Corporate Performance Relationship Research Articles

Moderating role of risk management effectiveness on corporate social responsibility- corporate performance relationship

This study is designed to provide empirical evidences on the conditional influence corporate social responsibility (CSR) on corporate accounting and market performance. This study considers risk management (RM) as a conditional or moderating variable. Accounting performance was proxied by return on assets (ROA), earnings per share (EPS), and net profit margin (NPM), while market performance was proxied by Tobin-Q and stock price. Furthermore, those proxies form corporate performance variable based on factor analysis. CSR measured using the Global Reporting Initiative (GRI G4) Index. Meanwhile, RM was measured using total risk management proxy. By applying purposive sampling method, 253 non-financial companies were selected as a sample of this study. The Structural Equation Modeling (SEM) with the WarpPLS approach was used for data analysis. This study found that the corporate social responsibility has a positive effect on corporate performance, and the relationship between corporate social responsibility and corporate performance will be stronger if corporate risk management is applied optimally. The findings of this study imply that the good corporate performance will be achieved since a company discloses more CSR information and runs effective risk management as well.

Assessing the Effect of Dynamic Capabilities on the ESG Reporting and Corporate Performance Relationship With Topic Modeling: Evidence From Global Companies.

The primary purpose of this study is to examine the relationship between the dynamic capabilities (DCs) embedded in ESG management, which are being pursued by global companies, and corporate performance amid increasing uncertainty. Furthermore, the secondary purpose is to examine the function of environmental uncertainty moderating the DCs-performance relationship. Concerning the analysis tool, this study employs topic modeling with Word2Vec embedding that analyzes unstructured data. This was employed as an alternative method beyond the limitations of the traditional approach, i.e., survey or interview. A DCs dictionary was constructed by redesigning the 12 detailed dimensions of Teece’s DCs into 10 dimensions, and then time series scores of individual global companies were extracted by applying this dictionary to the sustainability reports of 97 companies. Sustainability reports of 153 companies among Fortune Global 500 companies announced in 2020 were originally collected, but in the process of collecting additional financial data about these companies from OSIRIS, a total of only 97 companies was selected in the end due to omission of data. A fixed effect panel analysis was conducted, and the main findings are as follows: First, the DCs embedded in ESG management have a positive or negative direct effect on corporate performance. In particular, a statistically significant relationship was not observed in the innovation (technology) oriented capabilities, whereas a statistically significant positive relationship was observed in the customer (market) oriented capabilities. Second, uncertainty moderates the relationship between DCs and corporate performance positively or negatively. Interestingly, the moderating effect of uncertainty only appears in the function of the sensing and reconfiguring capabilities. From this, it can be seen that the function of DCs, which is embedded in the ESG management of global companies, is limited due to the imbalance between the sensing-seizing-reconfiguring capabilities. These findings imply that, despite the positive function of DCs embedded in ESG management, costs and benefits occur at the same time, and DCs can improve performance only if there is an organizational adaptation strategy suitable for uncertainty. Accordingly, business managers need to recognize the importance of pursuing sensing-seizing-reconfiguring capabilities in a balanced way to improve corporate performance through ESG management under uncertainty.

The mediating role of intellectual capital in corporate governance and the corporate performance relationship

PurposeThis paper aims to investigate the impact of intellectual capital (IC) as a mediator variable on the association between corporate governance (CG) practices and firm performance. This study also examines bi-causality linkages between these variables.Design/methodology/approachThe designated corporate governance index and the value-added intellectual coefficient method were used to assess the level of CG practices and the performance of IC. Tobin’s Q (TQ) and operating efficiency ratio were used to measure firm performance.FindingsThe aggregate CG score has a significant positive impact on the IC and the two measures of firm performance. However, the IC has only a partial mediation effect on the relationship between the aggregate corporate governance score and a firm’s operational efficiency ratio. The IC has partial and full mediation effects in the relationship between the sub-dimensions of corporate governance and the performance of Egyptian corporates. Moreover, a bi-causality relationship can be observed between CG and TQ.Research limitations/implicationsGeneralizing the obtained results would require the sample size to be extended.Practical implicationsThe findings should alert legislative institutions and practitioners of the need to comply with good CG practices and develop the efficiency of IC to elicit a firm’s superior performance.Originality/valueThis study is one of the first attempts to investigate the causality relationships and the mediation impact of IC on the relationship between CG practices and corporate performance in the Egyptian context.

