The impact of operational stickiness on product quality: product diversification moderation

Lin, Yu; Zhang, Shuaishuai; Shi, Yujun

doi:10.1108/jmtm-09-2020-0360

Cited by 4 publications

(9 citation statements)

References 90 publications

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“…Besides, it is suggested that the impacts of inventory stickiness on venture survival and product quality hinge partly on production. That is, our findings also provide new evidences for the prior researches which consider the optimal level of inventory stickiness as a type of management mechanism to improve the probability of venture survival, as well as enhance the quality of products (Shi et al, 2019;Zhu et al, 2021;Lin et al, 2021). To sum up, this research offers a fertile theoretical ground for future studies which may continue to build on the overall implications of inventory stickiness and the intricate causes of productivity.…”

Section: Theoretical Implicationssupporting

confidence: 57%

“…With respect to venture survival, Shi et al (2019) found that the relationship between operational stickiness and venture survival exhibits an inverted U-shape, where operational stickiness is composed of inventory stickiness, PPE stickiness and labor stickiness. Similarly, Lin et al (2021) went on to argue that operational stickiness reveals an inverted-U shaped relationship with product quality. Subsequently, Zhu et al (2021) further demonstrated that environmental dynamism positively moderates the inverted U-shaped relationship between inventory stickiness and venture survival, while financial constraints negatively moderate this relationship.…”

Section: Literature Review and Hypotheses Development 21 Literature R...mentioning

confidence: 99%

“…Taking into account that increasing inventory stickiness means reducing inventory leanness, sticky inventory management is more likely to exert a nonlinear impact on productivity growth. Unfortunately, extant researches paid more attention on the impact of sticky inventory management on profitability (Kroes and Manikas, 2018), product quality (Lin et al, 2021) and venture survival (Zhu et al, 2021). That is, the nature and empirical evidence on the relationship between inventory stickiness and productivity still remains equivocal.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Does sticky inventory management improve productivity?

Wang

Hou

Zhu

2021

JMTM

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PurposeThe purpose of this study is to demonstrate the nonlinear relationship between inventory stickiness and productivity, with investment efficiency being a mediator and environmental dynamism being a moderator.Design/methodology/approachUsing a large panel data collected from 1,479 Chinese listed manufacturing enterprises over the period from 2010 to 2020, this research employs the instrumental variable method combined with two-stage least squares estimators to explore the inverted-U-shaped relationship between inventory stickiness and productivity. Furthermore, the mediating role of investment efficiency and the moderating role of environmental dynamism are demonstrated via two three-model systems.FindingsAs its core, productivity initially increases with inventory stickiness until a turning point at the end of the sample, beyond which the incremental effect of inventory stickiness on productivity become negative. That is, an inverted U-shaped relationship between inventory stickiness and productivity is found to exist. Moreover, further mediated moderation analysis highlights that investment efficiency is a key mediator of this relationship, whereas environmental dynamism is a key moderator.Practical implicationsManagers ought to gauge carefully against the tradeoffs between inventory stickiness and productivity. In general, over 90% of manufacturing enterprises have great potential to increase productivity by implementing sticky inventory management. In addition, managers are suggested to place emphasis on investment management and environmental strategy.Originality/valueThis paper contributes to the current understanding about productivity by illustrating and verifying the nonlinear effect of sticky inventory management. It may be the first study to empirically demonstrate the mediating effect of investment efficiency and the moderating effect of environmental dynamism on the relationship between inventory stickiness and productivity.

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Section: Theoretical Implicationssupporting

confidence: 57%

Section: Literature Review and Hypotheses Development 21 Literature R...mentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Does sticky inventory management improve productivity?

Wang

Hou

Zhu

2021

JMTM

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“…The empirical research findings demonstrate that diversification is an essential factor influencing the performance of SMEs. Additionally, SMEs can mitigate the risks associated with over-reliance on a single product or market sector by diversifying their operations to explore new market opportunities [23,26]. Another empirical study found that, while product diversification did not directly correlate with overall performance, investment levels in rent-generating, proprietary assets were linked to the extent of product diversification [27].…”

Section: Literature Reviewmentioning

confidence: 99%

“…Another empirical study found that, while product diversification did not directly correlate with overall performance, investment levels in rent-generating, proprietary assets were linked to the extent of product diversification [27]. This suggests that diversification, when coupled with strategic investment, can potentially impact the performance of SMEs positively [26,28].…”

Section: Literature Reviewmentioning

confidence: 99%

Does Quality Certification or Product Diversification Improve the Performance of Small and Medium Enterprises?

Le,

Nguyen

2024

Sustainability

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This study utilizes a Cobb–Douglas production function and an instrumental variables regression approach to analyze the impact of quality certification and product diversification on asset productivity at the firm level. Analyzing a panel dataset of approximately 2500 firms from 2011, 2013, and 2015 showed that regional norms significantly influence adoption behaviors, which vary across industries and business types. The study reveals that firms employing computers and those with a larger scale are more inclined to adopt these strategies. The results showed that quality certification enhances asset productivity by approximately 26%, highlighting its positive role. In contrast, firms with diversified products exhibit about 18% lower asset productivity than mono-product firms, suggesting a trade-off inherent in diversification. The study concludes with policy recommendations emphasizing the promotion of quality certification while carefully considering the complexities and potential inefficiencies arising from product diversification strategies.

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Risk Management in Product Diversification: The Role of Managerial Overconfidence in Cost Stickiness—Evidence from Iran

Parsaei,

Askarany,

Maleki

et al. 2024

Risks

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Purpose: This study investigates the relationship between product diversification strategy and cost stickiness, focusing on managerial overconfidence as a moderating factor. It aims to address a critical gap in the literature by providing empirical insights grounded in the Resource-Based View (RBV) theory, specifically examining firms listed on the Tehran Stock Exchange. Methodology: Utilizing a sample of 149 companies from the Tehran Stock Exchange in Iran spanning from 2015 to 2021, this study tests two hypotheses: (1) a positive relationship between product diversification and cost stickiness and (2) the amplification of this relationship by managerial overconfidence. Product diversification is quantified using the Herfindahl Index, while managerial overconfidence is measured through an investment-based index derived from capital expenditures. Cost stickiness is assessed by analysing the asymmetric behaviour of costs in response to changes in sales, focusing on how costs tend to remain high even when sales decrease. Findings: The empirical results substantiate both hypotheses, demonstrating a significant positive relationship between product diversification strategy and cost stickiness. Furthermore, managerial overconfidence amplifies this relationship, highlighting the role of internal resources and managerial perceptions in shaping cost behaviour. Originality: This study contributes substantially to the literature by being among the first to empirically examine the interplay between product diversification strategy, cost stickiness, and managerial overconfidence. Extending the RBV theory to cost behaviour and strategic management provides novel insights for scholars and practitioners in entrepreneurship, corporate strategy, and organizational behaviour. The findings underscore the importance of strategic choices and managerial traits in determining cost stickiness, offering valuable implications for financial analysts, auditors, and stakeholders.

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The impact of operational stickiness on product quality: product diversification moderation

Cited by 4 publications

References 90 publications

Does sticky inventory management improve productivity?

Does sticky inventory management improve productivity?

Does Quality Certification or Product Diversification Improve the Performance of Small and Medium Enterprises?

Risk Management in Product Diversification: The Role of Managerial Overconfidence in Cost Stickiness—Evidence from Iran

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