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Dr. Hubert Pun is the PhD Program Director and an Associate Professor at the Ivey Business School at Western University. He received the Western Faculty Scholar Award for his research contribution to blockchain business application. This award "recognize[s] mid-career faculty members with an international presence in their discipline who are considered all-round scholars."
Hubert grew up in Hong Kong. He earned his undergraduate and Master’s degrees in engineering in Vancouver where he then worked for a few years. He became part of an expansion team at a Venezuelan start-up company which grew into Central/North America (e.g., Colombia, Mexico, Panama, and USA) during 2002-2005. His work at that time was helping firms to deploy secure computer networks.
Hubert completed his PhD in Operations Management and Decision Sciences at the Kelley School of Business (Indiana University) in 2010. He joined the Ivey Business School in 2010 and has taught in the HBA, MSc, MBA, EMBA and PhD programs. He was awarded with Ivey Dean’s Teaching Commendation Letters (top 10% Ivey faculty) and the University Students’ Council Teaching Honor Roll in 2016/2017. He also won the Research Merit Award (top 10% Ivey faculty) in 2019, 2020, 2021 and 2022. His research interests include co-opetition, counterfeiting product, and how blockchain can be used as an enterprise solution. He has published in Manufacturing & Service Operations Management (M&SOM), Production and Operations Management (POM), Journal of Operations Management (JOM), and other top tier journals. Currently, he is serving as a Senior Editor at Production and Operations Management (POM) and an Associate Editor at the International Journal of Production Research (IJPR).
Abstract: Outsourcing is a common operations strategy nowadays, but it may lead to an unintended consequence of supplier copycatting. When outsourcing, there is some subtle information that the manufacturer knows but is optional for the supplier to carry out the production task, such as how fit this product is to the market trend (product fit). This paper considers a game setting that the manufacturer has private information on product fit during the production stage, and it decides whether or not to disclose this piece of information to the supplier. The supplier decides whether or not to exert production process enhancement effort and whether or not to enter the market with a copycat. We discover two novel disclosure structures: (1) only disclosing the intermediate range of product fit information, and (2) always withholding information even though disclosure is costless. We find that the manufacturer can be better off, while the supplier can be worse off, from the supplier copycatting option. Our work lends support to the practitioners' recommendation that the manufacturer should withhold some crucial information from the supplier and keep the communication as basic as possible and uncovers the bright side of supplier's copycat on the manufacturer's profitability.
Abstract: Recommender systems (RSs) are an integral part of the online retail industry. They create tremendous potentials for cross-selling, including increasing sales revenue, improving consumer fulfillment, increasing customer lifetime value, controlling product consumption to optimize resources, and dynamically adapting to consumer behaviors. Online retailers have relied on the position and presence of RSs to assist users in better decision-making and thereby increase their revenues. However, with dynamic changes in consumer behavior patterns, the quality and accuracy of recommendations have become a significant challenge for e-commerce retailers. Moreover, with the rapid evolution of online data, most RSs suffer from data sparsity and scalability problems. This paper introduces a new model of applying clustering analysis concepts to RSs along with advancements in graph theory to react effectively to user changes and business challenges in the the online retail industry. A clustering-based RS using the notion of the cross-sold score—namely, “”—is proposed and tested with the aim of enhancing the quality of recommendations, handling data sparsity, improving consumer profiling and addressing scalability in the current recommendation methods in order to generate a more practical set of personalized recommendations. The proposed algorithm shows a significant improvement in both the prediction accuracy and the speedup as compared to the state-of-art collaborative filtering RSs, clustering-based collaborative filtering RSs, and rule-based RSs.
Abstract: We examine how different strategies can be used to protect global manufacturers from the prevalent issue of supplier copycatting in emerging markets. In particular, using a game theoretical model, we consider a manufacturer that sells a product to an emerging market, which requires the completion of multiple tasks. The manufacturer can perform any of these tasks in-house or outsource any of them to an emerging market supplier. The former approach carries a higher cost, while the latter puts the manufacturer’s intellectual property (IP) at risk of supplier copycatting. Either the manufacturer or the emerging market government can exert enforcement effort to protect the IP rights within the supply chain. Our results show that, surprisingly, there are cases where the manufacturer should outsource fewer tasks when in-house production is more costly. Further, even though the supplier is the target of the enforcement, we show that the manufacturer’s enforcement effort can help the supplier but hurt customers and the emerging market. Concerning whether the government or the manufacturer should take responsibility for IP protection, we recommend that the government enforce IP protection when the manufacturer has a weak brand quality, and that the manufacturer enforces IP protection when it has a strong brand. This managerial insight provides a theoretical framework to the recent practitioners’ debate about who should be responsible for protecting IP rights within the supply chain.
