Bank finance for private firms in China: Does political capital still pay off?

This paper investigates whether political connection can help private firms in China gain access to commercial bank loans. Based on data from the 2012 Nationwide Survey of Private Enterprises in China, it finds that: (i) politically connected firms were more likely to have access to commercial bank loans; (ii) the mechanism for this better access might be that, on the one hand, political connection was used by private firms as a tool to overcome discrimination and/or information asymmetry in the loan market; on the other hand, political connection was seen by banks as a signal of creditworthiness; and (iii) the importance of political connection seems to lie in the connection to the power to govern rather than the mere opportunity to influence policy.     

Signaling virtue: Does firm corporate social performance trajectory moderate the social performance–financial performance relationship?

Over the past 40 years, scholars have demonstrated the effects of corporate social performance (CSP) on corporate financial performance (CFP), finding mixed results on the main effect of CSP on CFP. This study moves beyond the search for a universal main effect of CSP on CFP to examine factors that drive some firms to experience greater returns from their CSP efforts. Building from the signaling and stakeholder theory definitions of reputation and the trajectory literature in psychology, this study examines the following question: what is the impact of a firm's CSP reputation on the relationship between CSP actions and CFP in the current period? Findings based on a sample of 351 US firms demonstrate that firms with either a history of growth in negative CSP, a propensity toward increasing negative CSP, or a more inconsistent history of positive or negative CSP, experience decreased returns from current period investments in CSP.     

Where does ESG pay? The role of national culture in moderating the relationship between ESG performance and financial performance

This study investigates the moderating role of a country’s culture as an external contingency factor in the relationship between a firm’s environmental, social, and governance (ESG) performance and financial performance. Using ESG performance data of 4978 firms from 48 countries for 17 years, we argue that the financial return from engaging in ESG varies depending on the countries’ cultural aspects because stakeholder evaluations and appreciations for a firm’s ESG performance differ across nations. We find that a country that espouses a culture of high individualism or masculinity tends to appreciate and reflect on this more explicitly, strengthening the relationship between a firm’s ESG performance and financial performance. Contrastingly, in a country with a culture of high power distance or uncertainty avoidance, firms’ ESG efforts are less likely to be associated with financial performance. Our findings have important implications for multinational enterprises facing various cultural environments when dealing with heterogeneous stakeholder demands across countries.     

Do HRD investment strategies pay? Exploring the relationship between lifelong learning and psychological contracts

In the context of the debate over the returns on investment from company-level HRD strategies, this article explores the relationship between a programme of lifelong learning and employee perceptions of their psychological contracts. It does so through an analysis of quantitative and qualitative data drawn from a longitudinal case study of a well-known Scottish company. The data provide evidence of a positive relationship between the lifelong learning programme and employee perceptions of careers, fairness, and certain key outcomes of psycho-logical contracts, even when the company reduced its previous commitment to job security. This finding allows us to speculate on the positive relationship between HRD and trust relations and the importance of this relationship for future organisational change in the plant.     

Is innovation always beneficial? A meta-analysis of the relationship between innovation and performance in SMEs

The performance implications of innovation in small and medium-sized enterprises (SMEs) have attracted considerable interest among academics and practitioners. However, empirical research on the innovation-performance relationship in SMEs shows controversial results. This meta-analysis synthesizes empirical findings in order to obtain evidence whether and especially under which circumstances smaller, resource-scarce firms benefit from innovation. We find that innovation-performance relationship is context dependent. Factors such as the age of the firm, the type of innovation, and the cultural context affect the impact of innovation on firm performance to a large extent.     

Gain or pain? New evidence on mixed syndication between governmental and private venture capital firms in China

I investigate the performance of mixed syndication involving both governmental and private venture capital firms (GVCs and PVCs) in the context of China. Using the data on the investments in start-ups between 1995 and 2011, I find that start-ups backed by mixed syndication in their initial financing round are less likely to survive to the next round to obtain refinancing, compared to those backed by syndication solely among PVCs. I present evidence consistent with two possible explanations of the underperformance of firms backed by mixed syndication: a potentially lower criterion of selecting portfolio companies when led by PVCs and less complementary resources but higher coordination cost in mixed syndication. The empirical results continue to hold when using instrumental variables, propensity score matching analysis and the quasi-maximum likelihood estimation method for mitigating the potential selection bias and endogeneity problems.     

Should entrepreneurs plan or just storm the castle? A meta-analysis on contextual factors impacting the business planning–performance relationship in small firms

Entrepreneurship research engages in an intense debate about the value of business planning. Prior empirical findings have been fragmented and contradictory. This study contributes insights to the business planning discussion by following an evidence-based research approach. We conduct a meta-analysis on the business planning–performance relationship and specifically focus on contextual factors moderating the relationship. Results indicate that planning is beneficial, yet contextual factors such as newness of the firms and the cultural environment of firms significantly impact the relationship. Based on this evidence, we propose a concomitant and dynamic approach that combines planning and learning.     

