories of American companies between 1981 and 2000? Management Science 51 2005 1015 1031 (Pubitemid 41344637)
23. J.L.C. Cheng, and I.F. Kesner Organizational slack and response to environmental shifts: The impact of resource allocation patterns Journal of Management 23 1 1997 1 18 (Pubitemid 127173443)
24. S. Chopra, and M.S. Sodhi Managing risk to avoid supply-chain break-down Sloan Management Review 46 Fall 2004 53 61
25. K.H. Chung, and S.W. Pruitt A simple approximation of Tobin's Q Financial Management 23 Autumn 1994 70 74
26. K. Clark Competing through manufacturing and the new manufacturing paradigm: Is manufacturing strategy passé? Production and Operations Management 5 10 1996 42 58 (Pubitemid 126499525)
27. R.W. Coff When competitive advantage doesn't lead to performance: The resource-based view and stakeholder bargaining power Organization Science 10 2 1999 119 133
28. R.T. Crook, D.J. Ketchen Jr., J.G. Combs, and S.Y. Todd Strategic resources and performance: a meta-analysis Strategic Management Journal 29 11 2008 1141 1154
29. R. Cyert, and J. March A Behavioral Theory of the Firm 1963 Prentice Hall Englewood Cliffs, NJ
30. Deming, W.E., 1986. Out of the crisis. Massachusetts Institute of Technology, Center for Advanced Engineering Study, Cambridge, Mass.
31. S. Dutta, O. Narasimhan, and S. Rajiv Success in high-technology markets: is marketing capability critical? Marketing Science 18 1999 547 568
32. J.J. Ebben, and A.C. Johnson Efficiency, flexibility, or both? Evidence linking strategy to performance in small firms Strategic Management Journal 26 13 2005 1249 1259 (Pubitemid 41655080)
33. Eroglu, C., Hofer, C. Lean, leaner, or too lean? The inventory- performance link revisiting. Journal of Operations Management, in press.
34. P.M. Fairfield, R.J. Sweeney, and T.L. Yohn Accounting classification and the predictive content of earnings Accounting Review 71 July 1996 337 355 (Pubitemid 126174080)
35. E.F. Fama Efficient capital markets: a review of theory and empirical work Journal of Finance 25 2 1970 383 417
36. E.F. Fama, and K.R. French Common risk factors in the returns on stocks and bonds Journal of Financial Economics 33 1993 3 56
37. E.F. Fama, and K.R. French The value premium and the CAPM Journal of Finance 61 5 2006 2163 2185 (Pubitemid 44414094)
38. J. Ferrer, J. Arlberg, and J. Hinting Integration: the key to global success Supply Chain Management Review 11 2007 1 4
39. Flitter, E., 2008. Verizon drops on DVR shortage, while oil prices halt Nasdaq rally. Wall Street Journal (February 19).
40. F. Fu Idiosyncratic risk and the cross-section of expected stock returns Journal of Financial Economics 91 2009 24 57
41. L. Fuentelzas, J. Gomez, and Y. Polo Intrafirm diffusion of new technologies: an empirical application Research Policy 32 4 2003 533 551
42. R.R. Fullerton, C.S. McWatters, and C. Fawson An examination of relationships between JIT and financial performance Journal of Operations Management 21 4 2003 383 404
43. S. Gavirneni Information flows in capacitated supply chains with fixed ordering costs Management Science 48 5 2002 644 651 (Pubitemid 34648420)
44. V. Gaur, M.L. Fisher, and A. Raman An econometric analysis of inventory turnover performance in retail services Management Science 51 2 2005 181 194 (Pubitemid 40360161)
45. W.H. Greene Econometric Analysis fifth ed. 2003 Pearson Education, Inc
46. T.S. Gruca, and L.L. Rego Customer satisfaction, cash flow, and shareholder value Journal of Marketing 69 July 2005 115 130 (Pubitemid 41017931)
47. R.W. Hall Zero Inventories 1983 Dow Jones-Irwin Homewood, IL
48. R.H. Hayes, and R. Wheelwright Competing through manufacturing Harvard Business Review 63 1 1985 99 110
49. M. Harry, and R. Schroeder Six Sigma: The Breakthrough Management Strategy Revolutionizing the World's Top Corporations 2000 Currency New York
50. K.B. Hendricks, and V.R. Singhal The effect of supply chain glitches on shareholder value Journal of Operations Management 21 5 2003 501 522
51. K.B. Hendricks, and V.R. Singhal Demand-Supply mismatches and stock market reaction: Evidence from excess inventory announcements Manufacturing & Service Operations Management 11 3 2009 509 524
52. K.B. Hendricks, V.R. Singhal, and R. Zhang The effect of operational slack, diversification, and vertical relatedness on the stock market reaction to supply chain disruptions Journal of Operations Management 27 3 2009 233 246
53. M. Holweg The genealogy of lean production Journal of Operations Management 25 2 2007 420 437 (Pubitemid 46341523)
54. B.W. Jacobs, V.R. Singhal, and R. Subramanian An empirical investigation of environmental performance and the market value of the firm Journal of Operations Management 28 5 2010 430 441
55. K.L. Keller Conceptualizing, measuring, and managing customer-based brand equity Journal of Marketing 57 Jan 1993 1 22
