The Application of Industrial Organization Economics to Supply Chain Management Research

Article excerpt


I am pleased to respond to the request of JSCM co-editor-in-chief Craig Carter to submit an invited article on the application of industrial organization economics to supply chain management research. After more than 25 years of authoring academic articles, I welcome the opportunity to address this interesting and important topic in a less formal manner. As such, I will approach the article quite differently from the typical research publication. This article will contain a minimum of references. Anyone wishing a more formal and well-referenced approach to the subject matter is referred to Cheng and Grimm (2006). The article will be informal, more personal than a normal research article. The article will contain my opinions and observations on the interface of economics and supply chain management.

Given the nature of the article, I will briefly describe my background on the subject matter so that the reader can best place my remarks in the proper context. I have undergraduate, masters and doctoral degrees in economics, with a focus in my PhD program on industrial organization economics. I am now in my 25th year of teaching and research at the Robert H. Smith School of Business, University of Maryland and will draw on this experience. My research has focused on applying economics to both supply chain and strategic management, with a particular emphasis on competition, policy deregulation and microeconomic reform both in the United States and overseas.

Since the 1980s, my teaching has included a doctoral seminar, every 2 years, on the application of industrial organization economics to strategic management and supply chain management. The course has been required for both our supply chain and strategy students. I have also been a co-developer of a course on empirical research in supply chain, taught most recently in fall 2007. While other PhD seminars in our department explore logistics-based supply chain research, the focus of our course is empirical supply chain research in journals such as Journal of Operations Management and Management Science. I have worked extensively with doctoral students in both strategy and supply chain, and have been involved in curriculum development in both strategy and supply chain. I have been active in professional organizations dealing in strategic management and supply chain, as well as economics.

This article will proceed with the following organization. The next section will provide my perspective on the different ways economics can influence a business school discipline. This will be followed by my perspectives on the field of supply chain management. Two core sections of the article come next, first, the influence of economics on supply chain through empirical methods, and second, the influence of economics on supply chain through theories. A conclusion finishes the paper.


Given that the subject matter is the application of economics to supply chain, an appropriate place to begin the discussion is with the broader issue of how economics might influence a business school discipline. Of course, economics is an old discipline, particularly in relation to all of the business school disciplines. It is a rich and vast discipline. It represents one of the fundamental social sciences, along with psychology.

Economics is a powerful discipline, with the potential for rich contributions to the younger, newer business school disciplines. Because the field is so old and vast, the wide range of fringe theories and contributions are very rich indeed, in addition to the extensive work within the mainstream. Economics is a large discipline, with virtually every university containing this area as an academic unit and focus of teaching and research. But there are also a host of think tanks, government agencies and research bureaus, not to mention private companies, with large groups of economists. …