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1 – 10 of 503Stephen Kehinde Medase and Ivan Savin
Although employees' creativity is vital for firm innovation and overall performance, little is done to examine the potential association between creativity and employment. This…
Abstract
Purpose
Although employees' creativity is vital for firm innovation and overall performance, little is done to examine the potential association between creativity and employment. This paper investigates the contribution of employees' creativity, process and product innovations to firm-level employment growth.
Design/methodology/approach
The authors use data from World Bank Enterprise Survey and Innovation Follow-up Survey on 9503 firms covering the period 2012–2015 in 11 countries from sub-Saharan Africa and Heckman's two-stage estimation model.
Findings
This study's results indicate a positive role of creativity on firm-level employment growth. In addition, the authors find evidence for a complementary effect arising from the combination of creativity with managerial experience, staff level of education and their associated skills, in contrast, combining creativity with internal or external R&D results in a substitution effect. Interestingly, these synergy effects are pronounced for SMEs but absent for large firms.
Practical implications
Policy makers in developing economies of sub-Saharan Africa should stimulate company management to use free time offered to employees to be creative in the workplace as one of their key strategies to stimulate employment growth. This strategy is expected to be particularly fruitful among SMEs having some managerial experience and skilled stuff.
Originality/value
In contribution to innovative work practices and workforce creativity, the authors demonstrate that providing employees with free time could be an alternative way to enhance the focal firms' performance.
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Danilo Brozović, Christian Jansson and Börje Boers
This article investigates how strategic flexibility (SF) is achieved in small and medium-sized enterprises (SMEs), exploring whether SF contributes to firm growth and the…
Abstract
Purpose
This article investigates how strategic flexibility (SF) is achieved in small and medium-sized enterprises (SMEs), exploring whether SF contributes to firm growth and the associated enablers and barriers of SF.
Design/methodology/approach
To offer a more nuanced view of SF in SMEs, a qualitative approach is applied. Researchers conducted and analyzed 91 interviews with owners and chief executive officers (CEOs) of SMEs exhibiting high growth and explored whether SF contributes to firm growth and the associated enablers and barriers of SF.
Findings
The results show a connection between SF and firm growth and confirm the importance of strategic orientation for SF in SMEs. Contrary to the existing literature, this study found a neutral impact of external networks and a positive impact of slack resources on SF. The lack of competent employees emerged as a considerable barrier to SF in SMEs.
Research limitations/implications
More research focusing on the relationship between SF and firm growth is suggested, as well as further research about the relevance of slack resources and external networks as enablers of SF in SMEs.
Practical implications
Motivating and developing valuable employee competence are the key managerial implications. Additionally, business consultants and business developers in the public sector must find ways to increase business consultants and business developers' relevance to SMEs.
Originality/value
This article explores SF in SMEs, a context of disagreement in previous literature, and finds that SF contributes to SME growth. A qualitative approach is used, enrichening a field dominated by quantitative methodological choices.
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Alejandro Rodriguez-Vahos, Sebastian Aparicio and David Urbano
A debate on whether new ventures should be supported with public funding is taking place. Adopting a position on this discussion requires rigorous assessments of implemented…
Abstract
Purpose
A debate on whether new ventures should be supported with public funding is taking place. Adopting a position on this discussion requires rigorous assessments of implemented programs. However, the few existing efforts have mostly focused on regional cases in developed countries. To fill this gap, this paper aims to measure the effects of a regional acceleration program in a developing country (Medellin, Colombia).
Design/methodology/approach
The economic notion of capabilities is used to frame the analysis of firm characteristics and productivity, which are hypothesized to be heterogeneous within the program. To test these relationships, propensity score matching is used in a sample of 60 treatment and 16,994 control firms.
Findings
This paper finds that treated firms had higher revenue than propensity score-matched controls on average, confirming a positive impact on growth measures. However, such financial growth is mostly observed in service firms rather than other economic sectors.
Research limitations/implications
Further evaluations, with a longer period and using more outcome variables, are suggested in the context of similar publicly funded programs in developing countries.
Originality/value
These findings tip the balance in favor of the literature suggesting supportive programs for high-growth firms as opposed to everyday entrepreneurship. This is an insight, especially under the context of an emerging economy, which has scarce funding to support entrepreneurship.
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Md. Atiqur Rahman, Tanjila Hossain and Kanon Kumar Sen
This study aims to measure impact of several firm-specific factors on alternative measures of leverage. The authors also aim to study impact of the subprime crisis on such…
Abstract
Purpose
This study aims to measure impact of several firm-specific factors on alternative measures of leverage. The authors also aim to study impact of the subprime crisis on such associations.
Design/methodology/approach
The authors utilized an unbalanced panel data of 973 firm-year observations on 47 UK listed non-financial firms for the years 1990–2019. Book-based and market-based long-term and total leverage measures have been used as explained variables. The explanatory variables are profitability, size, two measures of growth, asset tangibility, non-debt tax shields, firm age and product uniqueness. Fixed effect and random effect models with clustered robust standard errors have been utilized for data analysis. To find the effect of subprime crisis, original dataset was split to create pre-crisis and post-crisis datasets.
