Business Service Industries Research Articles

Not All High-Growth Firms Are Alike: Capturing and Tagging Ohio’s Gazelles

In this study, the authors present a statistically valid typology of high-growth firms (HGFs), also known as gazelles, to determine if payroll and job growth patterns differ between groups or clusters. Cluster–discriminant analysis was conducted on a cohort of 26,104 HGFs s in Ohio, using data from the Quarterly Census of Employment and Wages from 2010 to 2015. Only 1.2% of all Ohio’s firms can be classified as high growth. The larger herd of gazelles grows consistently, while the other, much smaller pack experiences short, intense growth spurts. Roughly 30% of the two gazelle clusters (Consistent High Growth and Volatile High Growth) are in the information service, financial service, and professional and business service industries, compared with 18% in the low- and slow-growth cluster. The nongazelle HGF cluster has proportionately more businesses in manufacturing and the leisure and hospitality industries than the gazelle clusters.

A Study on the Imact of Industrial Diversity on the Agglomeration by Type of Knowledge-Intensive Business Service Industry: Comparing Capital Region to Non-Capital Region

4차 산업혁명이 대두되면서 지역 내 산업생태계를 구성하는 기업들에게 지식을 가공한 중간재를 제공함으로써 혁신과 생산성 증진을 유발하는 지식집약사업서비스의 중요성은 점차 증대되고 있다. 본 연구에서는 우리나라의 75개 시 지역들의 2008년에서 2016년까지의 자료를 활용하여 산업 다양성이 KIBS 산업의 유형별 집적에 미치는 영향을 패널모형 분석을 활용하여 검증하였다. 또한 이 과정에서 수도권과 비수도권의 입지에 따라 산업 다양성이 미치는 영향의 차이를 함께 검증하였다. 분석 결과 일반시 전체를 대상으로 한 경우 산업 다양성이 모든 유형의 KIBS 산업의 집적을 촉진하는 것으로 나타난 반면, 수도권 지역의 산업 다양성의 증대는 기술 기반-전문성 주도 형태의 KIBS 산업의 집적을 약화시키며, 그 외의 유형에 대해서는 집적을 촉진시키는 것으로 나타났다. 또한 비수도권 지역에서는 산업 다양성의 증대가 기술 기반-전문성 주도 형태의 KIBS 산업의 집적을 촉진시키는 반면, 그 외의 유형에 대해서는 유의한 영향을 미치지 못하는 것으로 검증되었다.

Impact of intellectual capital on small-firm growth: a longitudinal study from Inc. 5000

ABSTRACT We explore whether intellectual capital is a precursor to Small and Medium Enterprise (SME) growth. We use data from Inc. 5000 of fast-growing SMEs in the USA and match companies to patent applications. We use a zero-inflated negative binomial model corrected for endogeneity to account for many SMEs without intellectual capital. We find the marginal benefit from intellectual capital on SME growth, revenue, and the number of years on the Inc. 5000 list. Across industries, we find a 1% increase in intellectual capital results in a 3.6% increase in revenue growth. The results change by industry: in particular, IT Services, Software, and Telecommunications are the only sectors that have a positive relationship between intellectual capital and growth. Perhaps surprisingly, SMEs in the Business Services, Engineering, and Health industry sectors experience negative growth with an increase in intellectual capital.

Impact of Industrial Diversity on the Accumulation of Knowledge Intensive Business Service Industry

Impact of Industrial Diversity on the Accumulation of Knowledge Intensive Business Service Industry

An evaluation of knowledge intensive business services industry efficiency: the Italian case

Knowledge intensive business services (KIBS) are private enterprises or organisations mainly concerned with providing knowledge-intensive inputs to the business processes of other organisations, represent a core feature of the knowledge-based economy functioning and play an important role in local and regional economies as a source of added value. The paper investigates the application of data envelopment analysis (DEA) in conjunction with financial ratios analysis (FRA) to estimate and compare the performance of the KIBS industry in Italy over the period 2012-2017. In particular, we evaluated the three main segments that identify KIBS services. The empirical investigation proposed reveals that the results of FRA approach do not provide sufficient and complete information on the efficiency of KIBS firms, while major advantages behind using of DEA are related to its structural characteristic in measuring performance and identifying opportunities for possible efficiency improvements by looking at the differences between efficient companies and inefficient ones.

