Trading activities,productivity and markups: Evidence for Spanish manufacturing

This work analyses the firms' internationalisation strategies of importing intermediates and exporting output, and the potential rewards of these activities in terms of total factor productivity (TFP), as a proxy for marginal costs, and markups. It further deepens into the study of the relationship between internationalisation strategies and markups by disentangling whether it operates through affecting firms' marginal costs and/or firms' prices. The panel database employed in this paper is the Spanish Survey on Business Strategies (ESEE) for the period 2006–14. Results in the paper distinguish between SMEs and large firms and indicate that there is high persistence in the performance of these activities and in firms' TFP and markups. For SMEs, we obtain rewards from importing inputs as well as exporting output in terms of TFP and markups. For large firms, we obtain rewards in TFP from the importing activity and rewards in markups from the exporting activity. Finally, we find evidence that the effects of internationalisation strategies on markups are due to both a price channel and a marginal cost channel.     

The role of firm-level and country-level antecedents in explaining emerging versus advanced economy multinationals' R&D internationalization strategies

We examined firm-level and country-level antecedents of R&D internationalization strategies, focusing on differences between enterprises in emerging and advanced economies. Previous research often focuses on the relative importance of home-base-exploiting versus home-base-augmenting knowledge transfer strategies. We suggest that country-level and firm-level effects differ for the two strategies, and hence, we examined each strategy independently. Collecting data in China, India, the United States, and Germany, we demonstrated that firms' relative technological position as a firm-level characteristic can explain differences in home-base-exploiting strategies between emerging and advanced economies. In contrast, home-base-augmenting is more closely related to exploratory institutional environments, a country-level factor. Thus, either firm- or country-level antecedents can gain a dominant role, depending on the strategy implemented.     

Internationalization Factors of Thai Multinationals and Thailand's Bilateral Trade Policy

This article investigates the impact of Thailand's recent bilateral free-trade agreements (FTAs) on the internationalization of Thai multinational enterprises (MNEs). The results highlight the relative importance of internal and external factors in the internationalization of developing country MNEs. The empirical evidence indicated that Thai MNEs judged bilateral FTAs as a critical facilitator of internationalization success. The FTAs facilitated firms' exports to a certain degree and marginally expedited firms' international purchasing activities. The influence of FTAs on firms' foreign investment was not discernible.     

Logistics mode strategy of firms selling fresh products on e-commerce platforms with private brand introduction

The popularity of online shopping has enticed many firms selling fresh products to establish third-party stores on e-commerce platforms. For those firms. adopting which logistics mode between platform logistics and third-party logistics (TPL) for their third-party stores is the real decision problem. Moreover, many platforms have introduced their private brands of fresh products to occupy more make share, which will inevitably affect firms' operation strategies. To explore the optimal logistics mode strategy of firms selling fresh products on platforms and the impacts of platform private brand introduction on those firms' operation strategies, four theoretical models are constructed. Main results show that regardless of whether platforms have introduced their private brands of fresh products or not, the optimal logistics mode strategy depends on the sizes of the platform logistics cost and the service level difference between platform logistics and TPL. Furthermore, introducing platform private brands of fresh products will increase firms' willingness to adopt TPL for their third-party stores on platforms. These main results are robust considering the existence of fresh product supplier and different consumer's sensitivity to freshness-keeping efforts.     

Do customers respond to the disclosure of internal control weakness?

In this study, we investigate the effects of firms' internal control weakness (ICW) disclosures on their customers. We hypothesize that ICW disclosure adversely affects customers' perceptions of firms' ability and incentive to honor implicit commitments to customers, and as such, customers are less willing to buy from such firms. We thus expect a decline in firms' sales growth after ICW disclosure. We find a significant decline in sales growth subsequent to Sarbanes–Oxley (SOX) Section 404 ICW disclosure after controlling for firms' past sales growth and other factors affecting sales performance and internal control. This result is robust to the consideration of selection bias in ICW disclosure. We also find that the decline is more pronounced for firms with company-level ICW disclosure, with industrial customers, in the durable goods industries, with high research and development (R&D) intensity, or without subsequent remediation of ICW. Taken together, these results are consistent with the argument that ICW concerns customers more when the implicit contracts between the firms and their customers are more intensive.     

Entries and Exits in Foreign Markets: Italian Firms' Multinational Expansion in the European Union

This paper focuses on the expansion strategies in foreign markets of a sample of Italian firms during the period 1987-93. The data reveal strong dynamics in entry and exit strategies and an overall increase in Italian firms' foreign manufacturing activities. Firms seem to be restructuring and reorganising their range of activities in view of the new competitive scenario promoted by the completion of the Single European Market. A logit model investigating the determinants of entry in foreign markets is tested at the firm level. The results suggest that firms' specific resources, target industry and foreign country characteristics are important explanatory variables. Some new insights concerning the export substitution effect, the presence of technological sourcing and the multinational/ diversification dichotomy are also discussed.     

