Women in top management and agency costs

This study investigates gender diversity among the top managers of Fortune 500 firms and its effect on agency costs. The study finds that firms with a greater percentage of female officers present lower agency costs but that the negative relation is not robust when considering the endogeneity of diversity. The study also finds that external governance influences the relationship. Although increasing diversity does not reduce agency costs for all firms, the evidence shows that diversity is significantly negatively related to agency costs in firms in less competitive markets. The results suggest that increasing diversity in management can have beneficial effects for firms where strong external governance is absent.     

The export performance of emerging economy firms: The influence of firm capabilities and institutional environments

We advance a two-stage theoretical model which contends that the export performance of emerging economy firms (EEFs) will depend both upon their firm-specific capabilities and their home institutional environments. Specifically, we argue that EEFs will be more likely to export when facing more uncertainty at home from greater political instability, substantial informal competition, and high corruption. Furthermore, we hypothesize that firms’ export intensities will be contingent upon specialized internal capabilities such as a skilled workforce, top managerial experience, and access to external technologies. We test these hypotheses using a dataset of more than 16,000 firms from the four BRIC economies (i.e., Brazil, Russia, China and India). Our results confirm that political instability and informal competition have robust effects on the export propensity of EEFs, whilst export intensity is contingent upon the availability of skilled workers and access to external technologies via licensing.     

Corporate governance in publicly traded small firms: A study of Canadian venture exchange companies

Most evidence regarding the determinants and effects of corporate governance practices is based on large firms. Herein, we explore these issues in the context of small publicly traded Canadian companies. We exploit the fact that such firms were not subject to corporate governance guidelines prior to 2005 and thus analyze the determinants of voluntary governance practice choices, as well as the effects of those practices on firm performance. Using a unique data set, we construct a corporate governance index for each firm. We measure performance by two variables: quality of accounting earnings and financial performance. The results indicate that corporate governance does matter for smaller traded Canadian firms. We find that both accounting and financial performance are positively related to corporate governance; however, their underlying mechanisms may differ somewhat. Given this result, it would be natural to expect all firms to choose higher levels of governance. However, our results also suggest small firms face resource constraints that limit their choices. We conclude that good governance is an important driver of small firm performance that cannot be neglected by the owners and managers of these firms.     

Power and Size of Firms as Reflected in Cleaning Subcontractors’ Practices of Social Responsibility

Recent discussions in the area of corporate social responsibility suggest that organizational size has complex meanings and thus requires more scholarly attention. This article explores organizational size in the context of relative power in inter-organizational networks. To shed light on the ways relative power interacts with size we studied social responsibility practices among cleaning subcontractors in three firms of different sizes. Our focus on the network differentiates these firms on the basis of their size and sector. Semi-structured interviews were used to trace cleaning subcontractors’ CSR-related practices. We analyzed subjective reports and discursive practices involved in subcontractors’ self-presentations. While the economic and philanthropic dimensions of social responsibility were presented by the cleaning subcontractors as independent of network constraints, the findings show that the legal and ethical dimensions were subject to large client–firm pressures. What we learn from our data is that the four dimensions of Carroll’s model, the economic, legal, ethical, and philanthropic, should all develop from and be evaluated against a fifth root dimension of inter-personal commitment.     

External technology acquisition and firm performance: A longitudinal study

External technology acquisition has been viewed as an important method used by firms to achieve higher economic returns. However, only a few studies have evaluated the contribution of external technology acquisition to firm performance. This lack of research is surprising because the benefits of external technology acquisition to innovation output have been emphasized extensively in the literature. This study therefore investigates the extent to which external technology acquisition effects a firm's performance, and how this effect is moderated by internal R&D efforts. This analysis concentrates on the electronics-manufacturing industry, taking advantage of the relative abundance of data on longitudinal investigation variables. A longitudinal sample allows this examination to control extraneous effects and to provide more convincing evidence for the relationship between external technology acquisition and firm performance. The analytical sample comprises a total of 341 Taiwanese electronics-manufacturing firms over the period from 1998 to 2002. The least square dummy variable analysis method reveals that external technology acquisition does not provide a significant contribution to firm performance per se; however, the positive impact of external technology acquisition on firm performance increases with the level of internal R&D efforts. Verifications for robustness and the split-sample analyses both validate the results in the setting of larger firms.     

