The belt and road initiative,cultural friction and ethnicity: Their effects on the export performance of SMEs in China

China’s Belt and Road Initiative (BRI) has provided Chinese firms with significant incentives to speed up the pace of internationalization. Yet very little international business (IB) research has been found to empirically examine such policy effects. This study explores this important issue using Chinese firms of different ethnicities in the Xinjiang Uygur Autonomous Region (XUAR) of China. We propose that the BRI has a positive formal institutional effect on the export performance of XUAR firms that target the “Belt” countries. Both cultural friction and ethnicity serve as the unique cultural contingencies that moderate the relationship between the BRI and export performance. More specifically, the cultural friction that results from the process of internationalization will negatively affect the export performance prompted by the BRI. The Uygur-owned firms will benefit more from the BRI due to their cultural similarity. Overall, the study takes the lead in investigating both internal conditions and external environments that promote and inhibit the internationalization process of small-to-medium enterprises (SMEs) in the XUAR that are geographically close to the “Belt” countries. The findings help enrich the understanding of the dual “push” and “drag” effects on the outcomes of SMEs’ international activities due to the government-led initiatives and the understanding of micro-foundation toward internationalization from an ethnicity perspective.     

Violence against women and new venture initiation with microcredit: Self-efficacy,fear of failure,and disaster experiences

Domestic violence is the most prevalent form of gender-based violence that threatens the wellbeing and dignity of women. In this paper, we examine whether and how exposure to physical or sexual assault by male partners influences women's decision to initiate a new business when they have access to financing. We collected primary data from rural Bangladesh in collaboration with a microfinance institution that provided small collateral-free loans to a group of married women. We conducted a baseline survey before loan disbursement and then conducted a follow-up survey 12 to 15 months later to collect information on loan usage. We find that women who experienced physical or sexual violence by their husband before receiving a loan are less likely to initiate a new business with their loan than those who did not experience such violence. Exposure to domestic violence obstructs the initiation of new businesses through reduced entrepreneurial self-efficacy and increased fear of business failure. The adverse impact of domestic violence is more detrimental for women who recently experienced another potentially traumatic event—an environmental disaster—than for those without such an experience.     

The effects of problem severity and recovery strategy on managers’ going concern judgments and decisions

Accounting standards now require management (as preparers of the financial statements) to assess and disclose going concern problems to stakeholders. However, important questions exist about managers’ ability and willingness to provide credible going concern assessments given their role as financial statement preparers and incentives to avoid self-reporting problems. The objective of this study is to investigate the effects of problem severity and recovery strategy on managers’ going concern disclosure judgments and decisions. We conduct an experiment with 84 experienced managers involved with financial reporting and find they are most likely to recommend going concern disclosure when financial distress is high and the recovery plan focuses on debt and equity. The results also suggest that managers have higher “substantial doubt” thresholds than auditors, and their perceptions regarding the fairness of the going concern standard also influence their decisions about disclosures of going concern issues.     

The impact of oil prices and the financial market on cost efficiency in the insurance and Takaful sectors: Evidence from a stochastic frontier analysis

The Gulf Cooperation Council’s (GCC) insurance industry, including conventional insurance and Takaful, has witnessed remarkable growth during the last decade. However, the economies of this region rely on oil as the primary stream of revenue and lack development in financial markets. This could affect the insurance industry. For this reason, this paper examines the impact of oil prices and the financial market on the cost efficiency of the insurance and Takaful sectors in GCC countries using a stochastic frontier cost function with data from 2009–2016. The results show that the relationship between oil prices and efficiency changes from positive to negative when the prices increase, whereas the relationship between the financial market and efficiency is negative. No clear evidence of the impact of oil prices on efficiency arises from the differences between conventional insurance and Takaful. However, there are differences regarding the financial market, with a negative impact on conventional insurance and a positive one on the Takaful business. The results of this study have implications for regulators and management. The Takaful industry is rapidly growing compared to conventional insurance in the GCC and, therefore, the financial market may have added benefits for the GCC region. However, caution is required in relation to the impact of the financial market on conventional insurance. Furthermore, management may require the development of strategies to deal with the nature of GCC economies to avoid shocks to oil prices.     

