Capacity Of Firms Research Articles

Innovation in family businesses: Exploring the influence of entrepreneurial orientation and absorptive capacity on innovative capacity

Firms’ innovation positively affects their competitiveness and thus their financial performance. To bridge the research gap in the theoretical framework of dynamic capabilities and respond to the call for papers to explore new ways of analyzing innovation in family businesses, this study investigates how entrepreneurial orientation and absorptive capacity influence innovative capacity in family firms. Data from 156 family firms are analyzed using the theoretical framework of dynamic capabilities and structural equation modeling. The results reveal that both entrepreneurial orientation and absorptive capacity influence innovative capacity and that this influence is greater when both capabilities act together than when they act individually. This study confirms that entrepreneurial orientation and absorptive capacity are antecedents of innovative capacity. Moreover, entrepreneurial orientation has a greater influence on innovative capacity than absorptive capacity does.

The impact of national policies on Europe-wide power system transition towards net-zero 2050

This research aims to investigate the potential impact of national policies on the attainment of Europe's goal of achieving net-zero greenhouse gas emissions by 2050. Specifically, it analyses the effects of policies on the power sector, by evaluating capacity expansion portfolios, import reliance, and costs by 2050. A linear programming model, the IESA-EUPS, is utilized to optimize the expansion and operation of the power system, considering 28 nodes and hourly temporal resolution. The study includes five scenarios from 2020 to 2050, with varying levels of biomass and nuclear penetration based on existing member state policies. Results show that by 2050, changes mainly occur in the interplay between firm capacities and cross-border transmission levels. Limiting biomass can significantly increase nuclear energy generation, while enforcing all policies leads to a 40 % rise in cross-border transmission by 2050, due to imbalances between countries. Some member states, such as Spain and Finland, are less affected, whereas others are heavily reliant on firm nuclear capacities. Western European countries with strict biomass and nuclear restrictions may see a boost in nuclear installations in countries allowing it. Member states without both nuclear and biomass may rely more on variable renewables, resulting in surplus electricity and increased LCOE.

Patent output and patent transfer network in China universities: Moderating roles of absorptive capacity and desorptive capacity

Although absorptive capacity and desorptive capacity has been widely present in university-industry relationships, there has been no research on their potential impact on the relationship between university patent output and university patent transfer network. We constructed datasets of patent applications and patent transfers to firms from 383 universities between 2002 and 2021 in China, and empirically demonstrated the effect of the patent output on university patent transfer network using negative binomial regression models. We also examined the moderating effects of absorptive capacity and desorptive capacity. The results reveal that university patent output positively affects the size and the connection strength of the university patent transfer network. Technology transfer offices and satellite institutions, for desorptive capacity in universities, negatively moderate the relationship between the university patent output and the university patent transfer network, respectively. For absorptive capacity in firms, research and development intensity of new products and the level of research and development personnel input, respectively, have a positively moderate effect on the relationship between the university patent output and the university patent transfer network. Our research provides insights into the dynamics of the university patent transfer network; especially against the backdrop of a sharp increase in university patent output and insufficient development of the university patent transfer network, this study provides evidence to the substitution effect of desorptive capacity in universities and the bidirectional effect of absorptive capacity in firms.

The Impact of Digital Transformation on the Innovation Capacity of Chinese-Listed Firms: The Role of Government Subsidies

As digital transformation progresses, listed Chinese firms are undergoing significant changes in their practices. These changes are crucial for establishing and maintaining a competitive advantage. This research investigates the process by which digital transformation affects firms' capacity to innovate, specifically focusing on the influence of government subsidies. The data was obtained from 1,063 publicly traded in China from 2018 to 2022 with a total of 4,027 data points. A fixed-effects model, stepwise regression analysis, and bootstrapping techniques were employed to construct the models. To address the conventional quantitative constraints and provide a nuanced comprehension of digital transformation's influence, this study uses textual analysis. Research has shown that digital transformation has a substantial positive impact on the ability of companies to innovate. Additionally, government subsidies are proven to have a role in facilitating this process. This paper offers a fresh viewpoint on comprehending the mechanism of government subsidies for digital transformation and corporate innovation capability. It also provides evidence supporting the idea that government subsidies may enhance innovation incentives more effectively