An evaluation of knowledge intensive business services industry efficiency: the Italian case

Knowledge intensive business services (KIBS) are private enterprises or organisations mainly concerned with providing knowledge-intensive inputs to the business processes of other organisations, represent a core feature of the knowledge-based economy functioning and play an important role in local and regional economies as a source of added value. The paper investigates the application of data envelopment analysis (DEA) in conjunction with financial ratios analysis (FRA) to estimate and compare the performance of the KIBS industry in Italy over the period 2012-2017. In particular, we evaluated the three main segments that identify KIBS services. The empirical investigation proposed reveals that the results of FRA approach do not provide sufficient and complete information on the efficiency of KIBS firms, while major advantages behind using of DEA are related to its structural characteristic in measuring performance and identifying opportunities for possible efficiency improvements by looking at the differences between efficient companies and inefficient ones.

Sustainability of Impact Sourcing Initiatives in Higher Education for Graduates’ Employability

Impact sourcing (ImS) initiatives in higher education play important roles in the employability of graduates, especially in the global business services (GBS) industry. This study explores the sustainability of ImS in higher education institutions (HEIs) for graduates’ employability. This study used qualitative research methodology, collecting data from related documents, observations, interviews, and focus groups with selected students, lecturers, and industry practitioners. The data were analyzed using Sen’s capability framework, with the primary objective of analyzing individual capabilities—specifically, conversions, resources, and capabilities. The findings show that ImS could improve future graduates’ technical and soft skills, thereby enhancing their employability in the GBS industry. Some constraints that need to be overcome include the infrastructure, rewards, and incentives, as well as system reliability. This study contributes to the development of the capability framework for ImS initiatives in relation to the employability of graduates and other marginalized communities. The conversions, resources, and capabilities should be considered when assessing the impact of ImS. In addition, this study contributes to the talent pool agenda with a specific focus on ImS and graduates’ employability.

The effects of R&D cooperation on innovation performance in the knowledge-intensive business services industry: focusing on the moderating effect of the R&D-dedicated labor ratio

ABSTRACT This study conducted an empirical estimation of the effects of R&D cooperation and the proportion of R&D personnel on the performance of four different kinds of innovation in the two major KIBS industries (t-KIBS and p-KIBS). For the empirical analysis, we used a multivariate probit model with 956 samples from the KIBS industry collected using the officially adopted Korean Innovation Survey of 2016. We found that vertical R&D cooperation had a positive effect on the overall performance in the t-KIBS industry, especially on service and marketing performances. On the other hand, horizontal R&D cooperation (competitor and institutional innovation) had a heterogeneous effect on the innovation of the KIBS industry depending on the type of cooperation. The proportion of R&D-dedicated personnel had a positive effect on service product innovation in the p-KIBS industry, but contrary to expectation, a high proportion of R&D personnel had no positive moderating effect with R&D cooperation in improving innovation performance. On the contrary, a high proportion of R&D personnel combined with institutional cooperation negatively affected the achievement of service innovation.

Study on tax burden calculation and risk allocation for industries in free trade zones

The existence of tax burden outlier of industries will hinder the sustainable development of the regional economy. By calculating the tax burden of 3,585 enterprises in 11 industries in China (Zhejiang) Pilot Free Trade Zone, we find that there are six industries with abnormal tax burden, namely, the construction industry, transportation, the warehousing and postal industry, information transmission, software and the information technology service industry, the financial industry, the real estate industry, and the leasing and business service industry. Based on the semi-parametric time-varying model, we changed the time variable into the industry variable, and studied the mutual influence of the tax burden of each industry under the control variables of actual tax burden and employment number respectively and jointly driven. Considering the control variable as the formulation of tax policy, we can calculate the interaction and fluctuation range of each industry tax burden under different tax policies. According to this result, the tax burden risk of six industries with tax burden outlier is allocated.