Abstract: When developing a new product, a buying firm solicits revenue sharing bids from two competing suppliers. Bidding behaviors of suppliers do not always align with predictions from rational agent models due to task uncertainty and bounded rationality, which could result in non-optimal supplier offers and ultimately hurt buying firm interests.
Methodology: We built an analytical model that considers the impact of supplier technological risk, buyer-supplier coordination cost, and supplier loss aversion on the optimal bid of the supplier. Next, using limited information processing capacity as a theoretic lens, we explore antecedents to the size of a focal supplier’s bidding error, the absolute difference between the actual bid and the optimal bid. We used quantitative lab experimental data to test the hypotheses.
Findings: (1) Bounded rational bidders often fail to differentiate between relevant and irrelevant competitive information when placing bids, (2) loss aversion of a bidder significantly affects not only levels of bids, particularly for bidders with competitive disadvantages, but also sizes of the bidding error, and (3) competitive information that has clearer performance implications are more influential in reducing sizes of bidding errors.
Originality: Our results provide a comprehensive view of the bidding behaviors of a bounded rational supplier in an innovation outsourcing context with competition. With our results, managers now have a better understanding of behavioral influencers behind non-optimal supplier bids in an innovation outsourcing context.
Abstract: We consider a manufacturer that has a capacity constraint and allocates capacity according to the lexicographic mechanism, which involves assigning different priority levels to different retailers. The manufacturer sells products to two competing retailers: a high-priority one and a low-priority one. The manufacturer’s capacity information is either public or private, which makes our paper the first to examine the impact of capacity information on the capacity allocation problem of a manufacturer. We investigate two contract types: wholesale-price and wholesale-price-and-quantity. Our results show that when capacity information is public, the manufacturer will always prefer a wholesale-price contract. Moreover, it can benefit from a lower capacity limit (capacity scarcity) due to the retailer’s capacity-withholding behavior. Interestingly, the high-priority retailer may prefer that the manufacturer use a wholesale-price-and-quantity contract to limit how many items the retailer can order. When capacity information is private, the retailer can order more than the capacity of a low-type manufacturer to reveal the manufacturer’s capacity level under the wholesale-price contract. At the same time, under a wholesale-price contract, the manufacturer may not want to supply all the order quantities to the retailers to avoid disclosing its capacity level. We find that pooling equilibrium can survive the Intuitive Criterion, and the manufacturer cannot benefit from capacity scarcity and withholding no longer occurs. Lastly, contrary to the case where capacity information is public, the manufacturer may prefer the wholesale-price-and-quantity contract when capacity information is private. Therefore, it is possible to achieve a win-win situation between supply chain partners with the right contract type, which is not possible when capacity information is public.
Abstract: In today’s complex business environment, conflicting relationships among firms are becoming the norm. Firms can be supply chain partners, but at the same time, they can be competitors. Moreover, capacity is often limited. Prior research has examined this problem in a perfect information setting, but in reality, a supplier often has private information in its own capacity. We consider a signaling game in which the supplier has private information in its own capacity. The supplier first sets the wholesale price. The buyer then decides on the order quantity, and the supplier decides whether or not to encroach on the end-customer market. We find that the supplier can be worse off while the buyer can be better off from the supplier’s private information on capacity. Moreover, when the capacity information is private, it is more likely for a supplier to encroach on the end-customer market. Our paper also shows that capacity withholding is less likely when information is asymmetrical. Finally, we find that both firms can simultaneously benefit from the supplier’s capacity constraint. Our paper demonstrates that keeping information on the capacity level private can be harmful, so the supplier should find ways to disclose its capacity information credibly (e.g., by using Electronic Data Interchange (EDI) or linking its database with the buyer). However, the buyer should be cautious about adopting these technologies. Furthermore, not having information about supplier capacity not only increases the possibility of supplier encroachment, but also makes strategic inventory (capacity withholding) less important.
