Masha Shunko

University of Washington, Foster School of Business, Faculty Member

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Cristina Bicchieri

University of Pennsylvania

Don Ross

University College Cork

Vincenzo Bavoso

The University of Manchester

Armando Marques-Guedes

UNL - New University of Lisbon

John Rogers

The Hong Kong Polytechnic University

Monika Dockendorff

Universidad Diego Portales

Renzo E . Saavedra

Pontificia Universidad Catolica del Peru

Cass Sunstein

Harvard University

Gwen Robbins Schug

University of North Carolina at Greensboro

Gabriel Gutierrez-Alonso

University of Salamanca

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Papers by Masha Shunko

Optimal Managerial Compensation and Financial Hedging in Commodity Procurement

The procurement of commodities, such as basic raw materials and energy sources, is an important o... more The procurement of commodities, such as basic raw materials and energy sources, is an important operations management activity that can significantly impact the value of a firm. Managing commodities may also include trading of commodities' contracts on the financial markets. The finance and economics literature suggests that financial hedging is a valuable risk management strategy because it can reduce the agency cost. We elaborate on this idea by studying the interaction between financial trading and physical trading decisions within a firm from the principal-agent perspective. This interaction creates tension between the compensation that the firm provides to the procurement manager responsible for physical trading and the financial hedging decision of the firm: a higher bonus rate makes the procurement manager exert more effort, which reduces the variability of the commodity price and reduces the need for hedging. As a result of this tension, we find that the bonus rate is no...

Recommended Citation Optimal Managerial Compensation and Financial Hedging in Commodity Procurement

The procurement of commodities, such as basic raw materials and energy sources, is an important o... more The procurement of commodities, such as basic raw materials and energy sources, is an important operations management activity that can significantly impact the value of a firm. Managing commodities may also include trading of commodities ’ contracts on the financial markets. The finance and economics literature suggests that financial hedging is a valuable risk management strategy because it can reduce the agency cost. We elaborate on this idea by studying the interaction between financial trading and physical trading decisions within a firm from the principal-agent perspective. This interaction creates tension between the compensation that the firm provides to the procurement manager responsible for physical trading and the financial hedging decision of the firm: a higher bonus rate makes the procurement manager exert more effort, which reduces the variability of the commodity price and reduces the need for hedging. As a result of this tension, we find that the bonus rate is non-m...

Value of Capacity Flexibility in Healthcare

Problem Definition: Healthcare industry is in dire need of operational improvements to enhance ef... more Problem Definition: Healthcare industry is in dire need of operational improvements to enhance efficiency and reduce costs. Using observational data from an outpatient clinic, we study the impact of introducing capacity flexibility (via exam room design) on the efficiency of care provision, which leads to direct cost reduction. Academic/Practical Relevance: Flexible design is well-studied in manufacturing and is largely ignored in healthcare industry despite its needs for improvements. We contribute to the academic literature and practice by extending flexible design applications to the healthcare setting and by offering an economically viable way to improve efficiency. Methodology: Using a proprietary dataset that covers the time before and after the flexible room redesign, we utilize a difference-in-differences model to identify the effect of this design on the efficiency of healthcare as measured by the physician time and the length of stay. Additionally, we study the heterogeneo...

Evidence of The Unintended Labor Scheduling Implications of The Minimum Wage

SSRN Electronic Journal, 2021

Problem definition: The effect of the minimum wage is an important yet controversial topic that h... more Problem definition: The effect of the minimum wage is an important yet controversial topic that has received attention for decades. Our study is the first to take an operational lens and empirically study the impact of the minimum wage on firms' scheduling practices. <br><br>Methodology/results: Using a highly granular dataset from a chain of fashion retail stores, we estimate that a $1 increase in the minimum wage, while having a negligible impact on the total labor hours used by the stores, leads to a 27.7% increase in the number of workers scheduled per week, but a 20.8% reduction in weekly hours per worker. For an average store in California, these changes translate into four extra workers and five fewer hours per worker per week. Such scheduling adjustment not only reduces the total wage compensation per worker but also reduces workers' eligibility for benefits. We also show that the minimum wage increase reduces the consistency of weekly and daily schedules for workers. For example, the absolute (relative) deviation in weekly hours worked by each worker increases by up to 33.0% (6.7%) and by up to 9.5% (2.0%) in daily hours, as the minimum wage increases by $1.<br><br>Managerial implications: Our study empirically identifies and highlights a new operational mechanism through which increasing the minimum wage may negatively impact worker welfare. Our further analysis suggests that the combination of the reduced hours, lower eligibility for benefits, and less consistent schedules (that resulted from the minimum wage increase) may substantially hurt worker welfare, even when the overall employment at the stores stay unchanged. By better understanding the intrinsic trade-off of firms' scheduling decisions, policy makers can better design minimum wage policies that will truly benefit workers.

