Capacity Of Firms Research Articles

Subsidising Textile Industries and Macroeconomic Performance in Developing Countries: An Application to the Cameroonian Economy

The most common researches on subsidies focus on the exports side. This policy is usual in the most developed countries and constitutes a mean for the government to accompany the industries. Concerning the textile sector, the developing countries are more often dependent while they have a high capacity to produce it themselves. Therefore, the objective of this article is to investigate the economic impacts of textile subsidy in developing countries. This is done through a computable general equilibrium (CGE) analysis applied to the Cameroonian economic. We show that by subsidizing the textile sector, the government participates not only to increase the capacity of firms to offer this good, but also the policy is favourable to the economic growth of these developing countries.

Business networks and organizational resilience capacity in the digital age during COVID-19: A perspective utilizing organizational information processing theory

Based on organizational information processing theory (OIPT), this study examines how and when business networks exert a positive influence on firms’ organizational resilience capacity. Using data collected from 409 Chinese manufacturing firms during the COVID-19 pandemic, and by disaggregating business networks into two dimensions—network breadth and network depth—our findings show, firstly, that both network breadth and network depth are positively correlated to the organizational resilience capacity of firms; secondly, that these relationships are mediated by firms’ ambidextrous learning; and thirdly, that the positive effects of network breadth and network depth on organizational resilience capacity are stronger when the firms’ digital technology levels are higher. Furthermore, through additional analysis, we find that the positive impact of business networks on organizational resilience capacity is stronger for non-state-owned enterprises (non-SOEs) than it is for SOEs, and also that the moderating effect of digital technology on the relationship between business networks and organizational resilience capacity is greater for non-SOEs than it is for SOEs. These findings provide new insight into how a firm's business network, in combination with its ambidextrous learning and level of digital technology, affects its organizational resilience capacity development, which helps it survive a crisis for future sustainable development.

HUMAN RESOURCE FLEXIBILITY AND ORGANIZATIONAL PERFORMANCE: AN EVIDENCE OF SELECTED MANUFACTURING FIRMS IN SOUTHEAST, NIGERIA

With increased competition in this era of globalization and knowledge economy, the role of human resources flexibility in promoting organization performance has become important for the survival and sustainable growth of the organization in both developed and developing countries, Hence contemporary workplace demands more energy, talent and multi skills with specialized aptitudes in order to succeed and survive in the face of multiple challenges created by global business. Thus the study focuses on human resource flexibility and organizational performance: an evidence of selected manufacturing firms in southeast, Nigeria .The study sought to determine the extent to which numerical flexibility influences organizational performance, ascertain the extent of the relationship between pay flexibility and organizational performance and to determine the effect of functional flexibility on organizational performance. The population size is3168 in which a sample size of 339 was realised using Taro Yamane’s formula at 5% error tolerance and 95% level of confidence. Instrument used for data collection were primarily questionnaire. Cronbach’s Alpha was used to determine the reliability of the instrument in which the value of 0.880 was obtained indicating that the instrument was reliable. Out of 399 copies of the questionnaire that were distributed, 375 copies were returned while 24 were not returned. The survey research design was adopted for the study. The hypotheses were tested using Pearson product moment correlation coefficient and simple linear regression statistical tools. The findings indicate that numerical flexibility significantly influence organizational performance (r = 0.861; F= 1069.377; t = 32.701; p <0.05). While, hypothesis two states that there is a significant positive relationship between pay flexibility and organizational performance. (r =.891, P<.05). Similarly; hypothesis three revealed that functional flexibility has significant effect on organizational performance (r = 0.828; F = 813.054; t = 28.514; p< 0.05). The study concluded that human Resource flexibility is instrumental in fostering the capacity of firms to be responsive to changes in market demands. Thus, manufacturing firms should adopt functional flexibility to adjust to the changes in the demand of their output.

