As supply chains become increasingly complex and global in their scale, supplier selection and management in the face of disruption risk has become one of the most challenging tasks for modern managers. Several novel model-based approaches to managing such risks have been developed in the academic literature, but how behavioral tendencies may aect procurement decisions under such conditions has received relatively less attention. In this paper, we present results from a study where paid subjects were asked to place orders from two suppliers who dier in their costs and risks to satisfy a xed amount of end-customer demand. We show that under such a scenario, it is theoretically optimal to sole-source exclusively from either the more reliable (and more costly) supplier or from the more risky but cheaper supplier, depending on cost and risk parameters. Subjects in our experiment, however, show a systematic tendency to diversify their orders between the two sources. We document this diversication tendency in procurement decisions and its possible impact on prots under various cost and risk settings. We also establish that bounded rationality of subjects can provide a possible rationale for the above phenomenon.

Technological advances present firms in many industries with opportunities to substantially improve their product's capabilities in short periods of time. Customers who invest in these products may, however, react adversely to rapid improvements that make their previous versions obsolete by deferring their purchase. In industrial markets, there is an emerging trend of sequentially improving products designed to be upgraded in a modular fashion. We study the impact of product architecture and introduction timing on the launch of rapidly improving products. We find that by localizing performance improvements in a sequence of upgradable modules of the product, a firm can better manage the introduction of rapidly improving products. Specifically, we show that modular upgradability can reduce the need for slowing the pace of innovation or forgoing upgrade pricing. The additional flexibility in pricing and timing makes the modular, upgradable approach preferable to an integrated architecture, even in some situations where there may be distinct performance or cost-related disadvantages to pursuing the modular architecture. We differentiate between proprietary and nonproprietary approaches to modular upgradability and consider the implications for profits. Our central contribution in this paper is the innovative integration of product architecture with pricing and timing decisions for managing the introduction of rapidly improving products.new product development and introduction, product architecture, modular upgradability, rapidly improving products

The rising trend of projects with high‐skilled and autonomous contributors increasingly exposes managers to the risk of idiosyncratic individual behaviors. In this article, we examine the effects of an important behavioral factor, an individual's cost salience. Cost salience leads individuals to perceive the cost of immediate effort to be larger than the cost of future effort. This leads to procrastination in early stages and back‐loaded effort over the course of the project. We model the problem confronting the manager of a project whose quality is adversely impacted by such distortion of individual effort over time. Complementary to prior works focused on the planning and scheduling tasks of project management in the absence of human behavior, we find that managers should reward contributions made in earlier stages of a project. Our analysis also yields interesting insights on the project team performance: teams with diverse levels of cost salience will perform better than homogeneous teams. We also address another important facet of team composition, namely, the choice between stable and fluid teams, and find that the practice of creating fluid teams might have previously unrecognized benefits when behavioral aspects of projects are considered. We conclude with insights and organizational implications for project managers.

Management of technology (MOT) concerns the processes by which innovations in technology are transformed to ultimately diffuse into the marketplace. As such, operations management contributes to the multidisciplinary realm of MOT through its study of a firm's resource capabilities. This special issue offers a broad and deep discussion on the interface between MOT and POM. The contributions of the MOT special issue are fourfold. First, we invited scholars from a variety of disciplines to write papers that highlight a broad perspective of emerging problems in MOT that can be addressed by POM researchers. Second, a set of contributed papers is included in the special issue spanning several themes at the intersection of POM and MOT. Third, much of this article is devoted to a deep discussion of an emerging theme that represents a fundamental challenge to the modern, knowledge‐intensive firm. Specifically, we explore how firms develop and leverage internal and external knowledge‐based resource capabilities to respond to the dynamic opportunities and threats created by innovations in technology. Lastly, we provide a comprehensive discussion of future research opportunities that relate to the challenges in managing the knowledge‐intensive firm.

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