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Article
Publication date: 2 May 2017

Ahmad Y. Khasawneh and Qais A. Dasouqi

The purpose of this paper is to examine the impact of debt financing on both performance and systematic risk in Amman Stock Exchange listed firms. The authors focus the…

Abstract

Purpose

The purpose of this paper is to examine the impact of debt financing on both performance and systematic risk in Amman Stock Exchange listed firms. The authors focus the study to analyze the differences between services and industrial firms in one sense and the differences between international and domestic firms in the other sense, as the study depends on the geographical distribution of sales to classify the nationality of firms.

Design/methodology/approach

The study sample includes all listed Jordanian firms in Amman Stock Exchange from 2005 to 2013 for both industrial and services sectors. Using panel data techniques, fixed effects regression with modified Driscoll-Kraay standard error as a remedy for heteroscedasticity problem is employed.

Findings

The results show that there is a significant negative impact of debt financing on the firm’s performance, where the sector and the sales nationality play an important role. Moreover, the results indicate that there is a significant positive impact of debt financing on the firm’s systematic risk. Taking the sector and sales nationality into consideration, the authors find that the debt financing has no significant impact on the systematic risk of services firms and domestic firms. Additionally, the findings indicate that services firms and international firms are, on average, more riskier than industrial firms and domestic firms, respectively.

Originality/value

The paper provides a visibility on the comparison between international and local firms in Jordan in terms of the impact of debt financing on the financial performance and systematic risk in one research.

Details

EuroMed Journal of Business, vol. 12 no. 1
Type: Research Article
ISSN: 1450-2194

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Article
Publication date: 3 June 2019

Adeel Tariq, Yuosre Badir and Supasith Chonglerttham

The purpose of this paper is to investigate the influence of green product innovation performance (GPIP) on a firm’s financial performance (i.e. a firm’s profitability and…

Abstract

Purpose

The purpose of this paper is to investigate the influence of green product innovation performance (GPIP) on a firm’s financial performance (i.e. a firm’s profitability and risk). In addition, it has adopted the resource-based view and contingency theory to explore how GPIP and a firm’s financial performance relationship is manifested when subject to the moderating role of a firm’s market resource intensity and certain environmental factors, such as technological turbulence and market turbulence.

Design/methodology/approach

Data were collected from 202 publicly listed Thai manufacturing firms. This research has used hierarchical regression analyses to empirically test the proposed research hypotheses.

Findings

The findings reveal that GPIP exerts a significant influence on a firm’s financial performance, i.e. higher the GPIP, higher the firm’s profitability and lower the firm’s financial risk. Moreover, findings support the theoretical assertions that the higher level of market resource intensity, market turbulence and technological turbulence further strengthens GPIP and a firm’s financial performance relationship.

Originality/value

By considering the independent moderating role of market resource intensity, market turbulence and technological turbulence, this research has contributed to reconcile the previously disparate findings regarding the GPIP and a firm’s financial performance relationship. Moreover, this research has highlighted the role of the essential moderators that business managers must understand and adjust to capitalize on and achieve superior financial performance.

Details

European Journal of Innovation Management, vol. 22 no. 3
Type: Research Article
ISSN: 1460-1060

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Book part
Publication date: 19 June 2019

Ling-Foon Chan, Bany-Ariffin AN and Annual Bin Md Nasir

Corporate diversification is a strategy that enables corporations to expand their core business into other businesses. In Malaysia, corporate diversification continues to…

Abstract

Corporate diversification is a strategy that enables corporations to expand their core business into other businesses. In Malaysia, corporate diversification continues to represent a fundamental organizational structure. Some two-thirds of Malaysian firms are diversified. However, when compared to developed countries such as the US and the UK, we find that firms are moving toward non-diversification. The study is based on the population framework consisting of all of the public limited companies (PLCs) listed on the Bursa Malaysia stock exchange from 2007 to 2012. A dynamic panel model system generalized method of moments (GMM) was used to analyze the diversification and firm’s performance theories.

The empirical findings demonstrated that diversification is better than non-diversification firms for the curvilinear relationship between diversification and firm’s performance (ROA and Tobin-Q) when using the entropy index and relatedness is taken into consideration. The research further concluded that related and unrelated diversification also has a positive relationship with performance, but diversification must be the dominant (focused) and cannot be too broad in nature. Diversification that is too broad may cause a positive relationship to turn in to a negative relationship toward performance in both related and unrelated instances of diversification.

Details

Asia-Pacific Contemporary Finance and Development
Type: Book
ISBN: 978-1-78973-273-3

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Book part
Publication date: 26 July 2007

Nessara Sukpanich

This study examines the effect of a firm's level of intra-regional sales in the triad markets of North American, Europe, and Asia on its performance. The form of the…

Abstract

This study examines the effect of a firm's level of intra-regional sales in the triad markets of North American, Europe, and Asia on its performance. The form of the relationship is explored. The results show that there exists a strong positive relationship between a firm's level of intra-regional sales and its performance (measured by return on equity (ROE) and return on assets, (ROA)). A firm tends to perform better when it has its sales in the home region of the triad. The hypothesis that there exists a non-linear relationship (second- and third-order curvilinear relationship) between performance and intra-regional sales is not supported.