Impact of Executive Remuneration and Firm Leverage on Firm Stability: Lessons from European Firms

The aim of this study is to examine the impact of executive remuneration and firms’ leverage on firms’ stability as measured by winsorized Zscore (wZscore). The wZscore measure corresponds to the Altman Zscore, which increases as default risk decreases. To test the study’s hypotheses, a linear regression model is applied to a 6-year panel dataset of 180 listed firms categorized in 10 economic sectors operating in 22 countries from the years 2013 to 2018. The results show that executive remuneration has a significant negative impact on firm stability as measured by wZscore. Additionally, firm leverage has a significant positive impact on firm stability. Beyond the theoretical implications, the findings of this study have some practical implications that are particularly relevant to boards of directors, shareholders, managers, and policymakers. The findings suggest that executives should be offered a proper remuneration package to maintain their firms’ stability along with the capacity of firms’ equity and assets to cope up with unprecedented circumstances and the firms’ long-term debts. Finally, this study offers specific recommendations for how firms can balance their pay and performance in terms of executive remuneration and ensure better leverage to optimize their own and society's sustainable development.

Enterprise Risk Management, Risk Committee, and Earning Capacity of African Banks: A Comparative Approach

This study did a comparative analysis on the effect of enterprise risk management (ERM), risk committee, on earning capacity of African banks. The study covered a study period of ten (10) years spanning from 2009 to 2018. The study covered Nigeria, Ghana, and South Africa. Data for the study were gotten from the fiscal reports of the banks under investigation. The study was analyzed using the panel data methodology. The study found that both ERM and risk committee efficiency have the greatest effect on the earning capacity of Nigerian firms (R2 = 60%) than the rest two countries. More so, our model has shown that South Africa has performed on a closer chase to Nigeria, in generating returns to the shareholders using the regressors mentioned above (R2 = 56%). Finally, Ghana has performed the least so to say as the same variables generated or made the least input to ROE (R2 = 24%). Hence, we conclude ERM and risk committee are instrumental to improved earnings capacity of selected African banks. As such, the study recommends that regulators in African countries should enforce strict compliance and ensure that the ERM policies are implemented across banks in Africa. Lastly, corporate board should engage men that are knowledgeable in risk management.

Survivors: A tentative mapping of centenarian firms around the world

Despite the relevance that the business longevity topic has taken in managerial studies over the last years, there is a lack of cross-country and cross-industry studies on business survival. Namely, there have not been concrete attempts to map long-lived companies still in operation on a global scale. In this direction, this paper aims to census firms that survived over at least 100 years worldwide, whatever their size or branch of industry. The research allowed the authors to discover the countries and the industries in which centenarian firms are most concentrated and to investigate their characteristics, such as their size or the year of their foundation. This research is the first step of a more complex and ambitious project directed to shed light on key factors of business longevity and explain the survival capacity of long-lived firms in response to rapid change in markets and society

Unraveling the airline value creation network with fuzzy cognitive maps

The creation of value is a critical factor that determines the competitive capacity of firms and their ability to survive. Notwithstanding its importance, value creation usually becomes a fuzzy concept that is difficult to grasp, especially when increasingly complex elements of reality are incorporated into its analysis. Building on the narrative of the firm as a complex adaptive system, this article provides empirical evidence showing value creation as emergent behavior resulting from hyper-connected value repositories. Several implications for scholars and practitioners are discussed. For scholars, expert knowledge is provided from 28 airline industry executives around the world together with a method based on fuzzy cognitive maps that allows modeling and simulating value creation in airlines through 26 value repositories and 77 interdependencies. For practitioners, the article raises awareness of the need to incorporate a complexity mindset into value creation analysis and smooths the transition towards a value performance management tool.

