Innovation Offshoring,Institutional Context and Innovation Performance: A Meta‐Analysis

Innovation offshoring (IO) has become a widespread management practice. Yet, evidence on the performance implications is inconsistent, and scattered across disciplines and contexts. We argue that the benefits firms can derive from IO depend on the institutional environment at home. Drawing on recent work on institutional theory in international business, we explore institutions that facilitate reverse knowledge transfer and/or institutional arbitrage with respect to innovation‐related activities. The results of our meta‐analysis that synthesizes evidence from 48 samples show that IO is related positively to innovation performance. As predicted, this relationship is moderated by differences in the institutional environments across countries. Specifically, when national innovation systems are weak at home, IO appears to enable institutional arbitrage strategy whereas Confucian cultures enable more effective reverse knowledge transfer. However, contrary to our expectations, the beneficial effects of IO appear to have diminished over time.     

Environmentally Sustainable Development through Stakeholder Engagement in Developed and Emerging Countries

This cross‐country study investigates the antecedents and outcomes of corporate environmental responsibility (CER) practices in developed and emerging countries. Based on stakeholder and institutional theory, we conducted an empirical study among firms in Germany, USA, India and China. We found support for a significant positive relationship between regulatory, market and social stakeholder influences, CER practices and business outcomes in the total and individual country samples. Regarding country differences, our data reveal significant similarities and differences between developed and emerging countries. Market stakeholder influences are stronger in developed countries, whereas regulatory and social stakeholder influences do not differ significantly between the two country groups. The relationship between CER practices and positive business outcomes is stronger in emerging than in developed countries. Implications for institutional theory and organizations are outlined. Copyright © 2014 John Wiley & Sons, Ltd and ERP Environment     

Identifying business opportunities for sustainable development: Longitudinal and experimental evidence contributing to the field of sustainable entrepreneurship

Which factors facilitate the identification of business opportunities for sustainable development? To answer this question, we develop a process model of sustainable opportunity identification. We argue that sustainable opportunity identification is a process with transitions from problem to solution identification and from solution to sustainable opportunity identification. Moreover, the transitions are facilitated by two factors—awareness of adverse consequences and entrepreneurial attitude—providing motivation and direction in the process. We tested our model in a field study (N = 107) and two experiments (N = 53 and N = 69). Our findings show that awareness of adverse consequences and entrepreneurial attitude influence the process of sustainable opportunity identification, explaining under which conditions people are more likely to identify business opportunities for sustainable development. Our study thus contributes to the field of sustainable entrepreneurship.     

Capital Allocation: Evidence,Analytical Methods,and Assessment Guidance

Capital allocation is one of top management's primary responsibilities. Although always important, it is critical today because corporate operating returns on invested capital are at an all‐time high, while recent growth and investment have been modest, and corporate balance sheets in the U.S. have substantial cash. Yet few senior executives are sufficiently well‐versed in finance theory and methods to allocate capital as effectively as possible. Further, incentive programs that focus on meeting earnings per share often encourage behavior that is not in the best interests of long‐term shareholders. In this report, the authors begin with the premise that the goal of corporate capital allocation is to build long‐term value per share; and with that view in mind, they examine the main sources and uses of capital by the largest 1,500 U.S. companies during the last 30 years. More specifically, the authors identify the amounts of capital allocated to each of seven important alternatives, including major uses of capital such as M&Amp;A, capital expenditures, R&D, and distributions of capital to investors such as dividends and stock repurchases. And after reviewing the past allocations of capital to each of these alternatives, the authors summarize the academic research on the effects on corporate values of each of these uses of capital. The authors report that U.S. corporations fund most of their investments internally, and that M&Amp;A and capital expenditures have long been, and continue to be, the largest operating uses of capital, though both capital expenditures and growth in assets have fallen in recent years. At the same time, both corporate cash holdings and distributions to shareholders in the form of dividends and stock buybacks are at record levels. But even with such high payouts, R&D spending as a percentage of revenue by U.S. companies has remained high, and actually increased during the past decade. Finally, the authors provide a framework that can be used either internally or by outsiders to evaluate the capital allocation practices and effectiveness of a management team. This framework asks management to assess its past performance, provide realistic projections of future returns on invested capital, and evaluate their own incentive programs—all while renewing their commitment to the five principles of thoughtful capital allocation: (1) zero‐based capital allocation; (2) funding of strategies, not projects; (3) no capital rationing; (4) zero tolerance for bad growth; and (5) continuous monitoring of the value of all assets and business, and willingness to take action if and when such values are larger outside than inside the firm.     