The impact of informal social interaction on innovation capability in the context of buyer-supplier dyads

Although many studies employ social network theory to explain firm innovation, how individual-level factors lead to a firm's collective innovation capability remains under-researched. Building on studies that use the work boundary to define formal and informal social interactions, this research aims to illuminate how informal buyer-supplier employee interactions influence buyer firms' innovation capabilities through knowledge acquisition. Integrating the literatures on absorptive capacity and social interaction, the analysis of survey data from 273 Chinese manufacturing firms suggests that employees' informal interactions are positively associated with knowledge acquisition and enhance firms' innovation capabilities. Furthermore, the indirect effects of informal interactions on innovation capability are moderated by knowledge application.     

To retrench or invest? Turnaround strategies during a recessionary time

By analyzing retail news published between 2008 and 2011, we examined retrenchment and investment strategies employed by retailers in the U.S. in response to the Great Recession. We found four categories of retrenchment (store closings, buyouts, bankruptcies, and pull backs) and five categories of investment (market expansion, product development, service development, strategic partnerships, and corporate social responsibility). Retrenchment decisions were constrained by retailers' financial strength, whereas investment decisions varied with firms' strategic orientations and resource capabilities. Findings of this study enhance theoretical understanding of underlying factors of specific retrenchment and investment decisions that retailers pursued during a challenging economic time.     

Price competition during and after promotions

We provide a framework for setting regular prices and using promotional discounts in a duopoly where long‐term promotional effects are present and the firms' pricing and promotional strategies are common knowledge (e.g., as in online markets). We show that at equilibrium, the two firms may not promote and instead adopt an Everyday Low Price (EDLP) strategy. Consumers' tendency to stockpile promoted products, the level of brand loyalty and product differentiation, and the possibility of a postpromotional sales increase critically influence regular prices, price discount rates, and profits. Under some conditions consumer stockpiling intensifies promotional competition and reduces firms' profits while the possibility of attracting new consumers reduces the need to heavily promote and ensures better profits. Managerial implications are discussed. Copyright © 2007 ASAC. Published by John Wiley & Sons, Ltd.     

Earnings management and firms' investment behavior: The threshold effect of ROE

This paper, on the basis of a sample of Chinese listed firms, investigates the relationship between both real and accrual-based earnings management activities and firms' capital investment behavior. We apply the threshold model proposed by Hansen (1999) and find firms managing earnings can either over or underinvest, depending upon firms' return on equity (ROE) level. The study results show an inverted relationship between earnings management and firms' investment, which changes from negative to positive with ROE rising beyond certain threshold levels. We also find that the level of ROE affects whether managers use real and accrual manipulations jointly or as substitutes in affecting firms' investment. Our evidence is important because it sheds new light on the relationship between earnings management activities and firms' investment behavior by showing that ROE may act as an important determinant in this relationship. This finding has important implications for policymakers such as the Chinese Securities Regulatory Commission (CSRC) as it shows that the regulatory benchmarks they set may have a significant impact on firms' investment behavior.     

The development of new products: The role of firm context and managerial cognition

We explore the effect of organizational factors and managerial cognition on firms' entrepreneurial actions and investigate the relationship between these antecedents by drawing from prior work on corporate entrepreneurship, managerial cognition, and the attention-based view of the firm. The analysis of data from 84 firms shows that firm strategy and resources influence the degree of negativity with which managers interpret events that lead to the development of new products. Our results also suggest that more negative evaluations of the triggering event lead to less innovative new products. While the strategy and the resources of a firm also have an effect on a new product's degree of innovativeness, at least part of this effect is mediated by executives' evaluation of the triggering event. The theoretical elaboration and our results contribute to a better understanding of the drivers of corporate entrepreneurial activities and point to the importance of considering both managerial and organizational factors for advancing our knowledge on firms' entrepreneurial actions.     

Loving Outside the Neighborhood: The Conflicting Effects of External Linkages on Incremental Innovation in Clusters

The present study assesses the explanatory capacity of three levels of factors, namely, internal to the company, and internal and external to the cluster, in predicting firms' incremental innovative performance in cluster contexts. The empirical research conducted here focuses on a sample of 92 companies from the Spanish textile industrial cluster in Valencia. Findings reveal that the significant role played by firms' interorganizational ties as a moderating factor between absorptive capacity and their incremental innovative performance. Additionally, results reflect the differentiated roles developed by intra‐ and extra‐cluster linkages in these interaction processes.     

