Export behavior of small firms: The impact of managerial attitudes

Perception of risk, profit and obstacles to initiation of an export marketing is important in determining the firm's export involvement. Research findings indicate that non-exporters do not have different perception of export profitability and riskiness from exporters. However, non-exporters believed exporting requires too much up-front cost in order to initiate an export program. Moreover, non-exporters perceive the difficulty in finding foreign markets as the major obstacle to export, while exporters believe that the high value of dollar is the major obstacle to their export involvement.     

The impact of R&D on value added for domestic and foreign firms in a newly industrialized economy

This study compares the impact of R&D on value added between domestic and foreign firms in Singapore. The analysis is based on a comprehensive panel database from 1993 to 1999 provided by the Singapore Government. Our results found that R&D investments of foreign firms generated higher value added than those of domestic firms, and that the difference in value added contributed by R&D was moderated by the type of R&D and the technological level of industry. The study supports the argument that the ownership advantages possessed by foreign firms, relative to domestic firms, have positive effects on R&D performance.     

The impact of FDI on the performance and entrepreneurship of domestic firms

This paper examines how foreign direct investments influence the performance and entrepreneurship of domestic firms, a crucial question for economies driven by incursion of exogenous factors and especially transition economies. The intent is to investigate the way foreign direct investments shape the capabilities of domestic firms; hence, for this purpose, we take Macedonia, a Southeast European economy, as a case study. We find that (i) foreign ownership has helped restructure and enhance the productivity of domestic firms, (ii) FDI has positive influence in reinforcing the creation of new firms, and (iii) in line with the established literature, a foreign investment is likely to influence the job seeker to get employed rather to start their own business. Overall, the results confirm the influence of foreign firms in assisting entrepreneurial activity. The impact of foreign investment is, in general, positive and tends to influence the restructuring process of domestic enterprises.     

The impact of kidnapping on foreign ownership of firms in Nigeria

Nigeria is one of the countries in Sub-Saharan Africa (SSA) that has faced high incidents of kidnapping. As a result of that, some studies have investigated its determinants and economic consequences in Nigeria. However, no study is yet to investigate its impact on the foreign ownership of firms. This is a research void that this article has attempted to fill. Using the World Bank Enterprise Survey and the United Nations Office on Drugs and Crime, we found empirical evidence of the negative impact of kidnapping on the foreign ownership of firms. An increase in the kidnapping rate by one (1 per 100,000 of population) will reduce the foreign ownership of firms by 4.855–10.098% depending on the econometric model. There is also empirical evidence that the impact of kidnapping on foreign ownership will vary by geographical regions in Nigeria and by firm size. Policy implications were deduced from our findings.     

Home country institutional environments and foreign expansion of emerging market firms

We propose that home country institutional environment shapes emerging market firms’ foreign expansion. We argue that better-developed home country institutional environment promotes emerging market firms’ expansion to foreign markets more advanced than the home country, while institutional instability in the home country reduces this propensity. We further hypothesize that the effects of home country institutional environment are contingent on firm-specific government ownership. Data on the foreign expansion of 921 Chinese firms in the period of 1996–2000 provide strong support for the effects of home country's institutional development and institutional instability. We also find that a high degree of government ownership weakens the positive effect of home country's institutional development on emerging market firms’ propensity to expansion to more advanced markets.     

The economic impact of the Canada small business financing program

This paper investigates the economic impact of the Canada Small Business Financing Program (CSBFP) using the 2004 edition of the Survey on Financing of Small and Medium Enterprises. To avoid the usual self-selection problem associated with voluntary participation in such programs, the financing behavior of the business and its intention to grow are used as control variables. Based on this analysis, participation in the CSBFP would have increased growth in salary, employment and revenues by 12, 12, and 7 percentage points, respectively, between 2004 and 2006. Furthermore, CSBFP would have induced around 5,000 jobs, approximately 3.8% of those created in that time span by small private businesses.     

Impact of domestic and foreign knowledge mechanisms on the innovation performance of Indian firms

Research on emerging market firms (EMFs) has acknowledged the role of innovation in catching-up with advanced economies. Although we know that EMFs’ innovation increasingly depends on collaborations and cross-border knowledge flows, less has been said about the effectiveness of foreign and domestic knowledge mechanisms adopted to improve EMFs’ innovation performance. We hypothesize that foreign mechanisms rely on diverse knowledge and foster explorative innovation (i.e. innovation that extends the existing local competencies), while domestic mechanisms are more likely to be associated with the exploitation of the local existing competencies. Additionally, we claim that the breadth of EMFs’ absorptive capacity strengthens the impact of foreign knowledge mechanisms on explorative innovation, while depth increases the impact of domestic knowledge mechanisms on EMFs’ exploitative innovation, thus highlighting that the interplay of knowledge resources internal and external to the firm involve different levels of recombination. Our empirical analyses conducted on a sample of 161 Indian bio-pharmaceutical firms observed from 1997 to 2018 confirm our hypotheses, thus contributing to the literature on EMFs’ catching up via internationalization and innovation.     

