Management Seminar - Professor Andy C. L. Yeung

Seminar Room 10.039, Level 10, The Spot Building, 198 Berkeley Street, Carlton

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Associate Professor William Ho

william.ho@unimelb.edu.au

T: +61 3 9035 7560

PRESENTER: Professor Andy C. L. Yeung (Hong Kong Polytechnic University)
TOPIC: “Mitigating the Financial Risk of R&D Investments: Do Quality and Efficiency Matter?”

Abstract:
We explore how firms could possibly mitigate the financial risk of R&D investments through quality management, using Six Sigma implementation as an example, and efficiency improvements, using the stochastic frontier estimation of relative efficiency as a proxy. Based on data from 560 manufacturing firms from 2007-2014 in the U.S., we construct the distributed lag model to capture the effects of R&D investments on firm risk. Using the system generalized method of moments (GMM) estimator, we show that R&D investments significantly increase a firm’s financial risk. Yet the risk associated with R&D investments is significantly alleviated when firms adopt Six Sigma and improve efficiency in operations. We argue that R&D investments improve a firm’s explorative capacity while quality and efficiency initiatives enhance a firm’s exploitative ability. The two different capabilities might reinforce each other, reducing the risk associated with R&D projects.

Bio:
Professor Yeung is Chair Professor of Operations Management and Head of the Department of Logistics and Maritime Studies at The Hong Kong Polytechnic University. He obtained his PhD from The University of Hong Kong. His research covers various OM areas such as innovation management, technology management, quality management, and supply chain management. His research has been published in top business journals such as Journal of Operations Management, Organization Science, Production and Operations Management, and Manufacturing and Service Operations Management (MSOM). His recent paper in MSOM was granted with the Responsible Research in Management 2017 Inaugural IACMR Presidential Award. Professor Yeung has been an Associate Editor of Journal of Operations Management since 2012 and received the Best Associate Editor Award in 2013. He co-edited a special issue for Journal of Operations Management in 2016 and is currently co-editing a special issue related to the use of social media in operations and supply chain management for International Journal of Operations and Production Management.

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