Essays at the Interface of Finance and Operations Management

There has been an urgent need, from both academics and practitioners, to find systematic approaches to strategic decision-making across business functions in the modern corporations. This dissertation aims to address issues at the interface of finance and operations management in particular. The first essay studies the interaction between equity markets and new product development and innovation in the context of green vehicles in the global automobile industry. We find that the investors embrace the green vehicle innovation positively, and specific operational decisions (e.g. technology and product segment choices) impose moderating effects on the associated value creation. These empirical findings put financial labels on the trade-offs between environmental and commercial benefits, which in return have strategic implications on the green product development in a low-carbon economy. In the second essay, we apply well-developed financial theory and tool to solving classic supply chain risk management problem. We use semi-variance to model the demand risk facing the supply chain and design an option contracting mechanism to help supply chain to manage the risk of uncertain demand and achieve a win-win outcome.