Management ownership and firm performance

This article explores the relationship between management ownership and firm performance. Using the panel data of Chinese listed firms from 2000 to 2004 and the average model, we attempt to avoid some of the deficiencies in research design and performance indicator selection in prior studies. Results show that the proportion of shares held by top management is significantly and positively related to firm performance. Empirical tests of sub-samples in each year confirm the above conclusion.     

Foreign ownership and firm performance in German services

This study provides the first comprehensive analysis of foreign-controlled enterprises in the German service sector based on new micro-data from official German statistics. Various performance measures were examined via comparison of unconditional and conditional means and through use of quantile regression techniques. Foreign-controlled affiliates consistently performed better than German-owned affiliates. In contrast, profitability exhibited precisely the opposite trend. Moreover, labour productivity did not significantly differ when the comparison group consisted of domestically owned affiliates with a high degree of internationalization. A breakdown by country of origin showed that European affiliates pay lower wages and export less relative to non-European affiliates, and US firms have no productivity advantage as in manufacturing.     

Sub-national institutions,firm strategies,and firm performance: A multilevel study of private manufacturing firms in Vietnam

Some private small and medium sized enterprises (SMEs) in transition economies have actively internationalized. This decision needs to accommodate institutional conditions that vary, not only between countries, but also within an individual country. Our paper examines the relationship between export strategy and firm performance, and the extent that sub-national institutional factors moderate this relationship. Using multilevel data analysis techniques with a sample of private manufacturing firms in Vietnam, we find institutional factors moderate export strategy and firm performance's relationship.     

Board independence, firm performance and ownership concentration: Evidence from Chile

What determines the composition of companies' boards in the context of high ownership concentration? Are independent directors important as an internal governance mechanism in companies with high ownership concentration? Do markets favor companies whose controlling shareholders use voting rights to elect professional directors?Using a four-year, 160-company panel data, and controlling for endogeneity, this paper addresses these three related questions, finding that an increase in the proportion of outside directors affects company value. The paper also finds that companies that present more exacerbated agency conflicts tend to incorporate professional directors to the boards, in an effort to improve corporate governance and ameliorate the agency problem.     

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.     

Symbiotic ownership,cultural alignment,and firm performance: A test among international strategic alliances

Based on a sample of 61 international firms in China with industry symbiosis, we examine the effects of cultural alignment on firm performance. We first predict that symbiosis will have a negative effect on firm performance. After that, focusing on the most dimension of culture, i.e., collectivism/individualism, we also predict that in a society with a high collectivistic value, organizational collectivism will be positively correlated with firm performance because of its alignment with the prevailing societal culture. Finally, we predict that this cultural value should have a moderating effect on the relationship between symbiosis and performance. Data are collected from multiple sources to test these predictions. The results of the data analyses show the benefits of building a collectivistic organizational culture for firms with a high level of industry symbiosis.     

Internationalization and performance: A contextual analysis of Indian firms

This paper explores the nature of the relationship between a firm's internationalization and performance (I–P) and provides interesting evidence on the moderating role of the firm's characteristics on this relationship. First, the paper investigates two modes of internationalization by firms: exports and foreign direct investment (FDI). The study anticipates the I–P relationship to be different for these two modes owing to the differences associated with market-seeking and strategic asset/resource-seeking motivations among internationalizing Indian firms. Drawing on these differing motivations, the study theorizes a positive linear I–P relationship with export intensity and a negative linear I–P relationship with FDI activity and finds strong support for the latter. Second, the study argues for the contextual nature of the I–P relationship and attempts to integrate the role of organizational characteristics such as business group affiliation, firm size, and firm age in influencing the I–P relationship. The study finds that business group affiliation and firm age positively moderate the I–P relationships, which signifies deeper institutional, resource-based, and legitimizing effects. These results are indicative of the need for greater mid-range theorizing to forge a more robust understanding of the role various organizational characteristics play in influencing the I–P relationship.     

Interfunctional dynamics and firm performance: A comparison between firms in Poland and the United States

This study compares between firms in the US mature market economy and in the Polish transitional economy. The study found that Poland's past as a planned economy may continue to hinder interdepartmental connectedness and act as an obstacle to firms in adopting a market orientation. According to the study, for Polish firms, there is less shared information and cooperation across departments, and less shared responsibility for departmental tasks, compared to US firms. The status of marketing in Poland remains that of a junior department, subordinate to influences from functional areas such as finance and accounting, which directed production in the former planned economy. The study supports the hypothesis that Polish firms have lower interdepartmental connectedness than US firms and finds strong support for the relationship between interdepartmental connectedness and firm performance.     

Mixed ownership and firm performance: Evidence from the Chinese venture capital industry

We examine the impact of mixed ownership on the performance of venture capital (VC) firms in China. We use successful/unsuccessful exits from VC-financed entrepreneurial companies and number of patent applications by VC-financed companies as proxies for VC firms' performance. Consistent with existing research on the inferior performance of SOEs relative to non-SOEs, we find that on average government-controlled VC firms (GVCs) underperform domestic private investors-controlled VC firms (PVCs). More importantly, we find that introducing minority private investors (i.e., mixed ownership) helps improve the performance of GVCs. However, we find no evidence that introducing minority government investors (i.e., mixed ownership) helps improve the performance of PVCs. Our results provide relevant information to the ongoing debate on the role of the government investors and private investors in developing the VC industry in emerging markets.     