Why do firms train? Empirical evidence on the relationship between training and technological and organizational change

We explore the relationship between training and innovation using key insights from the resource‐based approach, organizational learning and labour studies. By using data from 304 large enterprises in Italy, the study highlights a twofold role of training in favouring technological and organizational changes. First, training plays a role in allowing the acquisition and the assimilation of new knowledge. Consequently, firms in which the provision of training is part of a bundle of high‐performance management practices are more likely to undertake technological and organizational changes and to develop new competencies internally. Second, training supports firms in the assimilation of technological and organizational changes. Consequently, firms that undertake these changes exhibit a superior participation rate for employees and greater time intensity of their training programmes. Firms' inclination to develop new competencies internally does not affect, however, the intensity of training, thereby suggesting that organizational learning processes do not start by a broad involvement of employees in formalized training programmes.     

Which green matters for whom? Greening and firm performance across age and size distribution of firms

Small Business Economics - A growing body of literature links firm performance with sustainability efforts. We contribute to this literature by developing a novel framework for contextualising...     

What if your owners also own other firms in your industry? The relationship between institutional common ownership,marketing, and firm performance

The growth in institutional holdings of public firms has led to increased interest in the concept of common ownership, in which the same investor owns stakes in multiple firms within the same industry. Economic theory suggests that common ownership could affect firm performance, but little empirical research has examined the nature of this effect or how a firm’s extant marketing potentially relates to this effect. This paper addresses this gap by proposing a relationship between common ownership and firm performance that is moderated by the firm’s extant marketing capabilities and its relative marketing strategic emphasis. Our empirical approach employs data from over 43 million institutional holdings to develop a measure of common ownership and accounts for empirical issues like endogeneity and unobserved heterogeneity. The results document a positive relationship between common ownership and firm performance and provide some evidence that this effect is stronger for firms with lower marketing capabilities and a relative strategic emphasis towards R&D spending. These results suggest that public policymakers should consider the firms’ extant strategic marketing when assessing regulations on common ownership.     

Synergy between R&D and advertising on shareholder value: Does firm size matter?

Using the hierarchical linear model, we examine whether R&D and advertising and their synergy influence firm value. We also investigate whether firm size moderates the market value effects of R&D, advertising, and the synergistic effect of R&D and advertising on firm value. We find that R&D and the synergy between R&D and advertising have significant positive effects on shareholder value. Moreover, we find that the effects of R&D and advertising are significantly higher in large firms than small firms, while the synergistic effect is significantly positive in small firms but not in large firms. These results offer important insight for executives on the implications of resource allocation on R&D and advertising expenditures to create firm value. Copyright © 2016 ASAC. Published by John Wiley & Sons, Ltd.     

Does it really pay to be good,everywhere? A first step to understand the corporate social and financial performance link in Latin American controversial industries

Most research studying the corporate social performance (CSP)–corporate financial performance (CFP) link has utilized developed country samples. Also, this literature has generally focused on a wide variety of industries, ignoring the fact that certain sectors – such as controversial industries – have graver social and environmental issues. Hence, a gap exists in this tradition when it comes to emerging markets and controversial industries. This paper attempts to fill this void by providing preliminary evidence and insight on the matter. Based on an exploration in six Latin American countries and five controversial industries, we find a negative bidirectional association (or a non‐significant one at best) between CSP and CFP. These results tend to contradict the mainstream conclusion of a positive bidirectional link, suggesting that institutional and market‐level forces play a major role in shaping this relationship.     

Does customer sex influence the relationship between perceived quality and share of wallet?

This study examines the within and between sex differences on the relative importances of merchandise quality and interaction quality as drivers of behavioral loyalty (share of wallet). A sample of customers of a national retail chain serves as the study setting. The results indicate that for female customers, interaction quality and merchandise quality have equally strong total influence on share of wallet. For male customers, the total effect of merchandise quality on share of wallet is significantly stronger than the total effect of interaction quality. Across sex comparisons reveal that the total effect of interaction quality on share of wallet is stronger for female customers. However, merchandise quality exerts a stronger total influence on share of wallet for male customers. Implications of the results are discussed and avenues for future research are offered.     

Does the importance of value,brand and relationship equity for customer loyalty differ between Eastern and Western cultures?

The use of the customer equity framework as a focal marketing strategy to increase customer loyalty has emerged as an important topic. Despite a growing number of investigations, previous studies are limited by their strong U.S. and European orientations. Research into Western consumers cannot necessarily predict the behaviour of Eastern consumers though. Therefore, this study investigates whether the link between customer equity drivers (value equity, brand equity and relationship equity) and loyalty intentions is sensitive to the cultural environment. A sample of 1553 Chinese and 1085 Dutch consumers in the banking and supermarket industries reveals that all three customer equity drivers exert a greater impact in Western than in Eastern cultures. This study also shows that Eastern consumers in general have higher loyalty intentions than Western consumers.     