Knowledge seeking in going abroad

Based on knowledge theories, this study examines the impact of client‐following and market‐seeking entry strategies on foreign market entry by firms. The article also explores the subsequent development of knowledge in firms. Using data from 116 firms, we test three hypotheses using logistic regression. Our hypotheses are supported in the data. Our analysis shows that significant differences exist between client‐following firms and market‐seeking firms. Client followers are both supported and trapped by their international network, whereas market seekers, though not supported, are much freer to pursue higher‐order learning. Due to differences in their network ties, these two types of firms learn at different speeds and learn different things. We also found that firms with proactive knowledge‐seeking strategies learn more. Thus, learning strategies have consequences for exploration and exploitation of international markets, what is learned and how much is learned, and proactive internationalization strategies for firms. © 2009 Wiley Periodicals, Inc.     

Gender equality's impact on female directors’ efficacy: A multi-country study

This paper studies the role of gender equality in female directors’ efficacy and its subsequent effects on firms. Female directors in more gender equal societies should possess greater skills and exert more influence due to better access to educational/professional opportunities and more amicable boardroom dynamics. Therefore, we hypothesize that gender equality serves as an important moderator in the relation between female board representation and firm outcomes. Using a multi-national panel comprising 1986 public firms from 24 countries or areas spanning from 2007 to 2016, we obtain results that firms with higher female board representation exhibit higher overall performance, less earnings management, and less excessive risk taking, in which all three relations are stronger in countries with greater gender equality. Taken together, our paper implies that the impact of female directors on firm outcomes depends on a country's overall level of gender equality.     

A study on motivating employees’ learning commitment in the post-downsizing era: Job satisfaction perspective

From the resource-based perspective, organization learning is the foundation of firms creating their special resources and thereby increasing their competitive advantage. Organization learning is indeed derived from individual learning within the organization. However, many firms have adopted downsizing strategies to reduce the redundancy. Nevertheless, it had a great impact both on laid-off employees and remaining ones. The remaining employees lost their trust, loyalty toward the firm and eventually left. The consequence not only affected the firms’ daily operation but also impacted employees’ learning motivation for improving their ability to enhance the firm's competitive advantage. In the post-downsizing era, applying appropriate human resource management practices to motivate employees would be a critical issue. The study began with two psychological constructs: job satisfaction and learning commitment to explore the content of job satisfaction which significantly influenced remaining employees’ learning commitment. The study used both qualitative and quantitative methods to collect and analyze the data. The results revealed that the two criterion in job satisfaction “the relationship with colleagues” and “the relationship with the family” significantly influenced employees’ learning commitment. However, this was clearly different from managers’ subjective expectation. The findings provide important implications for both the research field and practical management of downsizing, employee motivation, cross-culture management and strategic HRM practices.     

How do firms finance their exports? – evidence from China

Using a firm-level production data over the period of 2005–2009 from China, this paper provides a new empirical evidence on how firms finance their exports when they have several financial options. The main results of the paper can be summarized as follows. First, firms who have better access to any finance are more likely to export and export more. More financial options lead to a higher export probability and capacity due to the complementary relation between financial options. Second, of all financial options, the internal finance captured by cash holdings or profit plays the most important role on firms’ export likelihood and volume. Firms rely more on the external finance through borrowing to start exporting, but depend more on issuing stocks to their shareholders to expand their exports. Third, subsample results suggest that the financial option of issuing stocks is generally more important for firms who have worse access to external finance in determining export propensity and quantity, such as private-owned firms, small-scale firms, young firms, and non-eastern firms.     

