Absorptive capacity development in Indonesian exporting firms: How do institutions matter?

This paper addresses how firms from an emerging market characterized by a challenging and variable institutional environment learn about internationalizing. Building on the organizational learning and institutional literatures, and the concept of absorptive capacity (AC), and using a sample of Indonesian manufacturing-sector exporters we identify two dimensions of internationalization-related AC: international market and international strategic operation. Unlike previous literature, we find that indirect, or second-hand, experience contributes more than the firm's own experience to the development of international market AC. Furthermore, the second-hand experience feeds Indonesian manufacturing exporters’ learning in both positive (e.g., buyers) and negative (e.g., suppliers and foreign multinationals in Indonesia) ways. In contrast, the development of international operation strategy AC appears to be driven internally, with minimal contribution from either first- or second-hand experience. We posit that these outcomes are influenced by the rapid and substantial changes in the domestic institutional environment faced by the Indonesian manufacturers.     

Facing global economic crisis: Foreign sales,ownership groups,and corporate value

This study extends the research on internationalization to a new organizational context – emerging market firms (EMF), and a new time context – global economic crisis. We propose a U-shaped relationship between foreign sales intensity and firm value for EMFs during global economic crisis. Further, we distinguish between EMFs’ relational owners (i.e., business groups) and transactional owners (i.e., institutional investors) to investigate their different moderating effects. We find empirical support for our hypotheses using a sample of Chinese firms during the global economic crisis in 2008. Moreover, we provide research and practice implications.     

‘Reverse internationalization’ in Chinese firms: a study of how global startup OEMs seek to compete domestically

This research investigates whether the global startup original equipment manufacturers (OEMs) in China could employ their knowledge-acquisition capability developed via internationalization to compete domestically (i.e. reverse internationalization), facing the recession in developed markets. Results examine that knowledge-acquisition capability can help these firms compete in ‘reverse internationalization’, while the conduct of own brand strategy partially mediates the positive relationship between their capability and domestic performance. We contribute to the literature by identifying the unique ‘Chinese global startup OEMs’, recognizing knowledge-acquisition capability as a high-order dynamic capability for such firms, and introducing a novel entrepreneurial phenomenon we call ‘reverse internationalization’.     

The determinants of successful R&D consortia: government strategy for the servitization of manufacturing

The Taiwanese government has started to promote the concept of the ??servitization of manufacturing?? with a view to accelerating the servitization of the country??s manufacturing industries. The objective is to enable Taiwan??s industries to progress from manufacturing toward innovation, R&D, and services. The main purpose of this study is to explore the factors determining the formation of R&D consortia among Taiwanese firms. In a literature review and analysis, we distinguish the factors underlying the formation of these R&D consortia into internal and external factors. The findings show that four external factors are positively significant: the degree of industry competition, the appropriability conditions of innovations, government subsidies, and cooperation between firms in different industries. Firm size and firm age are among the internal factors that are significantly positive in the formation of R&D consortia.     

Quality-cum-price sorting

This paper provides new evidence on how export status relates to prices and product quality. Using firm-product-level data on production, exports and imports for a sample of Danish manufacturing firms, we present three key correlations. First, exported varieties are on average sold at lower prices relative to only domestically sold varieties. Second, exported varieties have higher quality measured by ‘demand residuals’ (i.e., they have larger sales conditional on price). Finally, exported varieties are produced using cheaper imported intermediates. We introduce the term ‘quality-cum-price sorting’ to describe this sorting environment. The observed sorting behaviour in terms of output quality and import prices works not just across firms, but also within multi-product firms across the product portfolio. In contrast, the negative exporter premium in terms of output prices vanishes once firm-level unobservables are accounted for—consistent with the idea that unobserved firm efficiency is driving the negative correlation.     

Are Exporters More Likely to Introduce Product Innovations?

