Search results

1 – 10 of over 20000
Article
Publication date: 15 September 2022

Fernando Angulo-Ruiz, Naveen Donthu, Diego Prior and Josep Rialp-Criado

This study aims to ask whether the funding behaviour of companies is different during a recession. Specifically, the authors study whether firms fund marketing resources…

Abstract

Purpose

This study aims to ask whether the funding behaviour of companies is different during a recession. Specifically, the authors study whether firms fund marketing resources and capabilities with internal or external financing during a recession and under which conditions of strategic financial flexibility debt might be used to fund marketing resources and capabilities in recessions.

Design/methodology/approach

This study estimates empirical models using a newly merged data set covering 17 years, from 2000 to 2016. The authors merge firms’ marketing and financial information from Advertising Age, the American Customer Satisfaction Index, Compustat and the Centre for Research in Security Prices. The sample includes a panel of 653 firm-years of 67 top corporate advertisers.

Findings

The results indicate that firms take recessions as opportunities to be proactive and invest in short- and long-term marketing capabilities, companies with higher strategic financial flexibility relative to their industry peers tend to rely more on debt to fund short- and long-term marketing capabilities during recessions, firms use internal financing to fund their marketing budgets and short-term marketing capabilities in recessionary and non-recessionary periods and firms use internal financing and signals from past stock returns as mechanisms to fund long-term marketing capabilities.

Research limitations/implications

The findings contribute to the body of knowledge on the antecedents of marketing resources and capabilities. The results extend the pecking order theory to include recessions and provide nuances of the financing drivers of resources and capabilities.

Practical implications

Companies should be proactive during recessions and invest in short- and long-term marketing capabilities. When negotiating marketing budgets with chief financial officers, marketing practitioners could suggest the sources to finance specific marketing resources and capabilities. Based on the results of top corporate advertisers, the authors recommend companies to fund marketing capabilities with internal resources (e.g. cash flows, retained earnings), and if cash is not available, companies need to rely on their superior strategic financial flexibility to access long-term debt and fund investments in marketing capabilities. The authors also recommend companies to fund long-term marketing capabilities by re-allocating investments. As well, signals from past performance are an important source to gain access to capital and fund investments in long-term marketing capabilities.

Originality/value

This study provides a more complete picture of the financial antecedents of marketing resources and capabilities in general and during a recession. The authors provide light on the moderating role of strategic financial flexibility during recessions. This study also clarifies the potential signalling of past performance for funding marketing resources and capabilities.

Abstract

Details

The Current Global Recession
Type: Book
ISBN: 978-1-78635-157-9

Book part
Publication date: 16 September 2022

Francis X. Diebold

Entering and exiting the Pandemic Recession, the author study the high-frequency real-activity signals provided by a leading nowcast, the ADS Index of Business Conditions

Abstract

Entering and exiting the Pandemic Recession, the author study the high-frequency real-activity signals provided by a leading nowcast, the ADS Index of Business Conditions produced and released in real time by the Federal Reserve Bank of Philadelphia. The author tracks the evolution of real-time vintage beliefs and compares them to a later-vintage chronology. Real-time ADS plunges and then swings as its underlying economic indicators swing, but the ADS paths quickly converge to indicate a return to brisk positive growth by mid-May. The author shows, moreover, that the daily real-activity path was highly correlated with the daily COVID-19 cases. Finally, the author provides a comparative assessment of the real-time ADS signals provided when exiting the Great Recession.

Book part
Publication date: 6 April 2021

Amit Chatterjee and Ramesh Chandra Das

This study analyzes the trends and patterns of strategic and innovative macroeconomic variables during recession or slowdown periods of 10 countries – Brazil, the United…

Abstract

This study analyzes the trends and patterns of strategic and innovative macroeconomic variables during recession or slowdown periods of 10 countries – Brazil, the United States, UK, Germany, France, China, Japan, India, Saudi Arabia, and South Korea for the period 1980–2018, which includes major recessions like the 1982 debt crisis, 1991 economic crisis, 1997 Asian Financial crisis, and 2008 Sub-prime crisis. This study devised two models – Logistic Regression and a Range-based Custom-Made Recession-cum-Economy State indicator, based on Dynamic Ordinary Least Squares (DOLS) model parameters. Results for the logistic regression model show that most of the marginal effect values are positive for variables linked with globalization indicating that increase in adverse impact on such variables increases the probability of recession. The custom-made statistical index provides an individual country-wise range, along with a global range for the weighted total of the variables, the weights for which are derived from the DOLS model, which has a 59.66% accuracy in estimating the condition of an economy. The recent worldwide experience indicates that probability of recessions has decreased, and slowdowns have increased over a period. This is evident from the Cumulative Trend of Economic State analysis that indicates that the recession probabilities of countries have decreased 1990 and that of slowdown have become highly volatile.