Managerial ownership,diversification, and firm performance: Evidence from an emerging market

Numerous existing studies have explored the impact of corporate diversification on firm performance, whereas considerably less research has investigated the inter-relationships among managerial ownership, diversification, and firm performance. This paper develops several hypotheses based on the agency theory self-interest perspective and tests the relationships among managerial ownership, corporate diversification, and firm performance using a sample of 98 emerging market firms listed on the Taiwan Stock Exchange. The results show a U-shaped relationship between managerial ownership and corporate diversification, similar to that found in prior studies. However, the inflection point is 33.17%, which is lower than that found in previous studies. Moreover, in contrast to prior results, corporate diversification is found to be positively associated with short-term firm performance and bears no relationship with mid-term firm performance, while firms engaged in unrelated diversification outperform those engaged in related diversification. This paper concludes with theoretical implications and suggestions for future research.     

National institutional systems,foreign ownership and firm performance: The case of understudied countries

We analyse the relationship between institutional systems (configurations of countries with similar institutional characteristics) and firm performance. We use a large sample of firms from understudied countries to explore whether the performance impact of these configurations is the same (“equifinality”), whether this holds across different measures of firm performance (“Tversky effect”), and whether some institutional configurations better support foreign-owned firms. We find that it is possible to rank institutional systems according to their impact on firm performance, but the ranking differs according to the performance measure. Although foreign ownership on average confers performance advantages, the magnitude of the impact depends on the configuration. Our findings contribute to the understanding of the importance of institutional similarities across countries, and to the implications of these similarities for the theory of the MNE.     

State ownership,political ideology,and firm performance around the world

It is often taken as a stylized fact that state ownership harms the financial performance of firms. Yet we show that this relationship varies greatly across national contexts. We argue that the political ideology of the government, both independently and in conjunction with political institutions (state capacity and political constraint), affects this relationship. We test our hypotheses using meta-analytical techniques on an international sample spanning 53 years and 131 countries. Our research sheds further light on the state ownership – firm performance relationship by highlighting the role of the political ideology of the government, and its interactions with political institutions.     

Whose firm is it anyway? Analyzing ownership effects on IPO performance

This study revisits current practice that ownership holding at IPO has a homogeneous impact on IPO performance. Using signalling theory, we develop and test a conceptual model explaining the relationships between the aggregated ownership structure and IPO price premium. We argue that aggregated ownership has a direct effect on issue price premium, and offer specific hypotheses on the effect of the shares sold during the offering by each type of owner on IPO performance. We use archival data from a sample of US firms that issued IPOs between 1996 and 2000 and find a significant direct effect of ownership configuration, namely, heterogeneity in effect of each ownership type on IPO performance as well as interaction effects between different ownership types. Copyright © 2013 ASAC. Published by John Wiley & Sons, Ltd.     

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.     

The influence of family ownership on SME performance: evidence from public firms in Taiwan

The relationship between family ownership and firm performance has gained increased attention in the business strategy and financial economics literature. Most existing studies use large companies as the research sample; studies that explicitly investigate the influence of family ownership on the performance of small- and medium-sized enterprises (SMEs) remain sparse. This study raises this issue explicitly by investigating the influence of founding-family ownership on the return on assets and Tobin’s q of 341 public SMEs in Taiwan, during the period of 2002–2006. It emerges from the data that family ownership is prevalent and substantial in Taiwan, representing half of the public SMEs and accounting for more than 11 percent of their outstanding equity. It was found that the influence of family ownership on SME performance is positive and significant. Overall, the results suggest that family ownership is an effective organizational structure for SMEs in Taiwan.     

Managerial ownership and performance: A commentary essay

Florackis, Kostakis, and Ozkan [Florackis, C., Kostakis, A., and Ozkan, A., 2008. Managerial ownership and performance, Journal of Business Research, forthcoming] empirically examine the exact nature of the relationship between managerial ownership and corporate performance in the framework of semi-parametric regression. This commentary explores the authors' contribution to the corporate governance literature in the light of recent advances in semi-parametric regression. The commentary also considers how Florackis et al.'s findings align with important, emerging work in the corporate governance literature.     

Firm internationalization,business group diversification and firm performance: The case of Latin American firms

We examine the influence of multinationality and business group diversification on firm performance. Further, we examine how their interaction varies between service and manufacturing firms. We assess these relations in three Latin American countries using a sample of 103 firms over the period from 2000 to 2007. We found that there is a limit to the positive effects of business group diversification and that business group diversification effectively moderates the multinationality-performance (M-P) relationship. Our results also suggest that diversified business groups have a stronger positive influence on the M-P relationship for service firms compared to manufacturing firms.     

Technical performance and firm size: Analysis of patents and publications of U.S. firms

This study focuses on the scientific output of firms of different sizes in different industries in the U.S. Both patents, and papers and publications are used as measures of technical output. Data from two samples of firms, one consisting of 225 large firms (annual sales at least $250 million and minimum annual R&D budget of $1 million) and the other consisting of 248 small and medium sized firms (annual sales between $10 to $200 million and annual R&D budget at least $10 thousand) have been presented here. The study shows that determinants of R&D expenditure are different in firms of different sizes. For the large firms, R&D expenditure depends on net income as well as its size, measured in terms of annual sales. For small size firms, R&D expenditure is closely related with sales, rather than the net income. For large firms, R&D expenditure is related to both sales and income, the latter being more important than the former. The two output measures, patents and papers are correlated, but the correlation is not a very strong one for small firms. Patent and papers are correlated significantly with both R&D expenditure as well as annual sales. The firm's growth is not linked with patents. On the contrary, there is a negative relationship between patent and R&D growth and patent and income growth in the case of small firms. Papers are not linked with growth variables for small firms. Finally, this study confirms the hypothesis that small firms are more productive in innovation than the large firms. Small firms are more efficient than their larger competitors in terms of patents and papers per million dollars of R&D expenditure.