Strategic Risk-Taking Propensity: The Role of Ethical Climate and Marketing Output Control

In the wake of the current financial crises triggered by risky mortgage-backed securities, the question of ethics and risk-taking is once again at the front and center for both practitioners and academics. Although risk-taking is considered an integral part of strategic decision-making, sometimes firms could be propelled to take risks driven by reasons other than calculated strategic choices. The authors argue that a firm’s risk-taking propensity is impacted by its ethical climate (egoistic or benevolent) and its emphasis on output control to manage its marketing function. The firm’s long-term orientation is argued to moderate the control–risk propensity relationship. The authors also extend research on risk and performance and argue that the association of risk-taking propensity and firm performance is contingent on the ownership (publicly traded versus privately held) structure of the firm. Based on survey data from a sample of manufacturing industries in the United States, the results show significant impact of ethical climate and marketing output control on a firm’s risk-taking propensity; also risk-taking propensity shows a stronger association with firm performance in privately held firms than in publicly traded firms.     

The moderating effect of brand orientation on inter-firm market orientation and performance

Abstract

While prior research has shown that market and brand orientation are key contributors to successful business performance, research to date has not fully explored how inter firm collaboration for these two key orientations can enhance business performance. The purpose of the paper is to investigate the relationship between inter-firm market and performance; to test for the moderating role of brand orientation in that relationship. A total of 169 completed pairs of surveys were collected of small and medium enterprises operating internationally in a variety of industries in Switzerland. The results show that inter-firm market and brand orientation are two antecedents of marketing and financial performance. The impact of inter-firm market on marketing and financial performance is significant when the brand orientation is favorable. This study extends previous research by examining the moderating role of brand orientation on inter firm market orientation, which is important, especially for firms wanting to increase their brand reputation by entering into partnerships with other firms. Further research is indicated, to identify the key moderators of the driving force of inter-firm market in relation to business performance and the reason why maintaining a strong brand presence is important in the international marketplace.     

Learning about foreign markets: A study of Czech SMEs

Drawing on the organizational learning literature, our study examines the role of foreign market knowledge and firm emphasis on technological innovation in the internationalization of small, entrepreneurial firms in the Czech Republic. It is based on a sample of 168 SMEs representing a broad range of manufacturing industries that were founded after the fall of communism and as the Czech economy was transitioning to a more market-based economy. Findings indicate that emphasis on technological innovation is associated with greater acquisition of foreign market knowledge. In addition, our results indicate that emphasis on technological innovation directly and indirectly influences the performance of such SMEs in international markets. Our findings also suggest that foreign market knowledge partially mediates the relationship between firm emphasis on technological innovation and international performance. Implications of our findings from the perspective of theory and practice are discussed.     

The great trade collapse and the Spanish export miracle: Firm‐level evidence from the crisis

We provide novel evidence on the microstructure of international trade during the 2008 financial crisis and subsequent global recession by exploring a rich firm‐level data set from Spain. The focus of our analysis is on changes at the extensive and intensive firm‐level margins of trade, as well as on performance differences (jobs, productivity and firm survival) across firms that differ in their export status. We find no adverse effects of the financial crisis on foreign market entry or exit, but a considerable increase in the export intensity of firms after the financial crisis. Moreover, we find that exporters were more resilient to the crisis than non‐exporters. Finally, while exporters showed a significantly more favourable development of total factor productivity after 2009 than non‐exporters, aggregate productivity declined substantially in a large number of industries in Spanish manufacturing. We also briefly explore two factors that might help explain the surprisingly strong export performance of Spain in the aftermath of the great trade collapse: improved aggregate competitiveness due to internal and external devaluation and a substitutive relationship between domestic and foreign sales at the firm level.     

Intraindustry marketing strategy effects on the analysis of firm performance

Data aggregation across industries has been shown to be inappropriate in describing correlates of business firm performance. This study examines firms performing a similar function within one industry and suggests a further qualification to this analysis; it may be necessary to account for dominant and varying marketing strategies when estimating performance equations in some industries.     