A firm’s export status may improve its ability to introduce product innovations (learning by exporting). We explore this idea using very rich firm‐level data on Italian manufacturing, which enables us to control for many confounding factors in the exporting–product innovation link (i.e. selection on observable variables). We also make an attempt to address the potential self‐selection of firms into exporting according to unobservable characteristics using an industry–province specific measure of firm distances from their most likely export markets, and of these export markets’ potentials as sources of presumably exogenous variations in export status using an instrumental variables strategy. We find that export status significantly increases the likelihood of introducing product innovations and that this effect is not fully captured by the channels commonly stressed by the theoretical literature, such as larger markets (and accordingly firm size) or higher investments in R&D. We argue that heterogeneity in foreign customers’ tastes and needs may explain our findings.     

The Roles of Credibility and Social Consciousness in the Corporate Philanthropy-Consumer Behavior Relationship

We have empirically examined the relationship between top executives’ turnover and the corporate environmental responsibility by identifying the influence of ten specific turnover reasons resulting in the chairman’s departure and two important types of chairman’s succession. Using a sample of 782 manufacturing listed companies across 3 years in China, we find that the corporate environmental responsibility is negatively associated with the involuntary and negative turnover (i.e., dismissal, health and death, and forced resignation) and positively associated with improving corporate governance, and not associated with the normal turnover (i.e., retirement and contract expiration) and the types of chairman’s succession (i.e., independence, and internal or external promotion). Our study significantly contributes to research in environmental disclosure by revealing the relationship between chairman’s turnover and the corporate environmental responsibility. A feasible way is suggested to regulators and other stakeholders in monitoring or assessing the possible abnormality of environmental responsibility when firms experience involuntary and negative chairman’s turnover in the emerging economies.     

A psychological examination of attachment insecurity,loneliness, and fear of missing out as drivers of retail patronage among emerging adults

Recent consumer literature has shown that attachment insecurity (i.e., anxious, avoidant) enhances individual's motivations for retail shopping. We extend that literature using attachment theory to explain how attachment insecurity, loneliness (i.e., social, emotional), and fear of missing out (FoMO) affect retail patronage. We posit that these three negatively valenced psychosocial conditions generally incline emerging adult consumers toward retail patronage to resolve their relational deficits. Based on results from partial least squares-structural equation modeling (n = 509), we find support for most of our hypotheses. The study presents previously unavailable knowledge about antecedents of FoMO and multiple negative psychosocial drivers of retail patronage. We provide a foundation for future scholarship to examine more broadly how attachment, loneliness, and FoMO impact consumer behavior. Managerial and theoretical implications are also provided.     

Is environmental labeling certification a “green passport” for firm exports in emerging economies? Evidence from China

As the demand for more environmentally friendly products continues to increase, environmental label certification (ELC), as a voluntary environmental practice (VEP), has become a commonly used strategy by firms responding the green demands of the international market. While ELC is playing an increasingly important role in global trade, how ELC affects firms’ exports, especially how it affects the exports of those firms in emerging economies, remains unknown. This study explores the impact of ELC on firms’ exports. Insights are provided from resource-based views (RBV) by analysing China's A-share listed manufacturing firms to estimate the impact of China's ELC on exports. Our empirical results show that ELC can promote firms’ exports, because ELC emphasizes firms to reduce pollutant from the source, thereby, brings about cost advantage and green product differentiated advantage to boost high-quality exports. Using a series of robustness tests, we provide corroborating evidence for our hypotheses. The export-enhancing effect of ELC is impacted by the institutional context of emerging economies, as specialized market intermediaries and greater openness to the global market strengthen the export-enhancing effect of ELC. This research not only contributes to the literature, but also provides a reference for policy-makers and managers in using ELC to develop green trade.     

Digitalization Capabilities as Enablers of Value Co‐Creation in Servitizing Firms

As manufacturing companies pursue a servitization strategy, they are increasingly relying on developing digitalization capabilities to interact and co‐create value with their customers. However, many lack an understanding of what constitutes digitalization capabilities and how they can create value with customers. To address these questions, the study builds on qualitative data from four industrial manufacturing firms to conceptualize three underlying subcomponents of digitalization capabilities, namely, intelligence capability, connect capability, and analytic capability. The study identifies and explains how digitalization capabilities enable value co‐creation with customers through perceptive and responsive mechanisms. This study contributes to the servitization literature by showcasing how digitalization capabilities are enabling value co‐creation in a business‐to‐business context.     