Findings
The authors find that profitability significantly reduces leverage while firms having more tangible assets use significantly more debt in capital structure. Firm size and non-debt tax shield have statistically insignificant positive impact on leverage. Having more unique products reduces use of external debt, albeit insignificantly. Growth, when measured as market-to-book ratio, has inconsistent impact, whereas capital expenditure insignificantly reduces leverage. Age is found to be an insignificant predictor of leverage. After the subprime crisis, firms started relying more on internal fund instead of external debt, more particularly short-term debt. Having more collateral is gradually becoming more important for availing external debt.
Research limitations/implications
Data limitations restrict generalization of the findings.
Originality/value
This is one of the pioneering attempts to show how subprime crisis altered the theoretical domain of capital structure research in the UK.
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Patrícia Becsky-Nagy and Balázs Fazekas
Venture capital (VC) is an essential element in healthy entrepreneurial environments; therefore, many countries in developing entrepreneurial economies support the industry via…
Abstract
Purpose
Venture capital (VC) is an essential element in healthy entrepreneurial environments; therefore, many countries in developing entrepreneurial economies support the industry via direct or indirect government interventions. The purpose of this study is to examine through the example of the Hungarian market, whether direct or hybrid state involvement has contributed more to the growth of the invested enterprises. The findings are relevant in the design of government VC schemes and in the contracts mitigating the moral hazards inherent in government funding.
Design/methodology/approach
The basis of empirical research is a unique hand-collected database covering Hungarian government-backed VC (GVC) investments. Based on the financial data of investee firms, the authors investigate whether firms financed by hybrid VC involving market participants are able to outperform firms that receive pure public financing using panel regression.
Findings
Based on Hungarian evidence, hybrid VC-backed firms generated lower growth and employment than their purely government-backed peers. Both schemes showed meagre innovation activity. The conclusion is that because of the conflict of private and economic policy objectives in hybrid financing, the exposure of hybrid risk capital to moral hazard is higher than that of pure public financing. Private interests in hybrid funds can only improve investment efficiency if they are structured along the lines of market-based independent financial intermediation and the contracts imitate the ones existing amongst limited and general partners in private schemes.
Research limitations/implications
The research covers the data of Hungarian government-backed firms by tracking the full range of 86 investments made in the purely government scheme and 340 firms that received funding in the hybrid scheme. The research focuses on two government initiatives, and the results are influenced by the specific regulation of the programs; therefore, the results cannot be generalized for all government agendas; they are indicative in the designs of the agendas.
Originality/value
There is a limited number of empirical studies investigating the impact of VC in developing markets, especially in the Central and Eastern Europe region. This firm-level research on the impact of public VC can help improve the effectiveness of development policies. By analysing the entirety of investments of a VC program that is near to its completion, the authors provide new insight into the efficiency and prospects of GVC schemes in the region.
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Alexandre Teixeira Dias, Henrique Cordeiro Martins, Valdeci Ferreira Santos, Pedro Verga Matos and Greiciele Macedo Morais
This research aims to identify the optimal configuration of investment which leads firms to their best competitive positions, considering the degree of concentration in the market.
Abstract
Purpose
This research aims to identify the optimal configuration of investment which leads firms to their best competitive positions, considering the degree of concentration in the market.
Design/methodology/approach
The methodology was quantitative and based on secondary data with samples of 124, 106 and 90 firms from competitive environment classified as perfect competition, monopolistic competition and oligopoly, respectively. Proposed models' parameters were estimated by means of genetic algorithms.
Findings
Adjustments on firm's investment are contingent on the degree of competition they face. Results are in line with existing academic research affirmation that the purpose of investments is to create and exploit opportunities for positive economic rents and that investments allow firms to protect from rivals' competitive actions and reinforce the need for investment decision makers to consider the environment in which the firm is competing, when defining the amount of investment that must be done to achieve and maintain a favorable competitive advantage position.
Originality/value
This research brings two main original contributions. The first one is the identification of the optimal amount of capital and R&D investments which leads firms to their best competitive positions, contingent to the degree of concentration of the competitive environment in which they operate, and the size of the firm. The second one is related to the use of genetic algorithms to estimate optimization models that considers the three competitive environments studied (perfect competition, monopolistic competition and oligopoly) and the investment variables in the linear and quadratic forms.
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Donatella Depperu, Ilaria Galavotti and Federico Baraldi
This study aims to examine the multidimensional nature of institutional distance as a driver of acquisition decisions in emerging markets. Then, this study aims to offer a nuanced…
Abstract
Purpose
This study aims to examine the multidimensional nature of institutional distance as a driver of acquisition decisions in emerging markets. Then, this study aims to offer a nuanced perspective on the role of its various formal and informal dimensions by taking into account the potential contingency role played by a firm’s context experience.
