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The purpose of this paper is to investigate how customer relationship management (CRM) implementation affects internal capital allocation efficiency, the efficiency with which a firm allocates its capital across its business segments.

The authors use a statistical regression method to analyze a sample of 801 unique firms in the USA from COMPUSTAT and the Computer Intelligence database. This analysis examines the relation between CRM implementation and internal capital allocation efficiency and identifies the conditions under which firms benefit more from CRM implementation. They also use instrumental variables (IVs) to address endogenous concerns with a two-stage least squares (2SLS) model.

The authors find that CRM implementation is positively related to internal capital allocation efficiency. The results are robust to the 2SLS analysis with IVs. This positive relation is more pronounced for firms with effective internal control and for those operating in highly competitive markets.

The research implies that that CRM can have a significant cross-functional effect on corporate financing and budgeting. This also suggests that when chief marketing officers plan marketing initiatives and implement CRM, they should communicate to chief financial officers not only the direct effect but also the indirect strategic benefits of such initiatives to a firm.

The authors reveal a previously overlooked aspect of marketing accountability by suggesting marketing’s impact on internal capital markets. They also enrich the body of literature on CRM benefits by showing a cross-functional benefit from marketing to finance (or capital allocation).

The purpose of this study is to examine whether and how internal capital markets mitigate financial constraints and enhance firms' willingness to engage in R&D projects.

The study uses panel data relating to 2,095 publicly traded firms in the Chinese A-share market for the period 2007–2019. The tobit regression method is applied to explore R&D investment–cash flow sensitivity of group affiliates, while the systematic generalised method of moments and dynamic ordinary least squares models are adopted to address the endogeneity problem in the robustness test.

This study finds that firms affiliated with business groups demonstrate lower R&D investment–cash flow sensitivity than non-affiliated firms do and that R&D investments are significantly influenced by the cash reserves of other group members. In terms of financing channels, this study demonstrates that group firms use internal cash and equity financing to support other members' R&D investments, while debt financing does not influence member firms' R&D investments. In addition, this study discovers that R&D spending harms the stock and operating performance of some group members.

The findings of this study enable business groups to focus on resource allocation and investment efficiency.

Although prior studies indicate that internal capital markets can enhance R&D spending, few studies reveal the mechanisms through which internal capital markets benefit R&D. This study uses a unique methodology to test the ability of the internal capital market to enhance R&D spending. In addition, group firms use internal cash flow and equity financing to support partners' R&D projects.

Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some legal aspects concerning MNEs, cyberspace and e‐commerce as the means of expression of the digital economy. The whole effort of the author is focused on the examination of various aspects of MNEs and their impact upon globalisation and vice versa and how and if we are moving towards a global digital economy.

The paper's aim is to analyze excess returns generated by Canadian sell‐offs and their links to changes in firms' internal capital allocation efficiency to test the efficiency of internal capital markets after assets divestitures.

This study investigates the relationship between the level of the excess returns subsequent to sell‐offs and changes in the capital allocated through internal capital markets. The authors measure excess returns by calculating buy‐and‐hold abnormal (BHAR) returns up to three years after divestitures and test whether changes in value are related to changes in investment efficiency. The paper uses the relative value added by allocation (RVA) as developed by Rajan et al. to measure the variation in allocational efficiency of the internal capital market.

The study reveals that on average assets divestitures enable Canadian firms to keep up with the performance of their peers of the same industrial sector during the long‐run post divestiture period. A closer look at the results shows that the variation of long‐run post divestitures performance among Canadian firms is significantly and positively linked to changes in the allocational efficiency of the internal capital markets. These results suggest that dismantling some parts of the internal capital market does lead to improvements in firm value in the long run.

The sample is limited to a group of firms that sell off a portion of their assets. Further research could be conducted to determine whether other divestiture methods (spin‐off, sell‐off or equity carve‐out) have any impact on internal capital allocation efficiency and long run financial performance.

The paper adds to other studies examining the source of gains from divestitures by documenting the effects of changes in internal capital allocation efficiency on the creation of long‐term shareholder wealth.

Internal capital markets of diversified firms have been associated with inefficient allocation of investment funds across divisions, leading to value losses. Utilizing a sample of diversified firms that adopted or eliminated Residual Income (RI) plans between 1990 and 2009, we show that adoptions of these plans mitigate investment distortions and lead to value gains. Following the adoption of RI plans, diversified firms start allocating investment funds based on growth opportunities of their divisions. RI plan adopters lower their divisional investment levels, especially in segments with below-average growth opportunities. The overall investment allocation efficiency improves, and the diversification discount diminishes after the adoption of RI plans. However, RI plans appear to be used only as temporary tools for assessing corporate performance. The plans are adopted primarily by firms expected to immediately generate plan bonuses for management, and they are frequently eliminated by firms with bad accounting performance and low managerial bonuses. The study contributes to the literature on organizational efficiency, internal capital markets, and on the importance of measures based on economic profits or RI.