Trade and technology adoption

This paper endogenizes firms' choices of production technology in what would be a standard Melitz model otherwise. The responses of firms' productivity to trade liberalization are heterogenous: exporters, on average, improve their level of technology adoption, whereas nonexporters downgrade their level of technology adoption. The degree to which firms adjust production technology depends on domestic market size, export destination market size, trade impediments, and export status. The conflicting empirical results of the impact of trade liberalization on exporters' productivity are rationalized by showing that changes in different trade costs (variable vs. fixed costs) affect firms' productivity differently. We calibrate the model's parameters to match firms' characteristics in the global economy. The results indicate that endogenous productivity increases the gains from trade liberalization.     

Stakeholder–firm power difference,stakeholders' CSR orientation,and SMEs' environmental performance in China

Although stakeholder power theory has been at the forefront of environmental studies, extant research has focused on stakeholders' power while firms' countering power has not been systematically examined. Furthermore, different stakeholders may prioritize social goals differently. In this paper, we propose that stakeholder–firm power difference determines firms' environmental performance and stakeholders' CSR orientation (i.e., the degree to which a stakeholder holds firms' engagement in CSR as important) moderates this relationship. Utilizing a sample of 144 Chinese small- and medium-sized enterprises (SMEs), we found that governments-, competitors-, and the media-firm power difference indeed significantly affect Chinese SMEs' environmental performance. Besides, governments' and the media's CSR orientation moderate the relationship between stakeholder–firm power difference and firms' environmental performance. Research and practical implications are discussed.     

Contractual Completeness: A Comparison of Two Heterogeneous Emerging Markets

ABSTRACT

Interfirm contractual relations form an essential part of firms' survival. Such relations will likely differ across markets due to country-specific factors. Despite this understanding, there are few studies that examine interfirm contractual relations across markets. This article examines determinants of contractual completeness in two heterogeneous emerging markets (Tanzania and Poland). The terms “advanced” (Poland) and “less advanced” (Tanzania) are used to distinguish these two emerging markets and in the development of the hypotheses. The findings indicate that the dimensions involving weaker relational ties among firms have a stronger positive effect on contractual completeness in the relatively advanced emerging market than in the less advanced one, while stronger relational dimensions had a stronger positive effect in the less advanced emerging market.     

How Firm Strategies Impact Size of Partner‐Based Retail Networks: Evidence From Franchising

How do firms' partnering strategies impact the size of their partner‐based retail networks? We draw on agency theory to address this question in the context of franchising. Our econometric analyses (based on 9 years of longitudinal balanced panel data) include assessment of data nonstationarity and estimation of a dynamic panel data model that accounts for unobserved heterogeneity and endogeneity. Our findings indicate that franchisee network size is driven more by franchisor strategies that mitigate agency costs than by strategies that simply lower entry and ongoing costs and barriers for franchisees.     

An Application of Porter's Strategic Management Framework to Fast Food Retailing Performance

This study critically examines the link between strategy and performance of several major companies in foodservice retailing. Porter's framework for gaining sustainable competitive advantage is applied to assess the firms' strategic behavior. Our findings indicate that success in this industry typically hinges on five strategic factors: concept, personnel, adaptation, growth, and location.     

It is time for optimal distinctiveness: Corporate social responsibility engagement under dynamic competitive effects during the COVID-19 crisis

Firms tend to seek optimal distinctiveness when choosing CSR engagement timing. Building on the perspectives of optimal distinctiveness and competitive dynamics, this paper explains why firms' CSR engagement timing toward a certain event is affected by dynamic competitive effects. That is, to achieve optimal distinctiveness, focal firms pay more attention to their main competitors that are similar in market, size and resources. We apply a discrete-time survival analysis of 869 Chinese listed firms' CSR engagement action toward the COVID-19 pandemic during the first half of 2020. The results support the mechanism that when a highly similar competitor engages in CSR activities, it raises the probability that the focal firm engages itself beyond levels based solely on its own characteristics and common time-dependent factors.     

Democracy across Gender Diversity and Ethnicity of Middle Eastern SMEs: How Does Performance Differ?

This paper examines the relationship between boards of directors' demographic diversity and firms' financial performance. In particular, we highlight how women and ethnic minorities can affect Middle Eastern SMEs' financial performance. Using an unbalanced panel of 1,855 firm‐year observations of 371 boards of directors from nine Middle Eastern countries, our results support the positive impact of women and ethnic minority group members on Middle Eastern firms' performance. However, our evidence implies that when Western ethnic minority members increase, firms' performances tend to decrease, because these board members are appointed for regional and international board reputation legitimacy, personal business agendas, and links to the external corporate environment.