The internationalization of new and small firms: A resource-based view

This paper seeks to enhance understanding of the internationalization of small- and medium-sized enterprises (SMEs). The study focuses upon the following issues: Can the characteristics of principal founders, businesses, and the external environment at one point in time be used to `explain' at a later date whether a firm is still an exporter or a nonexporter, whether exporting firms are larger in size than nonexporting firms, whether exporting firms report superior performance than nonexporting firms, and whether exporting firms are more likely to survive than nonexporting firms? To address these questions, this study draws upon a sample of 621 manufacturing, construction, and services businesses located in twelve contrasting environments in Great Britain surveyed first in 1990/91 and then re-interviewed in 1997.A resource-based view is reviewed to identify the range of factors encouraging some owner-managed SMEs to enter export markets. Four categories of human and financial capital are examined: general human capital resources, the principal founder's management know-how, the principal founder's specific industry know-how, and a principal founder's ability to obtain financial resources that can act as a buffer against random shocks. Variables relating to resource availability in the external environment were also collected and considered control variables. Previous studies have highlighted substantial industry differences in the propensity for businesses to enter export markets as well as to survive. The principal industrial activity of each business in 1990/91 was, therefore, considered a control variable.Variables collected during the 1990/91 survey were selected to explain variations in the propensity to export reported by surviving independent firms in 1997. After elimination of missing values, the working sample was reduced to 116 independent firms for this study (86 nonexporters and 30 exporters in 1997). In addition, the 21 variables were selected to explain variations in business size in 1997, profit performance relative to competitors reported in 1997, changes in employment over the 1990/91 to 1997 period, and business survival over the 1990/91 to 1997 period (213 survivors and 395 nonsurvivors).Multivariate statistical analysis confirmed that previous experience of selling goods or services abroad is a key influence encouraging firms to export. Businesses with older principal founders, with more resources, denser information and contact networks, and considerable management know-how are significantly more likely to be exporters. Further, businesses with principal founders that had considerable industry-specific knowledge are markedly more likely to be exporters. Businesses principally engaged in the service sectors and those located in urban areas are significantly less likely to be exporters.A key finding of this study is that the explanatory variables significantly associated with the propensity to export sales abroad are not the same as those significantly associated with selected size and performance measures. The resource-based explanatory variables selected fail to significantly detect employment-growing firms over the 1990/91 to 1997 period. They also fail to significantly distinguish surviving independent firms from nonsurviving firms.Results from this study will provide policy-makers and practitioners with additional insights into the key resource-based factors associated with the decision by new and small independent firms to export sales abroad. Practitioners and policy-makers can focus upon the characteristics of principal founders, businesses, and the external environment to predict the subsequent propensity of an independent firm to be an exporter. Policy-makers and practitioners who want more new and small firms to export outside their local areas may prefer to target their resources and assistance to the relatively smaller proportion of firms that have the business and principal founder profiles that are significantly associated with a firm being an exporter.     

Micro-multinational or not? International entrepreneurship,networking and learning effects

Micro-multinational enterprises (mMNEs) represent a new breed of smaller firms in the field of international entrepreneurship. This study investigates the effects of the three sets of variables, namely international entrepreneurship (which encompasses innovativeness, proactiveness and risk-taking propensity), networking and learning on the probability that a firm will become a MNE. Drawing upon a survey of the activities of 116 Chilean internationalized small- and medium-sized firms and utilizing a logistic regression analysis, this study suggests that risk-taking propensity and networking with domestic and international partners increase the likelihood that the firm will become a mMNE. Our findings confirm the predictive validity of the international entrepreneurship and networking perspectives. Because of the positive association between mMNEs and international performance, the suggestions for management of internationalized firms are to nurture a risk-taking propensity and cultivate a networking orientation.     

Does Social Software Support Service Innovation?

Recent Internet technologies and web‐based applications, such as social software, are being increasingly applied in firms. Social software can be employed for knowledge management and for external communication enabling access to internal and external knowledge. Knowledge, in turn, constitutes one of the main inputs to service innovation. Hence, social software has the potential to support service innovation. Using data from German IT and knowledge‐intensive service firms, this is the first paper that empirically analyses whether the use of social software applications triggers innovation. It refers to a knowledge production function in which social software use constitutes the knowledge sourcing activity. The results reveal a positive relationship between social software and service innovation. Since this result is robust when controlling for former innovative activities and the previous propensity to adopt new technologies and to change processes, the analysis suggests that the causality runs from social software to innovation.     

The sustainability of ISO 9001 in a legal service organisation

This paper examines the sustainability and the changes experienced by a legal service organisation in the implementation of ISO 9001 in terms of reasons, benefits, and key success factors over an 8-year time interval. This exploratory study employs qualitative methods using a single case study approach. Data were collected through two phases of interviews, 1996 and 2004, with the same quality manager in the legal service organisation. Both interviews were based on a similar set of structured questions derived from the previous studies. Pattern matching was used to analyse and compare the 1996 and the 2004 findings. Three major findings are identified in this study. First, the internal reasons for implementing ISO 9001 are sustained, whereas the external reasons are diminished. Second, the benefits are mainly internal rather than external, and these are sustainable over time. Third, top management commitment and staff involvement are shown to be the critical factors of both the implementation and the maintenance of ISO 9001. The results contribute to a better understanding of the benefits of ISO 9001 as well as the level of commitment required to sustain these benefits. The results also show the learning process taken up by firms in better understanding the value of ISO 9001 implementation over time.     