Technology Spillover and Absorptive Capacity of Firms and Countries

Technology Spillover and Absorptive Capacity of Firms and Countries

Start-ups in entrepreneurial ecosystems: the role of relational capacity

PurposeEntrepreneurial ecosystems provide the context for start-ups to access resources. The authors investigate the reliance of start-ups on their entrepreneurial ecosystem and the driving factors behind the proportion of local actors (belonging to their entrepreneurial ecosystem) within their overall set of relationships (their business ecosystem). Recognizing the limited relational capacity of firms, the authors focus on three differentiating firm characteristics: size, age and innovation of firms.Design/methodology/approachThe authors developed a sample of 163 start-ups located in the entrepreneurial ecosystem of Toulouse, France. The authors investigated the characteristics of their relationship sets using regression analysis.FindingsThe results confirm that age is inversely related to the proportion of a start-up's relationships located in its entrepreneurial ecosystem. More surprisingly, for older start-ups, the authors also highlight the presence of a moderating effect of the start-up's size on the relationship between its degree of innovation and the proportion of its relationships in its entrepreneurial ecosystem: Larger and more innovative start-ups appear to rely more on their local entrepreneurial ecosystem.Originality/valueThis research increases the understanding of the characteristics driving the interactions of start-ups with their entrepreneurial ecosystems by adopting a relational capacity approach. The authors introduce digital methods as an innovative approach for uncovering firms' ecosystems. Finally, from a practical point of view, the research should provide public authorities seeking to promote the link between local resources and the development of innovative start-ups in their regions with interesting insights.

Potential and Realized Absorptive Capacity in Colombian Firms: The Mediating Role of the Organizational Climate for Innovation

The absorptive capacity is related to knowledge evaluation and acquisition (Potential Capacity), as well as to the transformation and exploitation of such knowledge (Realized Capacity). This research aims to analyze the absorptive capacity in Colombian companies and to investigate whether the Realized capacity can be predicted from the Potential capacity. Likewise, due to the importance of the context on the absorptive capacity development, the mediating role of the organizational climate for innovation was tested. Through a cross-sectional study, a total of 260 employees from different companies completed the Absorptive Capacity Scale and the Organizational Climate for Innovation Scale. The results showed that Potential absorptive capacity is needed for Realized absorptive capacity, additionally, organizational climate for innovation exerted a mediator role in this transition. These findings highlight that companies should have an organizational climate that allows them to acquire and transform knowledge in order to increase their innovativeness and be more competitive. Further studies should analyze the organizational innovation in relation to the proposed and tested model, while considering employees from different industrial sectors.

Cultural spillovers from multinationalto domestic firms: Evidence on female employment in Costa Rica

We study cultural spillovers from multinational corporations (MNCs) to domestic companies in the information technology (IT) sector of Costa Rica. Using firm-level panel data for 2001–2011, we explore to what extent domestic firms’ female labour share increases as a result of business operations of MNCs. We find evidence of two channels for cultural spillovers from foreign direct investment (FDI) to domestic IT firms influencing higher shares of female employment: learning (imitation) effects through labour mobility, which allows former MNC employees working in domestic firms to apply skills and gender practices from their previous work experience, and demonstration effects with the presence of MNCs (through competition in the labour market), which include imitation of social norms and values of MNCs by local firms. No evidence was found for a relationship between backward linkages (purchases) of MNCs from domestic suppliers and female labour share. To promote greater participation by women in labour markets through FDI attraction, strengthening cultural spillovers would require implementing FDI promotion policies to (i) enhance the absorptive capacity of domestic IT firms, (ii) attract IT MNCs with greater potential to generate spillovers, and (iii) foster a favourable national investment climate for enhancing business interactions between IT MNCs and domestic IT firms.

