Do external diversity practices boost focal firm performance? The case of supplier diversity

Based on the resource-based view, we propose that external diversity practices such as supplier diversity may affect firm performance. We find that the relationship between supplier diversity and short-term performance (i.e. productivity) is moderated by context such that firms in declining industries experience positive productivity effects while firms in munificent industries witness negative effects. For longer-term profitability (i.e. Tobin's q), we do not find support for a positive relationship between supplier diversity and long-term performance. However, positive supplier diversity effects emerge in munificent environments. Overall, in support of the strategic human resource management approach, we conclude that the effect of external supplier diversity on firm performance is contingent upon environmental munificence, which documented the necessity to include supplier diversity as a relevant component of a comprehensive diversity and equality management system.     

The impact of appointment-based CEO connectedness on firms’ performance and profitability

This paper investigates whether the performance variables of newly added intangible capital elements give the appointment relationship a deeper impact on the firms’ performance and profitability. We document that after correcting for endogeneity, when considering intangible capital, Total Q is a better proxy than Tobin’s Q for explaining the effect of appointment-based CEO connectedness on firm performance and profitability. Furthermore, we show that the influence of directors on company performance and profitability is more important than that of executives or managers. We also find that the stronger the appointment relationship, the worse the company’s performance and profitability. We further provide a series of alternative interpretations and robustness test evidence showing that intangible capital is more important for high technology and internet firms than industrial firms. Further, we find that the greater the number of executives appointed by the CEO, the better the firm’s research and development, but the worse the firm’s investment policy.     

Sustainable product attributes and firm performance: The moderating role of marketing resource intensity

This paper aims to study the performance implications of sustainable product attributes (SPA) of US manufacturing firms. Specifically, it analyzes the influence of aggregate and disaggregated SPA on firm profitability. The study further explores the moderating influence of marketing resource intensity on aggregate and disaggregated SPA and firm profitability relationships. The fixed-effect regression analysis of 433 US manufacturing firms' panel dataset reveals that aggregate and disaggregated SPA positively influence the firm profitability. The moderation analysis also confirms the positive influence of marketing resource intensity on aggregate and disaggregated SPA and firm profitability relationship. The current paper contributes to the triple-bottom-line and theory-of-the-firm literature streams by empirically studying the influence of aggregate and disaggregated SPA on firm profitability. Furthermore, this study uses the resource-based view to complement theory-of-the-firm model of SPA and empirically study the moderating role of marketing resource intensity between aggregate and disaggregated SPA and firm profitability. Finally, the findings inform the managers of the increased firm profitability by aggregate and disaggregated SPA, and the pivotal role of marketing resource intensity in strengthening the positive influence of aggregate and disaggregated SPA on US manufacturing firms' profitability.     

The competitive determinants of a firm's environmental management activities: Evidence from US manufacturing industries

Environmental management (EM) issues have received substantial attention in operations management. While the link between EM practices and firm performance has been well studied, little is known about the competitive drivers of a firm's EM activities. In this research, a Schumpeterian economics perspective is adopted to investigate competitive interactions among leader and challenger firms in the domain of EM, with a particular focus on operational EM activities. Using econometric methods, the empirical analysis of panel data from a broad cross-section of US manufacturing firms reveals that such rivalry does exist and that the effect of a rival's past EM activity on a focal firm's EM activity is greater for more profitable and smaller firms. In addition, firm characteristics such as market leadership, firm size and firm profitability are found to significantly affect the magnitude of a firm's EM activities. This study presents theoretical and empirical evidence of rivalrous behaviors in the domains of EM and OM and, thus, has interesting implications for operations management research and practice.     

Regional development and sources of superior performance across textile and IT sectors in Taiwan

The rapid growth and industrialization of Taiwan's textile and IT sectors, mainly comprised of small and medium-sized enterprises, has prompted an array of explanations among academics, including neoliberalism, structural-institutionalism, flying geese patterns, regional networks and economic geography. Drawing on neoliberal, structural-institutional, regional networking and economic geographic views in that strong Taiwanese entrepreneurial culture is important to its textile and IT sector development, this study shares their positive perspectives in influencing the sources of profitability differentials among Taiwan's textile and IT firms in international competitiveness. Researchers investigating the sources of performance differences among firms have focused mainly on the relative importance of industry and firm factors. Specifically, this study employs Taiwan's business database to examine industry and firm effects on profitability differentials in these sectors using return on assets and the economic performance measures of economic value added and market value added. A variance components model is proposed, and findings indicate that firm effects dominate performance while industry effects have little impact. Our discussion reconciles results with those of previous studies.     

