How do European firms adjust their labour costs when nominal wages are rigid?

Although workers' nominal wages are seldom cut, firms have multiple options available if they require adjustments in their wage bills. We broaden the analysis of relative (in)flexibility in labour costs by investigating the use of other margins of labour cost adjustment at the firm level beyond base wages. Using data from a unique survey, we find that European firms make extensive use of other components of compensation to adjust the cost of labour. Interestingly, firms facing base wage rigidity are more likely to use alternative margins of labour cost adjustment; therefore there appears to be some degree of substitutability between wage flexibility and the flexibility of other cost components. Changes in bonuses and non-pay benefits are some of the potential margins firms use to reduce costs. We also show how the margins of adjustment chosen are affected by unionisation and firm and worker characteristics.     

Does recession drive convergence in firms’ productivity? Evidence from Spanish manufacturing firms

This paper provides evidence on the effect of recessions and expansions on the productivity growth rate of productivity leaders and followers. We use data of a representative sample of the Spanish manufacturing sector for the period 1991 and 2005. These data allow us to estimate firm level productivity for a relatively long period of time and provide us with firm level perception of the business cycle. We find that productivity tends to converge in recessions because, in these periods, the productivity growth of followers is higher than the productivity growth of leaders. This fact is consistent with theoretical models of managerial incentives and competition. A recession can be seen as an exogenous increase in competition that reduces demand and poses a threat of liquidation. This threat is higher for followers and is high enough to create asymmetric incentives to become more productive. We test the robustness of our results to sample selection and different productivity measure.     

Does downsizing improve organisational performance? An analysis of Spanish manufacturing firms

The objective of this study is to examine the effect of downsizing on corporate performance, considering a sample of manufacturing firms drawn from the Spanish Survey of Business Strategies for the 1993–2005 period. No significant difference in post-downsizing performance arises between companies that downsize and those that do not. Likewise, we find that substantial workforce reductions through collective layoffs do not lead to improved performance levels either. Downsizing may not, therefore, be a way for managers to enhance performance. This is particularly true of Spain, where the labour market is characterised by the ring-fencing of employees' rights and substantial severance costs.     

Why locate manufacturing in a high-cost country? A case study of 35 production location decisions

In this paper, we examine in detail 35 final assembly location decisions to gain understanding of the manufacturing location decision from strategy and economic policy perspectives. We are particularly interested in the decision to locate final assembly specifically in a high-cost (high GDP per capita) environment. In contrast with the earlier literature, we focus not just on manufacturing activities themselves, but also the key linkages between production, market, supply chain, and product development. These linkages are examined using three key concepts from theories of organization design: formalization, specificity, and coupling. Using these concepts, an analysis of the micro-structure of each case reveals important commonalities that inform our understanding of location decisions. We conclude by discussing the policy implications of our findings.     

Why do firms cross-list? International evidence from the US market

Using a modified international asset-pricing model we find strong evidence that publicly quoted firms cross-list when exhibiting strong performance in their domestic market and wish to take advantage of this situation. After cross-listing, this advantage disappears. Our sample consists of daily data for 1165 firms from 47 countries that have cross-listed on the US equity markets over the period 1976–2007. Within the context of this model we provide tests of the validity of the main hypotheses of capital market segmentation and investor protection, which provide explanations for equity cross-listing and investigate whether the nature of the market (regulated or unregulated) and the accompanying legal framework (common or civil law) can account for the impact of cross-listing on returns. Supporting the segmentation hypothesis, we report a decrease in local market risk after cross-listing. However, we find that the magnitude of such a decrease is diminishing over time as international markets become more integrated. On the other hand, we do not find any change in the global market risk after cross-listing, except for firms that cross-listed between 2001 and 2007, where their exposure to international market risk decreases. Furthermore, we find no evidence to support the investor protection hypothesis.     

Why and how do firms reshore? A contingency-based conceptual framework

Much of the growing body of reshoring literature has focused on why firms reverse a prior location decision. While valuable, this work needs extending to how the decision to reshore is operationalised. Using a two-stage approach, this paper presents a conceptual framework that covers both why and how firms reshore. The framework also utilises contingency theory to identify the factors that influence these decisions. It is therefore claimed to be more comprehensive than others frameworks found in the literature. First, a systematic literature review deductively develops an initial framework. Second, a revised version of the framework is presented using evidence from a single, exemplar case of captive reshoring in the textiles industry. The case evidence identifies new factors and extends a typology of reshoring decisions proposed in the literature to more accurately reflect the dynamic, complex, and incremental nature of the onshore-offshore-reshore location and ownership decision.     

