Sharing Knowledge to an Entrant for Production Investment Confronting COVID-19: Incentive Alignment and Lose-Lose Dilemma.

Facing the urgent demand of medical devices for COVID-19 treatment, many automakers have recently begun manufacturing ventilators, even though they are inefficient in production and uninformed of demand variability. To help them, some incumbent ventilator manufacturers have chosen to share knowledge, such as production techniques and demand information. Clearly, the incumbent ventilator manufacturers are fulfilling social responsibility, but is their knowledge sharing rewarding, especially when the automakers are entrant rivals? If possible, are win-win situations in the sense of social responsibility and firms' profitability identifiable? In this work, we develop a game-theoretic model in which an incumbent and an entrant ventilator manufacturer engage in two-dimensional competition in production investment and sales volume. We examine the incumbent manufacturer's profitability with and without knowledge sharing by formulating the tradeoffs among supply expansion, intensified competition, and the entrant's production efficiency improvement and demand variance reduction. We identify both "win-win" and "lose-lose" situations for the two competing manufacturers. Specifically, we find that free knowledge could be harmful for the entrant manufacturer, but the incumbent manufacturer benefits from knowledge sharing when market competition is intense, or when market competition is mild but the production investment efficiency varies.

Conflict management in a multinational firm's production shifting decisions.

In recent years, many apparel multinational firms (MNFs) have shifted their production from traditional manufacturing bases (e.g., China) to the emerging ones located in Southeast Asia (e.g., Vietnam and Bengal). The interactions among market sizes, MNF's competition with local rival and the global tax rules play key roles in the MNF's decisions. In this paper, we study the preferences of a MNF and its contract manufacturer (CM) over two manufacturing outsourcing structures and investigate whether their objective conflicts can be reconciled. The MNF relies on the CM for production and sells goods in both Chinese and Southeast Asian markets. It is optional for the MNF to use a CM located in China, but has to suffer from the CM's differential prices because of China's partial value-added tax (VAT) refund policy. It is also optional for the MNF to use a CM located in Southeast Asia, resulting in uniform production fee for the goods sold in two markets. The former is traditional outsourcing structure (TS), and the latter is shifted outsourcing structure (SS). Interestingly, we find that, the MNF may first prefer SS, then prefer TS, and back to prefer SS, as the relative market potential between the Southeast Asian market and the Chinese market increases. The CM's preferences may switch twice, too. We identify the opportunities where the preferences of the MNF and the CM are aligned, which are driven by China's partial VAT refund policy.

Better Demand Signal, Better Decisions? Evaluation of Big Data in a Licensed Remanufacturing Supply Chain with Environmental Risk Considerations.

Big data ability helps obtain more accurate demand signal. However, is better demand signal always beneficial for the supply chain parties? To answer this question, we investigate a remanufacturing supply chain (RSC), where demand uncertainty is significant, and the value to reduce environmental risk is large. Specifically, we focus on a licensed RSC comprising an original equipment manufacturer (OEM) and a third-party remanufacturer (3PR). The latter pays a unit license fee to the former, and can be risk averse to the demand of remanufactured products. We show that the OEM and the risk-neutral 3PR always have incentives to improve their big data abilities to increase their profits. However, when the 3PR is risk averse, big data might hurt its profit: the value of big data is positive if its demand signal accuracy is sufficiently low. Interestingly, we find that while information sharing hurts the 3PR, it benefits the OEM as well as the supply chain. Thus, if costly information sharing is allowed, a win-win situation can be achieved. We also find that information sharing generates more valuation when the 3PR is risk averse than that when the 3PR is risk neutral. More importantly, we find that the 3PR's risk attitude and demand signal accuracy can significantly mitigate the negative environmental impact (measured by the amount of the waste): (1) the more risk neutral the 3PR is, the better the environment is; (2) the more accurate demand signal is, the better the environment is.