How information technology resources enhance absorptive capacity and individual ambidexterity: the moderating role of social interaction

Purpose Ambidexterity has become essential for organisations to remain competitive. Thus, the purpose of this study is to investigate the causal relationships among information technology resources, absorptive capacity and individual ambidexterity. Further, this study examines the moderating role of social interaction in the absorptive capacity–individual ambidexterity relationship. Design/methodology/approach A quantitative approach was used in this study through analysis of survey data from 475 employees in the Iraqi telecommunications sector. Structural equation modelling with AMOS was used to test the proposed hypotheses. Findings This study noted a positive relationship among information technology resources, absorptive capacity and individual ambidexterity. The results of this study also showed that individuals with a higher degree of social interaction were more likely to strengthen the association between absorptive capacity and individual ambidexterity. Practical implications The results indicate that managers should pay attention to the important relationship between IT resources, absorptive capacity and individual ambidexterity in the Iraqi telecommunications firms. It is also suggested to design strategies to promote social interaction among their employees and facilitate cooperation and information transfer. Originality/value This study shows that information technology has influence on absorptive capacity and individual ambidexterity and argues the importance of social interaction as a boundary condition on absorptive capacity and individual ambidexterity relationship for telecommunications firms in Iraq a context that neglected in previous studies.

Impact of Digital Transformation on the Innovation Capacity of Chinese-Listed Firms: Role of Government Subsidies

As digital transformation progresses, listed Chinese firms are undergoing significant changes in their practices. These changes are crucial for establishing and maintaining a competitive advantage. This research investigates the process by which digital transformation affects firms' capacity to innovate, specifically focusing on the influence of government subsidies. The data was obtained from 1,063 publicly traded in China from 2018 to 2022 with a total of 4,027 data points. A fixed-effects model, stepwise regression analysis, and bootstrapping techniques were employed to construct the models. To address the conventional quantitative constraints and provide a nuanced comprehension of digital transformation's influence, this study uses textual analysis. Research has shown that digital transformation has a substantial positive impact on the ability of companies to innovate. Additionally, government subsidies are proven to have a role in facilitating this process. This paper offers a fresh viewpoint on comprehending the mechanism of government subsidies for digital transformation and corporate innovation capability. It also provides evidence supporting the idea that government subsidies may enhance innovation incentives more effectively.

Varieties of corporate innovation systems and their interplay with global and national systems: Amazon, Facebook, Google and Microsoft’s strategies to produce and appropriate artificial intelligence

The widely accepted globalization of innovation entails two interrelated undertheorized aspects: (1) the capacity of certain firms to orchestrate transnational innovation systems appropriating successful results, which some have explained with the concept of corporate innovation systems (CIS), and (2) the co-existence of such globalization with those CIS and national innovation systems. I address these matters analysing US Big Tech artificial intelligence (AI) CIS showing that they combine multiple mechanisms to co-produce and appropriate AI. I propose ‘frenemy’ to describe Microsoft’s strategy because many Chinese organizations and even direct competitors integrate its CIS. ‘University’ symbolises Google’s strategy, given its focus on fundamental AI, its central place in the AI research field and appropriation mechanisms that are not translating into clear business advantages. ‘Secrecy’ defines Amazon’s strategy, maximizing knowledge inflows while minimizing outflows. Facebook, with the narrowest AI CIS, exhibits an ‘application-centred’ strategy. Ultimately, this paper contributes to understanding the multiple mechanisms used by leading corporations for controlling and shaping frontier transnational knowledge production and appropriation. By doing so, it advances our knowledge of the interplay between different innovation spheres (national, global and corporate) and highlights the dangers of CIS’s encroachment of national and global systems.

Spillover effects of Japanese firms and the role of absorptive capacity in Vietnam

The paper examines the role of the absorptive capacity of Vietnamese manufacturing firms in facilitating the link from Japanese spillovers to the productivity of local firms in the manufacturing sector. By using the Generalized Method of Moments (GMM) and threshold regression model with dynamic panel data from 2005 to 2018, the paper finds the following points. Firstly, the appearance and operation of Japanese firms can bring the positive horizontal labour effect and backward competition effect but it also brings the negative backward labour effect. Secondly, the absorptive capacity of domestic firms can help reduce the negative spillover effects and increase the positive spillover effects. Finally, if domestic firms cannot reach a threshold of absorptive capacity, they will suffer from Japanese spillovers while if they meet the threshold of absorptive capacity, they can enjoy the externalities from the operation and cooperation with Japanese firms.