This chapter investigates a shock transmission path between a home country (a country where globalized banks’ headquarters are located) and a host country (Indonesia as the emerging market) through the lending channel of global banks’ local branches (i.e., the internal transfer channel). Using novel data of monthly individual foreign bank’s balance sheet in Indonesia, the author finds the evidence that shocks to a parent bank and a home economy are transmitted to a host economy through the foreign banks’ internal capital market. With the Indonesia banks’ capital injections and their difficulty in financing dollar funds without risk premiums since the 1998s crisis, the foreign banks’ dollar lending in Indonesia is a good showcase of internal capital markets. A change in a home stock market index and industrial production appears to have a negative effect on growth rates in foreign currency loans of foreign banks in the host market. On the other hand, high growth rates in the parent bank’s stock price in the home market lead to an increase in foreign banks’ US dollar lending in the host country. This effect does not appear in local currency lending because limited hedging instruments against foreign exchange risk results in immobility of bank capital in the local currency.

Due to the great distinctions for the legal environments, institutions and taxations, the restrictive external financing and costly financing cost, and great influence of macroeconomy or regulations on single industry, firms may change or adjust their organization structure to adapt to rapidly changing environment. Flat structure can decentralize the powers to subsidiary managers and can internalize the managerial market to promote competition among subsidiary managers and create an internal capital market within firms to alleviate external financing constrains, and it is matched with the diversification strategy to lower the operation risk and regulation risk for firms in changing environment. The paper aims to discuss these issues.

The data of 6,065 listed corporations in China securities market since 2001-2006 are used to empirically test the hypotheses.

The paper examines the efficiency of flat structure within the firm, investigating its influence on capital allocation and corporate performance. It shows that flat structure is better in emerging market since it is efficient in capital allocation, reducing the inefficient investment by reducing the overinvestment and alleviating the underinvestment, thus beneficial for corporate performance, both short-term and long-term accounting returns.

From the results of this study, the paper can derive the important managerial implications that top managers should strengthen flexibility through flat structure so that their firms can grasp opportunities and obtain advantages through efficient improvement of mobility, adaptability, and combination in an uncertain environment. Moreover, flat structure can decentralize the powers to subordinate managers and create an internal managerial market and internal capital market within firms.

By using the previous and change of multi-unit structure, the change of corporate performance, diverse and concentrated firms, the paper shows that results are not due to the endogenous problem. The study finds that in less-developed capital market under the current situation, flat structure is better, which suggests that flat structure can properly implement the strategies in emerging market and beneficial for corporate performance.

This study contributes to the existing literature that corporate governance consist of internal and external governance behavior which refers to the complementarity of the elements of (1) competing values framework and (2) corporate legality framework theories and proper orientation in the provisions of the elements leads to a good corporate power in the modern legal environment. A questionnaire is designed, a survey is conducted based on the constructed corporate governance model in the study, which investigates the evolutionary background of the elements with the view of establishing the right corporate culture and corporate legality behavior. The empirical results revealed that there is a positive linear relationship between the elements of corporate culture provisions with internal governance behavior and a significant positive association between the elements of corporate legality provisions with external governance behavior. The model does not take into account long-term external factors. Therefore, measuring corporate governance may not be an easy task and may not be suitable for specific countries that have strong legal systems and corporate ownership. The elements in the model are practical to implement and facilitates corporate to improve shareholder involvement and governance reporting and hence prevent failure. The constructed model span almost every attribute embedding high quality corporate social responsibility and corporate governance for corporate to identify areas for improvement and contributes to existing corporate governance literature that, connecting corporate culture and corporate legality behavior positively affect financial markets and firm performance.

Conventional foreign direct investment (FDI) theories regard FDIs as strategic moves based on operational or industrial organization considerations. We demonstrate that financial factors are also important in corporate FDI decisions. The financial factors concern internal capital market strength and corporate governance and include exchange rate changes, internal and external financing cost, risk diversification, and agency costs. There is variability in the significance of financial variables depending on industries and destinations. The integrated model with both strategic and financial factors is superior to either component model in explaining FDIs. However, financial factors are no less important in explaining the prevailing FDI phenomena than strategic or operational variables.

The purpose of this study is to provide evidence for how business group firms transfer financial resources among affiliated firms by examining the differences in the level of debt financing and the choices of new equity financing between group affiliated and non‐affiliated firms in an emerging market, Turkey. The role of affiliated banks for internal capital market transactions is also to be examined.

Univarite analysis and simple pooled OLS regression analysis are performed to examine the role of group affiliation on the level of several debt financing measures. Additionally, a Logit regression analysis is used to analyze the behavior of affiliated firms in their equity financing decisions by issuing new shares.

Group affiliated firms transfer funds in the group by using transactions such as trade debt, and issuing cash rights and bonus shares. The affiliated firms – especially with a bank in the group – support their higher growth with new equity issues in the forms of cash rights and bonus shares along with higher trade debt. Moreover, non‐affiliated firms utilize a higher percentage of debt to shareholders, while affiliated firms without a bank utilize a higher financial debt. These findings are consistent with the idea that the role of the group bank is very important in financing choices of affiliated firms.

This paper provides direct measures of external and internal funds by focusing on new equity issues and debt structure, which can be applied in different economic environments, rather than using indirect measures or not readily available datasets such as connected party transactions.

The paper provides additional evidence to assess the efficiency of the use of internal capital markets. Moreover, the role of group affiliated banks among affiliated firms has not yet been extensively addressed in the literature and an examination of this issue leads to a better understanding of their roles in diversified business groups.