On the value relevance of information on environmental and social activities and performance – Some evidence from the UK stock market

Motivated by the requirements of the UK Companies Act 2006 for a Strategic Report introduced in late 2013, and the subsequent Directive 2014/95/EU of the European Parliament and of the Council, we investigate the relationship between the levels of disclosures on environmental and social activities and performance (analyst following) and subsequent analyst following (subsequent levels of disclosures on environmental and social activities and performance). We do so to investigate the value relevance of information about environmental and social activities and performance. Our evidence is consistent with their value relevance and an associated demand for, or general interest in, such disclosures from informed market participants. We also argue that our results suggest positive links between analyst following and the quality of environmental and social disclosure.     

Bribes as entrepreneurial actions: Why underdog entrepreneurs feel compelled to use them

Entrepreneurs often need external resources to found their new ventures. These can be obtained from many sources, but government sponsored programs are an important and often desirable one because they do not require repayment of the funds provided. Resources from such programs should, in principle, be equally available to all entrepreneurs, but in fact, some entrepreneurs—ones often described as underdogs – have restricted access to them. This disadvantage stems, in part, from personal factors they cannot readily change (e.g., gender, age, race, ethnicity, current occupation, family background, experience). The negative effects of being an underdog are especially harmful to entrepreneurs in the context of poor economic conditions, when competition for available resources is intense. In order to overcome such adversity, underdog entrepreneurs offer bribes to persons who control these resources. We hypothesized that there would be a positive relationship between the perception by entrepreneurs that local economic conditions are poor and their use of bribes, and that this relationship would be stronger for “underdog” entrepreneurs than for other entrepreneurs. We also hypothesized that the use of bribes by entrepreneurs and their perception that these bribes will be effective would interact to influence entrepreneurs' decisions to close their new venture. Specifically, bribes would influence such decisions only when they were viewed as effective. Results offered support for these hypotheses, thus providing new insights into why underdog entrepreneurs use bribes to overcome the adversity they face.     

Impact of institutional reforms and industry structural factors on market returns of emerging market rivals during acquisitions by foreign firms

This paper seeks to understand the joint impact of institutional reforms and industry structural factors on market returns earned by rivals in an emerging market during foreign acquisitions. We use a sample of 238 foreign acquisitions in India during the period 2004–2013 and find empirical evidence to support the notion that institutional reforms, foreign competition and business group competition positively impact the market returns of the rivals of acquired firms. Additionally, we find that the effects of foreign competition and business group competition on rivals’ market returns are shaped by the degree of institutional reforms in the industry, indicating that firms’ market returns in emerging markets during foreign acquisitions can be better understood through the incorporation of the joint role of industry structural factors and institutional reforms.     

Improving social harm indices with a modulated Hawkes process

Communities are affected adversely by a range of social harm events, such as crime, traffic crashes, medical emergencies, and drug use. The police, fire, health and social service departments are tasked with mitigating such social harm through various types of interventions. While various different social harm indices have been proposed for allocating resources to spatially fixed hotspots, the risk of social harm events is dynamic, and new algorithms and software systems that are capable of quickly identifying risks and triggering appropriate public safety responses are needed. We propose a novel modulated Hawkes process for this purpose that offers flexible approaches to both (i) the incorporation of spatial covariates and leading indicators for variance reduction in the case of rarer event categories, and (ii) the capture of dynamic hotspot formation through self-excitation. We present an efficient l1-penalized EM algorithm for estimating the model that performs feature selection for the spatial covariates of each incident type simultaneously. We provide simulation results using data from the Indianapolis Metropolitan Police Department in order to illustrate the advantages of the modulated Hawkes process model of social harm over various recently introduced social harm indices and property crime Hawkes processes.     

Market performance implications of modularization: Evidence from global auto firms operating in China

Auto firms play an increasingly important role in national economies. However, their internationalization strategies, especially the trend towards modularization has been underexplored in the international business literature. Drawing on the resource based theory, we develop hypotheses on the link between modularization and market performance. Analyzing a sample of 262 auto parts suppliers in China, the study shows the positive influence of modularization on firm performance and the moderating role of knowledge sharing tools and physical proximity in this relationship. In addition, these relationships are channeled by firms’ strategic actions to maintain superior business performance against competitors (firm positional advantage).