How well do fundraisers communicate with their donors?

Fundraising charities invest substantial resources in producing and distributing an ever-growing range of publications. As part of a major research study into how donors view the results of these endeavours the authors set out to evaluate how the major charities respond to general enquiries from the public, and to see how charities plan the publications they produce.     

Are innovation and R&D the only sources of firms’ knowledge that increase productivity? An empirical investigation of French manufacturing firms

The economic literature presents knowledge accumulation as one of the most important characteristics of innovation. The accumulation of knowledge arises from complex and dynamic interactions between a firm??s own internal capacity and external expertise. Research and development (R&D) remains important in the innovation process, but it must be integrated with knowledge from other sources, such as training and knowledge capitalization. This paper investigates the relationship between such knowledge sources and the productivity of French firms. Using asymptotic least squares, a Cobb-Douglas function including R&D, innovation, training expenditure and ISO 9000 certification is estimated for 1,213 French manufacturing firms. Our results show that innovation, training and ISO 9000 certification have a positive and significant impact on firms?? productivity.     

How do established firms improve radical innovation performance? The organizational capabilities view

The paper examines organizational capabilities for improving performance, with respect to radical innovation (RI), in established firms. These organizational capabilities are (1) openness capability, (2) autonomy capability, (3) integration capability and (4) experimentation capability. The paper proposes four research hypotheses, to examine the relationship between four types of organizational capabilities and radical innovation performance. A dataset of 112 corporate RI-specific capabilities and innovation performance data, from the top 500 Taiwanese manufacturing firms, is collected via a postal questionnaire survey. The multiple regression results reveal a positive relationship between organizational capabilities and radical innovation performance. Finally, some managerial recommendations, to develop radical innovation capabilities, are provided.     

When do retail investors pay attention to their trading platforms?

Buying and selling securities through online trading platforms has become increasingly popular among U.S. households in recent years. This study tracks U.S. households' attention to their online trading platforms using daily data for 2004 to August 2017. The analysis covers the 10 most popular online trading platforms among U.S. investors. The findings indicate that market shocks, captured by several proxies, as well as macroeconomic announcements attract investors' attention to trading platforms. We also document that the ostrich effect weakens when considering greater changes in the VIX. Our findings do not support the avoidance of information theory, but do support the theoretical argument that risk-averse agents engage in more information gathering when uncertainty prevails in hopes of reducing their risks.     

Why do firms set environmental performance goals?: Some evidence from organizational theory

Organizational goal setting is considered a critical strategic first step for corporations as it provides the basis for developing a roadmap for organizational activity as well as guidance for establishing the metrics to measure progress. Yet despite significant research interest in the environmental performance of corporations, environmental goal setting has received little attention. For example, it is not known why firms set environmental goals. Understanding this goal setting behavior is necessary to develop mechanisms to improve organizations' environmental management and performance. This study uses organizational change models of institutionalism, stakeholder management, natural selection, strategic choice and organizational learning to examine why firms set environmental performance goals. First, propositions related to environmental goal setting are developed from the models. The goal setting propositions use the goals of the US EPA's 33/50 programme, a national voluntary pollution prevention effort which aimed for a 33% reduction in releases by 1993 and a 50% reduction by 1995, as a basis for comparison to individual company goal setting. Next, the toxic release reduction goals of the 118 US corporations who set goals are analysed to determine which organizational change model propositions they support. All five models of organizational change examined here–institutionalism, stakeholder management, natural selection, strategic choice and organizational learning–show some promise in explaining corporate environmental goal setting. The combination of these models leads to the following depiction of the motivation for toxic release reduction. Firms will set goals to reduce toxic releases in an effort to respond to regulators and other factors in the institutional and stakeholder environment. This goal setting is likely to be enhanced if it can be more directly tied to economic benefits such as cost savings or if it is chosen by natural selection. This in turn will promote organizational learning with the end result of better environmental and economic performance. These findings provide some empirical evidence on which to base strategies for improving corporate environmental management. Copyright © 1999 John Wiley & Sons, Ltd and ERP Environment.     