Annual report readability and trade credit

Purpose The purpose of this study is to examine the influence of the readability of annual reports on firms’ ability to obtain trade credit from suppliers. Particularly, the authors conjecture that annual report readability helps firms obtain more trade credit from suppliers. Design/methodology/approach The authors use the Gunning Fog Index as the primary measure of annual report readability and the ratio of accounts payable to the book value of total assets as the measure of trade credit. Findings Results from the study of 4,754 firms during the 2004–2016 period indicate that suppliers extend more trade credit to firms with more readable financial reports. The authors’ results are robust to alternative measures of trade credit and annual report readability. The authors’ results remain robust when we control for firm fixed effects and potential endogeneity problems using the instrumental variable approach. A further test shows that the level of trade credit is higher for firms in business service industries, and that this relation is weakened when firms disclose less readable 10-K filings. Originality/value The authors’ findings provide new insight into the role of financial report readability in firms’ ability to obtain trade financing from suppliers. The authors’ results are also in line with the SEC’s encouragement that firms use plain English and easy language in financial reporting.

Ever‐transient FDI and ever‐polarizing regional development: Revisiting conventional theories of regional development in the context of China, Southeast and South Asia

AbstractIn this new age of globalization, regions attempt to attract foreign direct investment (FDI) in order to achieve regionally balanced development. We revisit existing theories of regional development and FDI by analyzing recent data sets on FDI, employment, and trade in China, Southeast Asia, and South Asia. Using Chinese provincial data in 2004, 2008, and 2013 and applying panel estimations, our econometric results demonstrate that FDI remarkably influenced the concentration of employment in manufacturing, financial, and business services industries within the three Chinese macro‐regions. We also find that FDI is ever transient, always moving away from high‐cost to low‐cost production bases across different regions. This transient nature of FDI is spatially selective and biased, and not able to generate the trickle‐down effects to other neighboring regions. That is why FDI recently moved from China to Southeast and South Asia rather than from its coastal to inland regions. Furthermore, we show that this nature of FDI generally leads to polarization development for regions. As a synthesis or extension of the existing theories, we propose a leapfrog polarization pattern and strategy for vast developing countries in considering their regional development strategies.

Testing Operating Performance of Chinese Listed Firms before and after Cross-border M&As: The Role of Entrepreneurial Orientation

t a time when China encourages its firms to go overseas, especially to countries and regions involved in its “Belt and Road Initiative”, and sets up a favorable domestic environment for innovation and entrepreneurship, this paper is a first trial looking along both the two dimensions to test whether Chinese firms' operating performance changes after cross-border merger and acquisition (CBM&A) activities, using entrepreneurial orientation (EO) as a moderating factor. The paper combines data from Chinese listed firms’ annual reports, Chinese stock market financial statements database and the Zephyr database from 2001 to 2015 to examine how acquirers’ operating performance changes after CBM&A activities using EO as a moderating factor. In order to test whether the results are affected by the stock market, this paper also defines abnormal return on equity (ROE) to detect abnormal operating performance. After these, the paper divides the sample into separate industry groups to see whether results will change. The results obtained for the whole sample show that the performance of Chinese listed firms is fluctuant after CBM&As within the sample years. It increases one year after the acquisition but drops two years later and then follows an increasing trend again. The moderating factor of EO is not significant for the sample as a whole. However, after dividing the sample into separate industry groups, it becomes clear that different industries have their own characteristics. EO helps Chinese listed firms to adjust to the post-acquisition situation and even to improve their performance to some extent in the metal mining industry and the business services industry. When ROE is substituted with abnormal ROE, the results do not change much.

Efficiency assessment of knowledge intensive business services industry in Italy: data envelopment analysis (DEA) and financial ratio analysis

