The impact of government financial support on the performance of new firms: the role of competitive advantage as an intermediate outcome

This research examines the influence of government financial support on new firms' performance. Extant empirical research on the topic has found mixed results, which warrants an exploration of the theoretical basis for the impact of support policies on new firms' performance. Grounding the theoretical model in the resource-based view and institutional theories, this study contends that performance outcomes – e.g. revenues or profits – should not be the first outcomes of public policies to be examined. Instead, competitive advantage formation is suggested as a link between support policies and new firms' performance. Using new firms from the USA, we examine the impact of government financial support measures – government loans, guarantees and government equity – on firms' overall competitive advantage and more specific types of competitive advantage based on innovation, licensing-in, marketing and human capital. Controlling for family funding, bank financing, equity of business angels and venture capitalists, industry, size as well as entrepreneur's characteristics, the results reveal that government guarantees and government equity have a direct effect on new firms' competitive advantage and only an indirect impact on performance. Our results suggest to policy-makers to focus on helping new firms build the necessary capabilities to compete successfully in the marketplace.     

More than lip service: linking the intensity of empowerment initiatives to individual well-being and performance

We conceptualize empowerment initiatives as varying in terms of intensity – or the degree to which the intervention is rhetorical (aiming to influence employees' sense of control at work, what we refer to as surface empowerment) as opposed to actual (aiming to influence the actual degree of employee job authority, what we refer to as deep empowerment). We then test the effects of rhetorical vs. actual empowerment interventions on employee well-being and performance, as well as the degree to which self-efficacy mediates these effects on the basis of a simulation-based experiment. Results indicate that although both surface and deep empowerment initiatives have beneficial effects on individual well-being, only the latter results in performance increase. We also find that self-efficacy fully mediates the association between surface empowerment (as compared with non-empowerment) and well-being, but only partially mediates the association between deep empowerment (as compared with non-empowerment) and well-being.     

Entrepreneurship and Firm Boundaries: The Theory of A Firm

abstract In this paper, we consider how a better understanding of entrepreneurial activities can help explain how firm and industry boundaries change over time and how a more comprehensive understanding of boundary setting can explain where entrepreneurial activities are directed. We start from the premise that while entrepreneurs believe themselves to have superior ideas in one or multiple parts of the value chain, they are characteristically short of cash, and of the ability to convince others to provide it. This premise motivates a simple model in which the entrepreneur has a value‐adding set of ideas for ‘upstream’ and ‘downstream’ parts of a value chain, as well as for the ways to make these two parts of the value chain work better when joined under unitary control. Assuming that the entrepreneur's objective is to maximize her wealth, we observe that even in the presence of transactional risks or other factors that might make integration preferable to specialization, initial scope depends also on relatively unexplored factors such as (a) how severe the entrepreneur's cash constraint is, and (b) how much value the entrepreneur's ideas add at each part of the value chain. Entrepreneurs will focus on the areas that provide the maximum profit yield per available cash – a criterion which implies that scope choices depend on cash availability and the depth of the demand for the new idea along the value chain. We also note that entrepreneurs make money not only from the operating profits of their firms, but also from the appreciation of the assets the firm has accumulated. This consideration can change the optimal choice of the firms’ boundaries, as entrepreneurs must be sensitive to choosing the segment that will enable them to benefit not only in terms of profit, but also in terms of asset appreciation. We propose that, in the entrepreneurial context especially, it is helpful to focus on the multiple considerations affecting the choice of boundaries for ‘a’ firm – the context faced by an individual entrepreneur – rather than on generic considerations affecting ‘the’ (representative) firm. Scope choices reflect the entrepreneur's own theory of ‘how to make money’.     

Exploring the performance effects of visible attribute diversity: the moderating role of span of control and organizational life cycle

Research on how cultural diversity – especially visible attributes such as race and gender – impacts organizational performance remains practically nonexistent. We examine the effect of racial diversity and gender diversity on firm performance utilizing a contingency framework. Empirical findings from a field study support the hypothesized contingent effects of an organization's structure, specifically managerial span of control, on both racial and gender diversity's pre-assumed benefits. In addition, the study highlights the role of life-cycle stage when modelling the diversity–performance relationship. Future research directions and managerial implications are discussed.     