Does corruption boost or harm firms’ performance in developing and emerging economies? A firm-level study

In the last decade, a growing number of studies have addressed the ongoing debate about whether corruption “sands” or “greases” the wheels of business at the firm level. This study revisits this debate and proposes a comprehensive theoretical framework to test whether corruption harms or boosts firm performance, as well as the extent to which this relationship is mediated by the countries’ institutional settings, the size and strategic behaviour of the firms, and market competition. Based on a sample of 21,250 firms located in 117 emerging and developing countries, and resorting to instrumental variable (IV) estimations, three main results were found: (a) regardless of the proxy used for corruption and firm performance, the former clearly harms the latter; (b) corruption “greases the wheels” of business for African firms but it “sands the wheels” for firms in Latin America, the Caribbean, Eastern Europe, Central Asia, and Southern Asia; and (c) the negative impact of corruption on performance is mitigated for larger and exporting firms.     

What the hack? A growth hacking taxonomy and practical applications for firms

As companies become increasingly digital, growth hacking emerged as a new way of scaling businesses. While the term is fashionable in business, many executives remain confused about the concept. Even if firms have an idea of what growth hacking is, they may still be puzzled as to how to do it, creating a strategy-execution gap. Our article assists firms by bridging the growth hacking strategy-execution gap. First, we provide a growth hacking framework and deconstruct its building blocks: marketing, data analysis, coding, and the lean startup philosophy. We then present a taxonomy of 34 growth hacking patterns along the customer lifecycle of acquisition, activation, revenue, retention, and referral; categorize them on the two dimensions of resource intensity and time lag; and provide an example of how to apply the taxonomy in the case of a fitness application. Finally, we discuss seven opportunities and challenges of growth hacking that firms should keep in mind.     

What do firms know? What do they produce? A new look at the relationship between patenting profiles and patterns of product diversification

In this work, we analyze the relationship between the patterns of firm diversification, if any, across product lines and across bodies of innovative knowledge, proxied by the patent classes where the firm is present. Putting it more emphatically, we investigate the relationship between “what a firm does” and “what a firm knows.” Using a newly developed dataset matching information on patents and products at the firm level, we provide evidence concerning firms’ technological and product scope, their relationships, the size-scaling and coherence properties of diversification itself. Our analysis shows that typically firms are much more diversified in terms of products than in terms of technologies, with their main products more related to the exploitation of their innovative knowledge. The scaling properties show that the number of products and technologies increases log-linearly with firm size. And the directions of diversification themselves display coherence between neighboring activities also at relatively high degrees of diversification. These findings are well in tune with a capability-based theory of the firm.     

Are top managers important for firm performance and idiosyncratic risk? Evidence from sharia vs non‐sharia‐compliant firms in the UK and Pakistan

We examine the impact of top managers on performance and idiosyncratic risk of the sharia‐compliant firms in the UK and Pakistan by constructing a manager–firm matched panel data and then tracking the role of individual top managers across different firms. The results regarding the individual effects on performance by a particular firm show that there exists a significant difference for managers who move from a non‐sharia to a sharia‐compliant firm. However, this difference is not significant for managers who move from a sharia‐compliant firm to another sharia firm. Policy implications of the findings are discussed.     

What drives the export performance of small and medium-sized subcontracting firms? A study of Korean manufacturers

Building on the resource-based view and network theory, we propose and test a framework of export antecedents of subcontracting small and medium-sized enterprises (SMEs). Whereas the internationalization of firms has been extensively studied in general, little is known about what drives the exports of subcontracting SMEs which play a very important role in the manufacturing sectors of East Asian economies. These subcontracting firms operate under very different conditions from other companies, resulting in specific ways they leverage their resources, capabilities and customer networks. An analysis of survey data from 1733 subcontracting SMEs in three South Korean manufacturing industries reveals that the firms’ export orientation and export intensity are related not only to their technological resources and their executives’ managerial capabilities, but also to features of their subcontracting network ties. Our study suggests that due to the specific nature of their business, subcontracting firms’ internationalization antecedents need to be analyzed in the context of their business environment which is strongly shaped by their customer relationships.     

Speed or quality? How the order of market entry influences the relationship between market orientation and new product performance

The role of market orientation as an antecedent of new product performance has been extensively documented in the literature. What is less clear, however, is how firms should make use of their market orientation under different market conditions. This study addresses this question by investigating how market orientation leads to superior new product performance for products that enter the market at different times. In particular, the study examines the moderating effect of order of market entry on the mediated relationship between market orientation and new product performance via product quality and innovation speed. Data from a sample of 244 new product development projects show that a firm's market orientation can improve the performance of first-to-market products and late entrants by facilitating the development of quality products, whereas it can improve the performance of early entrants by facilitating greater innovation speed.