56. D.E. Kieso, J.J. Weygandt, and T.D. Warfield Intermediate Accounting 2004 John Wiley & Sons Inc Hoboken, NJ
57. A.K. King, and M. Lenox Exploring the locus of profitable pollution reduction Management Science 48 2 2002 289 299 (Pubitemid 34292398)
58. A. Krasnikov, and S. Jayachandran The relative impact of marketing, research and development, and operations capabilities on firm performance Journal of Marketing 72 4 2008 1 11
59. A. Krasnikov, S. Mishra, and D.O. Orozco Measuring the financial impact of branding using trademarks: a framework and empirical evidence Journal of Marketing 73 6 2009 154 166
60. L. Lang, and R. Stulz Contagion and competitive intra-industry effects on bankruptcy announcements: an empirical analysis Journal of Financial Economics 32 1 1992 45 60
61. R.P. Lee, and R. Grewal Strategic responses to new technologies and their impact on firm performance Journal of Marketing 68 4 2004 157 171 (Pubitemid 39508318)
62. H. Lee, P. Padamanabhan, and S. Whang Information distortion in supply chain: the bullwhip effect Management Science 43 4 1997 546 558 (Pubitemid 127569855)
63. H. Leibenstein Allocative efficiency vs. X-efficiency American Economic Review 56 1966 392 415
64. B. Lev On the usefulness of earnings and earnings research: lessons and direction from two decades of empirical research Journal of Accounting Research 27 3 1989 153 192
65. D. Levinthal, and J.G. March A model of adaptive organizational search Journal of Economic Behavior and Organization 2 1981 307 333
66. E.B. Lindenberg, and S.A. Ross Tobin's Q ratio and industrial organization Journal of Business 54 January 1981 1 32
67. X. Luo, and N. Donthu Marketing's credibility: a longitudinal investigation of marketing communication productivity and shareholder value Journal of Marketing 70 4 2006 70 91 (Pubitemid 44714011)
68. C.A. Mackinlay The event studies in economics and finance Journal of Economic Literature 35 1 1997 13 39
69. L. McAlister, R. Srinivasan, and M. Kim Advertising, research and development, and systematic risk of the firm Journal of Marketing 71 January 2007 35 48
70. R. Metters Quantifying the bullwhip effect in supply chains Journal of Operations Management 15 2 1997 89 100 (Pubitemid 127382279)
71. D. Mitra, and P.N. Golder How does objective quality affect perceived quality? Short-term effects, long-term effects, and asymmetries Marketing Science 25 3 2006 230 247 (Pubitemid 44064503)
72. N. Mizik, and R. Jacobson The financial value impact of perceptual brand attributes Journal of Marketing Research 15 February 2008 15 32
73. S.B. Modi, and V.A. Mabert Exploring the link between efficient supply chain management and firm innovation: An archival search and analysis Journal of Supply Chain Management 46 4 2010 81 94
74. C. Moorman, and A. Miner Organizational improvisation and organizational memory Academy of Management Review 23 4 1998 698 723
75. D.O. Moses Organizational slack and risk taking behavior: tests of product pricing strategy Journal of Organizational Change Management 5 3 1992 38 54
76. P. Narasimhan, S. Rajiv, and S. Dutta Absorptive capacity in high-technology markets: the competitive advantage of the haves Marketing Science 25 2006 510 524 (Pubitemid 44664560)
77. R. Narasimhan, and S. Talluri Perspectives on risk management in supply chains Journal of Operations Management 27 2009 114 118
78. R.R. Nelson, and S.G. Winter An Evolutionary Theory of Economic Change 1982 Belknap Press Cambridge, MA
79. N. Nohria, and R. Gulati Is slack good or bad for innovation? Academy of Management Journal 39 1996 1245 1264
80. J.A. Ou, and S.H. Penman Financial statement analysis and the prediction of stock returns Journal of Accounting Economics 11 Nov 1989 295 329
81. D.X. Peng, R.G. Schroeder, and R. Shah Linking routines to operations capabilities: a new perspective Journal of Operations Management 26 2008 730 748
82. J. Pontiff, and A. Woodgate Share issuance and cross-sectional returns The Journal of Finance 63 2 2008 921 945
83. E. Rabinovich, M.E. Dresner, and P.T. Evers Assessing the effects of operational processes and information systems on inventory performance Journal of Operations Management 21 1 2003 63 80 (Pubitemid 35452430)
84. A. Rappaport Creating Shareholder Value 1986 The Free Press New York, NY
85. E.D. Rosenzweig, and G.S. Easton Tradeoffs in manufacturing? A meta-analysis and critique of the literature Production and Operations Management 19 2 2010 127 141
86. E.D. Rosenzweig, and A.V. Roth Towards a theory of competitive progression: evidence in high-tech manufacturing Production and Operations Management 13 4 2004 354 368 (Pubitemid 40306049)
87. Roth, A.V., 1996. Competitive progression: Explanation and evidence. In: Voss, C. (Ed.), Manufacturing Strategy in a Global Context. London Business School Press, London UK, pp. 309-314.