贸易环境变化背景下中国制造业参与全球价值链分工--研究前沿综述

近年来,"逆全球化"思潮和贸易保护主义持续抬头,中美贸易摩擦趋于常态化,中国制造业参与全球价值链分工的外部环境已经发生深刻变化,如何应对新挑战成为重大课题,引起国内外学者的浓厚研究兴趣。对该领域的研究前沿进行综述,并对未来研究方向进行展望表明,中国制造业在全球价值链上的赶超与攀升无疑是此轮中美贸易摩擦的"催化剂",虽然中美贸易摩擦不会从根本上改变中国制造业的赶超态势,但其负面影响也在逐步显现。中国依托融入全球价值链分工实现制造业高速增长的基础条件已经发生重大变化,重塑制造业竞争优势、转变制造业贸易方式、推动中间品贸易自由化、利用对外直接投资主动整合资源和加速制造业服务化,是中国制造业应对贸易摩擦和提高分工地位的有效途径。未来研究应更多关注中美贸易摩擦的"典型事件",并基于客观数据分析其影响;从宏观视角向微观视角拓展,系统跟进中美贸易摩擦对中国制造业的现实影响;适应环境变化,关注中国制造业深度嵌入全球创新链的策略。     

The role of network embeddedness across multiple social networks: Evidence from mobile social network games

This article examines peer influences from network relationships within a social network game (i.e., embeddedness) and across such games (i.e., multiplexity). Drawing on social influence theory, we develop a bivariate Poisson model of users’ repeated visits and latent attrition that accommodates peer interaction after controlling for homophily. We estimate the model using data from two social network games with considerable overlap among network members. We find that friends who are only multiplex across games exert greater peer influence on users’ game visits than members who are embedded within a single game. We also determined that ignoring network multiplexity across games may lead firms to mistarget users due to biased peer influences of embedded friends. This result provides an unresearched explanation—strength of peer influence—for the mixed findings in previous literature on network embeddedness. We utilized our results to conduct several scenario analyses to demonstrate how firms can effectively manage users’ engagement and target users in multiple social network games.     

The Effects of Relationship Marketing on Share of Business: A Synthesis and Comparison of Models

ABSTRACT

Purpose: The article synthesizes the extensive empirical work on relationship marketing (RM) and compares the various conceptualizations to give a better understanding of the relational factors (i.e., characteristics of the business relationship) that improve a seller’s objective performance (i.e., share of business) in a business-to-business (B2B) services context. These conceptualizations, taken from the literature, link relational antecedents (i.e., communication, domain expertise, relational value, and mutual goals) to relational mediators (i.e., trust, satisfaction, commitment, relationship quality) to explore how they in turn affect a seller’s share of business.

Methodology/approach: All 4 models derived from the literature review were assessed using a dataset drawn from a survey of 948 client firm representatives of a Portuguese hotel chain in a B2B services context.

Findings: The best of the models in terms of model fit and prediction of share of business shows that only customer commitment directly drives a seller’s share of business, and simultaneous interrelated changes in customer trust and satisfaction, as well as customer perceptions of relational value, drive customer commitment, and so exert indirect effects on performance. The model that proposes that a seller’s performance is strengthened by simultaneous interrelated improvements in customer trust, satisfaction, and commitment (i.e., with these three mediators being conceptualized as a single, combined, higher-order mediator, termed relationship quality [RQ]) shows inferior fit. No combination of mediators (satisfaction, trust, or commitment) improves the seller’s objective performance over and above their individual effects (i.e., there are no synergistic effects).