On the ‘ENGO + focal firm’ governance strategies of pollution of small and medium suppliers

Presently, the environmental pollution problem, especially that of the small and medium-sized enterprises, has become a bottleneck restricting the high-quality development of China’s economy. It is imperative to accelerate the construction of a collaborative governance system with multiple subject participation. The behavior modes of Environmental Non-governmental Organizations (ENGOs), a key player in environmental care, in collaborating with core enterprises to control pollution from small and medium-sized suppliers should be explored. Therefore, we constructed a collaborative governance system consisting of ENGOs, focal firms and small and medium-sized suppliers. Then a two-stage game model was established to analyze the strategies of the governance system. Specifically, we studied the collaborative green cooperation strategy and antagonistic pressure supervision strategy between ENGOs and focal firms, analyzed factors influencing the strategic choices of each subject, and gave the advantages of the cooperation strategies through further comparisons. The results showed that: Under the cooperation strategy, ENGOs provided knowledge of environmental protection to the focal firms, then both the audit efforts of focal firms and the environmental protection efforts of small and medium-sized suppliers were effectively improved. Since ENGOs could not fully obtain the pollution information of small and medium-sized suppliers or accurately trace it from their downstream focal firms, it was difficult to drive the supply chain’s endogenous governance by this external monitoring of ENGOs, making the effect of pressure supervision strategy limited. The effectiveness of green cooperation strategy was positively correlated with the knowledge absorption capacity of focal firms, the unit product revenue, and the focal firms' violation penalties for small and medium-sized suppliers. When ENGOs' violation penalties for small and medium-sized suppliers were higher, or the reputation loss of focal firms was higher, more unfavorable conditions of green cooperation strategy could be achieved. Accordingly, ENGOs should choose to cooperate with focal firms with strong knowledge absorption ability and high profit per product; focal firms should learn environmental protection knowledge to improve the screening standards and review capabilities, and promote the achievement of green cooperation strategy conditions by strengthening active information disclosure; the government should promote the collaboration between ENGOs and focal firms by issuing environmental guidelines.

TECHNOLOGY TRANSFER AND MANUFACTURING PERFORMANCE: NIGERIA’S COINTEGRATION AND CAUSAL EVIDENCE

This paper investigates the long-run and causal relationships of technology spillovers on manufacturing performance in Nigeria using the share of Foreign Direct Investment (FDI) in gross fixed capital formation as a proxy for technology transfer for the period 1981 to 2019 in a Vector Error Correction Model (VECM). The FDI stock appears to be too low at less than 1% of capital formation to generate any significant positive spillovers on manufacturing performance, resulting in an insignificant negative long-run relationship and the absence of causal relationships. The size of the local market has the most significant positive long-run effect on manufacturing performance, and the causality for this effect is one-way from manufacturing. A one-way causality was also observed from manufacturing to income per capital, though the long-run effect was significantly negative. The paper concluded that FDI technology spillover is presently not a major factor in Nigeria’s manufacturing performance. This may be redressed with policies aimed at increasing FDI inflows, increasing the technology-learning capacity of local firms and their vertical integration with foreign firms, and the creation of national infrastructure for technology development and diffusion

Determinants of innovation by agri-food firms in rural Spain: an MCA PLS-SEM analysis

The development of a sustainable rural world must have an innovative agri-food industry as one of its bases. This article offers a comprehensive analysis of the main drivers of innovation by small and medium agri-food companies in Spain. A combined multiple correspondence analysis (MCA) and structural equation modelling (PLS-SEM) is performed to identify the key factors among 63 indicators in the domains of the technology-organisation-environmental approach. The results suggest an open field of research. Positively related to innovation are firm capacities and financial resources. Moreover, agri-food firms innovate in products, processes or marketing in order to increase sales, enter new markets, or increase the quality of their products. On the contrary, most of these firms did not innovate to reduce costs or time of response, meet regulatory compliance or maintain employment. Authorities should be aware that smaller and younger agri-food firms face more restrictions to innovate, and firms feel public policies could help to meet market demand as a driving force of innovation. On the contrary, essential objectives of regional development such as environmental compliance and maintaining employment seem to depend solely on public action.

Exogenous Shocks and the Adaptive Capacity of Family Firms: Everything New in the COVID-19 Pandemic?