The moderating role of local embeddedness on the performance of foreign and domestic firms in emerging markets

This paper examines the impact of the firm’s degree of local embeddedness on its performance in emerging markets using the World Bank’s Enterprise Survey Manufacturing Sector Module data on 15,715 firms covering 78 emerging markets. We use the degree of localization of sourcing and sales to measure the degree of embeddedness in the host country market. We argue that since embeddedness brings the firm into closer interaction with local firms and institutions, the costs of embeddedness should be lower for local firms than for MNE subsidiaries, since local firms can be assumed to be better able to decipher local institutions. We find that both dimensions are subject to a reversed U-shaped function. That is, by extending the degree of local sales and local sourcing up to a certain percentage, a firm can realize positive performance growth by becoming more embedded into the emerging market, but beyond this point, the performance impact is negative. We also find that foreign firms involved in local sales seem to lose part of their ability to exploit their ownership advantages as compared to foreign firms that export their production.     

The impact of trade on aggregate productivity and welfare with heterogeneous firms and business cycle uncertainty

This paper presents a model with monopolistic competition, productively heterogeneous firms, and business cycle aggregate shocks. With firm-specific productive heterogeneity, weaker firms quit when faced with a negative aggregate shock. Consequently, trade does not always increase firm-level aggregate productivity as negative shocks on the home market can be compensated for by positive shocks elsewhere. Weaker firms, which would otherwise quit in autarky, can continue to operate by exporting. Despite this, trade can still improve welfare for the risk-averse consumer by reducing aggregate price fluctuations.     

The impact of firm strategy and foreign ownership on executive bonus compensation in Japanese firms

Building on information-processing perspectives and the Japanese contextual factors, this study investigates the relationships between firm strategy and executive bonus pay as well as the moderating role of foreign ownership on the strategy-compensation relationship in Japanese firms. We focus on R&D investment and product diversification as strategy variables and investigate their direct effects on executive bonus pay. Further, we examine the moderating effects of foreign ownership on the strategy-pay sensitivity. The results, based on a sample of the 148 largest industrial firms in Japan for the 1990-1997 period, show that both R&D investment and product diversification are positively related to executive bonus pay. Our findings also indicate that foreign ownership negatively moderates the relationships between the strategy variables and executive compensation, suggesting that foreign investors play an active monitoring role, reducing cash bonus payments when their invested firms choose to increase R&D or pursue diversification strategy.     

The impact of domestic diversification and top management teams on the international diversification of Chinese firms

Despite increasing research on outward foreign direct investment (OFDI) by firms from emerging economies, our understanding of the relationship between domestic operations and international diversification of these firms is still limited. Using a unique dataset of Chinese listed firms, we examine the impact of domestic diversification on their international diversification. We find that international diversification is positively affected by firms’ domestic industrial and domestic regional diversification. We also find that top management team (TMT)’s previous international experience strengthens the impact of domestic diversification on firms’ international diversification, whereas TMT's prior political connections weakens the impact of domestic diversification on international diversification.     

The impact of home business network attributes on Chinese outward foreign direct investment

Researchers who take a network perspective argue that insidership in foreign market networks is a necessary condition for internationalization. In this study, we argue that insidership in home market networks also matters. The effect of home network insidership on outward foreign direct investment (OFDI) depends on both individual and joint effects of structural and relational network attributes. Our study based on a survey of 194 Chinese firms shows that firms in a central network position are more likely to engage in OFDI than those in a brokerage position. Furthermore, we find the interaction between firms’ centrality and their connections to foreign-invested enterprises to be significantly and positively associated with OFDI, whereas a significantly negative effect is evidenced when a firm is connected more to domestic firms.     

How foreign knowledge spillovers by returnee managers occur at domestic firms: An institutional theory perspective

Instead of treating the spillover process as a black box, this paper conducts a qualitative study of foreign knowledge spillovers by returnee managers at Chinese firms. Unlike mainstream spillover studies which adopt economics approaches, this paper uses an institutional theory perspective and regards returnee managers as boundary spanners. Results show that returnee managers' boundary-spanning activities in the form of social interaction, including building relationships with colleagues and transforming their identities from outsiders to insiders, help gain legitimacy for their new roles. Their boundary-spanning activities in the form of grafting foreign knowledge, including understanding existing knowledge resources, introducing foreign knowledge to colleagues, and integrating foreign knowledge with domestic firms, help gain legitimacy for foreign knowledge. Foreign knowledge' contributions in new product development at product, process, and cultural perspective levels reinforce its institutionalization at domestic firms. Absorptive barriers include domestic firms' administrative heritage and returnee managers' arduous relationship with others.     