Research implications: The literature review suggested four ways of modeling RM antecedents, mediators, and their effect on performance. Complex second-order constructs such as RQ lack explanatory power when predicting outcomes and mask the effects of individual relational mediators. Correct conceptualization is important, as conclusions vary drastically even with the same set of relational mediators and same dataset.

Practical implications: B2B service providers’ investments in RM will lead to improved share of business only if customer commitment is high or there is at least the potential to improve it. This requires an understanding of how valuable

the customer believes the relationship to be, and how the customer rates the relationship with the firm in terms of satisfaction and trust. A customer segmentation approach to relationship building and maintenance is advocated and detailed suggestions are put forward.

Originality/value/contribution: Apart from the work by Palmatier, the relationships between RM antecedents and mediators have not yet been examined simultaneously and findings are fragmented. The article provides a synthesis of this expansive literature. It contrasts different interplays between RM mediators, including their interrelationships as a higher-order construct, and explores possible synergy effects. Unlike previous work, this study focused on an objective measure of seller performance (i.e., share of business), whereas previous studies have tended to examine subjective measures, especially within the B2B context. Furthermore, four full models were assessed here, each of which included the antecedents to RM mediators and their links to objective performance.     

Imitation,performance feedback,and outward foreign direct investments by emerging market firms

Extending the rational-based perspective of imitation, this study investigates how emerging market firms (EMFs) selectively imitate the frequency of outward foreign direct investment from two theoretically connected role models, i.e., large firms in an industry and board-interlocked firms. We posit that large and board-interlocked firms have differential values in endowing legitimacy and providing information because of their differences in terms of visibility to outsiders and value of acquired information. Using performance feedback as a moderator, we also indicate that EMFs performing above aspiration level decrease their imitation of large firms and board-interlocked firms. We also find that EMFs performing below aspiration level are more likely to imitate interlocked firms but less likely to imitate large firms.     

Shareholder Engagement on Environmental,Social, and Governance Performance

We study behind-the-scenes investor activism promoting environmental, social, and governance (ESG) improvements by means of a proprietary dataset of a large international, socially responsible activist fund. We examine the activist’s target selection, forms of engagement, impact on ESG performance, drivers of success, and effects on the targets’ operations and value creation. Target firms are typically large and visible, perform well, and have high liquidity (stock turnover) and low ESG performance. Engagement induces ESG rating adjustments: firms with poor ex ante ESG ratings experience a ratings increase after complying with the activist’s demands, whereas firms with high ex ante ESG ratings experience a ratings decrease following the revelation of their ESG problems. Activism that is focused on environmental and social issues is more likely to succeed if targets are ESG-sensitive (i.e., they have a strong ex ante ESG profile). Successful engagements boost targets’ sales. Risk-adjusted excess stock returns (with four-factor adjustment and relative to a matched sample of non-engaged firms) of successful engagements outperform those of unsuccessful engagements by 2.7%. Results are especially strong for firms with low ex ante ESG scores. Specifically, targeted firms in the lowest ex ante ESG quartile outperform matched peers by 7.5% in the year after the end of the engagement. Our results thus suggest that the activism regarding corporate social responsibility generally improves ESG practices and corporate sales and is profitable to the activist. Taken together, we provide direct evidence that ethical investing and strong financial performance, both from the activist’s and the targeted firm’s perspective, can go hand-in-hand together.

     

Virtual customer environment design and organizational innovation: An exploration–exploitation perspective

ABSTRACT

Many firms are developing virtual customer environments (VCEs) that provide customers the opportunity to submit, discuss, and vote for new ideas. Some studies show that VCEs promote the development of incremental improvements in existing products and services (i.e., exploitative innovation). However, other studies find that customers working in VCEs will often suggest radical ideas for brand new products and services (i.e., exploratory innovation). Exploration and exploitation are often incompatible; thus, we address this paradox by investigating whether the design of a firm’s VCE architecture is related to the firm’s exploratory innovation activity and exploitative innovation activity. Using matched data collected from VCEs and managers, we show that two-way information exchange VCE tools facilitate exploratory innovation, and one-way information exchange VCE tools enhance exploitative innovation. We also find that absorptive capacity positively moderates the latter relationship. Our findings have implications for research and practice in VCEs, organizational innovation, and organizational learning.     