The COVID-19 pandemic has been and is currently still affecting organizations of any size and in any industry and research still lacks profound insights into the managerial implications of this phenomenon. In particular, it is unclear how family firms, which are the economic backbone of most of the countries affected by the pandemic, have adapted to COVID-19. This paper addresses this gap by drawing on a rich body of evidence collected from 90 interviews and secondary data in a longitudinal case study of four German family firms. We develop a framework for understanding how family firms adapt to exogenous shocks such as the COVID-19 pandemic and find that the exogenous shock further reinforces the family firm’s resource constraints and the family’s fear of losing their socioemotional wealth (SEW). These motivational sources, in turn, trigger behavioral changes in both the firm and the family. In addition to a temporarily induced short-term orientation, these changes manifest in a (pseudo-)family cohesion, less rigid mental models, and a utilization of digital technologies. Organizational outcomes such as new alliances, digital platforms, and the adaptive capacity of family firms are the result of these behavioral changes. By providing a comprehensive understanding of how COVID-19 affects family firms, the insights from our study contribute to innovation research, business practice, and policy-making alike. More broadly, we provide innovation scholars with a theoretical comprehension of how exogenous shocks can challenge our canonical understanding of organizations’ (innovative) behavior.

How Industry 4.0 technologies and open innovation can improve green innovation performance?

PurposeThis study investigates the impact of Industry 4.0 technologies on green innovation performance. In this relationship, the mediating role of green innovation behavior is also studied. Moreover, open innovation is tested as a mediator between Industry 4.0 technologies and green innovation behavior.Design/methodology/approachA quantitative research method is adopted in which a structured questionnaire was used to collect data from 217 manufacturing firms of Malaysia. After collecting data, the partial least squares-structural equation modeling (PLS-SEM) technique is applied to analyze data and test the hypothesis of study.FindingsIt is found that Industry 4.0 positively impacts open innovation which leads to green innovation behavior. Also, the former lays positive impact on green innovation behavior which leads to improve green innovation performance.Research limitations/implicationsThe authors conclude that Industry 4.0 technologies can play an important role to improve green innovation performance of Malaysian manufacturing firms by managing open innovation for green innovation behavior which further improves the green innovation performance. In this context, it is recommended that strategists and policymakers should undertake the role of open innovation and Industry 4.0 technologies to promote environment-friendly innovations and to promote the green behavior in companies. The authors suggest hereby that firms should be given incentives to adopt and utilize Industry 4.0 technologies and collaborative innovation interactions – as they foster a climate for sustainable green innovations (which is also a key component to achieve competitive advantage) and a growing concern nowadays.Practical implicationsFirst of all the research contributes to achieving the broader of United Nations to promote sustainable innovation through green innovations. Moreover, the companies can also incorporate the findings and insights of this study while devising their policies to foster green innovations.Originality/valueThis research has done the novel contribution by bridging the gap between open innovation approach and sustainability fields while promoting green innovations in small and medium enterprises (SMEs). These two research fields are rarely studied in previous studies by focusing open innovation particularly. Hence, the authors suggest researchers to undertake these fields to further enhance the level of scholarship between innovation management and sustainability. Also, the authors recommend considering technological orientation and technological absorptive capacity of firms to improve green innovations. The current study has investigated the SMEs perspective in general irrespective to their sectoral differences, thus, for future researchers the authors suggest investigating the sector-wise comparison, i.e. electrical and electronics sector, chemical sector, etc.; or service and manufacturing sector differences.

