Intraurban manufacturing location decisions and local tax differentials

This study examines the role that fiscal factors play in the intrametropolitan location decisions of manufacturing firms. Emphasis is placed on analyzing location choices of relocating firms, rather than existing patterns of economic activity or estimating changes in net employment. The results indicate that the property tax rate is a significant location factor to relocating firms selecting sites within an urban area and that income tax differentials have a negative but weak influence on those decisions. The location disincentives of property taxes are strongest for large firms and tend to decrease with firm size.     

Foreign location decisions by US transnational firms: An empirical study

The paper aims at identifying the variables that are significant in determining the choice of host countries for manufacturing subsidiaries of US transnational firms. The approach that is taken is to relate variables that on the basis on a priori theoretical reasoning influence foreign location decisions, with (a) total market penetration by US firms and (b) the choice these firms make between exporting to their foreign markets and on site manufacturing. Location decisions are viewed as emerging from the interaction of characteristics typical to the industry of the transnational firm and factors specific to potential host countries. Particular attention is devoted to finding out whether locational choices and market shares are interdependent. The sample of observations under investigation consists of the activities of US majority-owned subsidiaries, classified in fourteen industry groupings and operating twenty countries. Sub-samples of countries are also studied. It is found that for the European countries, in particular EEC members, market penetration is dependent on local manufacturing.     

Is synergy always good? Clarifying the effect of innovation capital and customer capital on firm performance in two contexts

The resource-based view (RBV) posits that a firm can leverage the effect of existing capital on firm performance via capital configuration, complementarity, and integration, but little empirical research has addressed these issues. This study investigates the effects of innovation capital and customer capital on firm performance, whether their complementary interactions are important determinants of relative firm performance within the industry, and whether these effects considerably differ significantly between high- and low-technology manufacturing firms. Based on data collected from 312 high-technology manufacturing firms and 204 low-technology manufacturing firms in the Taiwanese manufacturing industry, the results of SEM analyses demonstrate that the main effects of both innovation and customer capital significantly and positively impact firm performance. The analytical results demonstrate that: (1) a significant interaction effect only exists in the high-technology manufacturing firms; (2) the main effect of customer capital is lower among high-technology manufacturing firms; (3) the main effect of innovation capital is the same for both high- and low-technology manufacturing firms. Additionally, this investigation also discusses the limitations of the current research, future research directions, and the theoretical and practical implications of the empirical analysis.     

Drivers and antecedents of manufacturing offshoring and backshoring—A German perspective

Discussions on the potentials and risks of the relocation of manufacturing activities to low-wage countries have resurged in recent years in the wake of a new globalisation debate. Manufacturing offshoring has become an increasingly interesting option for firms of all sizes. Besides the chances to improve the company's cost position, the risks of production offshoring are also evident. An analysis of the manufacturing offshoring and backshoring activities of 1663 German manufacturing companies shows that production offshoring has currently lost momentum. On the other hand, backshoring of once offshored manufacturing capacities is also a quantifiable phenomenon. Every fourth to sixth offshoring activity is followed by a backshoring activity within the following 4 years, mainly due to lack of flexibility and quality problems at the foreign location. A deeper, qualitative analysis in 39 German manufacturing companies shows that not all companies do pay sufficient attention to qualitative factors crucial for success and competitive advantage in their location decisions. Thus, managerial implications for a systematic location planning process are drawn from our findings.     

Location,Proximity, and M&A Transactions

In this paper, we examine how the geographic location of firms affects acquisition decisions and value creation for acquirers in takeover transactions. We find that firms located in an urban area are more likely to receive a takeover bid and complete a takeover transaction as a target than firms located in rural areas, and takeover deals involving an urban target are associated with higher acquirer announcement returns, after controlling for the proximity between the target and the acquirer. In addition, a target's urban location significantly attenuates the negative effect of a long distance between the target and the acquirer on acquirer returns, a fact that is documented in the existing literature. Our findings reveal a previously underexplored force—firm location—that can affect takeover transactions, in addition to proximity. Our paper suggests that a firm's location plays an important role in facilitating the dissemination of soft information and enhancing information‐based synergies.     