Do Free Trade Agreements Facilitate FDI Spillover Effects on Domestic Firms? Empirical Evidence from Oman

This paper underlines the significance of free trade agreements in attracting foreign direct investment and their impact on the operational capacities of local firms in host countries. It argues that free trade agreements do not only eliminate barriers to trade, but they also increase the size of the regional market and improve the business environment, making it more attractive to foreign direct investment, along with all the attributes and spillover effects associated with it. While determining the type of spillover effects of foreign direct investment associated with Oman’s trade agreements, this paper uses the Kruskal–Wallis H-test and 438 samples from companies surveyed between 1 August and 31 October 2023 to assess the impact of spillovers on the performance of the surveyed companies. The results reveal that technology transfer, knowledge transfer, labour productivity, product efficiency, capital investments, and job creation have positive effects on the firms’ operational capacities, with technology transfer having the highest impact (27%), followed by labour productivity and job creation (18%). The spillover effects are almost the same for company size and percentage of ownership. They also identified manufacturing and tourism as priority sectors and the availability of a skilled workforce as a major challenge. These findings make original contribution to the field as this is probably the first study to produce a firm-level analysis of spillover effects of foreign direct investment and trade agreements in the context of Oman and the wider Gulf region. The paper concludes with practical implications for policy makers when negotiating trade agreements and designing investment policies to optimize spillover effects on the performance of their domestic firms.

Tracing China’s agrochemical complex

Chinese firms, both private and state-owned, have transformed the global agrochemical complex. China dominates exports of pesticides (particularly herbicides) and various kinds of nitrogen- and phosphorous-based fertilisers. And yet the precise nature of this transformation is poorly understood: where are Chinese agrochemicals made and by whom; in what ways is domestic production changing; which actors are active in the export market; and what is flowing where? In this article we begin to flesh out some of the detail of China’s massive agrochemical complex and its internal dynamics by examining key actors and flows in China’s agrochemical export industry. Our analysis is framed by insights drawn from the Global China literature and from pesticide studies. We find two distinct industries, both of which are in flux. Domestic environmental regulations and industry upgrading are reconfiguring the landscape for mining and chemical production, resulting in a scaling back of pesticide and fertiliser production, while mergers and acquisitions are concentrating production and export capacity in particular firms. Export flows are nonetheless growing in a generally favourable export environment. Concealed in the generic categories ‘pesticide’ and ‘fertiliser’ is the fact that different products go to different destinations and do so in patterns that complicate North-South categories. Our analysis highlights the need for new commodity geographies of Chinese-made agrochemicals that can account for production, circulation, and use.

Personal income tax and corporate innovation: The key role of inventors’ financial incentives

Despite the importance of the personal income tax around the world, little is known about its impact on innovation. We construct a large database of inventors who patented at publicly listed companies during the 2008–2016 period and exploit the revised Personal Income Tax (PIT) Law of 2011 in China as a quasi-natural experiment to establish the causal effect of the personal income tax on corporate innovation. Using a difference-in-differences identification strategy, we show that a lower personal income tax rate has a significantly positive impact on patent quantity and quality. Further, the revised PIT Law raises the efficiency of R&D activities, induces more explorative innovation, and improves the success rate of patent applications, providing consistent evidence for the intentional effort channel. Moreover, this positive innovation effect is more pronounced in firms with an R&D team that is more sensitive to the salary incentive system, greater innovation dependence, better governance, and firms located in regions with better innovation environments. Taken together, our findings shed light on how inventors and firms respond to decreasing personal income tax rates and confirm that the net return to innovation can be vital to the innovation capacity of firms.

