We extend the theoretical model of external corporate financing to the case when the buyers of the borrowing firm may default during the financing period. In our setup there is an asymmetric information and hence moral hazard between the lender and the borrower concerning the effrts of the borrower. We define the optimal debt contract in two cases. In the symmetric case the lender and the borro...

In this paper we investigate the interplay between operations and financial decisions within the context of a two-echelon supply chain. A retailer purchases a single product from a supplier and afterwards sells it in the retail market to a random demand. The retailer, however, is budget-constrained and is therefore limited in the number of units that he may purchase from the supplier. We invest...

Considering the growing externalisation of strategic activities, the problem of the control of buyersupplier relationships is crucial. Therefore, researchers usually propose modes of control that are adapted to various environments. However, the organisations are often considered as “black boxes” whose goals are unspecified. This paper examines buyer-supplier control configurations that take in...

Reserve prices are commonly used in procurement auctions, and the logic is simple: They help the buyer avoid paying too much for the contract. The reserve price is set by the buyer before the auction based on the buyer’s knowledge about suppliers’ costs. In practice, buyers can refine their knowledge about suppliers’ costs through activities known in industry as cost modeling. In this paper we ...

Recent years have witnessed the pervasive supply disruptions and their impacts on supply chain performance. In this paper, we investigate the optimal procurement design with supply disruptions and heterogeneous beliefs between the buyer and the supplier. We examine the impact of information asymmetry on the supplier’s belief, the control right of the backup production, and the verifiability of ...

In a decentralized supply chain, supplier-buyer negotiations have a dynamic aspect that requires both players to consider the impact of their decisions on future decisions made by their counterpart. The interaction generally couples strongly the price decision of the supplier and the quantity decision of the buyer. As a result, the outcome of the negotiation may not have an equilibrium. We prop...

IT-enabled exchanges in electronic markets have significant implications for buyer-supplier relationships. Building on previous research that emphasizes the role of intangible assets in inter-organizational relationships, this study argues that buyers are less likely to use reverse auctions for supplier relationships involving a high degree of non-contractibility. The argument complements tradi...

We study capacity reservation contracts in high-tech manufacturing, where the manufacturer (the supplier) shares the risk of capacity expansion with her OEM customer (the buyer). We focus on shortlife-cycle, make-to-order products under stochastic demand. The supplier and the buyer are partners who enter a "design-win" agreement to develop the product, and who share demand information. The supp...