Abstract: This paper examines the information acquisition strategy of a dual-channel supply chain, in which a manufacturer sells a product both through a retailer and through its own direct channel. Either the manufacturer or the retailer can acquire demand information from a third-party marketing research company. The manufacturer first decides whether or not to acquire such information, and then the retailer decides whether or not to acquire information. This setup implies a signaling game (either the manufacturer or the retailer may have private demand information) with an endogenous information structure. We identify conditions under which neither of the firms will acquire demand information, even when the cost of implementation is negligible. We also show that information acquisition can have a negative impact on the retailer, the supply chain, customers, and society. The manufacturer who acquires information always prefers to share information with the retailer, which benefits the retailer. The retailer who acquires information, however, may not want to share information with the manufacturer. The managerial insight of our paper is that firms that have more accurate demand data must develop strategies for the appropriate use of that information, both in their own planning and within the context of their dual-channel supply chain.
Abstract: The retailer, who is closer to customers, usually has more information on demand than its manufacturer does. This paper focuses on a manufacturer’s information acquisition strategy in a supply chain, and the design of the first-best contract to achieve a win-win for the manufacturer and its retailer. We consider a manufacturer encroachment supply chain in which the manufacturer sells products both directly to the consumer and indirectly through a retailer. The retailer has private demand information while the manufacturer has the option of acquiring demand information. The manufacturer sets the retail price in its direct channel, and the retailer sets the retail price in the retail channel. We consider the two retail price leadership cases, either the manufacturer decides the retail price first or the retailer decides the retail price first. We find that the manufacturer can be hurt by acquiring information, even when the cost is negligible, because competition between the two channels is intensified. Moreover, while one might expect that the retailer is better off from having more information, we show that the retailer can in fact benefit when the manufacturer acquires information. Lastly, we find that the retailer may be worse off from being the retail price leader when the manufacturer acquires demand information, and price competition can be intensified if more customers prefer the direct channel (indirect channel) when the manufacturer (the retailer) acts as the price leader.
Abstract: Outsourcing has long been a strategy to decrease cost. Increasingly firms recognize the value in their supply chains and call on suppliers to innovate, both in products and processes. Innovation to increase quality and demand or to reduce costs is critical to firm and supply chain success. In a two-stage supply chain, we investigate the impact of focal firm and supplier innovation costs (and capabilities) on the type of outsourcing chosen and the resulting investments in process and product innovation. The focal firm determines whether to perform design (including product innovation in the form of quality enhancement) and manufacturing (including process innovation in the form of cost reduction) in-house, to outsource manufacturing/process innovation while insourcing design/product innovation, to outsource both manufacturing/process innovation and design/product innovation, or to co-develop product innovation while outsourcing manufacturing/process innovation. We also examine the conditions under which co-development is favorable given the supply chain faces potential positive and negative synergies from either the co-location of the innovation activities or costs of collaboration. After characterizing the optimal outsourcing decision, we find that the decision to outsource is more nuanced than simply which activities to outsource, but must include options to collaborate on particular activities, and specifically product innovation. We offer the insight to managers that co-development, despite costs of collaboration, can benefit the firm and result in higher profits. This occurs through the improvement of demand via higher quality products.
Abstract: We study gain-sharing agreements in a target price-minimum quality payment system. Our work is inspired by the Centers for Medicare and Medicaid Services’ (CMS) Comprehensive Care for Joint Replacement (CJR) bundled payment model. In our model, patients receive care from a hospital and a post-acute care provider. A third-party payer establishes target levels for total billing by the hospital and provider, and a target on the overall quality of care. The hospital and provider receive fee-for-service (FFS) billings during an episode of care, defined as the period that starts with an admission of a patient to the hospital and ends 90 days post-discharge. The hospital may also receive an incentive payment if total FFS billing by both parties is below the target price and total quality by both parties is above the minimum quality. The goal of the incentive payment is to encourage hospitals to enter into “gain-sharing” agreements with providers. We model the interactions between the three parties. We show that while using a gain-sharing agreement might be a “win-win-win” scenario for the three parties, good design of the payment scheme by the payer is essential to incentivize a hospital to participate in the bundled payment model (e.g., CJR) and sign a gain-sharing agreement with the provider. Furthermore, we illustrate that a target price-minimum quality bundled payment model would be more effective, in care-coordination, in healthcare settings where the provider is much more effective than the hospital in reducing its billing.