Three levels of culture and firms’ entrepreneurial orientation: A research agenda

Numerous studies examining the linkage between corporate entrepreneurship and performance resort to the entrepreneurial orientation construct to assess a firm's degree of entrepreneurship. Little conceptual and empirical research has been devoted to understanding the factors and conditions that produce Entrepreneurial Orientation. Generic explanatory variables such as environment, organization, strategy and culture have been mentioned in past research, but though a number of hypotheses have been proposed, few have been thoroughly developed and tested. In this article, we focus on one explanatory variable – culture – that we develop along multiple axes. We propose a conceptual framework that aims to provide a better understanding of how three interdependent levels of culture – national, industry and corporate – influence Entrepreneurial Orientation.     

CEO Succession Mechanisms,Organizational Context,and Performance: A Socio‐Emotional Wealth Perspective on Family‐Controlled Firms

This article extends the literature on CEO succession and financial performance by addressing corporate owners' mixed motives and desires to protect their interest in being in business. We draw on a Socio‐Emotional Wealth (SEW) perspective to investigate how the choice of one of three succession mechanisms – relay succession, ‘horse races’ among internal CEO candidates, and hiring from outside – may effectively balance trade‐offs between corporate owners' non‐financial SEW motives and the firm's financial performance. We find that implementing one of these succession mechanisms reduces the negative impact that typically characterizes CEO transitions in family firms. We also show that family presence on the board of directors offsets the benefits of having selected these balancing succession mechanisms, in either placing too much emphasis on SEW, or creating negative dynamics that make the chosen succession mechanisms less effective.     

Corporate Carbon and Financial Performance: The Role of Emission Reductions

This article uses econometric techniques to examine the effect of corporate carbon performance on corporate financial performance. I extend the existing literature in this research field by differentiating between two measurement perspectives: carbon performance expressed as annually reported carbon dioxide (CO₂) emission equivalents and improvements in carbon performance over time. Thereby, the article re‐addresses the research question ‘when and how does it pay to be green?’ in the context of carbon emissions and climate change mitigation. Using a nonlinear modeling technique, the findings indicate that it pays to be green for companies with superior carbon performance but not for companies with inferior carbon performance. The results also show that carbon emission mitigation is linearly and significantly positive related to return on sales (ROS) but negatively related to Tobin's q . These contradictory findings help us to understand why – in spite of growing regulatory pressure – companies have been slow to respond with effective action to tackle climate change beyond marginal efficiency improvements that correspond to ‘low‐hanging fruits’. The empirical analysis is based on an unbalanced sample of 7625 firm‐year observations covering carbon emission data (Scope 1 and Scope 2) for 1640 international firms from 2003 to 2015. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment     

Temporal Orientation and Corporate Social Responsibility: Global Evidence

There has been a growing emphasis on the importance of a long-term perspective in academia and practice. Yet understanding of the interdependency of those factors – the temporal preferences embedded in organizations and in societal values as well as the influence of temporal orientation of investors – remains limited. We theorize whether and how a firm's corporate social responsibility (CSR) is affected by the societal temporal orientation, its time horizon, and its investors' time horizon. Using a global sample, we confirm that CSR activity is higher when a country has a long-term orientation culture, when the firm has a long-time horizon, and when the controlling institutional investor has a long-term investment horizon. We also find that the national culture's long-term orientation heightens the effect of a firm's long-time horizon on its CSR. Further, our results show that the effects of temporal orientation are more pronounced in environmental than in social CSR.     

A theory of work gamification: Something old,something new,something borrowed,something cool?

A key assumption driving organizations' adoption of work gamification – applying principles of digital and computer games to work contexts – is that such efforts increase worker motivation, effectiveness, and performance. This paper presents a theory of work gamification, positioning work gamification as an intended enhancement of traditional performance management systems which promotes increased worker access to performance information, and improves task enjoyment. In addition to explaining why work gamification should be expected to have motivational and work effectiveness benefits, the theory also highlights the application and worker characteristics that may act as important boundary conditions to the efficacy of gamification applied to work. Theoretical and practical implications of work gamification are discussed.     

