Brian W. Jacobs

The Financial Impact of FSC Certification in the United States: : A Contingency Perspective

This article focuses on an important and emergent standard for sustainable operations management: the Forest Stewardship Council (FSC) certification. Unlike similar certifications, its focus is on the entire upstream supply chain, reflecting the criticality of supply chain management to ensure sustainable products. We investigate the financial impact from FSC certification, offering valuable decision support for managers considering this certification. Taking a contingency perspective, we view a firms supply chain position and its prior certification to the ISO 14001 standard as influencing the results. Drawing on signaling theory, we suggest that firms farther downstream in the supply chain realize significantly greater abnormal financial performance benefits than firms upstream in the supply chain. We further hypothesize that firms that were not ISO 14001 certified at the time of FSC certification realize significantly greater abnormal financial performance benefits than firms that did have the ISO 14001 certification. To test these hypotheses, we utilize financial data of all publicly traded firms in the United States that have obtained the FSC certification, and assess whether FSC certification leads to abnormal performance benefits considering the above contingencies. Data collected from the FSC Certificate Database and Compustat, employed in an event study, provide support for our hypotheses. Overall, our findings contribute to research on decision making in the context of sustainable operations management, and offer a plausible explanation for contradictory results in prior studies. We highlight the applicability of signaling theory to decision sciences research, and stress the need to consider contingencies in sustainability management research.

Completely synchronous manufacturing for automotive assembly: some lessons learned

Abstract The concepts of synchronous manufacturing look deceptively simple on paper. It appears obvious on the surface that when manufacturing operations are dependent upon one another, then the slowest operation will determine the pace of the combined operations. Theory is one thing. Learning to really get a complex manufacturing and assembly system to work smoothly takes real patience. One of the teaching tools was computer simulation with animation to demonstrate the concepts of synchronous manufacturing. This paper focuses on 3 models developed using this simulation/animation tool.

Toxic Emissions and Financial Performance: The Role of Complementary Strengths in Employee Relations

This research examines the role of complementary strengths in the relationship between firm toxic emissions and financial performance. The research posits and demonstrates that the impact of toxic emissions on performance is moderated by the firm’s employee relations strengths and concerns. This research also posits that the moderating role of employee relations strengths and concerns in the emissions performance relationship is contingent on the firm’s labor productivity. Hypotheses are tested in the context of US manufacturing firms using secondary data drawn from the US Environmental Protection Agency, Compustat, and KLD Research & Analytics. The analyses and discussion suggest that not only do employee relations strengths and concerns influence the firm’s ability to reduce its levels of emissions profitably, but their impact differs based on firm’s labor productivity.

Stock Market Reaction to Supply Chain Disruptions from the 2011 Great East Japan Earthquake

The business press characterized the March 11, 2011 Great East Japan Earthquake (GEJE) as the most significant disruption ever for global supply chains. In the aftermath of the GEJE, there was a great deal of debate about the risks and vulnerabilities of global supply chains and there were calls to redesign and restructure supply chain strategies. To examine this issue, we empirically estimate the effect of the GEJE on the stock prices (or shareholder value) of firms. Our analyses are based on a global sample of 460 publicly traded firms collected from articles and announcements in the business press that identify firms affected by the GEJE. We find that firms experiencing supply chain disruptions due to the GEJE lose on average 3.73% of their shareholder value during the one month period after the GEJE, and the loss remains roughly at this level when measured over the three month period after the GEJE. This level of loss in shareholder value is economically significant. However, if we consider the claims about the widespread and significant disruptions in supply chains caused by the GEJE, together with the rarity of such an event, the loss does not seem inordinately negative. It suggests that supply chains were probably not that vulnerable to the GEJE, and/or they were able to recover quickly and reduce the losses, indicating that they were fairly resilient. We also find that subsequent to the GEJE, upstream and downstream supply chain propagation effects are negative, the contagion effect on firms related to the nuclear industry is very negative and sustained, and although the competitive effect is positive over the first month after the GEJE, much of this effect dissipates over the next two months.

Market Value Implications of Voluntary Corporate Environmental Initiatives (CEIs)

Although firms engage in a variety of practices to manage their internal environmental performance as well as those of their supply chains, and they often promote those efforts to concerned stakeholders, it is not well understood how those voluntary corporate environmental initiatives (CEIs) affect the financial bottom line, and the market value of the firm. In this chapter, we discuss the various types of environmental initiatives that are reported in the business press, and how they can potentially impact firm costs and revenues. We provide empirical evidence of the relationships between CEIs and the market value of the firm.