An Assessment of Pandemic Era Inflation, 2021–2022

This paper examines the inflationary period of 2021 to the middle of 2022 primarily by employing US data but is suggestive of the global inflation experience given important cross-border linkages. Inflation is posited as a result of buyer firms, operating across multiple, global supply chain stages, who must shift their purchases to a reduced set of supplier companies. Supply is crimped because of pandemic impacts on capacity. Supply-induced shortages cause global demands to concentrate around fewer oligopoly producers who hike markups and prices. Empirical work is directed at understanding which specific factors that affect pricing are most responsible for the experienced inflation. The paper finds that markup increases represent a larger fraction of price increases than the other price components, suggesting that profit-push is the most important cause of the global inflation experience. Industrial data show that cuts to the aggregate productive capacity of firms did occur, setting the stage for shortages to develop, particularly after demand recovered from the pandemic lockdown.

Corporate Governance and Collateral Effect of Real Estate

The collateral channel literature predicts that soaring real estate prices increase the debt capacity of firms with more real estate asset holdings. This paper discusses the different relationships between collateral and investment. We find that firms with strong corporate governance were more likely to increase debt capacity via the collateral channel during the real estate boom from 1993 to 2006. Entrenched managers used less debt to finance their investments when their real estate collateral values increased. Our results hold even after controlling for non-collateralized debts and credit rating of the sample firms.

How top leaders’ support affects open government data (OGD)-driven innovation capacity of firms: Based on the TOE framework perspective

Abstract The innovation value of open government data (OGD) drives firms to the participation in OGD-driven innovation. However, to fully excavate the innovation value of OGD for firms, it is essential to explore the factors and mechanisms that affect OGD-driven innovation capacity. On the basis of the technology–organization–environment (TOE) framework, a theoretical model affecting OGD-driven innovation capacity is proposed for analysis by partial least squares structural equation modeling with 236 sample data from China. The results indicate that top leaders’ support positively impacts on OGD-driven innovation capacity in firms. And we also prove that technical competence, organizational arrangement, and innovation support partially mediate the relationship between top leaders’ support and OGD-driven innovation capacity on the basis of the TOE framework. Consequently, the findings provide new research perspectives and practical guidance for promoting OGD-driven innovation capacity in firms.

The Impact of COVID-19 on Attitudes towards Growth Capacity of Tourism Firms: Evidence from Greece

The aim of this study was to examine the overall impact of the COVID-19 outbreak on the growth capacity of tourism firms in Greece during the first wave of the pandemic. To this end, questionnaires were distributed in 548 tourism enterprises operating throughout Greece within different sub sectors (hotels, travel agents, restaurants, etc.) of the domestic tourism industry. Structural equation modeling (SEM) was employed for analyzing data. The results indicated that COVID-19 negatively influenced the growth capacity of tourism firms, which in turn affected their overall performance. In particular, the negative impact on growth capacity is reflected in dimensions such as managing economic losses and meeting financial obligations. On the other hand, factors such as psychological pressure and fear had no direct impact on the growth capacity of Greek companies during the first wave of the pandemic. A slight association between psychological pressure and growth capacity was detected, which needs further scientific investigation to be supported. Overall, the study highlighted how health crises influence the dynamics and operation of firms operating in the tourism sector, offering useful insights for addressing similar turbulences in future. In this context, domestic tourism authorities should take measurers for improving the growth capacity of Greek firms in periods of turmoil to ensure sustainability in the sector.

Absorptive capacity in family firms: exploring the role of the CEO

PurposeAbsorptive capacity (AC), the ability to leverage external knowledge for innovation, helps explain the mixed findings on family firms' (FFs) innovation performance. Our research focuses on the chief executive officer (CEO)’s role – whether family or non-family and founding or later generation – in influencing AC. We also explore how firm size and environmental dynamism affect these relationships, offering insights into varying AC levels among FFs.Design/methodology/approachOrdinary least squares (OLS) regression models were estimated to test the hypotheses using a sample of 364 FFs in Spain.FindingsFFs’ AC is greater when the CEO is a family member, and even more so when the family CEO belongs to the founding family generation. While AC diminishes in larger FFs, this effect is mitigated when the CEO is a family member. The predicted moderating effect of environmental dynamics is not supported by the analyses.Originality/valueThis paper adds insights about the drivers of heterogeneity in innovation among FFs, addressing recent calls for more nuanced views of how family members drive the strategic behavior of the business and incorporating considerations of different types of FFs based on the identity of the firm CEO. The results overall support the theoretical claims and also open up important questions for future studies.