The Role of Perceived Organizational Performance in Organizational Identification,Adjustment and Job Performance*

abstract Favourable organizational status and prestige has a substantial role in shaping constituents' attitudes and actions. The status and prestige of an organization is often a reflection of its achievements or performance. In the present study, we investigate the role of organizational performance or achievement (as assessed by organizational members) in evoking employees' identification, adjustment, and job performance. The results of this study indicate that two forms of organizational performance (labelled as perceived social responsibility and development and perceived market and financial performance) are associated with organizational identification. However, when compared to perceived market and financial performance, perceived social responsibility and development had a larger effect on organizational identification, which in turn resulted in enhanced employees' work outcomes – adjustment and job performance.     

Exploring environmental,social, and governance disclosure effects on the S&P 500 financial performance

Much of the literature measuring the relationship between environmental, social, and governance (ESG) scores and firm performance treats the score as a measure of sustainability performance. In this study, we treat a firm's ESG score as a demonstration of strategic choice in the level of transparency that results in increased firm performance as measured by Tobin's Q and return on assets. Performance differences are a result of choice moderated by the size of the firm as measured by employees and sales. We analyze 467 firms in the S&P 500 from 2009 to 2015. Applying legitimacy and stakeholder theory, we find that there is significant difference between groups with respect to disclosure and performance. The results of quartile analysis by sales, capitalization, and Tobin's Q are relevant to understand the influence that the ESG score has on financial performance. ESG influences on Tobin's Q are greatest for large firms as measured by sales, as opposed to the ESG affects on Tobin's Q and return on asset for smallest firms as measured by market capitalization.     

Too Good to be True: Board Structural Independence as a Moderator of CEO Pay‐for‐Firm‐Performance

Whether voluntary or mandatory in nature, most recent corporate governance codes of best practice assume that board structural independence, and the application by boards of outcome‐based incentive plans, are important boundary conditions for the enforcement of Chief Executive Officer (CEO) pay‐for‐firm‐performance; that is, for optimal contracting between owners and executive agents. We test this logic on a large Australian sample using a system Generalized Method of Moments (GMM) approach to dynamic panel data estimation. We find that Australian boards exhibiting best practice structural arrangements – those chaired by non‐executives and dominated by non‐executive directors at the full board and compensation committee levels – are no more adept at enforcing CEO pay‐for‐firm‐performance than are executive‐dominated boards. These findings suggest that policy makers' faith in incentive plans and the moderating influence of structural independence per se may be misplaced. Our findings also hold significant implications for corporate governance theory. Specifically, the findings lend further support to a contingency‐based understanding of board composition, reward choice and monitoring; an approach integrating the insights afforded by behavioural approaches to Agency Theory and by social‐cognitive and institutional understandings of director outlook, decision‐making and behaviour.     

Linking people management and extra‐role behaviour: results of a longitudinal study

This article examines the validity of the assumption that employees' perceptions of those people management activities of their supervisor that impact on employees' abilities, motivation and opportunities to perform influence employee extra‐role behaviour. The results of a longitudinal survey with data from 3,368 employees provide support for this assumption. This study's distinctive features – the concept of people management that involves the management of HR implementation, the longitudinal research design, and the use of the AMO framework for specifying the linkages between HRM and performance – make it possible to address the core questions in the HRM‐performance debate that still remain unanswered according to Guest.     

DETERMINANTS OF PUBLIC PENSION PLAN INVESTMENT RETURN. The role of fund value maximization and public choice theory

Public pension plans are a major type of institutional owner during the new era of investor capitalism, yet little is known about them. Based upon fund value maximization (FVM) and public choice theory (PCT), we develop hypotheses on the determinants of plan performance as measured by plan annual investment return. FVM espouses that the plan's fund or investment portfolio will be invested to maximize return for a given level of risk, while PCT holds that agency costs are significant in the public sector, and will have a negative effect on plan return. Using biennial pension plan data for 1992–96 for several hundred plans, we found that fund value maximization has a much greater influence on plan performance, but that plan performance is also subject to agency costs associated with public choice theory.     

Gravity's pull: The identity-related motives and outcomes of hiring stars

Strategic human capital scholarship, alongside a wealth of evidence from the popular press, suggests that star employees can influence an organization's socially constructed identity. However, an overarching conceptual framework that explains these shifts has yet to emerge. In this paper, we draw upon Hatch and Schultz's (2002) theory of identity change to discuss how organizational identity-change related motives – defined as decision makers' interest in spurring changes to socially constructed, internal perceptions of their organization's central and distinctive features – act in concert with considerations of value creation and capture to influence the hiring of different identity-aspirant stars (i.e., stars that embody a desired future organizational identity). Given that stars represent catalysts for identity change that have agency and become part of the social fabric of an organization, we then explain how the mechanisms by which stars' attempts to gain or retain status – coupled with organization members' willingness to emulate their behaviors – can affect internal-oriented organizational identity change. This paper advances consideration of social-psychological factors alongside economic views of stars and offers implications for the literatures on strategic human capital and organizational identity.     