Supplier Selection Practices among Small Firms in the United States: Testing Three Models

One of the issues investigated in recent studies on small business enterprises involves the role of supply chain management. Supply chain management has become an important part of strategic planning in both large and small businesses in the 1990s as firms increasingly choose outsourcingas an externally-driven strategic growth path. This study examines the supplier selection practices among 78 small business executives in the midwest United States by testing three models: rational/normative, external control, and strategic choice. Although the results show support for all three models, the rational/normative model emerges as the most significant model for predicting the supplier selection practices of small firms.     

Family firms and debt: Risk aversion versus risk of losing control

This study examines the effect of family management, ownership, and control on capital structure for 523 Colombian firms between 1996 and 2006. The study finds that debt levels tend to be lower for younger firms when the founder or one of his heirs acts as manager, but trends higher as the firm ages. When family involvement derives from direct and indirect ownership, the family–debt relationship is positive, consistent with the idea that external supervision accompanies higher debt levels and reduces the risk of losing control. When families are present on the board of directors (but are not in management), debt levels tend to be lower, suggesting that family directors are more risk-averse. The results stress the tradeoff between two distinct motivations that determine the capital structure of family firms: risk aversion pushes firms toward lower debt levels, but the need to finance growth without losing control makes family firms to prefer higher debt levels.     

Improving human capital through knowledge management practices in knowledge-intensive business services

This article studies how knowledge management (KM) practices improve human capital. We conceptualize KM practices through six dimensions and test the relationship between each dimension and human capital. The empirical study which was carried out in Spanish firms belonging to the biotechnology and telecommunications industries shows that introducing KM practices has a positive impact on the improvement of human capital. In fact, firms that introduce practices related to continuous learning and the development of an innovative culture that encourages R&D projects improve the skills or abilities of their human capital.     

Executive integrity,audit opinion,and fraud in Chinese listed firms

We examine the influence of auditors on mitigating corporate fraud in China, which is known to have weak legal enforcement, weak investor protection along with tight control of the media and labour unions. We find that firms with executives that have lower integrity, indicated by a greater degree of earnings manipulation, are associated with higher propensity of regulatory enforcement actions against corporate fraud in the subsequent year. We show that this effect is moderated by the issuance of a modified audit opinion report by the auditors. This finding implies that auditors can serve as external governance mechanism to discourage executives with lower integrity in committing fraud. Our results have policy implications for further strengthening auditor independence in emerging countries like China.     

The Influence of IT Management Sophistication and IT Support on IT Success in Small and Medium‐Sized Enterprises

This study examined three factors that influence information technology (IT) success in small and medium‐sized enterprises (SMEs): internal IT support, external IT support, and IT management. Using survey data gathered from 289 small and medium‐sized Chartered Accounting firms in New Zealand, the results suggest that IT management in SMEs is best understood as a multidimensional concept consisting of practices related to: IT planning, IT organizing, IT controlling, and IT leading. This view clarifies and improves our understanding of the nature and character of IT management in SMEs. The results show that some SMEs are significantly more sophisticated than others in terms of their IT management practices. Both IT planning and IT leading were found to influence IT success.     

Multimarket Contact and the Use of Power in Buyer–Supplier Relationships

Buyers and suppliers often have multiple business relationships with each other across different geographical and product markets, forming a potentially complex web of connections. What happens between the firms in one geographical or product market may influence their interactions in others. Prior research in strategic management has found that similar multimarket contact in horizontal relationships between competitors has important consequences for the firms’ use of market power. However, the consequences of multimarket contact in vertical buyer–supplier relationships remain unexplored. Building on resource‐advantage theory, this study proposes that multimarket contact between buyers and suppliers is linked to their respective propensity to use three types of mediated power in their relationships (i.e., reward, coercion, and legal legitimate) and that the effects of multimarket contact differ between buyers and suppliers. A vignette study with 143 purchasing managers and 137 business‐to‐business sales managers tests the developed hypotheses. The findings show that a higher level of multimarket contact encourages suppliers to use legal legitimate power to a greater extent and encourages buyers to use reward power to a greater extent but legal legitimate power to a lesser extent.