Optimal geographic diversification and firm performance: evidence from the U.K.

This paper examines the relationship between multinationality and firm performance. The analysis is based on a sample of over 400 UK multinationals, and encompasses both service sector and manufacturing sector multinationals. This paper confirms the non-linear relationship between performance and multinationality that is reported elsewhere in the literature, but offers further analysis of this relationship. Specifically, by correcting for endogeneity in the investment decision, and for shocks in productivity across countries, the paper demonstrates that the returns to multinationality are greater than those that have been reported elsewhere, and persist to higher degrees of international diversification.

Product configuration,ambidexterity and firm performance in the context of industrial equipment manufacturing

The practice of configuring products to individual customer orders has found application in a variety of industry contexts, but little is known about the specific capabilities that firms develop to successfully compete when offering configurable products. Our research begins to fill this gap in the context of industrial equipment manufacturing. Drawing from the ambidexterity literature, we argue that firms have to balance dual goals of reducing variation and promoting variation in their product configuration activities by fostering two distinct firm-level capabilities: product configuration effectiveness (PCE) and product configuration intelligence (PCI). Specifically, we hypothesize that the simultaneous presence of PCE and PCI—that is, product configuration ambidexterity (PCA)—drives superior firm responsiveness and, indirectly firm sales and operating margin. However, we also contend that responsiveness gains through PCA can diminish with product complexity and can increase operating cost. We test these hypotheses by collecting both primary and secondary data from a sample of 108 European industrial equipment manufacturing firms. Results from our analyses indicate that PCA has an indirect effect through responsiveness on sales and operating cost but not on operating margin, with this effect diminishing with product complexity. Taken together, our results suggest that investment in developing PCA may represent a conundrum for industrial equipment manufacturing firms, because it translates into market but not financial advantages, and it is intertwined with product design decisions. We conclude this study with a discussion of the findings for theory and practice.     

Servitization: Disentangling the impact of service business model innovation on manufacturing firm performance

As manufacturing businesses operate in an ever more competitive, global economy where products are easily commoditized, innovating by adding services to the core product offering has become a popular strategy. Contrary to the economic benefits expected, recent findings pinpoint implementation hurdles that lead to a potential performance decline, the so-called ‘servitization paradox’. In this paper, we analyze this paradox by disentangling the value creation and value appropriation processes of 44 national subsidiaries of a global manufacturing firm turned product-service provider, in the 2001–2007 period. Our findings show that the firm under study is able to successfully transcend the inherent substitution of products by services and to enact complementary sales dynamics between the two activities. Moreover, labor-intensive services such as maintenance, which imply higher levels of customer proximity, further enhance product sales. Empirical results also reveal a positive yet non-linear relationship between the scale of service activities and profitability: while initial levels of servicing result in a steep increase in profitability, a period of relative decline is observed before the positive relationship between the scale of services and profitability re-emerges. These findings suggest the presence of initial short-term gains but also indicate the existence of a ‘profitability’ hurdle; profitable growth seems feasible only to the extent that investments in service capability are translated into economies of scale. In helping to clarify the performance implications of service innovation, our findings suggest pathways to sustainable growth through servitization for manufacturing firms.     

Individual, organizational and environmental determinants of new firm employment growth: evidence from Latin America

New ventures are increasingly playing an important role in Latin American economies. However, little is known about the determinants of new firm growth in this context. The purpose of this study is to gain an understanding of the factors influencing new firm growth in Argentina, Brazil, Mexico and Peru. Individual, organizational and environmental factors are included in an empirical model, which is tested using data collected by face-to-face interviews with 582 entrepreneurs. Different specifications of employment growth and regression approaches are employed. Results suggest that growth strongly depends on the characteristics of the entrepreneur. National environment and firm-related factors are also important factors in determining growth.

