Debi P. Mishra

Modularization as a Supplier Opportunism Safeguard in Knowledge Process Offshoring Relationships: Theory and Empirical Evidence

Buyers often procure products and services from suppliers in low cost countries like India and China. Such overseas procurement, or offshoring, offers significant direct cost savings vis-a-vis in-house production. Historically, offshoring was primarily confined to manufactured goods. However, in recent years, this practice has spread to the service sector as modern technology has made it possible for geographically dispersed buyers and sellers to interact in real time and exchange data. One area that has witnessed explosive growth is the Knowledge Process Offshoring (KPO) industry comprising services such as marketing and advertising research, financial and management consultancy, research and development, and business and technical analyses, among others. While the main rationale for offshoring knowledge based services centers on direct cost advantages, buyers also have to grapple with an unintended and adverse type of cost inefficiency engendered by supplier opportunism. For example, suppliers have an incentive to expropriate quasi rents by deliberately leaking knowledge based specific assets and diverting them to other clients. Such opportunistic actions expose buyers to significant hidden costs since conventional contractual safeguards breakdown due to information asymmetry, temporal and spatial separation, and vastly different institutional environments facing buyers and sellers. Hence, the overall attractiveness of KPO arrangements is contingent upon effective governance of supplier opportunism. This paper investigates some of the preceding issues by drawing upon Transaction Cost Theory perspectives to develop and empirically test a conceptual model about the antecedents and consequences of supplier opportunism in one KPO setting, i.e., marketing research services. Using an online survey methodology, data were collected from 215 current and future buyers in the market research industry. Results show that suppliers tackle knowledge appropriation hazards by deploying creative non contractual safeguards such as modularization and standardization. Such deterrents curb supplier opportunism and create substantial buyer efficiencies. The paper discusses several managerial and research implications, and outlines the scope for further research.

Marketing and the Global Financial Crisis (GFC) of 2008: A Theoretical Analysis

It is widely recognized that the Global Financial Crisis (GFC) of 2008 began when sub prime borrowers defaulted on loans made by sellers. Complex dependencies among various players in the mortgage industry further exacerbated this problem. For example, derivative products like mortgage backed securities were created from loan tranches of varying quality leading to erroneous ratings by credit agencies and inefficient signaling outcomes. This study looks at the ‘marketing’ side of the GFC. Given marketing’s emphasis on the exchange paradigm, the basic premise of this paper is that buyer-seller interactions in the mortgage market can be gainfully studied using a ‘marketing’ lens. To achieve this objective, this paper develops a two-sided model of agency relationships in the mortgage industry and identifies fault lines that contributed to the GFC meltdown. The paper discusses several approaches for designing efficient markets and delineates implications for academics and practitioners.

Distribution Channels for Consumer Goods in India: Past, Present, and Future Directions

India’s economy is projected to grow at a fast clip over the next few years. With increasing purchasing power and a rising middle class, the fast moving consumer goods (FMCG) industry is posed to grow dramatically. To leverage opportunities, FMCG manufacturers and retailers will have to develop and implement deliberate strategies for gaining market access. This paper provides an in-depth look at the strategic role of distribution channels in the FMCG industry. Specifically, it surveys the state of current distribution channels in India and identifies four archetypes that FMCG firms can use as a starting point to develop their distribution strategy in the future.