David Bendig

Towards a Technology-Oriented Theory of Production

Manufacturing companies in high-wage countries—one of the pillars of the European national economies—are particularly exposed to changes in global markets and rising market volatility. It is therefore necessary that manufacturers in these countries not only focus on reducing costs, but instead address the entire set of commonly defined operational capabilities: cost, quality, flexibility, and delivery performance. Although the optimization of these factors has been viewed since long as being largely mutually exclusive, we argue that advances in modern production technology might enable the resolution of the involved dichotomous relationships. In this chapter, we hence aim at presenting a technology-oriented theory of production that operationalizes the link between technological advances and possibilities to strengthen the four competitive priorities of manufacturing companies. For this purpose, existing production theories are first reviewed to ground and classify our theory. We subsequently formalize the technology-oriented theory by adopting a profitability assessment perspective derived from the insights of all projects within the Cluster of Excellence Integrative Production for High-Wage Countries.

Share Repurchases and Myopia: Implications on the Stock and Consumer Markets

Investor demand has promoted share repurchases to the dominating payout instrument for U.S. firms. However, critics worry that the repurchase boom leads to firms neglecting long-term investments. Even worse, scholars have shown that investor pressure also motivates firms to cut marketing investments with the aim of boosting short-term income, a practice called myopic marketing management. Extant theory still lacks an understanding of whether and how the co-occurrence of share repurchases and myopic marketing affects firm stakeholders such as investors and consumers. Using a large-scale cross-industry sample, the authors reveal that there is a higher share of firms cutting marketing investments among repurchasing firms than among nonrepurchasing firms. Furthermore, investors immediately respond negatively to myopic firms that also repurchase shares. Finally, repurchases and myopic marketing are also associated with an increase in product recalls. This first study to assess share repurchases through a marketing lens hence reveals negative effects on both the stock and the consumer markets.