Design/methodology/approach
Building on institutional economics and organizational institutionalism, this study explores the heterogeneity of institutional distance and its effects on the decision to enter emerging versus advanced markets through cross-border acquisitions. Thus, institutional distance is disentangled into its formal and informal dimensions, the former being captured by regulatory efficiency, country governance and financial development. Furthermore, our framework examines the moderating effect of an acquiring firm’s experience in institutionally similar environments, defined as context experience. The hypotheses are analyzed on a sample of 496 cross-border acquisitions by Italian companies in 41 countries from 2008 to 2018.
Findings
Findings indicate that at an increasing distance in terms of regulatory efficiency and financial development, acquiring firms are less likely to enter emerging markets, while informal institutional distance is positively associated with such acquisitions. Context experience mitigates the negative effect of formal distance and enhances the positive effect of informal distance.
Originality/value
This study contributes to institutional distance literature in multiple ways. First, by bridging institutional economics and organizational institutionalism and second, by examining the heterogeneity of formal and informal dimensions of distance, this study offers a finer-grained perspective on how institutional distance affects acquisition decisions. Finally, it offers a contingency perspective on the role of context experience.
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Thi Bich Tran and Duy Khoi Nguyen
This study investigates the optimum size for manufacturing firms and the impact of subcontracting on firms' likelihood of achieving their optimal scale in Vietnam.
Abstract
Purpose
This study investigates the optimum size for manufacturing firms and the impact of subcontracting on firms' likelihood of achieving their optimal scale in Vietnam.
Design/methodology/approach
Using data from the enterprise census in 2017 and 2021, the paper first estimates the production function to identify the optimum firm size for manufacturing firms and then, applies the logit model to investigate factors associated with the optimal firm size.
Findings
The study reveals that medium-sized firms exhibit the highest level of productivity. Nevertheless, a consistent trend emerges, indicating that nearly 90% of manufacturing firms in Vietnam operated below their optimal scale in both 2017 and 2021. An analysis of the impact of subcontracting on firms' likelihood to achieve their optimal scale emphasizes its crucial role, especially for foreign firms, exerting an influence nearly five times greater than that of the judiciary system.
Practical implications
The paper's findings offer crucial policy implications, suggesting that initiatives aimed at enhancing the overall productivity of the manufacturing sector should prioritise facilitating contract arrangements to encourage firms to reach their optimal size. These insights are also valuable for other countries with comparable firm size distributions.
Originality/value
This paper provides the first empirical evidence on the relationship between firm size and productivity as well as the role of subcontracting in firms' ability to reach their optimal scale in a country with a right-skewed distribution of firm sizes.
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Sabina Szymczak, Aleksandra Parteka and Joanna Wolszczak-Derlacz
The study aims to examine the joint effects of foreign ownership (FO) and involvement in global value chains (GVCs) on the productivity performance of firms from a catching-up…
Abstract
Purpose
The study aims to examine the joint effects of foreign ownership (FO) and involvement in global value chains (GVCs) on the productivity performance of firms from a catching-up country (Poland) and a leader economy (Germany).
Design/methodology/approach
The authors use micro-level data on firms combined with several sector-level GVC participation measures. The authors investigate whether the link between productivity and the overall sectoral degree of involvement in global production structures depends on a firm's ownership. The authors verify the robustness of the obtained results by using an instrumental variables approach and weighted regression.
Findings
The results show that domestically owned firms are less productive than foreign ones, which is particularly true at low GVC participation levels. However, as GVC involvement increases, the FO productivity premium decreases, leading to productivity catching up between foreign and domestically owned firms. This mechanism is similar in Poland and Germany. However, in the leader country (Germany), the productivity performance of domestically owned firms is more stable along the distribution of GVC involvement.
Originality/value
This study contributes to the foreign direct investment (FDI)–productivity literature by comparing the catching-up and developed countries' perspectives and incorporating the productivity–GVC relationship into the FDI analysis. The authors show that the FO premium is not confined to the developing context but is also present in a leader country. Moreover, the link between productivity and the overall sectoral degree of involvement in global production structures depends on a firm's ownership.
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Shukuan Zhao, Xueyuan Fan, Dong Shao and Shuang Wang
This study aims to investigate the impact of supply chain concentration (SCC) on corporate research and development (R&D) investment and determine the moderating roles of industry…
Abstract
Purpose
This study aims to investigate the impact of supply chain concentration (SCC) on corporate research and development (R&D) investment and determine the moderating roles of industry concentration and financing constraints on the relationship between SCC and R&D investment.
Design/methodology/approach
The study collected data from Chinese listed companies, used the fixed effects model to test the research hypotheses and further used the two-stage Heckman test and propensity score matching (PSM) to address potential endogeneity issues.
Findings
The result reveals a negative impact of SCC on corporate R&D investment. In addition, industry concentration mitigates the negative impact of SCC on corporate R&D investment, but financing constraints strengthen the negative impact.
Originality/value
This study introduces the concept of SCC and empirically tests its effect on R&D investment, further explaining the lack of corporate innovation. This study inspires companies to strengthen SC management and weigh the level of SCC with environmental factors.
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