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We argue that in analyzing panel-data econometric models, researchers rely excessively on statistical criteria to determine model specification, treating it primarily as a matter of statistical inference. This inferential emphasis is most obvious in the common practice of using statistical tests (e.g., the Hausman test) to choose between fixed- and random-effects specifications, often ignoring the assumptions underpinning these tests. For instance, the Hausman test depends on the true within-panel (longitudinal) and between-panel (cross-sectional) parameters being equal. This assumption is often not justified, because longitudinal and cross-sectional variances and covariances may manifest different underpinning mechanisms. In addition to different mechanisms often resulting in different variables determining within and between effects, within and between variables may also have different meanings. To help researchers make theoretically informed choices, we formulate five questions that can guide researchers to think of model specification in a theoretically rigorous way. We examine these issues with examples from both general management and operations management research. Importantly, we argue that addressing the questions regarding model specification must involve primarily theoretical and contextual judgment, not statistical tests.

To authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1540-5915.2008.00221.x Byline: Jan Holmstrom (1[dagger]), Mikko Ketokivi (1), Ari-Pekka Hameri (2) Keywords: Action Research; Design Science; Managerial Relevance; Methodology; and Operations Management Abstract: ABSTRACT Despite ambitious efforts in various fields of research over multiple decades, the goal of making academic research relevant to the practitioner remains elusive: theoretical and academic research interests do not seem to coincide with the interests of managerial practice. This challenge is more fundamental than knowledge transfer, it is one of diverging knowledge interests and means of knowledge production. In this article, we look at this fundamental challenge through the lens of design science, which is an approach aimed primarily at discovery and problem solving as opposed to accumulation of theoretical knowledge. We explore in particular the ways in which problem-solving research and theory-oriented academic research can complement one another. In operations management (OM) research, recognizing and building on this complementarity is especially crucial, because problem-solving-oriented research produces the very artifacts (e.g., technologies) that empirical OM research subsequently evaluates in an attempt to build explanatory theory. It is indeed the practitioner-not the academic scientist-who engages in basic research in OM. This idiosyncrasy prompts the question: how can we enhance the cross-fertilization between academic research and research practice to make novel theoretical insights and practical relevance complementary? This article proposes a design science approach to bridge practice to theory rather than theory to practice. Author Affiliation: (1)Helsinki University of Technology, POB 5500, FI-02015 HUT, Finland, e-mail:jan.holmstrom@hut.fi,mikko.ketokivi@hut.fi (2)HEC-Lausanne, University of Lausanne, BFSH-1, CH-1015 Lausanne, Switzerland, e-mail:ahameri@unil.ch Article History: [Received: January 2008. Accepted: September 2008.] Article note: ([dagger]) Corresponding author.

Understanding determinants of business location decisions is important from the point of view of economic policy. While the determinants of manufacturing and R&D location have been extensively covered in the literature, in this article we examine a largely neglected question: Under what conditions do manufacturing and R&D have to be physically colocated, that is, when is unbundling the two impossible? In a sample of 241 Finnish industrial firms, we find that unbundling R&D and manufacturing is possible for some companies but indeed a postindustrial myth of sorts for many others. The need for colocation correlates with knowledge intensity of activities: product complexity, process complexity, and industry rate of change, but interestingly enough, not with the size of the firm's R&D budget. KEY WORDS: business location decisions, unbundling, inseparabilities, knowledge intensity, colocation, R&D, manufacturing, Introduction The effectiveness of economic policy with regard to business location decisions depends heavily on a proper understanding of what drives decision making in organizations. The question is particularly relevant [...]

Research on supply chain relationships tends to focus on power and asymmetric dependency. Our objective is to complement this by examining contractual challenges in the context of bilateral dependency. Our specific empirical focus is on how Indian Railways, one of the largest railroads in the world, manages warranty claims related to engine failures. Warranty resolution is complex, because failures typically involve the simultaneous failure of several engine subsystems provided by different suppliers, giving rise to supplier performance ambiguity. Through a combination of theoretical reflection rooted in transaction cost economics and an empirical analysis of Indian Railways' supply chain, we argue that in the case of bilateral dependency, "the benign approach" is more efficient than "the muscular approach," to use Oliver Williamson's terminology. Specifically, while the latter is founded on unilateral decisions by the comparatively more powerful party, the former is based on voluntary long‐term cooperation, and calls for mutual credible commitments and joint problem‐solving. Additionally, we highlight that even if dependency is asymmetric at the outset, it can develop bilateral features over time. Theoretically, our research offers an enhanced understanding of trust in buyer–supplier relationships, emphasizing its organizational as opposed to personal basis. [ABSTRACT FROM AUTHOR]

While alleviating the adverse effects of employees' pursuit of their subgroups' goals over organizational goals is important, finding ways to avoid them may be even more important. In this paper, we investigate whether strategic planning can be used to reduce organizational members' position bias, or the extent to which they direct their attention toward the immediate goals and priorities attached to their position. We examine the hypothesis that involving employees in the strategic planning process and communicating the agreed-upon priorities to them afterwards enhance goal convergence by attenuating position bias. We examine these questions in a sample of 164 manufacturing plants from five countries and three industries, where we asked middle-level managers to assess the importance of various organizational goals. We find that participation and communication function as complements to jointly reduce managerial position bias. [ABSTRACT FROM AUTHOR]