Understanding Market-Driving Behavior: The Role of Entrepreneurship

In recent years, the marketing literature has placed significant emphasis on market-driving and proactive market-driven behavior within firms in attempts to reconceptualize the meaning of "market orientation." For their part, market-driving firms such as Starbucks, Amazon.com, Dell, and Southwest Airlines are demonstrating how business model innovation results in sustainable advantage and superior long-term performance in a wide range of industries. In this paper, we contend that market-driving behavior is distinct from a firm's market orientation, and instead is the essence of entrepreneurial action in the Schumpeterian "creative destruction" sense. It is further argued that the firm's entrepreneurial orientation interacts with other strategic orientations, in the process determining how they are manifested and, in some cases, whether they are manifested. Furthermore, entrepreneurial orientation plays a critical role in determining transitions among various strategic orientations over time. An integrative model illustrates the dynamics of the interface between marketing and entrepreneurship from both a content and process perspective. Two case studies illustrate how trajectories can be identified in the dominant strategic orientations within companies as they evolve.     

Impact of industry sector on corporate diversification and firm performance: Evidence from Indian business groups

Prior business group (BG) studies implicitly assume that corporate diversification‐firm performance relationships are uniform across industry sectors. This generalization may lead to research implications that are not equally true for BG‐affiliated manufacturing and service firms. Drawing on strategy and marketing literature, this research addresses this scholarly gap. Our empirical analysis of a large sample of BG‐affiliated Indian firms over a five‐year period (2004‐2008) indicates that the influence of corporate diversification on firm performance is greater for affiliated service firms than affiliated manufacturing firms. Results also indicate that the influence of BG size and diversity on diversification‐firm performance relationship varies significantly depending on whether the focal firm belongs to the manufacturing or service sector. Firm's share ownership does not generate similar influence. Copyright © 2015 ASAC. Published by John Wiley & Sons, Ltd.     

Integrating organizational learning with high-performance work system and entrepreneurial orientation: a moderated mediation framework

This study proposes a moderated mediation model to investigate the relationship between organizational learning and firm performance. We argue that entrepreneurial orientation mediates the positive effect of organizational learning on firm performance. Furthermore, the relationship between organizational learning and entrepreneurial orientation is strengthened when firms employ a higher level of high-performance work system. Hypotheses are supported by data from 181 firms operating in the manufacturing and service industries in China. Statistical results further reveal that a high-performance work system has different moderating effects on exploitative learning and exploratory learning. This research extends our understanding of organizational learning theory, entrepreneurship and human resource management literature by cross-fertilizing constructs in these fields with empirical evidence.     

Contextual influences on the corporate entrepreneurship-performance relationship: A longitudinal analysis

Over the past several years corporate entrepreneurship has been widely touted by executives and researchers alike as an effective means for revitalizing companies and improving their financial performance. For the most part, the call for greater entrepreneurial behavior on the part of established companies has been accepted on faith as an inherently desirable objective. The implicit logic behind the pervasive belief in the value of corporate entrepreneurship seems to be that risk taking, innovation, and aggressive competitive action—the key elements of entrepreneurial corporations—will help in identifying and pursuing lucrative product/market opportunities and in providing new bases for achieving superior competitive positions.But what do we really know about the financial consequences of corporate entrepreneurship? Most of the evidence that corporate entrepreneurship “pays off” is anecdotal in nature or based on cross-sectional studies that focus on the short-term implications of entrepreneurial behaviors. As such, in a definitive sense, we know very little about the financial consequences of corporate entrepreneurship.In an attempt to improve our understanding of this issue, this article describes a study of corporate entrepreneurship and its impact on company financial performance. Data were collected from three different samples over a seven-year period to assess the longitudinal impact of corporate entrepreneurship on firm performance. These samples consist of 24 medium-sized manufacturing firms representing 14 industry segments, 39 chemical companies, and 45 Fortune 500 industrial firms representing five industry segments. Data were gathered on each sample using both primary and secondary sources. Regression analysis was then used to analyze the data.The results suggest that corporate entrepreneurship has a positive impact on financial measures of company performance. This effect on performance, which tends to be modest over the first few years, increases over time, suggesting that corporate entrepreneurship may, indeed, be a generally effective means for improving long-term company financial performance. Moreover, the results indicate that corporate entrepreneurship is a particularly effective practice among companies operating in hostile environments (as opposed to benign environments).The study has three principal implications for practicing managers. First, the study documents the general financial viability of engaging in corporate entrepreneurship. This is not to suggest that corporate entrepreneurship is a panacea for improving financial performance. However, entrepreneurial behavior, when considered on the whole (i.e., across firms and industries), is associated with superior financial performance. Second, the study suggests a need to use a long-term time horizon in order to adequately judge the financial consequences of corporate entrepreneurship. The use of a shorter evaluation period may not allow sufficient time for entrepreneurial actions to have their full market and corresponding financial impact. Finally, the study identifies the context-specific character of effective entrepreneurial practice. Specifically, corporate entrepreneurship appears to be a particularly effective strategic practice among firms operating in hostile business settings.     