Exploring environmental,social, and governance disclosure effects on the S&P 500 financial performance

Much of the literature measuring the relationship between environmental, social, and governance (ESG) scores and firm performance treats the score as a measure of sustainability performance. In this study, we treat a firm's ESG score as a demonstration of strategic choice in the level of transparency that results in increased firm performance as measured by Tobin's Q and return on assets. Performance differences are a result of choice moderated by the size of the firm as measured by employees and sales. We analyze 467 firms in the S&P 500 from 2009 to 2015. Applying legitimacy and stakeholder theory, we find that there is significant difference between groups with respect to disclosure and performance. The results of quartile analysis by sales, capitalization, and Tobin's Q are relevant to understand the influence that the ESG score has on financial performance. ESG influences on Tobin's Q are greatest for large firms as measured by sales, as opposed to the ESG affects on Tobin's Q and return on asset for smallest firms as measured by market capitalization.     

How do corporate environmental policy and corporate reputation affect risk‐adjusted financial performance?

The current study aims to answer dual, related questions: Does corporate environmental policy affect corporate reputation, and does this link also influence risk‐adjusted profitability and company's risk? With a comprehensive framework involving analyses of each question, among a sample of firms traced by the Reputation Institute, this study reveals several notable results, after correcting for endogeneity biases. First, environmental engagement and green product innovation are both antecedents of corporate reputation. Second, corporate reputation has a positive impact on risk‐adjusted profitability and Z score indicator of financial distress risk. Thus, corporate environmental responsibility and green practices represent cospecialized assets that enhances an intangible asset, namely, corporate reputation. The latter influence constitutes a missing link between sustainable development and the firm's financial performance. Overall, environmental engagement and corporate reputation act as insurance‐like protections of firm competitiveness.     

What a Diverse Top Management Team Means: Testing an Integrated Model

Prior research has produced inconsistent results on the relationship between top management team (TMT) diversity and firm performance. Drawing on the information–social categorization framework, this study is designed to investigate both the mechanism and the contextual factors underlying the relationship between TMT cognitive diversity and firm performance by examining them in a unified model so as to better understand how a diverse TMT works. Based on a multi‐sourced survey of top managers from 118 Chinese firms, this study finds that team interdependence and team cohesion moderate in the linkage between TMT cognitive diversity and elaboration of task‐related information. In addition, TMT's elaboration of task‐related information mediates the interactive effects of TMT cognitive diversity and team interdependence on firm performance as well as the interactive effects of TMT cognitive diversity and team cohesion on firm performance.     

The impact of bullwhip on supply chains: Performance pathways,control mechanisms,and managerial levers

Even though few empirical studies have tried to actually explicate the relationship between the bullwhip effect and performance of the supplier firm, there exists a common perception for over 30 years among both practitioners and academics that the bullwhip effect naturally results in decreased firm profitability. Anecdotal evidence further suggests that this decline in profitability arises from a decline in operational performance. However, the results of our study, which empirically examines the bullwhip effect across supply chain partners through an analysis of 383 actual customer base-supplier dyads, challenge this commonly held position by suggesting that while traditional bullwhip often yields reduced ROA, it ultimately has no relationship with the firm's operating margin. Additionally, our results also call into question whether or not production coordination between customers and suppliers can minimize the need for inventory and capacity buffers, which are the two commonly utilized methods for battling the bullwhip effect. Thus the relationship between bullwhip and firm performance is far more nuanced and complicated than previously believed. We also show how the managerial bullwhip levers of coordinating production across supply chain partners, or deploying inventory and capacity buffer control mechanisms, can help maximize a firm's performance along different dimensions.     