PurposeWithin the service sectors, Knowledge Intensive Business Services (KIBS) play an important role in local and regional economies as sources of competitive advantages and providing knowledge-intensive inputs to the business process of small and medium-sized enterprises. This study aims to analyze the changes in financial performance of KIBS industry in Italy over the period from 2012 to 2017.Design/methodology/approachThis paper examines the efficiency of the KIBS firms by applying data envelopment analysis (DEA) to compute the Malmquist Productivity Index for the period under investigation. The DEA-based Malmquist productivity analysis is applied at firm level using a sample consisting 1.674 companies, representative of the Italian KIBS sector and related to three different NACE activity code (72-computing services; 73-research and development; 74 other professional business activities). The efficiency measures are then used to characterize KIBS firm financial performance through the analysis of average productivity patterns grouped by Italian geographical regions. The Malmquist productivity measures are decomposed into two components: efficiency change and technical change index. The overall analysis is coupled with a financial ratio analysis approach, selecting return on equity (ROE) and leverage ratio as descriptor to validate the results and better characterize differences in efficiency patterns among geographic-based groups of KIBS companies.FindingsOver the period 2015-2017, the results show that the average annual growth of the overall Malmquist productivity index was positive in nine Italian regions that represent only 17 per cent of the total KIBS firms selected. On the other side, a decrease of the average performance measure is observed for the five geographic areas that contribute to 75.7 per cent of the total sample. In general, the technological change component, as a measure of innovation, strongly limits the productivity growth behavior of KIBS industry for all geographic regions. The use of selected financial ratio does not provide additional insight to the performance investigation and further in-depth studies are needed to better evaluate the correlation between average productivity results and regional business dynamics.Practical implicationsThe study investigates the applicability of DEA-based Malmquist indices to the analysis of the productivity behavior of KIBS industry at regional level. It will be of value to provide first evidence to the policymakers to understand industry growth pattern in time frame selected and relate them to additional business factors to detect specific industry constraints.Originality/valueThe analysis in this paper contributes to the existing body of knowledge on industry performance measurement by applying specific analytical techniques to the productivity of Italian KIBS companies. The paper also contributes to the limited body of academic literature investigating KIBS industry at national level proposing a methodological framework that constitutes a first attempt to track average productivity behavior at regional level.

Coordinative Relationship between Business Service Industry and Economic System in Hubei Province

Coordinative Relationship between Business Service Industry and Economic System in Hubei Province

The Effect of Innovation Capability on Business Performance: A Focus on IT and Business Service Companies

With the introduction of a wide variety of new technologies during the fourth industrial revolution, companies in Korea have attempted to enhance their innovation activities, which include investment in new technology adoption, technical and non-technical innovation factors, and Research & Development (R&D) activity, to ensure the development and growth of their business performance and sustainability. In particular, IT and business services, two important industries in Korea, have been impacted by the development of new technology and have sought to adopt new technologies as soon as possible to survive in a rapidly changing business environment. The aim of our study is to empirically explore the effect of innovation activities on the performance of Korean IT and business service companies. To achieve this aim, we examine the innovation activities and business performance of 160 companies (80 large companies and 80 small- and medium-sized enterprises (SMEs)) in the IT and business service industries in Korea from 2009 to 2017. This study empirically analyzes panel data using fixed effect and random effect models with Hausman tests. According to our results, an improvement in product innovation has a positive impact on business performance (i.e., revenue and labor productivity) in both large companies and SMEs, as does R&D investment, research resources, and company age. However, an improvement in process innovation only has a positive impact on the business performance of large companies, and R&D cooperation only has a positive impact on the business performance of SMEs. As a result, both large companies and SMEs should concentrate on technological innovations to improve their sustainability and thus ensure their success in the long term.

Determinants of innovation performance

Purpose The purpose of this paper is to analyse the relationship between organisational learning capabilities (OLCs) and innovation performance (IP) in organisational contexts where knowledge creation and exploitation are the business’ main source of competitive advantage. Design/methodology/approach The study hypotheses are tested on a unique sample of 74 high-performance businesses operating in knowledge-intensive business services (KIBS) industries and non-knowledge intensive sectors in 2016. The study employs a sequential deductive triangulation analysis (QUAN → qual) based on linear regression models and qualitative interviews. Findings The results indicate that OLCs positively impact IP. Additionally, the findings reveal that this relationship is stronger in organisations where knowledge creation and exploitation constitute the main source of competitive advantage, namely, KIBS firms. Research limitations/implications This paper offers insights into how the innovation outcomes of OLCs are heterogeneous across industries. This study contributes to a better understanding of the conditions under which the effects of developing learning-enhancing strategies occur in businesses operating in different industries. Practical implications Both knowledge generation and exploitation processes are critical for business success, and OLCs play a decisive role in this process. In this sense, the results suggest that managers need to turn their attention to the characteristics of business operations when considering the development of strategies aimed at enhancing OLCs. Originality/value The paper further explores the influence of OLCs on IP by analysing how organisational learning strategies interact with relevant organisational characteristics – that are linked here to the exploitation of knowledge-based resources – to yield superior IP.