Impact of ICT on the productivity of the firm: evidence from Turkish manufacturing

This paper aims to explore the impact of Information and Communication Technologies (ICT) on labor productivity growth in Turkish manufacturing. This is the first attempt at exploring the impact of ICT on productivity in Turkish manufacturing at the firm level. The analysis is based on firm level data obtained from Turkish Statistical Institute (TURKSTAT) and covers the period from 2003 to 2012. The data used in the analysis includes all firms employing 19+ workers in Turkish manufacturing industry. Growth accounting results show that the contributions of conventional and ICT capital to value added growth are not significantly different from each other. On the other hand, results based both on static (fixed-effects) and dynamic panel data analysis highlight the positive influence on firms’ productivity exerted by ICT capital. The findings show that the impact of ICT capital on productivity is larger by about 25 to 50% than that of conventional capital. This contribution of ICT capital is higher than that of non-ICT capital for small sized and low-tech firms. Our findings imply that investing in ICT capital increases firm productivity by increasing the productivity of labor and also that convention growth accounting approaches may not be adequate to identify such linkages.     

The impact of diversity and equality management on firm performance: Beyond high performance work systems

This article demonstrates that a diversity and equality management system (DEMS) contributes to firm performance beyond the effects of a traditional high‐performance work system (HPWS), which consists of bundles of work practices and policies used extensively in high‐performing firms. A DEMS typically includes diversity training and monitoring recruitment, pay, and promotion across minority or other disadvantaged groups. Our analysis of quantitative data from service and manufacturing organizations in Ireland confirms that HPWS practices are associated with positive business performance and finds specifically that DEMS practices are positively associated with higher labor productivity and workforce innovation and lower voluntary employee turnover. © 2010 Wiley Periodicals, Inc.     

The effects of slack resource of R&D professionals on firm performance: evidence from traditional manufacturing firms in an emerging economy

Abstract

As an important component of organizational human resource slack (HR slack), the slack of research-and-development (R&D) professionals has been studied by several authors. However, it remains unclear whether and how this small component of general HR slack, i.e. the slack of research-and-development professionals (RHR slack), may affect overall firm performance in an emerging economy without much R&D tradition or pro-R&D institutions. Based on two organizational theories, i.e. institutional theory and the resource-based view of the firm (RBV), we propose competing hypotheses on the relationship between RHR slack and firms’ accounting performance. We also examine whether the relationship between RHR slack and firm performance should be linear or curvilinear. Finally, we also test the relationship between RHR slack and other dimensions of firm performance. Several interesting findings have been obtained. For instance, neither the perspective based on institutional theory nor that based on RBV can fully predict all types of RHR slack-performance relationships, be these relationships linear or curvilinear.     

The impact of human resource management practices and corporate entrepreneurship on firm performance: evidence from Turkish firms

This paper outlines the important role of human resource management practices with a link between corporate entrepreneurship and firm performance. Data were collected from a survey of 124 firms operating in different industries in Turkey. The findings of this study indicated that human resource management (HRM) practices partially mediated the relationship between corporate entrepreneurship and firm performance. In other words, corporate entrepreneurship affects firm performance, both directly and through its effects on HRM practices. In addition to corporate entrepreneurship, it is found that HRM practices explain a significant level of additional variance (9 per cent) in firm performance. The theoretical and managerial implications are discussed.     

Assessing the impact of green supply chain practices on firm performance in the Korean manufacturing industry

As a growing number of customers tend to view corporate social responsibility (CSR) as a key purchase decision criterion, demands for CSR including environmental sustainability have accelerated in today's business world. To meet such demands, many firms consider embracing environment-friendly business practices. However, many firms are still hesitant to implement those practices due to sceptical views about their real managerial benefits. Although the previous literature confirms the positive link between a firm's commitment to environmental sustainability and its performance, the varying degree of impact of different kinds of environment-friendly supply chain practices on the firm's operational performance is still unknown. To fill the void left by prior research, this paper aims to classify various types of green supply chain management (GSCM) practices and then assess the impact of each of these distinct types on the firm's operational performances (especially manufacturing and marketing performance). Also, this paper examines how the firm's organisational profiles such as firm size affect the particular firm's choice of GSCM practices. Our experimental results reveal that the chosen type of GSCM practices influences the firm's performance differently.     