Details

Regional Aspects of Multinationality and Performance
Type: Book
ISBN: 978-0-7623-1395-2

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Book part
Publication date: 31 August 2016

Ari Dothan and Dovev Lavie

Resource reconfiguration enables firms to adapt in dynamic environments by supplementing, removing, recombining, or redeploying resources. Whereas prior research has…

Abstract

Resource reconfiguration enables firms to adapt in dynamic environments by supplementing, removing, recombining, or redeploying resources. Whereas prior research has underscored the merits of resource reconfiguration and the modes for implementing it, little is known about the antecedents of this practice. According to prior research, under given industry conditions, resource reconfiguration is prompted by a firm’s corporate strategy and by characteristics of its knowledge assets. We complement this research by identifying learning from performance feedback as a fundamental driver of resource reconfiguration. We claim that performance decline relative to aspiration motivates the firm’s investment in knowledge reconfiguration, and that this investment is reinforced by the munificence of complementary resources in its industry, although uncertainty about the availability of such resources limits that investment. Testing our conjectures with a sample of 248 electronics firms during the period 1993–2001, we reveal a clear distinction between exploitative reconfiguration, which combines existing knowledge elements, and exploratory reconfiguration, which incorporates new knowledge elements. We demonstrate that performance decline relative to aspiration motivates a shift from exploitative reconfiguration to exploratory reconfiguration. Moreover, munificence of complementary resources mitigates the tradeoff between exploratory and exploitative reconfigurations, whereas uncertainty weakens the motivation to engage in both types of reconfiguration, despite the performance gap. Nevertheless, codeployment, which extends the deployment of knowledge assets to additional domains, is more susceptible to uncertainty than redeployment, which withdraws those assets from their original domain and reallocates them to new domains. Our study contributes to emerging research on resource reconfiguration, extends the literature on learning from performance feedback, and advances research on balancing exploration and exploitation.

Details

Resource Redeployment and Corporate Strategy
Type: Book
ISBN: 978-1-78635-508-9

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Article
Publication date: 10 June 2019

Xiaoyu Liu, Harrie Vredenburg and Urs Daellenbach

The purpose of this paper is to untangle the impacts of a firm’s corporate reputation and its alliance partners’ social capital on its financial performance, drawing on…

Abstract

Purpose

The purpose of this paper is to untangle the impacts of a firm’s corporate reputation and its alliance partners’ social capital on its financial performance, drawing on the relational and the network points of view.

Design/methodology/approach

This paper explored the moderating effect of corporate reputation on the relationship between partners’ social capital (e.g. resource heterogeneity, structural relations and partners’ social ties) and a focal firm’s performance. An OLS three-step regression model (controls, main effects and interaction effects) was used to test the proposed hypotheses based on 265 US joint ventures.

Findings

The influence of partners’ social capital on a focal firm’s performance is negatively moderated by the focal firm’s reputation at the firm and network levels; larger and more prestigious firms listed in Fortune database tend to choose partners with a higher level of resource heterogeneity, whereas smaller firms tend to choose partners in similar industries to increase economies of scale. The social capital factors of the partners will have different effects on the focal firm performance.

Originality/value

The value of this paper is in providing insight into the importance and nuances of corporate reputation in offsetting the advantages of inter-firm alliances and their impact on firm performance. In particular, the performance benefits of inter-firm alliance partners’ social ties and heterogeneous resources are negatively affected by the corporate reputation of a firm.

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Article
Publication date: 12 November 2018

Lee Li, Gongming Qian, Zhengming Qian and Irene R.R. Lu

Using behavioral theory of the firm, the purpose of this paper is to examine how a small firm’s performance relative to historical and social aspirations is related to its…

Abstract

Purpose

Using behavioral theory of the firm, the purpose of this paper is to examine how a small firm’s performance relative to historical and social aspirations is related to its international entrepreneurial orientation (IEO). This study also explores two environmental factors, liability of foreignness (LoF) and host-country market potential (HMP), as the moderators for the relationship of performance and IEO.

Design/methodology/approach

This study uses survey for data collection from Canadian small firms and employs regression models for data analysis.

Findings

The results show that small firms demonstrate stronger IEO when their performance is below aspirations, but their IEO diminishes when their performance exceeds aspirations. The authors also found that a small firm’s LoF does not moderate the impact of its performance feedback on IEO. However, the authors found HMP plays a moderating role when a small firm’s performance is below aspirations.

Originality/value

This study investigates the relationship of IEO to aspiration and found that this relationship is moderated by HMP. The study advances our knowledge on small firms’ international behavior.