Customer referencing as business actor engagement behavior – Creating value in and beyond triadic settings

The rising impact of customer engagement is increasingly evident in business markets. This paper studies customer referencing as an important manifestation of engagement behavior in the business-to-business (B2B) context. To extend extant research, which has thus far examined referencing almost exclusively from the seller's viewpoint, we study how referencing affects value creation in business networks. We explore resources contributed and gained though referencing and the resulting value outcomes for the entire reference triad (the seller, the reference customer, and the prospective buyer). Empirically, the paper draws on an extensive field study conducted in knowledge-intensive business service industries. The results explicate how customer referencing affects value creation within and beyond the triad, by i) enhancing or impairing actors' internal processes; ii) strengthening or damaging relationships between the triad actors; and iii) facilitating exchange in their broader business network. The paper contributes to research on customer referencing by explicating its role in value creation on a network level. As one of the first studies on engagement in the B2B context, this paper contributes to the emerging actor engagement research by analyzing how influencing behavior operates in a business network. These insights can help firms to facilitate exchange in complex markets.

New KIBS on the bloc: the role of local manufacturing for start-up activity in knowledge-intensive business services

ABSTRACTThis study investigates the effect of local manufacturing on start-up activity across knowledge-intensive business services (KIBS) industries by relying on the natural experiment of German reunification. KIBS did not exist in the former socialist East Germany. The findings show that local manufacturing affected the co-location of new KIBS firms in East Germany while there was no such effect for West Germany, where the KIBS sector was already well established. The East German effect was fading over time when the KIBS sector became more established. The result suggests that strengthening the industrial base in peripheral regions could induce knowledge-intensive start-up activity.

The need for digital and soft skills in the Romanian business service industry

Abstract The Romanian Business Service Sector developed fast in the last decade. Today it employs more than 120 000 Head Counts and continuously grows. However, companies claim not to get the right skills from employees to pursue the digital transformation from a mere service sector towards a more value-added service. Since it has a very young working population with an average age between 26 and 35 years, it is increasingly important to review the employability skills needed by this industry to safeguard the continuation of the sector. So far, Romanian studies have been deducted reflecting the skills needed from the sector. In the first instance, these studies used the questionnaire methodology or global surveys mostly on a very holistic view (ABSL, 2017; Boşcor and Băltescu, 2014). This paper shows a new approach by deriving the skills needed by employers from their own database: job descriptions of entry positions published in companies or job boards were analyzed within a specified period, allowing an accelerated approach to defining skills needed without a too high time delay given the rapid progressing digitalization. The job descriptions are analyzed by using the method of qualitative content analysis according to Mayring (2014) using specific criteria based on the literature review of employability skills. Key findings confirm demand for hard skills such as languages and IT skills such as Office Suits, Development Environments as well as higher demand for soft skills especially analysis and problem solving induced by digitalization.

Managing virtual teams for open innovation in Global Business Services industry

PurposeThe purpose of this paper is to investigate the impact of human dimensions, team climates, and technological features on Global Virtual Team (GVT) performance in the Malaysian Global Business Services (GBS) industry. Attention has also been paid to examine the moderating effect of team diversity and the extent of virtuality on GVT performance.Design/methodology/approachData were collected using structured questionnaire and tested using partial least square – structural equation modelling. The authors collected 263 sample and the assessment of reflective measurement models, structural model, reliability and validity were conducted subsequently.FindingsThis paper found that team climates like team cohesion, team confidence, and team knowledge, skills, and abilities demonstrated different impact on the human dimensions which include trust and creativity. It will then subsequently affect GVTs’ performance. Besides, team diversity which comprised of three major components that include age diversity, functional diversity, and attitudes/values diversity was found to moderate the relationships between the antecedents and consequent. In spite of that, the extent of virtuality was found to have no moderating effects on the relationships between the team creativity and trust and perceived team performance.Originality/valueAs nowadays an increasing number of firms are becoming global, inquiring into GVTs efficient management is of crucial importance for successful implementation of open innovation practices, while GBS companies could represent the most suitable setting to examine the GVT’s underlying principles. This paper integrates adaptive structuration theory with input-mediator-output-input model to provide a holistic study on GVTs’ performance. In addition, this study also illustrated how the extent of virtually can be measured quantitatively.