An Investigation of Spanish SME Innovation during Different Economic Conditions

This study investigates product, process, and management innovation among a sample of Spanish manufacturing small and medium‐sized enterprises (SMEs) during the current economic downturn and a period of economic growth. Tobit analyses examined whether the level of process, product, and management innovation changed during the recessionary period relative to the expansionary period; and MCO estimations were used to show whether the recession affected the relationship between SME innovation and performance. Three main findings are: (1) innovation among Spanish manufacturing SMEs declined during the recent economic crisis; (2) the type of innovation at Spanish manufacturing SMEs changed during different economic conditions; and (3) innovation was positively associated with firm performance during the economic expansion and recession years. The results demonstrate the importance of adopting innovation into SME strategy over the business cycle. The findings have relevance to SMEs, government policymakers, and providers of consulting services.     

Job Creation and Job Destruction by Small Firms: An Empirical Investigation for the Dutch Manufacturing Sector

This paper studies the differences in behaviour of small and large firms, concerning job creation and job destruction, in the Dutch manufacturing sector over the period 1978–1991. We find that both job creation and job destruction rates are higher in small firms than in large ones. In addition, we found that the persistence of jobs created in slumps are much higher for small firms than for large firms. Persistence rates of job destruction are, however, less connected to the state of the business cycle and increase with firm size. More importantly, small firms seem to reallocate their jobs in a continuous way, as job turnover moves independent of the business cycle. Large firms, on the other hand, reallocate counter-cyclically. An obvious explanation for this phenomenon is that small firms are better equipped to adjust to shifts in economic circumstances. Large firms adjust only slowly and for them reallocating jobs in a recession is more advantageous than in a boom.     

Time Allocation and Performance: The Case of Chinese Entrepreneurs

This paper analyses the effect of time allocation on the financial performance of entrepreneurial firms. We apply the Lewbel estimator to a pooled data set of Chinese private manufacturing firms that are managed by their owners. Time is allocated between management, networking, and study activities. After accounting for endogeneity, we find an inverted U-shaped relationship between management hours and firm performance and between networking and firm performance. However, no relationship between time spent studying and firm performance is observed. We also find that the managing hours–performance relationship is particularly strong for companies managed by entrepreneurs who own more than 75% of share, for companies that are managed by owners with previous experience, for male entrepreneurs, and for smaller-sized firms.     

The entrepreneurial orientation–performance relationship in private family firms: the moderating role of socioemotional wealth

Drawing on socioemotional wealth (SEW) literature, this paper revisits the established entrepreneurial orientation (EO)–performance relationship in a family business context. The main idea in entrepreneurship literature is that EO leads to increased firm performance. We question this logic in a family business context because family related non-financial goals, like SEW, may prevent the firm to reap the fruits of their entrepreneurial efforts. Specifically, we argue that SEW engenders inefficiencies that place constraints on the realization of the benefits of entrepreneurship. Therefore, we propose that a high level of SEW preservation hinders the transmission of the family firm’s EO into positive performance effects. To test this hypothesis, an empirical study was developed using a sample of 232 Belgian private family firms. Robust linear regression analysis reveals that the positive effect of EO on financial performance decreases as the level of SEW preservation increases.     

Entrepreneurship and knowledge management in small service-sector firms

The purpose of the paper is to examine the performance of small UK service-sector firms during a period of poor economic conditions in relation to entrepreneurial behaviour and knowledge management. A mail survey of small rural hotels was undertaken. Hotels achieving higher sales growth exhibited an entrepreneurial orientation and have created effective knowledge management systems. The practical implications of the study are that service firms seeking to survive in turbulent times should focus upon adopting entrepreneurial solutions and the creation of effective knowledge management systems. The originality of this study is in providing empirical evidence of the advantages of small UK service-sector firms during the current economic downturn adopting an entrepreneurial orientation in order to sustain business performance.     