Laying the foundations of international careers research

As an editorial to the special issue “new avenues in international careers research” this article discusses the roots of the international careers research stream, which sits at the intersection between career studies, HRM and international management. In order to support future studies in this emerging area of enquiry, we attempt to lay down the foundations of a research agenda based around what we see as the three core areas of interest: contextualised careers research, comparative careers research and careers research in internationally operating organisations. After providing some suggestions for the kinds of theoretical and methodological tools that will be required to build on these foundations, we introduce the five empirical papers that comprise this special issue.     

The effect of investment and withdrawal horizons on myopic loss aversion

Using unique survey data, we find that a longer investment horizon (6–10 years and 11+ years) reduces the likelihood of exhibiting myopic loss aversion (MLA) compared to an investment horizon of less than 2 years. In addition, we find that investors with higher levels of assets under management (AUM) are less likely to exhibit MLA compared to the lowest AUM quartile.     

Bank intermediation activity in a low-interest-rate environment

This paper investigates how a prolonged period of low-interest rates affects bank intermediation activity. We use data for 113 large international banks headquartered in 14 major advanced economies during the period 1994–2015. We find that low-interest rates induce banks to shift their activities from interest-generating to fee-related and trading activities. This rebalancing is stronger for low capitalised banks. Banks also moderately adjust their funding structure, away from short-term market funding towards deposits. We observe a concomitant decline in the risk-weighted asset ratio and a reduction in loan-loss provisions, which is consistent with signs of evergreening.     

Does reputation of sponsors matter in IPO? Evidence from Hong Kong

Contrary to other markets where underwriters perform a combined role of underwriting and sponsoring in an Initial Public Offering (IPO), IPO issuers in Hong Kong must appoint at least one sponsor in addition to the underwriters. The splitting of the single role of underwriters into two separate ones offers an ideal setting to disentangle the effects of the two roles and to examine which of the two roles—sponsor or underwriter—is more important in explaining IPO underpricing and initial volatility in the Hong Kong equity market. Interestingly, our findings provide supportive evidence that the sponsor reputation does matter in an IPO and it is even more significant than the underwriter reputation in explaining the IPO underpricing phenomenon. Given the recent high-tech fervor, our research goes deeper to examine specifically the role of sponsors on high-tech firms, with results indicating that the reliance on sponsors is higher for traditional issuers than for technology firms. We further discover that sponsors and underwriters are playing substitution roles rather than complementary roles. In order to examine the regulatory policy impact, our research also compares the role of IPO sponsors before and after the launch of the new sponsor regulatory regime in 2013. The empirical findings lend support to our argument that after the launch of the new regulations, public awareness of sponsors is raised, respect towards more reputable sponsor increases, and thus, the role of sponsors becomes more important than before.     

Combining Matching and Nonparametric Instrumental Variable Estimation: Theory and An Application to the Evaluation of Active Labour Market Policies

We show how instrumental variable and matching estimators can be combined in order to identify a broader array of treatment effects. Instrumental variable (IV) estimators are known to estimate effects only for the compliers, representing a subset of the entire population. By combining IV with matching, we can estimate the treatment effects for the always‐ and never‐takers as well. Since in many cases these groups are the (endogenous) outcome of some assignment process, such estimates also help in judging the implications of such a selection process. In our application to the effects of participation in active labour market programmes in Switzerland, we find large and lasting positive employment effects for the compliers, whereas the effects for the always‐ and never‐participants are small. In addition, the compliers have worse employment outcomes without treatment than those who participate in the programme with or without the intervention under investigation. This suggests that the earlier assignment policy of the caseworkers was inefficient in that the always‐participants were neither those unemployed who would experience the highest expected treatment effects nor those unemployed who had the largest need for assistance. Copyright © 2014 John Wiley & Sons, Ltd.     

The Global Financial Crisis and Its Impact on Australian Bank Risk

This paper examines the global financial crisis (GFC) and its impact on Australian banking risk. An augmented market model is developed to identify changes in listed Australian bank systematic risk in relation to three key events: the GFC's start in August 2007, the market downturn in Australian and global share markets in January 2008, and the announcement of Australia's Deposit and Wholesale Funding Guarantee (DWFG) scheme on 12 October 2008. The study also examines changes in bank systemic risk during these event periods. The Australian market offers a unique opportunity to observe the impact of the introduction of the DWFG in that it lacked any explicit deposit insurance prior to the crisis. Initially, the crisis period had little impact on bank systematic risk while bank systemic risk increased considerably. The share market downturn caused a marked increase in both systematic and systemic risks for Australia's major internationally connected banks followed by a reduction in both systematic and systemic risks with the introduction of the guarantee scheme for all Australian banks.