Emerging‐Market Firms Venturing into Advanced Economies: The Role of Context

Sociocultural, economic, political, and institutional differences between countries increase uncertainty and complexity in today's highly competitive international business environment. Moreover, the “West‐Leads‐East” to “West‐Meets‐East” shift in the global economy requires firms in both advanced economies and emerging markets to seek sustainable solutions by collaborating across geographic boundaries. Such novel collaborative partnerships may help build a stable, resilient, and sustainable world economy by leveraging the resources and capabilities of firms from both advanced and emerging economies. This article has three general objectives. First, we seek to show that context has been a long‐standing issue in management, organization, and international business research and provide an overview of the puzzles that informed and motivated this special issue. Second, we highlight the key insights and contributions of the articles included in this special issue by reviewing their theoretical underpinnings, methodological approaches, and empirical findings. Finally, we outline a future research agenda on emerging‐market firms venturing into advanced economies that can help advance international business and management studies. © 2017 Wiley Periodicals, Inc.     

The evolution of financial constraints

We demonstrate that the severity of financial constraints has declined over time for two reasons: (i) improved access to external funds as evidenced by a decreased reliance on internal cash flows, and (ii) an inward shifting investment frontier with reduced investment opportunities. The decline in financial constraints coincides with the documented diminishing sensitivity of investment to cash flows, yet we show that cash flows remain a determining factor in helping constrained firms overcome restricted access to external capital. There is a flight-to-quality during economic shocks, where the adverse effects following periods of tightened credit are particularly pronounced for smaller firms, with larger firms appearing largely unaffected.     

Asymmetric impact of earnings news on investor uncertainty

We describe a model that predicts an asymmetric impact of disclosure on investor uncertainty. We show that good news tends to resolve more uncertainty than bad news, and that uncertainty can be revised upwards if the investors' prior belief is sufficiently strong and the signal is sufficiently bad. This result is in contrast to classical disclosure models, where new information always resolves uncertainty and the change in uncertainty depends only on the relative precision of the news. Using option-implied volatility as a proxy for uncertainty, we find strong support for our predictions. We also show that our results are robust to competing explanations, notably to the leverage effect and volatility feedback, as well as to the jump risk induced in anticipation of the earnings announcements.     

The accounting identity trap: identification under stock-and-flow rank deficiency

Empirical research relying on inputs from published company financial statements ignore the fact that the observed accounting data matrix has been purposefully designed to be rank deficient by means of articulation between stocks and flows. This inherent feature of the data-generating process suggests structural non-identification when both stocks and flows appear in the design matrix and a constraint is required to identify parameters. Much financial research has fallen into this ‘accounting identity trap’ and routinely employs implicit constraints to enable estimation, albeit without acknowledgement of the constraints hence the misleading inferences. This article elucidates the problem of parameter identification under stock-and-flow rank deficiency using existing applications on equity pricing. The focus is on the interpretation of slope coefficients that must be anchored on economically defensible parameter constraints.     

Corporate Reputation Through Strategic Corporate Social Responsibility: Insights From Service Industry Companies

Corporate social responsibility (CSR) has gained global awareness in recent years. The proponents of CSR state that a good corporate reputation may be beneficial to an organization. This research paper reviews the theoretical basis of CSR, and by adopting a qualitative methodology examines the characteristics of CSR strategies and CSR communication tactics of eight companies in Cyprus market through personal in-depth interviews. Results reveal that CSR has a positive impact on the company's employees, the environment, stakeholders and the general public, and highlight that CSR is an important ingredient for the success of the organizations in the Cyprus market.     

Consumer perceptions of risk and uncertainty and the implications for behaviour towards innovative retail services: The case of Internet Banking

Research on the consumer perceptions of innovative offerings has tended to focus on products as opposed to services. Perceived risk has generally not been awarded a major role while uncertainty, which is viewed here as distinct from risk, has for the most part been disregarded. The study reported in this paper strives to identify some of the major risks and uncertainties associated with a new service, Internet Banking, during the early stages of its market development. The empirical research involved a qualitative study of a small sample of consumers and a survey of both adopters and non-adopters of Internet Banking. The survey employed a traditional research instrument, which involved the presentation of pre-identified risks and uncertainties. It was possible to identify several major ‘risks’ as well as ‘uncertainties’. We raise questions about whether or not the anxieties and concerns identified by such a process of consumer research are true reflections of the major influences affecting consumer behaviour towards new retail services. The adoption of a ‘perceived risk’ stance as against one founded on the view that consumers may lack certainty about outcomes and consequences has implications for both theory and practice.     

Land consolidation in Cyprus: Why is an Integrated Planning and Decision Support System required?

This paper explores issues of land fragmentation, consolidation and reallocation and argues that a new planning support system for land consolidation is needed in Cyprus because of the long duration of projects, the high operational costs and the conflicts between the stakeholders involved. An Integrated Planning and Decision Support System is proposed that integrates artificial intelligence technologies and multi-criteria decision methods with a geographical information system for use in routine land consolidation planning as well as for undertaking ex ante evaluations of land consolidation projects, as required by the European Union. A framework is provided which shows how the system will contribute to reducing the problems associated with the land consolidation process.     

Agility and flexibility in international business research: A comprehensive review and future research directions

This study explores 134 articles on agility and flexibility research published in the top-nine international business (IB) journals. Accordingly, we critically analyze, map and structure flexibility and agility research in IB, and synthesize the findings into an integrative framework. The paper identifies a wide range of definitions of the concept and a lot of work on its conceptualization. However, studies at the individual and institutional levels of analyses are scarce, and the concept is under-theorized, as there is a dearth of real theoretical underpinnings in this research stream. Thus, in addressing this gap, more qualitative and interdisciplinary research is needed.