Details

International Marketing Review, vol. 35 no. 6
Type: Research Article
ISSN: 0265-1335

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Article
Publication date: 10 September 2018

Gun Jea Yu and Joonkyum Lee

The purpose of this paper is to investigate the contrasting moderating effect of a firm’s exploration on the relationship between the two types of long-term incentives…

Abstract

Purpose

The purpose of this paper is to investigate the contrasting moderating effect of a firm’s exploration on the relationship between the two types of long-term incentives (stock options/stock ownership) for the chief executive officers and a firm’s long-term performance. Even though the two types of incentives are designed to improve long-term performance, the degrees of impact on long-term performance differ. Based on behavioral agency theory, this study theoretically and empirically examines the role of a firm’s exploration on the above relationship.

Design/methodology/approach

This study used three archival sources to obtain data on stock options, stock ownership, patents and exploration, financial measures, and others. Based on a sample of 1,963 firms in various industries from 1995 to 2006, this study tested the moderating effect of a firm’s exploration on the relationship between stock options/ownership and a firm’s performance.

Findings

This study reveals the contrasting moderating effect of a firm’s exploration on the relationship between stock options/ownership and a firm’s long-term performance: a positive moderating effect on the relationship between stock options and performance and a negative moderating effect on the relationship between stock ownership and performance. In addition, empirical evidence was added on the inverted U-shaped relationship between stock ownership and a firm’s long-term performance.

Originality/value

There is little research on a firm’s internal characteristics that strengthen or weaken the effects of stock options and stock ownership on firm performance. This study demonstrates the differential moderating effects of exploration on the relationship between stock options/stock ownership and long-term performance. Such effects of exploration come from the different risk features of stock options and stock ownership. The key implication is that stock options could be more effective than stock ownership to enhance a firm’s long-term performance when a firm has a strong exploration orientation.

Details

Management Decision, vol. 56 no. 9
Type: Research Article
ISSN: 0025-1747

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Article
Publication date: 8 June 2015

Cristina Sancha, Cristina Gimenez, Vicenta Sierra and Ali Kazeminia

The purpose of this paper is twofold. First is to investigate the impact of social supplier development practices on the suppliers’ social performance. Second is to…

Abstract

Purpose

The purpose of this paper is twofold. First is to investigate the impact of social supplier development practices on the suppliers’ social performance. Second is to analyze if the implementation of supplier development practices by Western buying firms pays off in terms of operational and economic results.

Design/methodology/approach

Hypotheses are tested in a sample of 120 Spanish manufacturing firms using Path Analysis.

Findings

The results suggest that while supplier development practices help to improve the suppliers’ social performance and the buying firm’s operational performance, they do not pay off in terms of economic performance.

Research limitations/implications

The paper shows that supplier development practices help to improve the suppliers’ social performance while improving the operational performance of the buying firm. The study has two main limitations. First, because cross-sectional data are used, possible recursive relationships could not be accounted for. Second, the study is limited to the Spanish scope and, as such, results need to be interpreted in that context.

Practical implications

The results of this study provide insights to managers with respect to the implementation of supplier development practices to make their suppliers more socially responsible. Furthermore, managers are shown the implications of implementing such practices in terms of operational and economic outcomes.

Originality/value

This paper contributes to the existing literature on the effectiveness of sustainable supplier development practices by including the suppliers’ performance, which has been generally neglected. Objective measures for economic performance are also included.

Details

Supply Chain Management: An International Journal, vol. 20 no. 4
Type: Research Article
ISSN: 1359-8546

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Article
Publication date: 15 May 2017

Ayda Farhan, Siti Normala Obaid and Hairul Azlan

The purpose of this paper is to show the effect of the corporate governance (CG) on firms’ performance in the United Arab Emirates (UAE). The governance mechanisms…

Abstract

Purpose

The purpose of this paper is to show the effect of the corporate governance (CG) on firms’ performance in the United Arab Emirates (UAE). The governance mechanisms employed in this study are board size, board independence and audit committee’s (AC) characteristics. The examined AC characteristics are: AC member’s independence, number of financial experts in the committee, ratio of meetings held during the year, and the incentives received by the AC members.

Design/methodology/approach

This paper uses all the public listed corporations in the UAE financial markets. The secondary data for four years are used starting from 2010 where the mandatory corporate governance code had been mandated.

Findings

Board independence has been found to negatively affect firms’ performance. AC meetings and financial experts’ ratio did not affect firm’s performance, while AC incentives and AC independence negatively affected firms’ performance.

Originality/value

This study is supposed to fill the gap of the lack in CG studies based on fast growing economy which is UAE. Besides, this research investigates the AC’s characters’ effect on firms’ performance which was rarely covered in literature.

Details

Journal of Economic and Administrative Sciences, vol. 33 no. 1
Type: Research Article
ISSN: 1026-4116

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