Benchmarking absorptive capacity for sustainability: a study of Indian firms

PurposeThe paper aims to explore the attributes and systemic characteristics of absorptive capacity in sustainability oriented firms in India. Such understanding shall pave a way to integrate knowledge about societal stakeholders with technological and market knowledge. The study may help other firms to benchmark their business process considering sustainability aspects to integrate a broader set of stakeholders in decision making.Design/methodology/approachA questionnaire-based survey was conducted to gather responses from 689 managers of 60 firms belonging to various industry sectors. Absorptive capacity of firms based on result of factorial analysis, variances explained by factors and rank of attributes is presented.FindingsThe study provides a glimpse of variability in steps taken by firms to remain competitive in current and future markets. This study highlights the importance of benefits sharing among alliance partners, knowledge-management processes, social integration for tacit knowledge and exploration of new knowledge sources. Surveyed firms require improvements in employee's skill set up-gradation, exploitation of knowledge spread across different departments and suitable training systems to promote knowledge sharing behaviour.Research limitations/implicationsThe sample of study covers respondents mainly from Health, Safety and Environment/Sustainability/Clean Development Mechanism departments so leading to certain biasness in their perception.Practical implicationsThe study may lead organizations to transform business processes to integrate stakeholder's concerns and expectations.Social implicationsThe study may help organisations to develop important attributes of absorptive capacity for effective integration of stakeholders considering sustainability challenges.Originality/valueThis research article enhances understanding on common aspects of absorptive capacity, dynamic capability and sustainability strategies.

Study on Financial Capacity in Aquaculture Firms Listed on Vietnam’s Stock Market

The study investigates financial capacity through the capacity of management and the use of capital in aquaculture firms listed on Vietnam’s stock market, which is one of the basic characteristics of a joint stock company. The study employs a set of aggregated data from 12 aquaculture firms listed on Vietnam’s stock market. We have performed some descriptive analysis, compared with support by software Stata to evaluate and measure financial capacity in aquaculture firms listed on Vietnam’s stock market. The results show that there is a big difference in financial capacity in aquaculture firms listed on Vietnam’s stock market. For each company, there is change in financial capacity in the period 2016-2020. Based on the findings, some recommendations are given for aquaculture firms to improve financial capacity.

Mergers and acquisitions in emerging markets: What drives absorptive capacity in target firms?

Purpose: The purpose of this study was to investigate how knowledge flow and productivity affect the absorptive capacity of target firms in emerging markets.Design/methodology/approach: We used self-administered questionnaires to measure absorptive capacity, knowledge flow and productivity constructs. The sample comprised individuals who were employees of firms that completed acquisitions between 2015 and 2017. The acquisitions were publicly announced and the target firms were all in emerging markets.Findings/results: Firstly, our results confirmed the multidimensional nature of absorptive capacity. Secondly, we found a positive correlation between a target firm’s knowledge flow and productivity and its absorptive capacity. Thirdly, our results indicated that knowledge flow and operational processes will support the introduction and integration of external knowledge into a target firm. Therefore, understanding the absorptive capacity of target firms is central to the ability of new and existing knowledge to be assimilated.Practical implications: The realisation of the strategic intent of an acquisition is dependent on effective knowledge flow, supported by efficient communication and operational processes. The target firm’s absorptive capacity is, therefore, a key consideration for acquiring firms. Understanding this will be useful for firms to consider acquisitions of target firms in emerging markets and could potentially enhance their chances of success.Originality/value: This study contributes to the limited body of research on emerging market merger and acquisition activity. It responds to the call for further research to be conducted on emerging markets and the role of absorptive capacity in realising the strategic intent of acquisitions.

Innovation in the backward linkage firms in Ghana’s gold mining sector

ABSTRACT This contribution illustrates how Freeman’s ideas, concepts and approach, helped me build my framework of thought for my paper on innovation in supply firms to the gold mining firms in Ghana. Freeman’s theory of the National System of Innovation helped me to better understand the importance of government policy in developing the innovative capacity of firms. My research discovered that Ghana’s local content policy had increased local participation in the gold mining industry. Yet the lack of investment in the development of the technological capacity of firms and research institutions had led the firms that supply to the gold mining companies to import most of the items on the procurement list without adding any value.