Labor unions and productivity: An empirical analysis using Japanese firm-level data

This paper empirically analyzes the relationship between labor union and firm performance in areas such as productivity and profitability by using data on more than 4000 Japanese firms, ranging from listed large firms to unlisted SMEs, in both the manufacturing and non-manufacturing sector. The presence of labor unions has statistically and economically significant positive effects on firm productivity. Unions' effects on wages are also positive, their magnitude being slightly larger than those on productivity. The decrease in the number of employees is greater at unionized firms than at non-unionized firms. The difference in employment growth is mainly attributable to the change in the number of part-time workers. In order to enhance productivity, close cooperation between management and unions is essential.     

Top Management Team Functional Diversity and Firm Performance: The Moderating Role of CEO Characteristics

Past research indicates that the effect of TMT functional diversity on firm performance is equivocal. We address this issue by focusing on the integrative role of the CEO, postulating that the CEO's expertise and background characteristics affect the TMT functional diversity–firm performance relationship, because of their impact on the exchange and integration of distributed knowledge within the TMT. Using a dataset of 33 Dutch and Belgian Information Technology firms we investigate the moderating role of three sets of CEO characteristics (functional background, status as founder, and shared experience with the other TMT members) on the relationship between TMT functional diversity and firm performance. Our results reveal that CEO and TMT characteristics do interact in realizing the potential advantages of distributed TMT functional expertise.     

Flow Signals: Evidence from Patent and Alliance Portfolios in the US Biopharmaceutical Industry

Integrating signalling theory and the portfolio diversity literature, we theorize that diversity in a firm's patent and alliance portfolios sends contrasting flow signals impacting its market value in a nuanced way. Diversity in an alliance portfolio mediates the patent portfolio diversity – market value relationship by suppressing the negative effect of patent portfolio diversity creating an overall positive effect. We test our mediation model on a longitudinal set of 225 US biopharmaceutical firms that were awarded 17,078 patents and participated in 37,744 alliances between 1990 and 2006. Our theory and findings contribute three novel insights. First, we demonstrate the value of a temporal lens in explaining why diversity in a firm's patent and alliance portfolios send flow signals that establish expectations among market observers and have performance implications. Second, establishing that patent and alliance portfolio diversity are temporally sequenced provides compelling evidence for the value of studying multiple types of portfolios, their temporal relationships and effects on firm outcomes. Third, since diversity in a firm's portfolios can send contrasting flow signals conditioned on the cognitive demands and proximity involved in interpreting the signals, firms that do not maintain a ‘signalling fit’ with market observers increase the probability of unintentional negative signalling effects.     

Sustaining Competitive Advantage Through Corporate Environmental Performance

This research investigates the relationship between a firm's environmental efforts and the sustainability of its competitive advantage by analyzing the effects of change in firm environmental performance on the persistence of profitability growth. We find that environmental resources allow a firm with superior financial performance to sustain its competitive advantage, and also complement the efforts of a poorly performing firm to hasten recovery from inferior financial performance. Our findings further indicate that firms attain such positive effects through enhanced profit margins resulting from improved environmental performance. Additionally, we observe that a corporate strategy of improving environmental performance demonstrates management's responsibility to maximize the shareholder wealth of a well‐performing firm. The results provide valuable insights to align environmental activities towards developing unique resources for sustaining the competitive advantage. The study provides an empirical support for creating economic value by benefiting the environment. Copyright © 2016 John Wiley & Sons, Ltd and ERP Environment     

The impact of knowledge spillovers and innovation on firm-performance: findings from the Balkans countries

This paper investigates factors affecting firm performance. Using data from Business Environment and Enterprise Performance Surveys (BEEPS 2013–2014), findings indicate that the following have a positive effect on firm performance: (i) innovative activities; (ii) knowledge spillovers; (iii) foreign ownership; and (iv) the proportion of skilled workers in the workforce. The paper therefore argues that innovation activities are endogenously related to firm performance, and that the performance of firms is influenced by knowledge spillovers and innovation activities, among other firm characteristics. The paper contributes to the literature by identifying spillovers and innovation activities as causal variables of firm performance—a novel approach to investigating knowledge spillovers and innovation activities.     