Pay dispersion and the financial performance of the firm: evidence from Korea

Pay dispersion has been found in prior research to negatively affect both individual and workplace performance. In this study, we examine whether the relationship between horizontal pay dispersion and firm financial performance is curvilinear in nature, with moderate levels of dispersion leading to more positive outcomes than either low or high levels. Using data from a government-sponsored survey of Korean firms, we find support for the hypothesized curvilinear relationship between pay dispersion and firm financial performance. We further find that this curvilinear relationship is moderated by firm and human resource system characteristics. Where the firm had more incumbents in the rank being examined, where pay level was higher, and where there was greater organizational investment in performance evaluation and feedback, the positive slope (within the curvilinear relationship) inverted at a higher level of dispersion.     

The impact of green supplier integration on firm performance: The mediating role of social capital accumulation

Although green supplier integration has received widespread attention, how it impacts various types of firm performance remains unclear. Based on social capital theory, this study explores the influence of green supplier integration on three dimensions of social capital accumulation, which further affect economic and environmental performances. To verify the hypotheses, we collect two-wave survey data from 206 Chinese manufacturers. Results show that green supplier integration significantly affects social capital accumulation. Relational and structural capital accumulations have positive effects on both economic and environmental performances, while cognitive capital accumulation only has a positive impact on environmental performance. Additionally, relational and structural capital accumulations partially mediate the effects of green supplier integration on economic and environmental performances, whereas cognitive capital accumulation only partially mediates the impact of green supplier integration on environmental performance. This research deepens the understanding of how green supplier integration influences firm performance via social capital accumulation, and provides a theoretical basis for firms attempting to enhance their performance.     

Survival of the fittest: The impact of eco‐certification and reputation on firm performance

Owing to the increased trend for organic products and the concept of sustainable development, firms must invest in valuable and unique resources to achieve long‐term success and gain competitive advantages. Building on insights from the resource‐based view and natural‐resource‐based view of the firm, the study focuses on the contribution of corporate reputation and eco‐certification as intangible influences on corporate performance. Duration analysis is applied on a sample of 1,572 German wineries over the period 1994 to 2017. The results indicate that individual reputation and eco‐certification have a statistically significant and positively impact on corporate performance, whereas there is no clear evidence of this relationship for collective reputation. In addition, especially those firms with high individual reputation benefit most from eco‐certification. These results are robust across different parametric and semiparametric model estimations.     

The economy of Portugal within the European Union: 1990–2002

This article analyzes the impact of the EU on Portugal’s economy, how the EU rules and regulations have affected the country’s policy-making style, and the impact of EU’s transfer of resources. It shows that Portugal has greatly benefitted from joining the EU: the rapid exposure to foreign competition has forced modernization of many sectors; there was a retreat of the state from direct involvement in economic activities and the creation of a number of new export-oriented sectors, and EU transfers were effectively applied in modernizing the country’s infrastructure. However, increased productivity has not improved equity from both an income distribution point of view and from regional income concentration.     

The impact of culture on HRM styles and firm performance: evidence from Japanese parents,Japanese subsidiaries/joint ventures and South Asian local companies

This paper investigates national and organizational cultural influences among managers in three types of companies: Japanese companies in Japan, South Asian domestic companies and Japanese subsidiaries/joint ventures in South Asia. The findings suggest that a Japanese parent company's culture tends to have a much stronger influence with Japanese companies operating in Japan. Japanese parent company culture tends to have less influence than the South Asian national culture in shaping the HRM styles and practices in Japanese subsidiaries/joint ventures operating in South Asia. While some South Asian firms are in the initial stages of learning about participative HRM from foreign companies, most still tend to maintain their national culture and traditional ways in the operating systems of their organizations.     