Too Close for Comfort? Understanding Peer Effects in Large Franchised Networks

SSRN Electronic Journal, 2021

Proximity between stores in franchise networks that share the same brand is a highly contentious ... more Proximity between stores in franchise networks that share the same brand is a highly contentious issue. A high-performance store may have different impacts on its proximal peer stores from a negative impact, such as potential cannibalization, to a positive impact, such as improved brand reputation or knowledge spillover. Most of the previous studies exploring the peer effects between stores in branded franchise networks emphasize only either the positive effect or the negative effect. In this paper, we consider both and seek to understand the net peer effect between each store pair in a large franchise network and how it changes with distance. We adapt an approach from spatial econometrics utilizing a weight matrix and extend it to allow for identification of both positive and negative peer effects between stores within a large-scale network. By applying our method to a large dataset from a major national fast food restaurant chain in the US, we show that the peer effects are negative between stores within 3 miles of each other, positive between stores within 3-7 miles of each other, both of which are economically significant. However, the peer effects generally diminish beyond 7 miles. These results inform individual franchisees of when they may be threatened or benefit from their proximal peer stores that share the same brand and for lawmakers to design policies to protect individual franchisees from encroachment. These results also reconcile the seemingly conflicting view of the issue in the literature and in practice. We then conduct a network analysis based on our estimated peer effects. Our network analysis results provide guidance for the franchisor on which areas they should avoid for further expansion and which stores they should prioritize to mitigate the tension between the franchisor and the franchisees.

Nudging Drivers to Safety: Evidence from a Field Experiment

SSRN Electronic Journal, 2019

Driving is an integral component of many operational systems, and any small improvement in drivin... more Driving is an integral component of many operational systems, and any small improvement in driving quality can have a significant effect on accidents, traffic, pollution, and the economy in general. However, making improvements is challenging given the complexity and multidimensionality of driving as a task. We used telematics technology (i.e., real-time sensor data from accelerometer, GPS, and gyroscope in a mobile device) to measure driving performance as well as to deliver nudges to the drivers via notifications. Leveraging a smartphone application launched by our industry partners, we sent three types of performance nudges to drivers, indicating how they performed on the current trip with respect to their personal best, personal average, and latest driving performance. We found that personal best and personal average nudges improved driving performance compared to the control group, which received no nudges, by, on average, 18.17% and 18.71% standard deviations of the performance scores calculated by the application. This improvement translates to an increase in the inter-accident time by nearly 1.8 years, while also improving driving performance consistency as measured by the standard deviation of the performance score. Using generalized random forests, we showed that high-performing drivers who are not frequent feedback seekers benefit the most from personal best nudges, while low-performing drivers who are also frequent feedback seekers benefit the most from the personal average nudges. Using these findings, we constructed personalized nudges that, according to our counter-factual estimates, should significantly outperform both of these nudges. Finally, we conducted an online experiment in which we replicated our key findings in a non-driving context, and we further identified changes in participants’ efforts in response to different nudges as the mechanism behind the results.

Constrained Load-Balancing Policies for Parallel Single-Server Queue Systems

Management Science, 2020

Flow-control policies that balance server loads are well known for improving performance of queue... more Flow-control policies that balance server loads are well known for improving performance of queueing systems with multiple nodes. However, although load balancing benefits the system overall, it may negatively impact some of the queueing nodes. For example, it may reduce throughput rates or engender unfairness with respect to some performance measures. For queueing systems with multiple single-server nodes, we propose a set of constrained load-balancing policies that ensures the expected arrival rate to each queueing node is not reduced, and we show that such policies provide multiple benefits for each queueing node: stochastically fewer customers and lower variance of the number of customers at each queueing node. These results imply performance improvement as measured by multiple general objective functions, including but not limited to the expected number of customers at a queueing node, probability of having a high number of customers, variance of the number of customers, and ex...

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