Customers often evaluate products at brick-and-mortar stores to identify their “best-fit” product but buy it for a lower price at a competing online retailer. This free-riding behavior by customers is referred to as “showrooming,” and we show that this is detrimental to the profits of the brick-and-mortar stores. We first analyze price matching as a short-term strategy to counter showrooming. Price matching allows customers to purchase a product from the store for less than the store’s posted price, so one would expect the price matching strategy to be less effective as the fraction of customers who seek the matching increases. However, our results show that with an increase in the fraction of customers who seek price matching, the store’s profits initially decrease and then increase. While price matching could be used even when customers do not exhibit showrooming behavior, we find that it is more effective when customers do showrooming. We then study exclusivity of product assortments as a long-term strategy to counter showrooming. This strategy can be implemented in two different ways: (1) by arranging for exclusivity of known brands (e.g., Macy’s has such an arrangement with Tommy Hilfiger) or (2) through the creation of store brands at the brick-and-mortar store (T. J. Maxx sells a large number of store brands). Our analysis suggests that implementing exclusivity through store brands is better than exclusivity through known brands when the product category has few digital attributes. However, when customers do not showroom, the known-brand strategy dominates the store-brand strategy. The online appendix is available at https://doi.org/10.1287/mnsc.2017.2764 . This paper was accepted by Chris Forman, information systems.

Multisourcing, the practice of stitching together best-of-breed IT services from multiple, geographically dispersed service providers, represents the leading edge of modern organizational forms. While major strides have been achieved in the last decade in the information systems (IS) and strategic management literature in improving our understanding of outsourcing, the focus has been on a dyadic relationship between a client and a vendor. We demonstrate that a straightforward extrapolation of such a dyadic relationship falls short of addressing the nuanced incentive-effort-output linkages that arise when multiple vendors, who are competitors, have to cooperate and coordinate to achieve the client's business objectives. We suggest that when multiple vendors have to work together to deliver end-to-end services to a client, the choice of formal incentives and relational governance mechanisms depends on the degree of interdependence between the various tasks as well as the observability and verifiability of output. With respect to cooperation, we find that a vendor must not only put effort in a “primary” task it is responsible for but also cooperate through “helping” effort in enabling other vendors perform their primary tasks. In the context of coordination, we find that task redesign for modularity, OLAs, and governance structures such as the guardian vendor model represent important avenues for further research. Based on the analysis of actual multisourcing contract details over the last decade, interviews with leading practitioners, and a review of the single-sourcing literature, we lay a foundation for normative theories of multisourcing and present a research agenda in this domain.

The rapid pace of technological innovation necessitates that information technology (IT) services firms continually invest in replenishing the skills of their key asset base, the human capital. We examine whether human capital investments directed toward employee training are effective in improving employee performance. Our rich employee level panel data set affords us the opportunity to link formal training with performance at the individual employee level. Using a dynamic panel model, we identify a significant positive impact of training on employee performance. A unit increase in training is linked to a 2.14% increase in an employee's performance. Interestingly, we find that in the IT sector, skills atrophy and consequently high-experience employees reap higher returns from training, which highlights the uniquely dynamic nature of IT knowledge and skills. We also find that general training that an employee can utilize outside the focal firm improves employee performance. However, specific training pertinent to the focal firm is not positively linked to performance. On the other hand, although domain and technical training both enhance employee performance individually, the interaction between the two suggests a substitutive relationship. Thus, our findings suggest that the value of training is conditional on a focused curricular approach that emphasizes a structured competency development program. Our findings have both theoretical and practical significance. Most important, they justify increased human capital investments to fuel future growth in this important component of the global economy. This paper was accepted by Lorin Hitt, information systems.

We utilize the event of store opening by a large apparel retailer and use customer-level data to estimate the effect of store presence on the online purchase behavior of its existing customers. We find that the retailer's store openings resulted in an increase in online purchases from such customers. Drawing on the Theory of Planned Behavior and Prospect Theory, we propose two mechanisms to explain this complementary effect of store presence on online purchases by existing customers. These mechanisms are the store engagement effectcustomers making higher online purchases due to higher engagement from store interactions, and the store return effect -reduced risk of online purchase due to the option of store returns. We provide direct empirical evidence of these mechanisms on customer-level data. We further show that these effects increase as customers' distances from the retailer's store reduce due to the store openings. Our findings have significant implications for multichannel retailers.These papers could not differentiate between the two effects because they analyzed sales data at the ZIP code level whereas one needs customer-level purchase data to separate these two factors.Therefore, our first research objective focuses on identifying whether store presence increases online purchases made by existing customers of a multichannel retailer selling products rich in non-digital attributes (e.g. apparel). If this effect were economically significant, then it would be useful to understand the mechanisms that drive this store-facilitation effect for existing customers. An understanding of these mechanisms can help retailers design appropriate marketing policies to improve their online and overall sales.

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A software product becomes less valuable for its consumers over time due to technological and economic obsolescence. As a result, firms have an opportunity to introduce and sell upgrades that provide higher utility to consumers compared to an older and out-of-date software product. In a market that is growing and consists of homogeneous customers, we prove that the optimal upgrade intervals are monotonically increasing throughout the product's life cycle solely because of demand and cost considerations. This finding is in conformity with empirical evidence, thus validating our theoretical model. We then present comparative statics results to show that increase in the rate of obsolescence or network externalities may sometimes increase upgrade intervals for early upgrades and decrease these for later upgrades in the product's life cycle, but increase in market growth rate always decreases these intervals. Further, when successive software upgrades are forward compatible, upgrade intervals are longer than when they are not. Finally, we present three separate extensions of our model to showcase the robustness of our results. Since upgrade development costs depend on upgrade intervals, these insights help managers understand how costing for upgrades changes over the product's life cycle. 3 revisions. priate compatibility design between existing and new versions of a software product creates an inducement in favor of adoption of the upgrade and enables the

The ongoing digitization of multiple industries has drastically reduced the half-life of skills and capabilities acquired by knowledge workers through formal education. Thus, firms are forced to make significant ongoing investments in training their employees to remain competitive. Existing research has not examined the role of training in improving firm level productivity of knowledge firms. This paper provides an innovative econometric framework to estimate returns to such employee training investments made by firms. We use a panel dataset of small-to-medium sized Indian IT services firms and assess how training enhances human capital, a critical input for such firms, thereby improving firm revenues. We use econometric approaches based on optimization of the firm's profit function to eliminate the endogenous choice of inputs common in production function estimations. We find that increase in training investments is significantly linked to increase in revenue per employee. Further, marginal returns to training are increasing in firm size. Therefore, relatively speaking, large firms benefit more from training. For the median company in our data, we find that a dollar invested in training yields a return of $4.67, and this effect approximately grows 2.5 times for the 75 th percentile sized firm. A variety of robustness checks, including the use of Data Envelopment Analysis, are used to establish the veracity of our results.

Many successful open-source projects have been developed by programmers who were employed by firms but worked on open-source projects on the side because of economic incentives like career improvement benefits. Such side work may be a good thing for the employing firms, too, if they get some strategic value from the open-source software and if the productivity of the programmers on these projects improves through learning-by-doing effects. However, the programmers may work more or less on these projects than what is best for the firms. To manage the programmers' efforts, the firms set appropriate employment policies and incentives. These policies and career concerns then together govern the programmers' effort allocation between the open-source and proprietary projects. We examine this relationship using a variant of the principal/agent model. We derive and characterize optimal employment contracts and show that firms either offer a bonus for only one of the two projects or do not offer any bonuses. However, if attractive alternate employment opportunities are available, they change their strategy and may offer bonuses for both projects simultaneously.