The tortoise and the hare: the impact of employment instability on firm performance

The main objective of this study is to assess the influence of employment instability on firm performance in a sample of publicly traded firms. Competing theoretical arguments are considered with regard to likely outcomes associated with employment instability. A large sample of cross‐sectional time‐series data is then analysed using generalised estimating equations (GEE) regression techniques. Results indicate that employment instability is negatively associated with firm performance, although the relationship is also demonstrated to be quadratic (an inverse U‐shaped relationship). This suggests that the main relationship varies depending upon the level of employment instability. Industry characteristics are also examined as moderators of this main effect. The results suggest a disordinal interaction effect for industry differentiation, where employment instability is negatively associated with firm performance for firms in highly differentiated industries and positively associated in less differentiated industries.     

The impact of uncertainty on firm investment: evidence from machinery industry in Liaoning province of China

We test the impact of uncertainty on investment of Chinese firms during market transition with a sample of 195 firms in the machinery industry in Liaoning province of China during 1993–1998. The system Generalized Method of Moments (GMM) estimates show that both demand and labor costs uncertainties do not affect investment of state enterprises, while labor costs uncertainty has a positive effect on investment of collective firms. This result suggests that managers of state enterprises have little incentive to respond to uncertainty probably due to the ex ante arrangements of the contract responsibility system, while collective firms show risk-taking behavior during market transition. We also find that sales growth is an insignificant signal for investment of both state and collective enterprises, violating the standard accelerator principle. We provide a few possible explanations to this result.     

The effects of innovation–cost strategy, knowledge, and action in the supply chain on firm performance

Despite the importance of supply chains within today's economy, we know little about how the knowledge of supply chains can contribute to superior performance at the firm level. Building on the resource-based view, knowledge-based view and strategic choice theory, we develop hypotheses linking two knowledge-driven supply chain phenomena (i.e., knowledge development capacity and intellectual capital), innovation–cost strategy, and action to firm-level performance. Using survey and archival data from 489 firms, we found that performance is influenced by how well knowledge development capacity and intellectual capital efforts complement alternative chain strategies. More specifically, each strategy type requires different constellations of knowledge development capacity and intellectual capital to enhance action and create superior firm performance. These results highlight the importance of supply chain phenomena for firm-level performance, and more broadly, the value of supply chains as a competitive weapon in contemporary firms.     

A multi-level examination of quality-focused human resource practices and firm performance: evidence from the US healthcare industry

In today's business world, the role of quality has become ever more significant for organizations to compete in a global marketplace. Based on the quality management theory, this study empirically examines the relationship between quality-focused human resource practices (QHRP) and organizational performance outcomes. Data from 69 healthcare organizations indicate a strong support for this relationship. A Human Resource (HR) system focused on quality management was directly related to multiple dimensions of organizational performance outcomes (i.e., intangible – employee satisfaction and customer satisfaction – and tangible – profit). Specifically, two measures of QHRP, knowledge management and strategic management, were found to be positively related to the financial performance of firms implementing quality management. Process management is found to be negatively related to employee satisfaction. General Human Resources were positively related to both employee and customer satisfaction. Employee focus of the firms is also positively related to employee satisfaction. In addition, employee satisfaction is also related to both customer satisfaction and financial performance while customer satisfaction is found to be positively related to employee satisfaction. The findings indicate a generally strong positive relationship with the organizational performance outcomes. The results of this study are particularly important in showing HR's contribution to the organization's bottom line.     

Changes in HRM and job satisfaction, 1998–2004: evidence from the Workplace Employment Relations Survey

This paper examines the relationship between human resource management practices and job satisfaction, drawing on data from the 1998 and 2004 Workplace Employment Relations Surveys. The paper finds significant increases in satisfaction with the sense of achievement from work between 1998 and 2004; a number of other measures of job quality are found to have increased over this period as well. It also finds a decline in the incidence of many formal human resource management practices. The paper reports a weak association between formal human resource management practices and satisfaction with sense of achievement. Improvements in perceptions of job security, the climate of employment relations and managerial responsiveness are the most important factors in explaining the rise in satisfaction with sense of achievement between 1998 and 2004. We infer that the rise in satisfaction with sense of achievement is due in large part to the existence of falling unemployment during the period under study, which has driven employers to make improvements in the quality of work.