Network architecture and firm performance: A resources-based view

Previous studies have investigated alliance networks primarily from two alternative views, a relational view that focuses on the “strength of strong/weak ties,” or a structural view that refers to a firm’s position and structural embeddedness. We posit a firm’s network architecture, i.e., the portfolio of strong/weak ties, influences its conduct and performance. From a resource-based view, the network architecture itself could be a source of sustained competitive advantage. We argue that both network architecture and duration of a firm can enhance its performance. However, their effects and the interaction are contingent on different performance outputs. Using strategic alliance networks data from a survey of the manufacturing industry in China, we examine the performance implications of network architecture. Results suggest that benefits from networks may evolve with network duration, hence firms should search for optimal network configurations. By integrating an alliance portfolio, firms with dual network architectures can enjoy both the strengths of strong ties and weak ties and avoid the risks inherent in a pure strong/weak-tie network.     

Who really cares about the environment? CEOs’ military service experience and firms’ investment in environmental protection

Prior literature suggests that the chief executive officer (CEO) plays a significant role in a firm's environmental performance or voluntary pro‐environmental behaviors; we extend this line of research to examine the effect of CEOs’ military service experience on firms’ investment in environmental protection. Drawing upon the insights of imprinting theory, we argue that military service experience may instill in CEOs pro‐environmental values such as duty, self‐discipline, self‐sacrifice, and sense of community, which motivate them to adopt pro‐environmental behaviors such as investing more resources in environmental protection. However, we argue that the effects of pro‐environmental values imprinted on CEOs through military service are likely to vary across regions. In regions where the market is more developed and the local value system has experienced greater exposure to the impact of foreign values, and in regions where firms are more concerned about profit, this effect is likely to be attenuated. An analysis of three waves of a nationwide survey of private firms in China using the Tobit regression model supports these predictions. This study makes a unique contribution to the existing literature by linking a firm's pro‐environmental behaviors (i.e., environmental protection investment) to its CEO’s experiences in early life (i.e., military service experience).     

Investigating a revised service transition concept

This paper seeks empirical validation of a revised conceptual framework of ‘service transition’ that re-interprets the adoption of advanced services by manufacturing firms as a progressive expansion, rather than a shift or migration, of the offering. Using cluster analysis and logistic regression, three groups of firms are identified with respect to the offering of four categories of services, ranging from basic to highly advanced services. Results indicate that advanced services predominantly complement, rather than replace, basic or less advanced services, supporting the revised conceptual framework. In doing so, the paper responds to the call for empirical research that quantitatively validates the conceptual foundations of the field of servitization. Nevertheless, the clusters identified provide a reference scheme to scrutinise potential synergies between sets of services that can complement and leverage each other.     

Performance feedback and outward foreign direct investment by emerging economy firms

Integrating the behavioral theory of the firm (the BTF) and the self-enhancement motive of managers, this paper examines how performance feedback—the discrepancy between actual performance and aspiration levels—affects the international expansion of emerging economy firms (EEFs). Empirical results using panel data on 876 publicly-listed Chinese manufacturing companies over a 7-year period indicate that performance relative to social aspiration (i.e., peer performance) and relative to historical aspiration (i.e., firms’ own past performance) affects EEFs’ levels of subsequent outward foreign direct investment (OFDI). Specifically, performance below social or historical aspiration enhances levels of OFDI, while the effect of performance below social aspiration is stronger than that of underperforming historical results. The results also show that performance above social aspiration enhances levels of OFDI, while performance above historical aspiration decreases levels of OFDI. Moreover, we uncover the importance of considering the joint effect of historical and social performance feedback, as receiving consistent or mixed signals about firm performance may result in risk-taking behaviors that differ from those triggered by just one performance signal on its own. These findings underscore the impact of performance feedback relative to social and historical aspirations on EEFs’ OFDI activities.