Abstract: When a manufacturer outsources the production of a product, it distributes its intellectual property (IP) into a supply chain that it may not be able to fully control. An IP agreement between a manufacturer and its suppliers is a popular solution to address the challenge of supplier-copycatting. The goal of this paper is to examine the impact of copycatting, from both the supplier and third-party firms, and the effectiveness of an IP agreement. Specifically, we use a game-theoretic approach to examine a system where a manufacturer outsources to a supplier. The supplier and a third-party firm decide whether or not to enter the market with copycat products while the manufacturer selects the level of marketing investment. The manufacturer can reduce the threat of supplier-copycatting by signing an IP agreement. However, we find that the manufacturer can be worse off from signing an IP agreement with its supplier, even if the IP agreement is costless and perfectly enforceable. We show that a manufacturer can deter copycat products through vertical integration and IP agreements and we outline the instances where each method is preferred. Furthermore, we find that the manufacturer may choose not to invest in quality improvements as a copycat deterrence strategy. We show that the supplier can benefit from the manufacturer’s decision to sign an IP agreement and that the supplier and the consumers can benefit from IP regulations against copycat products. Our paper demonstrates the strengths and limitations of various copycat deterrence strategies when a supplier and third-party may produce copycat products.
Abstract: Counterfeiting is a severe problem in many sectors. There are two types of counterfeits: non-deceptive and deceptive. While both types are important business challenge, deceptive counterfeit have an additional negative impact – customers have a post-purchase regret if they expect to purchase a real product but ended up with a fake. The focus of this paper is on the setting that relates to deceptive counterfeits. Our paper is one of the first that examines the effectiveness of blockchain as a solution to a supply chain challenge. Specifically, the unique feature of blockchain that we model, which none of the traditional strategies studied in the literature is capable of, is that blockchain adoption changes the analysis from a deceptive counterfeit setting to a non-deceptive counterfeit setting. We also consider government being a decision maker and customers’ privacy concern from blockchain adoption, two features that are not examined in the existing literature. We consider a market with a manufacturer and a deceptive counterfeiter. The manufacturer can signal product authenticity either with blockchain technology or through pricing. The government can provide subsidy to encourage blockchain adoption. Blockchain should be used when the counterfeit quality is intermediate or when customers have intermediate distrust about products in the market. When customers have serious distrust about products, differential pricing strategy is more effective than blockchain adoption. If government provides subsidy, blockchain can be more effective than differential pricing strategy in eliminating post-purchase regret. Our results advocate for government providing subsidy because it benefits both customers and the society and could be a better approach than government enforcement efforts.
Abstract: Firms often must procure inventory/capacity before knowing what the demand will be, so there is a potential for a mismatch between inventory and demand, the “inventory risk.” We show that because of inventory risk, an increase in the number of competitors can lead to an increasing trend in market prices. Furthermore, we show that, ceteris paribus, because of how inventory risk impacts competitive behavior, firms may prefer to incur inventory risk rather than to avoid it. To illustrate the robustness of our results, we establish these findings using three complementary methodologies: (i) using data from a classroom experiment, (ii) using a quantal response equilibrium simulation to capture realistic irrationalities in managerial decisions under competition, and (iii) using a fully-rational Nash equilibrium model to capture the impact of the competition per se. That all three methods lead to identical qualitative findings reinforces the main message of our paper: inventory risk reverses the standard intuition for how an increase in the number of competitors impacts prices.
Abstract: Releasing an upgraded version of a product is a common tactic that firms use to maintain competitiveness. However, in light of the significant research and development investment required to upgrade products, a new industry trend has emerged in which incumbents collaborate with market entrants to innovate products. At the same time, such collaboration may lead customers to think that the upgraded products are more similar than those innovated without collaboration. Consequently, we consider the following tradeoff: collaboration allows firms to share the innovation investment, but leads to less differentiated products. Specifically, we consider a two-period model where the incumbent is a monopoly during the first period. This incumbent and a market entrant decide whether or not to collaborate to innovate their products, and the two firms sell their products during the second period. We find that both firms can benefit from a higher innovation cost. Moreover, the market entrant can be better off when the products become less differentiated due to collaboration, or when customers are impatient to buy in the second period. Finally, we find customers can be worse off when there is a lower innovation cost or more differentiated products.
Pun, H.; Chen, J.; Li, W., 2020, "Channel Strategy for Manufacturers in the Presence of Service Freeriders", European Journal of Operational Research, December 287(2): 460 - 479.
Platform’s information sharing strategy in a supplier encroachment context with scale economies. (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4206694)
Experience
Associate Instructor, Indiana University, USA, (2005-2010)