How do interregional spillovers influence the distribution of technology? The case of Chinese manufacturing

The Chinese economy displays considerable inequality across regions. In this paper, we analyzed the distribution of intermediate input shares in China. We use regional input–output tables from 2007 and find that regions with higher GDP per capita generally had higher input shares, regardless of sector. Then, using intermediate input shares as a proxy of technology, we analyzed the pattern of regional technology distributions across manufacturing sectors as well as the extent of interregional technology spillovers. Our results indicate that interregional backward spillovers have significantly positive impacts on the shape of the technology distributions in eastern (coastal) regions. By contrast, the vertical spillovers of the central and western regions are largely dominated by intra-regional forward effects. Our results suggest that the shift of Chinese manufacturing from coastal to inland regions with lower production costs cannot reduce the imbalance among regions unless the technology gap is narrowed.     

Should retail stores locate close to a rival?

Journal of Economic Interaction and Coordination - I simulate firms competing in an urban landscape that is segregated by income level. Some firms are located close to wealthy neighborhoods and far...     

How do institutional shareholders manipulate corporate environmental strategy to protect their equity value? A study of the adoption of ISO 14001 by Egyptian firms

Theoretical as well as empirical evidence regarding the influence of institutional ownership on corporate environmental strategy not only is inconclusive but also reflects experience from either the Anglo‐American context or other developed countries. The underlying assumption of most of this literature is that institutional shareholders are always ‘active’ or ‘passive’ in their actions towards corporate environmental strategy. However, this study argues that this relationship might be moderated by various motivations such as legitimizing existence and operations, conforming with industry norms or lessening managerial entrenchment. Econometric analysis, using a sample of Egyptian firms, as hypothesized, demonstrated that institutional ownership exerted positive and significant effects on a corporation's tendency to adopt environmental management standards only when financial resources are available and investment opportunities are limited. A possible explanation of this finding is that Egyptian institutional investors are more likely to use corporate environmental responsibility to offset their inability to confront managerial discretionary power. An implication of this finding is that not only will different types of stakeholder ask for different levels of social and environmental responsibility, but also the same type of stakeholder may ask for different levels of social and environmental responsibility in different contexts. Copyright © 2009 John Wiley & Sons, Ltd and ERP Environment.     

Outstanding fundraising practice: how do nonprofits substantively increase their income?

• In this paper, we examine the characteristics of charities that have generated substantive increases in their fundraising income. We interviewed 25 fundraising directors and team members, from organizations experiencing rapid growth, adopting a “decoding the discipline” approach to identify how each organization had overcome key barriers to its success. We identify that fundraising leaders in these exceptional nonprofits focus particularly on matters connected to their team, organizational structures that support that team, and the development of an organization‐wide learning culture. We also find that these teams were successful because of the “systems” way in which they understood and coped with the complexities of decision making. They were exceptional in isolating the right problems and exceptional too in the processes they adopted to solve them.

Copyright © 2016 John Wiley & Sons, Ltd.     

Do firms share the same functional form of their growth rate distribution? A statistical test

We propose a hypothesis testing procedure to investigate whether the same growth rate distribution is shared by all the firms in a balanced panel or, more generally, whether they share the same functional form for this distribution, without necessarily sharing the same parameters. We apply the test to panels of US and European Union publicly quoted manufacturing firms, both at the sectoral and at the subsectoral NAICS level. We consider the following null hypotheses about the growth rate distribution of the individual firms: (i) an unknown shape common to all firms, with all the firms sharing also the same parameters, or with the firm variance related to its firm size through a scaling relationship, and (ii) several functional shapes described by the Subbotin family of distributions. Our empirical results indicate that firms do not have a common shape of the growth rate distribution at the sectorial NAICS level, whereas firms may typically be described by the same shape of the distribution at the subsectorial level, even if the specific shape may not be the same for different subsectors.     

Put your money where your mouth is: Do financial firms follow their own recommendations?

In this paper, we explore how US financial firms trade relative to their own equity analyst recommendations. In the quarter-of and that immediately follow a recommendation, firm trades are significantly positively related to recommendation changes. This relation is robust to controls for sub-sample effects, return/momentum related phenomena, size effects, controls for consensus recommendation, and other data normalizations. Our results show that financial firm trades are consistent with their analysts’ research and recommendations, despite recent conjecture to the contrary.