Details

Strategic Outlook in Business and Finance Innovation: Multidimensional Policies for Emerging Economies
Type: Book
ISBN: 978-1-80043-445-5

Keywords

Book part
Publication date: 1 March 2016

Carolyn E. Predmore and Lauren Trabold

In much of the literature written in Sustainability and Environmental Justice, the focus is on the effects of government mismanagement or corporate social…

Abstract

Purpose

In much of the literature written in Sustainability and Environmental Justice, the focus is on the effects of government mismanagement or corporate social irresponsibility, or CSR ignored for the goal of greater profits. Certainly we have seen natural resources ripped from communities and nations for the benefit of corporate profits (Sarkar, 2013). The idea that a participatory government will lead to greater efforts for sustainability must be viewed in the light of its times and economy (Gonzalez-Perez, 2013). What happens when the man-made disaster precedes or clashes with natural disaster? The Great Recession of 2008 was stunning in the rapidity with which it spread around the globe. The recession illustrated a global acceptance of financial wisdom that had been presented as fact and yet could easily be undermined by people who understood the barriers, boundaries, and restrictions in place as well as where the financial assumptions could be deceived by introduction of new terms and definitions as in the case of credit default swaps.

In this chapter, we focus on the influence of the recession on one of the most powerful financial capitals of the world, New York City. We discuss the general effect of the recession on New York City as a whole and then take a narrower look at each of the five boroughs, Manhattan, Queens, Staten Island, Brooklyn, and the Bronx. We examine the disparate economic states of each borough and how the recession has impacted each of them. Furthermore, we discuss the implications of the general perception of Manhattan’s resilience to the recession and how is has impacted the other boroughs, such as the housing crisis in Staten Island and Queens following Hurricane Sandy, unemployment rates in the Bronx, and the rebuilding of a sustainable job market in Brooklyn.

Findings

We reviewed relevant literature, including academic research, reports issued by the State of New York, census data, articles printed in popular press outlets, and business resources to provide a thorough look at the influence of the Great Recession on New York City and each of its five boroughs. We found extensive support for the disparity amongst the five boroughs, despite the perception that New York City is thriving in the wake of the Great Recession and Hurricane Sandy. We detail the unique economic and environmental factors of each borough and explain how it influenced the impact of the Great Recession and subsequent natural disaster.

Manhattan was well insulated from the initial impact of the Great Recession, with tourism in the city remaining high through 2008 and financial firms on Wall Street experiencing record high profits well into 2009. Despite the downfall of Lehmann Brothers and Merrill Lynch, the financial bailouts and Federal Reserve credit available to Wall Street firms prevented Manhattan’s financial sector from experiencing the dramatic unemployment rates that the rest of New York and the United States were facing (DeFreitas, 2009).

The Great Recession hit disadvantaged areas, like the Bronx, harder than other areas of New York, while Hurricane Sandy halted the economic recovery in areas like Queens and Staten Island. While unemployment remains low in New York City as a whole, the recovery from the Great Recession has been uneven, further widening the gap between New York City’s boroughs, with the lower income areas at a greater disadvantage and the higher income areas souring. While Manhattan has recovered significantly, with Wall Street profits reaching record levels in 2009, other boroughs haven’t experienced the same economic upturn and are still facing significant challenges (Parrott, 2010). While the city has gained nearly 375,000 jobs, nearly twice the number of jobs that were lost during the Great Recession (Crain’s New York Business, 2013), the significant variance in wages and high costs of living has not greatly reduced the number of working poor across New York City and has not resulted in an evenly spread boost in wealth.

Practical implications

At the end of our chapter, we discuss “lessons learned” and, in particular, the importance of preparation for both fiscal and natural disasters. Local policy makers must ensure that the needs of its constituents are being met and will be met in the future if such hardship were to strike. Government leaders need to have a forward-looking plan, rather than simply handling immediate needs.

Originality/value

The originality of our content stems from a deeper look into the nuances of the economy of New York City. Statistics paint a picture of a thriving City, despite the Great Recession. However, understanding the distinct differences amongst the five boroughs illustrates that these citywide averages do not paint an accurate picture of life for New Yorkers off of Wall Street. The extent to which the high-income areas in Manhattan have recovered suggests that the economy of New York City as a whole is thriving, whereas the reality is that the middle-class has not recovered and the previously disadvantaged are now even more so. It is important to look at each of the five boroughs of New York City individually when creating policy to both recover from and prevent events such as the Great Recession and the destruction of Hurricane Sandy. Our chapter illustrates stark differences within New York City in the face of both financial and natural crises.

Details

Lessons from the Great Recession: At the Crossroads of Sustainability and Recovery
Type: Book
ISBN: 978-1-78560-743-1

Keywords

Article
Publication date: 29 July 2022

Rizal Yaya, Rudy Suryanto, Yazid Abdullahi Abubakar, Nawal Kasim, Lukman Raimi and Siti Syifa Irfana

The global recession caused by the COVID-19 pandemic has led to the closure of thousands of village-owned enterprises (VOEs), which are community-managed enterprises that…

Abstract

Purpose

The global recession caused by the COVID-19 pandemic has led to the closure of thousands of village-owned enterprises (VOEs), which are community-managed enterprises that operate in the hostile rural areas in emerging economies. Thus, considering that a Schumpeterian view of economic downturn sees recessions as times where old products/services decline while new products/services emerge, this paper aims to explore the specific innovation-based diversification strategies that matter for the survival of emerging economy VOEs in recession periods to develop new theoretical insights.