Entrepreneurial orientation and Palestinian family-owned businesses: does governance or geographic location make a difference?

PurposeThis article explores the effect of entrepreneurial orientation (EO), governance and geographic location on the performance of Palestinian family-owned businesses.Design/methodology/approachThis quantitative study uses data collected in the fall of 2022 from 180 Palestinian-owned family companies – 90 were located in Palestine and the other 90 were located in the USA. Using R software, multiple regression analysis was employed to examine the relationships between the constructs that formed the study's conceptual framework.FindingsThe results indicate that (1) the risk-taking, innovation and proactiveness dimensions of EO have a significant positive impact on the performance of Palestinian family-owned businesses; (2) Governance moderates the EO dimensions of risk-taking and proactiveness on the performance of Palestinian family-owned companies and (3) geographic location does not moderate the relationship between the EO and performance of Palestinian-owned family businesses.Originality/valueThe current intensified conflict in Palestine warrants exploring the role Palestinian family-owned businesses worldwide can play in rebuilding the local economies of Gaza and the West Bank. The following years will be crucial in determining how proactive risk-taking and innovation will support regional recovery and augment the entrepreneurial and reinvestment capacity of diasporic and home country-based Palestinian family-owned firms. Thus, our study into factors that might enhance these businesses' performance and growth potential is pertinent. A further contribution of this study is new insight into the particularities of Palestinian family-owned businesses, augmenting general theories associated with ethnic and diasporic entrepreneurship.

Firm digital investments and capacity utilisation: A perspective of factor inputs

Data resources empower traditional inputs and promote capacity utilisation. Previous research has proven the positive role of digitisation on capacity utilisation from the perspectives of information asymmetry and technological innovation, but there is still a lack of theoretical foundation. This study proposes a model of the impact of information and communications technology capital on capacity utilisation. We empirically test the relationship between firms' digital investments and capacity utilisation using the data of Chinese manufacturing-listed companies from 2007 to 2021. First, an inverted U-shaped feature exists between firm digital investments and capacity utilisation, and the main mechanisms are the ‘cost effect’, ‘capital allocation effect’ and ‘labour input effect’. Second, firms' bargaining power, industrial technology density and regional market development influence capacity utilisation when firms engage in digital investments. Third, narrowing the digital gaps within industries and regions and increasing investments in artificial intelligence, big data and digital technology applications can enhance the non-linear impact of firm digitisation on capacity utilisation. Fourth, digital transformation can resist the negative impact of external shocks on capacity utilisation to some extent. Our research provides theoretical and practical support to facilitate the high-quality development of firms.

Procurement Planning Technique: A Strategy for Sustaining Production Capacity of Bread-Baking Firms in Port Harcourt, Rivers State, Nigeria

The small and medium-scale industry is considered to be an informal section in the Port Harcourt Rivers State, Nigeria. However, the volume of business activity carried out in the sector was perceived to be capable of opening and increasing the per capita income of the city Port Harcourt if their mode of operation is mainstreamed to size procurement of materials geared towards increasing productivity amongst bread baking firms. Thus, the general aim was to evaluate how procurement technique enhances production capacity among firms in the bread-baking industry in Port Harcourt. The study was necessitated as a result of the inability of firms to strategically increase production capacity, given the apparent local means for material procurement in practice. A correlation design was adopted for the study, with the aid of a structured questionnaire on a total population of 96 firms. Questionnaires were administered to 96 production supervisors; hence, it was a judgmental census study. Findings upheld that all dimensions measured were of strong positive correlation at the least measure of 0.6 (p) ≥ 0.00. Among the conclusions reached was that making decisions was more strategically viable for firms to adopt in the industry. Thus, an empirically proven approach to procurement selection technique would be more reliable for sustaining the production capacity of the firms studied.

Literature review on the definition of absorptive capacity in firms, the conceptualization process and the factors that will ıncrease absorptive capacity

Literature review on the definition of absorptive capacity in firms, the conceptualization process and the factors that will ıncrease absorptive capacity