The impact of firm size, firm age and environmental management certification on the relationship between green supply chain practices and corporate performance

PurposeThe purpose of this paper is to explore if control variables have any impact on corporate performance when implementing green supply chain management practices. The research in particular examines the impact of firm size, firm age and possession of environmental management system (EMS) certification as control variables on different dimensions of the corporate performance.Design/methodology/approachThe research design consists of a comprehensive literature review, followed by an empirical questionnaire based survey with responses of 117 participant organizations proceeded by a comprehensive statistical analysis to validate the developed theoretical framework and contribute to both practical and methodological approach. This study investigates the impact of each of these three control variables on four dimensions of corporate performance using multiple regression analysis.FindingsThe research found that there is positive relationship between firm size and environmental performance, economic performance and social performance but not with operational performance. The study also found that a certified EMS within UAE firms is having a positive impact on all four performance dimensions while firm age does not have any relationship with any of the four performance outcomes.Research limitations/implicationsThe research provides guidance for supply chain managers in the UAE and other similar emerging market in order to better understand the relationship between control variables, impact and performance, on corporate outcome. The paper also describes relevant strategies that should be taken into consideration by these managers in order to build their sustainable supply chain. The research contributes to social dimensions of supply chain sustainability on how resilient green strategies are important for supply chain stakeholders during uncertain conditions so that it can respond to uncertain changes in order to contribute to corporate social responsibility. Some of the limitations of this research include the geographic coverage of the study region and other methodological limitation.Originality/valueThis research is the first of its kind in the UAE region to assess the link between firm control variables and its impact on green supply chain management practices; which are less studied in the green supply chain literature. While there might be few other studies that addressed and uncovered the relationship between implementing green supply chain management practices and corporate performance, however, no study has attempted to find out if firm size, firm age and possession of EMS would have any impact on the green supply chain practices and corporate performance relationship. The research was conducted in an emerging economy to understand the relationship better. A series of recommendations are also provided for firms interested in improving their environmental performance while implementing green supply chain practices.

The Mediating Role of Environmental Innovation on Knowledge Acquisition and Corporate Performance Relationship—A Study of SMEs in China

Open innovation theory believes that external knowledge acquisition is the key to gaining competitive advantage. This research aimed to examine the relationship between external knowledge acquisition, environmental innovation, and performance of small and medium-sized enterprises (SMEs). This study divides the external knowledge acquisition of enterprises into external technical knowledge acquisition and external market knowledge acquisition, and examines this theoretical framework with environmental innovation as a mediator. Using a sample of 416 Chinese SMEs, empirical results revealed that high levels of technical knowledge acquisition and market knowledge acquisition were positively related to SMEs’ performance. The positive impact of technical knowledge acquisition is mainly embodied through economic performance; the positive impact of market knowledge acquisition is mainly embodied through environment performance. Meanwhile, environmental innovation plays a significant mediating role in the relationship between external knowledge acquisition and enterprise performance; environmental performance plays a significant mediating role in the relationship between environmental innovation and economic performance. This paper provides several managerial implications for managers and policy makers to improve SMEs’ performance.

The influence of a board’s ethical commitment on corporate governance in enhancing a company’s corporate performance

