In this installment of Organizational Performance, we draw attention to two types of shareholders that tend to push executive decision-making in different directions. Quality shareholders (QSs) invest in a small number of companies and hold their shares over time. QSs offer patient capital that allows executives to focus on building and sustaining competitive advantages. Transient institutional investors (TIIs) hold dispersed shareholdings across a wide array of companies and frequently trade in and out of any given stock. TIIs impose pressure on quarterly earnings reports that induce managerial myopia and inhibit strategic thinking. We consider the influence of these investors on how many consumers are harmed before a defective product is pulled from the market. The good news is that for every 1% increase in QS shareholding, prerecall consumer harm decreases by 2%. Unfortunately, for the same amount of increase in TII shareholding, prerecall consumer harm increases by 6%-a frightening prospect. The case of product recalls draws the difference between QSs and TIIs into stark contrast. In response, we offer practical recommendations to assist managers in navigating these two types of powerful institutional investors.

When Ashmark Corporation’s largest supplier, Red Star Castings (Red Star), was forced to declare bankruptcy, Ashmark had to develop and implement a contingency plan, while also appeasing its customers, who were growing increasingly impatient for their parts to arrive. Since Red Star closed, Ashmark had been late on 200 units of production due to missing components. Although this figure represented less than 1 per cent of the company’s total monthly shipments, things were likely to get more difficult, especially with the loss of key employees due to the stressful situation. In addition, the new supplier was having trouble bringing the tooling online, there were delays in the qualification and testing process, and the modest amount of inventory built up in advance of the bankruptcy had diminished. As Ashmark looked to move forwards, it would need to develop a much better sense of how to manage supply chain risk.

When Ashmark Corporation's largest supplier, Red Star Castings (Red Star), was forced to declare bankruptcy, Ashmark had to develop and implement a contingency plan, while also appeasing its customers, who were growing increasingly impatient for their parts to arrive. Since Red Star closed, Ashmark had been late on 200 units of production due to missing components. Although this figure represented less than 1 per cent of the company's total monthly shipments, things were likely to get more difficult, especially with the loss of key employees due to the stressful situation. In addition, the new supplier was having trouble bringing the tooling online, there were delays in the qualification and testing process, and the modest amount of inventory built up in advance of the bankruptcy had diminished. As Ashmark looked to move forwards, it would need to develop a much better sense of how to manage supply chain risk.