The impact of innovation centres on small technology-based firms: The example of the federal republic of Germany

Small and medium-sized enterprises have not only in the Federal Republic of Germany been the source of several strategies of economic development and innovation policy for some time. The majority of these measures aims at revealing the potential strength of small and medium-sized enterprises in the innovation process by eliminating particular bottlenecks in the development and other problems of these enterprises which large enterprises do not have. Since 1983, the instrument of innovation centres for a specific promotion of a part of the small and medium-sized enterprises, namely, the new technology-based firms, has been applied also in the Federal Republic. This article investigates to what extent the meanwhile nearly 70 innovation centres could have a positive influence on the development of technology-based small firms. The empirical basis of the analysis consists of data collected in 31 innovation centres and 177 of the enterprises located there.The majority of the entrepreneurs indeed expect advantages over against alternative locations in the same region. The services offered by the centres meet with a lively demand from the tenants who, however, criticize the weaknesses, especially in the advisory services, generally attributable to the centres' managers. Concerning their infuence on the enterprises, the innovation centres do not at all represent a homogenous group, but differ considerably with regard to personnel and infrastructure. However, this assessment can only be tentative, a definite assessment regarding the effectiveness of this instrument is not possible after only six years of existence in the F.R.G.     

The labor market effects of foreign owned firms

Foreign firms have a more educated workforce and pay higher wages than domestic firms even after controlling for worker quality, at a given moment in time. This does not imply that foreign ownership improves the labor market outcomes of the workers since foreign investment may be guided by unobservable firm and worker characteristics correlated with schooling or wages. This paper asks whether foreign investors acquire firms with high human capital or wages, or whether foreign acquisition improves these outcomes. Using a matched employer-employee data set, I find that foreign acquisitions of domestic firms have small effects on the human capital and on average wages of the acquired firms. Instead, foreign investors “cherry pick” those domestic firms that are already very similar to the group of existing foreign firms.     

Entrepreneurship and small business: The Hungarian trajectory

In Hungary the superiority and the rationality of the centrally planned system had already been questioned in the mid-1950s and in lower or louder voice ever since. After the suppressed revolution and initiated systemic changes of 1956, the comprehensive economic reform of 1968 was an attempt to combine plan and market keeping basic characteristics of the system as dominance of state ownership, high centralization, the power of the single party, etc. Despite several new initiatives, this experiment failed.From these initiatives, four will be dealt with: the birth and flourishing of the second economy, the rise and fall of the intrapreneurial groups, the turn from toleration to promotion of private small business, and the start of the divestiture privatization. The four junctions of the special Hungarian “reform trajectory” nolens-volens prepared the fundamental systemic changes: the transition to a proper market economy—partly by introducing basic constitutents of the new system, and partly by contributing to the erosion and disintegration of the former system.The analysis of these historical lessons helps to understand the present situation of the Eastern European economies and in particular of Hungary. It facilitates the identification of the major tasks to stop stagnation and decline, to start revitalization of these economies, and instead of the use of routine International Monetary Fund and World Bank schemes, to elaborate adequate forms and methods of aid.In the European market economies, the share of small business in employment (measured by firms up to 100 employees) might be around 50%, in Hungary, about 20%, in Poland about 15%, and less in the other Eastern European countries. The development of entrepreneurship and small business is one of the major prerequisites of the transformation of these economies. The knowledge, however, about the actual situation, the conditions needed to increase the number of start ups, the rate of survival, and the growth potential of small and medium-sized enterprises is rather scarce.From the findings of the questionnaire survey, the following conclusions can be derived:1. The increase of the share of the SMEs should be based on their better competitiveness in domestic and export markets; this is overshadowed now by the quantitative ambitions.2. SMEs have advantages vis-à-vis the large enterprises as well as disadvantages. To counterbalance them, an accelerated development of the infrastructure for banking, training, consultancy, and information; preferential treatment (credits, taxation) in some cases, networking, and more services of the trade associations are needed.3. In a declining, depressed economy, one cannot expect the renaissance of entrepreneurship and small business. Fighting high inflation, loosening restrictions, and a better management of the country's debt service should create a healthier economic environment—for small, medium, and larger enterprises equally.     

Ethnocentric tendencies of Indian consumers: impact on preference for domestic versus foreign products

India is witnessing a plethora of foreign and domestic products competing against each other in its retail market. In order to understand how ethnocentrism among Indian consumers leads to attitudes toward foreign/domestic products, this study aims to understand the antecedents (socio-psychological and demographic) of consumer ethnocentric tendencies (CET) among Indian consumers, the impact of ethnocentrism on attitude toward domestic versus foreign product and service, and the impact of a moderator (perceived economic threat) on the relationship between ethnocentrism and attitudes. Using a sample of 800 Indian consumers, the relationships among variables were analyzed by means of structural equation modeling (SEM) using one product (soap) and one service (mobile phone service) category. The findings suggest that Indian consumers who are ethnocentric prefer domestic product/service to foreign product/service. Ethnocentrism of Indian consumers is influenced by education, income, cultural openness, and collectivism. The relationship between ethnocentrism and attitudes was moderated by perceived economic threat. Implications are provided for both Indian and foreign marketers to successfully promote their products to Indian consumers.