Family income and children's education: Using the Norwegian oil boom as a natural experiment

Parental income is positively correlated with children's educational attainment. This paper addresses the causality of this observed link. We have a unique data set for Norwegians born in the period 1967–1969, with a measure of permanent family income in the children's adolescence. This enables us to examine the long-term effect of family income on children's educational attainment. The Norwegian oil shock in the 1970s is used as an instrument, because this – in some regions but not in others – implied a general increase in income unrelated to parents' abilities. This variation in income is used to estimate the causal effect of family income on children's educational attainment. We find no such causal relationship. This result is robust with respect to different specification tests.     

The relationship between trust,HRM practices and firm performance

Numerous researchers have begun to examine organizational trust and its influence on the workforce. However, little empirical research has focused on the conditions that engender organizational trust – those that make managers more willing to accept the vulnerability inherent in certain managerial actions that are part of human resource management. This study evaluates the trust mechanism and the way HRM practices mediate its impact on improving organizational performance. One hundred and four HR managers from the leading companies in the Israeli industrial, service and trade sectors, based on sales and operating revenue, completed questionnaires. Overall, we found that HR managers are more likely to offer training and shape the internal promotion system when trust is high. In addition, we found that firms exhibited higher organizational performance when trust is high. The paper also presents some of the model's implications.     

Comparisons of the effects of individual and collective performance-related pay on performance: A review

Debate on whether performance-related pay enhances organizational performance has centred on individual-based systems. This paper reviews studies that compare these with collective-based systems such as team bonuses and profit-sharing. Analysis of such comparisons – both field and experimental studies – reveals that collective systems, either alone or in conjunction with individual systems, are associated with higher performance. In no study do individual incentives outperform collective systems. Tests for moderators were rare but suggest that task interdependency may enhance collective systems' effects. Tests of mediators are also rare but point to enhanced levels of cooperation and idea generation under collective systems. This review examines how the included studies contribute to our understanding of key issues in payment-systems research – the roles of sorting effects and free riding under collective systems, and whether financial incentives may undermine intrinsic motivation – and finds it is limited, suggesting future work should concentrate on these areas.     

Trump versus Reagan – the global dimension

• ? Could the Trump era resemble the 1980s? ‘Reaganomics’ boosted world growth – but not necessarily in the ways people think – and not for emerging markets (EMs), a larger part of today's world economy. Growth then was also aided by factors such as declining interest rates, which are missing today, and we doubt that deregulation will lead to a productivity surge. US asset prices, meanwhile, were depressed in 1981, unlike now, so the big gains of the 1980s are unlikely to be repeated. EM assets should do better than back then, though.
• ? Optimistic observers – and to some extent, markets – have been drawing parallels between the policy mixes of the Trump and Reagan administrations, and talking up the prospects of stronger global growth. But while the US did support world growth in the 1980s, this was arguably more due to Keynesian' demand‐side policies than supply‐side ones: Reagan's record on supply‐side policies was mixed.
• ? The US is still an important driver of global activity, but markets may be too optimistic about the effect of Trump's policies on world growth. Any Trump fiscal stimulus will occur against a much less favourable background than that of the 1980s, when US growth also benefitted from a variety of factors missing now.
• ? It is also unclear whether Trump's administration will tolerate large expansions of the current account and fiscal deficits as the ‘price’ for more growth. And we are sceptical about the prospects of big gains from deregulation: US economic dynamism has waned, but the policies so far proposed in this area look potentially misdirected.
• ? Over the coming years asset market performance is unlikely to mirror that of the 1980s: valuations suggest less room for dollar appreciation and stock market gains this time around. But emerging market (EM) assets may do better – the soaring dollar and high US rates that hit EMs in the 1980s are unlikely to be repeated. And our analysis suggests even modestly better US growth will support commodity prices and EM growth.