Effects of agency risks and procedural justice on board processes in venture capital-backed firms

This paper builds a model of the effects of agency risk and procedural justice in the boards of directors of venture capital-backed firms. Such boards are unique in that they consist of managers and outside owners with significant power and incentive to be highly involved in venture governance. The authors integrate agency theory and procedural justice perspectives to develop propositions regarding the effects of agency risk and board processes on the responses to poor performance and conflicts of interest. This integrated perspective suggests that factors that increase perceived agency risks will increase outsiders' tendency to focus efforts on monitoring and controlling board decisions and their propensity to resort to formal means to resolve conflicts. However, the authors suggest that through their effects on trust and positive attributions, fair procedures and interactions will reduce these tendencies. A discussion of the practical and theoretical implications of the proposed model concludes the paper.     

Is R&D spending influenced by disinvestment and local political corruption? The case of Indian central public sector enterprises

The current study examines the effect of disinvestment (dilution of state ownership) and local political corruption on R&D spending in enterprises owned by the central government of India. Based on certain characteristic features of innovation as a strategy available to state-owned enterprises, I build two sets of hypotheses formalising the channels of how these variables may affect the possibility and amount of R&D. Data is drawn from multiple sources to compile a dataset that covers all manufacturing central government-owned enterprises in India over a period of ten years from 2007 to 2016. The study employs an instrumental variable technique to reduce the endogeneity between disinvestment and R&D decisions. We find that, while disinvestment and local political corruption have strong negative effects on whether a firm invests in R&D or not, it has no effect on the amount of R&D. In fact, the amount is driven by a host of firm-specific factors such as size, profit and proficiency of the share of skilled labor, managerial strength and non-unionisation of labor. We also find that the effects are strongly driven by the size of firms, special status awarded to firms and the ideology of the state where the enterprise operates.     

Executive compensation in North American high-technology firms: a contextual approach

After reviewing the literature surrounding the link between executive compensation and innovation activities of North American firms, we examine two gaps in the area. First, we analyze how contextual factors can affect CEO pay in high-technology companies. In particular, we study three contextual dimensions: political, economic, and social. Second, we consider the specific case of executive compensation in high-technology firms when family ties are present at the helm. Drawing on agency rationale and previous research, we develop a series of instrumental propositions intended to provide the theoretical basis for a future research agenda in the area.     

Production subcontracting and location

Using data from a panel of Spanish manufacturing firms, I examine factors that explain firms' production subcontracting decisions and test whether there is any evidence that production subcontracting is facilitated in areas typically associated with higher agglomeration economies. The results show that location matters. Firms in industry agglomerations are more likely to subcontract production activities. While in general, larger and older firms as well as high wage firms show a greater probability for production subcontracting, industry agglomeration particularly facilitates subcontracting for smaller and lower wage firms and it allows firms to respond to a greater degree to expansive demand conditions by taking advantage of subcontracting.     

Expatriates' hesitation and the localization of Western business operations in China

Many foreign firms intend to localize their business operations in China. The incumbent expatriates' ability and willingness to bring about their own replacement is crucial. However, expatriates could be less than enthusiastic about the prospect of making themselves redundant. They may not be mentally prepared for such an endeavour, considering themselves unable or unwilling to localize, impeding such a process. To examine this proposition, a mail survey was directed to Western business expatriates in China. Results showed that there was a negative relationship between localization and expatriates' unwillingness to localize, because they prefer to stay on or are of the opinion that localization is not necessary. However, expatriates' perceived inability to localize was not associated with localization. Considering oneself unsuitable to train locals or that it is not one's job to train local employees did not seem to obstruct localization as expected. Implications for firms intending to localize their business operations in China are discussed in detail.     

Explaining Total Factor Productivity at Firm Level in Italy: Does Location Matter?