Employee ownership heterogeneity and firm performance in China

Employee ownership (EO) has gained increasingly significant attention from both business practitioners and policy makers in China. Through the examination of the implementation of EO by China's listed firms from 1992 to 2017 with a total of 3,396 firms and 36,559 firm‐year observations, we explored the relationship between EO implementation and firm performance. In general, we found that over time, EO firms outperform non‐EO firms in China, and the influence of EO is only different in nuanced aspects in different time periods according to the change of policies. The data from the most recent period, that is, 2014–2017, indicate that EO adopters have higher performance than matched non‐EO firms both before and after adoption, but the relative performance does not increase after adoption. We further examined the interactive effect between EO and executive stock ownership (ESO) schemes and found that the adoption of ESO weakens the positive relationship between EO and firm performance. Regarding different types of EO, we found lower performance in companies with high return rights but no control rights, and we found better performance when high return rights are combined with control rights. We suggested policy and managerial implications on the basis of the findings.     

Does it pay to venture abroad? Exporting behavior and the performance of firms in Indian industry

Using contemporary data for a firm-level sample of over 600 Indian firms, this paper investigates the impact that an export-orientation has on the profitability of the firms studied. The results, based on a two-stage least squares method, establish a positive and significant relationship between firms' levels of exports and profitability. For firms from developing and transition economies like India it does pay to venture abroad, and the ability to sell goods overseas has a significant impact on firms' economic performance. © 1998 John Wiley & Sons, Ltd.     

Environmental sustainability orientation and performance of family and nonfamily firms

Despite the growing research evidence on the effect of environmental sustainability orientation (ESO) on firm outcomes, contingent factors that may influence the strength of this relationship have received little scholarly attention. In this study, we use insights from the literature on ESO and family business to introduce family status and firm age as moderators in the ESO‐performance linkage. Using time‐lagged data from 253 small and medium‐sized enterprises in Ghana, we found the impact of ESO on firm performance is amplified for nonfamily firms but not significant for family firms. Our evidence suggests it is stronger among older firms than younger ones. Implications and directions for future research are discussed.     

Talent management,absorptive capacity,and firm performance: Does it work in China and Russia?

This article investigates the relationship between talent management (TM), absorptive capacity (AC), and firm performance. We build a theoretical framework and examine the mediating role of a firm's AC in TM–performance relationships in the contexts of China and Russia. We use a sample of 120 Chinese and Russian firms to provide empirical evidence of our hypotheses. Our results show for both Chinese and Russian firms, a well‐developed TM system positively influences a firm's ability to acquire, assimilate, and exploit knowledge as well as increase the overall level of a firm's AC. We also found support for the argument that TM has an indirect positive effect on firm performance through its AC; moreover, the effect is stronger for Chinese firms, specifically, within the link between AC and performance.     

Innovation efficiency and firm performance in a benchmarking context

This paper examines the effect of innovation efficiency on firm performance using the Greek version of the Community Innovation Survey (CIS) 2012–2014 and employs a dataset of 1,274 innovative manufacturing firms. Introducing a data envelopment analysis (DEA)-type benchmarking strategy with non-continuous knowledge inputs, the main findings suggest that innovation efficiency, although does not exert a direct impact on firm performance, moderates the relationship between the internally generated knowledge and firm performance. On the other hand, such a moderation relationship is not confirmed for the relationship between external knowledge and innovation spillovers on firm's performance. Although the impact of the embodied to innovation inputs spillovers, on firm performance, is always positive and significant, empirical results indicate that absorptive capacity exhibits diminishing returns with respect to performance.     

Board gender diversity and corporate environmental performance: The moderating role of family and dual‐class majority ownership structures

While prior work has investigated the impact of (a) ownership structure and (b) board gender diversity separately on corporate environmental performance, researchers have not studied the potentially important relationship between ownership control and female board diversity in influencing corporate environmental performance jointly. We do so in the context of majority ownership in family‐controlled and dual‐class firms whose motives and influence are theoretically different from that of the firm's minority shareholders. Drawing on resource dependency, socioemotional wealth theory, and secondary agency theory, we hypothesize that majority family owners and dual‐class owners likely choose women directors to help advance their personal preferences for environmental corporate social responsibility. Our empirical tests utilizing 2,755 U.S. firm years over the 2010–2015 show that, as hypothesized, these two majority ownership types interact with board gender diversity to positively influence corporate environmental performance.