Understanding the link between customer feedback metrics and firm performance

Practitioners utilise customer feedback metrics (CFM's) to monitor business performance. However, the influence of CFM's on firm performance has been ignored. Thus, this paper aims to examine the effects of CFM's on firm performance. Our study collected data about CFM's, marketing efforts, and financial performance over the period 2005–2020 from American Customer Satisfaction Index. The present study used a multiple regression panel analysis to investigate the influence of different CFMs (i.e., SAT, Top-2-Box, NPS proportion, NPS value, and CES) on firm performance (i.e., gross margin, sales growth, and Tobin's Q), moderating by operating environment factors (i.e., munificence, power, and dynamism). Our results revealed that Top-2-box is the best predictor CFM's to compare firms in online booking, hotels, and online shopping industries, while consumer satisfaction is the best predictor for electronic and fixed telecom industries. CES is the best CFM's to compare companies in restaurants industries. Moreover, NPS is the best metric to compare different companies in holiday parks industries. The results provide considerable managerial implications for effective use of resources regarding investing in most suitable CFM's to enhance firm performance.     

High-growth entrepreneurial firms in Africa: a quantile regression approach

This article analyses the growth performance of a large set of entrepreneurial firms in ten manufacturing sectors of 11 Sub-Saharan African countries. The focus of the article is on identifying those entrepreneurs’ attributes and firm characteristics that tend to generate a significant number of high-growth firms in these countries. To this end, we use a quantile regression, which provides a more complete estimation of the growth distribution of firms conditional on different attributes. The results indicate that firms that engage in product innovation, have their own transport means and are connected to the internet through their own website are especially characterized by higher growth rates and also display a distribution of growth rates skewed to the right, hosting a higher number of high-growth firms. The effect of the last two variables, which relate to distance-bridging modes of infrastructure, points to the self-reinforcing growth effects they generate in creating wider input and output markets. Education raises growth opportunities by affecting the lower quantiles, but it does not appear to influence the upper quantiles. The estimated conditional growth distributions for the technology-intensive machinery and electronics sectors show more extreme tails and a lower mean in comparison to the traditional industries, indicating the more risky nature of doing business in these industries.     

Competing with Marketing Channels and Logistics in Africa's Booming Markets: An Investigation of Emerging Supply Chain Management Practices in Ghana

Using Ghana as the African context for testing the applicability of supply chain management, this study reveals that firms there place less emphasis on logistics and channels management practices relative to product and pricing marketing mix elements. However, this situation is changing in response to the perceived positive impact of the regulatory and technological environment on market-share competitive performance. Those firms that emphasize integration of both logistics and channels management practices exhibited the strongest competitive market-share and financial performance; firms whose practices placed moderate emphasis on both logistics and channels management integration reported moderate levels of market-share and financial performance. These results suggest that firms in Ghana compete along a continuum of supply chain integration primarily on the basis of the increasingly market-oriented business environment.     

Marketing and company performance: An examination of medium sized manufacturing firms in Britain

In recent years several studies have pointed to the importance of marketing to company performance and considerable emphasis has been placed, in Britain, on improving the marketing performance of small and mediumsized enterprises. Based on a mail survey of 231 medium sized manufacturing firms in the U.K., and in-depth inteviews with the Chief Marketing Executive of a sub-sample of 20 firms, the study confirms that the most successful companies are those which are marketing orientated. Nevertheless, several traditional tenets of marketing are questioned by the findings and it would seem that the traditional marketing model, as developed for large companies, is neither entirely necessary nor applicable for the smaller firm.     

Entrepreneurship and survival over the business cycle: how do new technology-based firms differ?

We investigate the survival performance of new technology-based firms (NTBFs) over the business cycle and compare them against other entrepreneurial firms. Our data comprise the entire population of entrepreneurial firms entering the Swedish economy from 1991 to 2002, which we follow until 2007. Discrete-time duration models are employed to investigate whether the business cycle impacts differently on the survival likelihood of NTBFs vis-à-vis other entrepreneurial firms. Our main findings are three. First, NTBFs generally experience a lower hazard rate compared to other entrepreneurial firms, which is interpreted as a sign of their high ‘quality.’ Second, all entrepreneurial firms are sensitive to and follow a pro-cyclical pattern of survival likelihood over the business cycle. Three, when comparing NTBFs with the broader group of other entrepreneurial firms, we find that NTBFs are more sensitive to business cycle fluctuations. The above results come with a qualification, though. The sensitivity during the business cycle mainly pertains to self-employed NTBFs. Also, NTBFs’ higher survivability is only linked to not being characterized as self-employed.