Abstract

This study analyses how firms' internal variables and regional factors affect total factor productivity (TFP) of Italian manufacturing firms. Due to the hierarchical structure of our data, we employ a multilevel model that allows for a clear distinction between firm and region-specific effects. Results refer to 2004–2006 and show, as expected, the importance of firm-specific determinants of TFP. At the same time, they indicate that location matters in the sense that the context where firms operate plays a crucial role in determining the level of TFP. In more detail, we find that the regional endowment of infrastructure, the efficiency of local administration and the investments in R&D exert a positive effect on firms' performance.     

The Effects of Foreign Direct Investment Colocation: Differences Between Manufacturing and Service Firms

Colocation may result in positive performance effects because of agglomeration benefits or in negative outcomes because of fiercer competition. Using the notions of industrial organization economics, this study offers a comprehensive industry‐specific analysis on the performance effects of international colocation. We predict that bigger firms will benefit more from colocation of foreign firms in a host country. Considering industry and home country peers, the analysis suggests that positive effects dominate for manufacturing firms whereas service firms are negatively affected. However, these effects are mitigated by a firm's size in a location. A large‐scale empirical analysis on firm‐level data supports the hypotheses. Copyright © 2015 John Wiley & Sons, Ltd.     

The effect of international staffing practices on subsidiary staff retention in multinational corporations

This paper contributes to the scarce body of research on employee turnover in multinational corporations' foreign subsidiaries and addresses some key issues related to dealing with turnover of local staff. Based on a literature review, I conceptualize locals' perceived career prospects and their organizational identification as key variables mediating the relationship between international staffing practices and local staff turnover. In a second step, the paper develops instruments that help international firms to retain their subsidiary staff. Specifically, I focus on how international staffing practices need to be configured to ensure employee retention and I derive moderating factors. My arguments are integrated into a framework for the effect of international staffing practices on subsidiary staff retention in multinational corporations.     

IN SEARCH OF EXCELLENT MANAGEMENT

Despite important advances in recent years, no agreement exists concerning what constitutes management excellence. Specific knowledge of how managerial behaviour is perceived and evaluated by others will help to resolve unsettled questions about what is meant by management excellence and improve the actual decisions of managers. This article examines the determinants of managerial excellence as perceived by corporate CEOs, directors, and financial analysts in Fortune magazine's annual survey of the best-managed American firms in 33 industries. While the firms perceived to be best managed are more profitable and less risky, and grow faster and reward their stockholders more than less well-managed firms, these variables explain only about 30 per cent of the variance in management ratings. the firms perceived to be best managed have more involvement in international markets and research and development, while large firm size and firm diversification reflect negatively upon perceived managerial quality. the relative inability of conventional financial measures of firm performance to explain perceptions of managerial excellence underlines the complex nature both of these perceptions and strategic behaviour. the results support Varadarajan and Ramanujam's conclusion that excellent management depends upon a diverse set of competencies and values, as well as Chakravarthy's contention that the most important characteristic of firm performance is management's ability to transform the firm and adapt to a rapidly changing environment. By contrast, little support is found for the maximization of stockholder wealth criterion of Rappaport.     

Neighborhood effect on stock price comovement

We investigate how the geographic distance between firms’ headquarters affects their stock price comovement. Our results show that a firm's stock return has stronger comovement with the returns of nearby firms than with those of distant firms. Being in the same state and/or in the same industry strengthens the return comovement, but does not substitute for the negative effect of geographic distance on price comovement. Firms of similar share price and size also show stronger return comovement, but these factors do not mitigate the negative distance impact. Consistent with investor home bias and neighborhood effect literature, our results suggest that investors’ preference for local stocks and their interactions lead to correlated trading in local stocks and therefore stronger local price comovement.     