88. R.W. Schmenner, and M.L. Swink On theory in operations management Journal of Operations Management 17 1 1998 97 113 (Pubitemid 128419950)
89. R. Shah, and P.T. Ward Lean manufacturing: context, practice bundles, and performance Journal of Operations Management 21 2 2003 129 149
90. R. Shah, and S. Hojunq Relationships among information technology, inventory and profitability: an analysis of level invariance using sector level data Journal of Operations Management 25 4 2007 768 784 (Pubitemid 46764438)
91. Simms, J., 2009. Japan's inventory hangovers. Wall Street Journal (March 8).
92. W. Skinner Manufacturing-the missing link in corporate strategy Harvard Business Review 47 3 1969 136 145
93. W. Skinner Manufacturing strategy on the ''S'' curve Productions and Operations Management 5 1 1996 3 14
94. S. Srinivasan, and D.M. Hanssens Marketing and firm value: metrics, methods, findings, and future directions Journal of Marketing Research 46 3 2009 293 312
95. R.K. Srivastava, T.A. Shervani, and L. Fahey Marketing, business processes, and shareholder value: an organizationally embedded view of marketing activities and the discipline of marketing Journal of Marketing 63 1999 168 179
96. D. Stauffer Risk: the weak link in your supply chain Harvard Business Review 81 2003 3 5
97. F.W. Taylor The Principles of Scientific Management 1911 Harper & Brothers New York
98. D.J. Teece, G. Pisano, and A. Shuen Dynamic capabilities and strategic management Strategic Management Journal 18 7 1997 509 533 (Pubitemid 127467809)
99. J.D. Thompson Organizations in Action 1967 McGraw-Hill New York
100. J. Tobin A general equilibrium approach to monetary theory Journal of Money Credit and Banking 1 Feb 1969 15 29
101. G. van Ryzin, and S. Mahajan On the relationship between inventory costs and variety benefits in retail assortments Management Science 45 1999 1496 1509 (Pubitemid 30523642)
102. S.K. Vickery, C. Droge, and R.E. Markland Production competence and business strategy: do they affect business performance Decision Sciences 24 1993 435 455
103. S.C. Wheelwright Reflecting corporate strategy in manufacturing decisions Business Horizons 21 1 1978 57 66
104. R.E. White, J.N. Pearson, and J.R. Wilson JIT manufacturing: a survey of implementations in small and large US manufacturers Management Science 45 1999 1 15
105. S. Winter Organizing for continuous improvement: evolutionary theory meets the quality revolution J. Baum, J. Singh, Evolutionary Dynamics of Organizations 1994 Oxford University Press New York
106. J.P. Womack, and D.T. Jones Lean Thinking: Banish Waste and Create Wealth in your Corporation 2003 The Free Press New York, NY
107. J.P. Womack, D.T. Jones, and D. Roos The Machine that Changed the World. Rawson Associates 1990 HarperCollins NY
108. S. Wuyts, S. Dutta, and S. Stremersch Portfolios of inter-firm agreements in technology-intensive markets: consequences for innovation and profitability Journal of Marketing 68 2 2004 88 100 (Pubitemid 38544938)
109. M. Yasai-Ardekani Structural adaptations to environments Academy of Management Review 11 1 1986 9 21
110. P.H. Zipkin Does manufacturing need a JIT revolution? Harvard Business Review 69 1 1991 40 50