Design/methodology/approach

The study is based on multiple-case studies of 13 leading VOEs operating in the rural areas of Java Island in Indonesia, an emerging economy. The data was analysed using within-case and cross-case analyses.

Findings

Overall, a number of major novel findings have emerged from the analysis, based on which the authors developed several new propositions. First, from the perspectives of both new product and new service diversification, “unrelated diversification” is the primary resilience strategy that seems to be associated with the survival of VOEs in the COVID-19 recession, over and above “related diversification”. Second, from an industrial sector diversification perspective, the most dominant resilient strategy for surviving the recession is “unrelated diversification into tertiary sectors (service sector)”, over and above diversification into the primary sector (agriculture, fisheries and mining) and secondary sector (manufacturing and construction).

Originality/value

The authors contribute to the literature on entrepreneurship in emerging economies by identifying the resilience diversification strategies that matter for the survival of VOEs in recession.

Details

Journal of Entrepreneurship in Emerging Economies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2053-4604

Keywords

Book part
Publication date: 19 December 2017

Michael Wallace and Joonghyun Kwak

Using a sample of 214 US metropolitan areas, we examine the connection between the Great Recession and bad jobs, taking into consideration the macro-level determinants of…

Abstract

Using a sample of 214 US metropolitan areas, we examine the connection between the Great Recession and bad jobs, taking into consideration the macro-level determinants of the troubled economy. Our measure of bad jobs is derived from Kalleberg, Reskin, and Hudson’s (2000) conceptualization as those that have low pay, lack health insurance, and lack pension plans. We find that the Great Recession increased the prevalence of bad jobs, consistently for men and selectively for women. Among the macro-level processes, the decline of the manufacturing base, union membership, and public sector employment are sources of increasing bad jobs, especially for men. Those macro-level processes which are growing in influence such as casualization, globalization and financialization show no signs of reversing the negative trends in bad jobs. Human capital variables in the labor market such as educational and age variability consistently suggest more adverse effects on bad jobs for men than women. Our findings contribute to the further understanding of the nature of precarious work in a troubled economy.

Book part
Publication date: 19 September 2014

Eirik Sjåholm Knudsen and Lasse B. Lien

The relevance of finance for strategy is probably never greater than during a recession. We argue that the strategy literature has been virtually silent on the issue of…

Abstract

The relevance of finance for strategy is probably never greater than during a recession. We argue that the strategy literature has been virtually silent on the issue of recessions, and that this constitutes a regrettable sin of omission. Recessions are also periods when the commonly held view of financial markets in the strategy literature – efficient, and therefore strategically irrelevant – is particularly misplaced. A key route to rectify this omission is to focus on how recessions affect investment behavior, and thereby firms’ stocks of assets and capabilities which ultimately will affect competitive outcomes. In the present chapter, we aim to contribute by analyzing how two key aspects of recessions, demand reductions and reductions in credit availability, affect three different types of investments: physical capital, R&D and innovation, and human- and organizational capital. We synthesize and conceptualize insights from finance- and macroeconomics about how recessions affect different types of investments and find that recessions not only affect the level of investment, but also the composition of investments. Some of these effects are quite counterintuitive. For example, investments in R&D are both more and less sensitive to credit constraints than physical capital is, depending on available internal finance. Investments in human capital grow as demand falls, and both R&D and human capital investments show important nonlinearities with respect to changes in demand.

Details

Finance and Strategy
Type: Book
ISBN: 978-1-78350-493-0

Keywords

Abstract

Details

Nonlinear Time Series Analysis of Business Cycles
Type: Book
ISBN: 978-0-44451-838-5

Book part
Publication date: 30 September 2010

Kajal Lahiri

With the increasing importance of the service-providing sectors, information from these sectors has become essential to the understanding of contemporary business cycles…

Abstract

With the increasing importance of the service-providing sectors, information from these sectors has become essential to the understanding of contemporary business cycles. Contribution of services to GDP during postwar recessions is clearly recorded in Table 4.1. On average, decline in real GDP during recessions would have been at least 70% more severe without the stabilization effect from services. Moore (1987) noted that the ability of the service sectors to create jobs has differentiated business cycles since the 1980s, and has led economy-wide recessions to be shorter and less severe. This is reflected as mild declines in employment of service sectors and its dominance in the total nonfarm employment, as plotted in Figure 4.1a. The growth in real GDP by major type of products obtained from National NIPA is depicted in Figure 4.1b. Since 1985, services never had a negative growth, which has muted the volatility in goods and structures, and resulted in more stable economy measured by total GDP (see also McConnell and Perez-Quiros, 2000).

Details

Transportation Indicators and Business Cycles
Type: Book
ISBN: 978-0-85724-148-1

1 – 10 of over 20000