Crisis spillover of corporate environmental misconducts: The roles of perceived similarity,familiarity, and corporate environmental responsibility in determining the impact on oppositional behavioral intention

Negative impact of a firm's environmental misconduct can spread to other firms under the same category due to stakeholders' categorization. Such problem implies a sociocognitive process that has yet to be explored. Therefore, this study extends the current literature by exploring how interfirm similarity affects the spillover effects through stakeholders' engagement. We propose that interfirm similarity can be perceived by stakeholders as a categorization standard, which can lead to their opposition to other firms. Spillover of misconduct is caused by the decreasing stakeholders' trust, wherein the negative effect is contingent upon stakeholders' perceptions. A questionnaire study is conducted to investigate how people resist an innocent firm in China when a chemistry firm experienced an explosion accident. Our findings confirm that interfirm similarity increases stakeholders' opposition to the innocent firm by decreasing their trust. However, the negative effect is alleviated when the innocent firm is perceived as highly environmentally responsible. Our work contributes to the crisis spillover literature and carries important implications for the management of innocent firms that may lose from an industry peer's misconduct.     

Financial factors and company investment decisions in transitional China

We investigate the propensity of Chinese publicly listed firms to invest in response to financial factors, according to the a priori degree of a firm's information problems: industry sector, ownership structure and firm size. The firms in primary and tertiary industries are found to be liquidity‐constrained in their investment decisions. The investment‐cash flow sensitivity of the firms in secondary industry indicates that they lost privileged access to credit in the course of China's market transition. However, we find no evidence that financial liberalization resulted in an easing of financing constraints for small‐ and medium‐sized firms. Our result indicates that agency problems, stemming from a state‐controlling pyramidal ownership structure, are responsible for the misallocation of internal funds. The importance of bankruptcy and agency costs in relation to debt finance for certain types of borrowers reflects the transitional nature of the financial environment facing Chinese firms. Copyright © 2008 John Wiley & Sons, Ltd.     

Knowledge,diversity and entrepreneurship: a spatial analysis of new firm formation in Great Britain

This paper argues that the diversity of a region's knowledge stock and its balance between knowledge-based manufacturing and services are both important determinants of variations in the rate of new business formation across spatial areas. An empirical study of new firm formation across 408 local unitary authorities and districts in Great Britain over the period 2001–2007 is presented, taking explicit account of the interactions amongst spatial units through an econometric modelling procedure involving maximum likelihood spatial models and alternative spatial weighing matrices. The results indicate that both related and unrelated knowledge diversity have a positive impact on the rate of business formation, whilst aggregate local economy-wide industrial and ethnic diversity has no impact; the division of the knowledge stock between services and manufacturing is also significant, with services having a positive impact on new business formation in contrast to a negative impact for high-technology manufacturing. There is also some support for the view that low wages and economic inactivity constrain new business formation, whilst a competitive regional environment has a positive impact. The results imply that polices should be aimed at creating a diverse set of knowledge-based industries rather than specialization in a narrow range.     

Location determinants of high-growth firms

County-level location patterns of INC5000 companies provide one map of American entrepreneurship and innovativeness, and understanding the local factors associated with these firms’ emergence is important for stimulating regional economic growth and innovation. We draw on the knowledge spillover theory of entrepreneurship to motivate our regression model, and augment this theory with additional regional features that have been found to be important in the firm location literature. Zero-inflated negative binomial regressions indicate that these firms exist in counties with larger average establishment size, higher educational attainment and more natural amenities. Income growth, a mix of higher paying industries, and more banks per capita are associated with a smaller presence of these types of firms, all else equal. We conclude that the local conditions favouring high-growth firms are likely to be different from those favouring new firms in general, and that these conditions differ significantly in urban and rural areas and by industrial sectors.     

Understanding the Inputs into Innovation: Do Cities Substitute for Internal Firm Resources?

We examine whether there is a trade-off between employing internal (firm) resources and purchased external (local) resources in process innovation. We draw on a rich dataset of Internet investments by 86,879 US establishments to examine decisions to invest in advanced Internet technology. We show that the marginal contribution of internal resources is greater outside of a major urban area than inside one. Agglomeration is less important for firms with highly capable IT workers. When firms invest in innovative processes they act as if resources available in cities are partial substitutes for both establishment-level and firm-level internal resources.