PurposeThe purpose of this paper is to examine the relationship between corporate governance and company performance and how a board’s ethical commitment can influence this relationship. Prior studies documented mixed evidence on the corporate governance and corporate performance relationship, which can be due to the influence of a board’s ethical commitment and will shape the corporate governance mechanism in the company and, in turn, influence performance.Design/methodology/approachThis study collected data for two years, i.e. 2013 and 2014, from the biggest 500 Malaysian companies listed in the stock exchange. Corporate governance is measured based on the requirements of the Malaysian Code of Corporate Governance (MCCG), while a board’s ethical commitment is measured based on the MCCG and various international best practices. Corporate performance is measured based on return on equity, return on assets, net profit margin, market-to-book value and TobinQ.FindingsA board’s ethical commitment was found to be significant in increasing the strength of the relationship between corporate governance and corporate performance. The findings are robust to the alternative performance measurements and lagged one-year corporate performance.Research limitations/implicationsThis paper provides further evidence on the importance of ethical practices to improve corporate environment and, hence, sustain a company’s performance. This study, however, was conducted on only large companies with a limited data collection period.Practical implicationsThis study provides an indicator that the policymaker and regulatory authorities need to double their efforts in promoting and encouraging a board of directors to take a bold step in improving its ethical culture. Shareholders and investors need to use their power and rights to demand the company to improve their governance and ethical practices.Originality/valueThis study is original, as it measures a board’s ethical commitment from various sources of local and international best practices such as Malaysia, Australia, Canada, Norway, South Korea, Singapore, Sweden, Turkey, the UK and the USA. It also contributes to the literature and theoretical understanding of the interaction between a board’s ethical commitment and corporate governance on corporate performance, particularly in developing countries like Malaysia, which is scarce in the literature.

A Moderated Mediation Model for Board Diversity and Corporate Performance in ASEAN Countries

Despite the major investigations in prior studies for direct links among board diversity and corporate performance, the literature has not covered many indirect associations among them. This article analyzes the association between board diversity (gender and foreigner) and corporate performance by focusing on the mediating role of corporate social responsibility reporting (CSRR) and the moderated mediation role of South East Asian (ASEAN) countries through new institutional theory, which consists of legitimacy and institutional theories. According to a sample of 264 corporates from all industries by using GRI G3 guideline from 2011 to 2013, we found that foreign and gender diversity have partial and full mediation effects in ASEAN countries. The main conclusion of the current article indicates that board diversity affects directly with corporate performance and indirectly with CSRR through moderated path analysis. The implications are valuable for academics, managers, and policy makers who are interested to determine the impact of intervening variables on the board diversity and corporate performance relationship in ASEAN countries.

The Innovation - Corporate Performance Relationship in Emergent Countries

Abstract Innovation has become a highly actual topic. The main goal of this study is to identify the existence of any possible impact of innovation on companies’ performances in the case of companies from 115 emergent countries, based on data provided by the World Bank. Thus, using the methodology of principal components analysis, we proposed two composite indexes: a multidimensional composite index measuring the corporate sector's innovation and another composite index measuring the companies’ performances for selected countries. In the case of innovation, four different dimensions were taken into consideration oriented towards the company's endeavor in obtaining the recognition of its products’ quality and accounting practices and also in enhancing its visibility on market and improving communication with business partners using information and communication technologies. Also, corporate performances were described by four measures regarding the dynamics of the annual sales and labor productivity and the company's propensity towards investing in fixed assets or in employee's formal training. The main output of this paper is that, using the generalized linear model in order to identify the relationship between the proposed two composite indexes, the innovation described by the selected dimensions has a significant influence on companies’ performances measures in selected countries.

The Mediating Role of Intellectual Capital in Corporate Governance and the Corporate Performance Relationship

Corporate governance significantly effects corporate performance and this relationship is established through number of studies theoretically and empirically conducted in this field. Also, there are studies which show the relationship between corporate governance and intellectual capital performance. Furthermore, intellectual capital performance positively effects corporate performance as shown in the previous studies. These relationships trigger this study to explore the role of intellectual capital as a mediator between corporate governance and corporate performance relationship. This study focuses on the idea that governance measures, board of directors in this study, can contribute to the intellectual capital efficiency of the companies which in turn results in higher corporate performance. A single structural model of corporate governance, intellectual capital and corporate performance is conceptualized. In the model, board of directors, variables are taken as governance measures, Value Added Intellectual Coefficient (VAICTM) as intellectual capital performance measure and traditional financial measures as corporate performance measures. It is intellectual capital resources which act as mechanism through which the corporate governance is able to influence the corporate performance. Intellectual capital is taken as mediator to confirm that IC properly mediates the CG and performance relationship conceptually. This study will be beneficial for the research community to combine different areas of study under one model. This study will suggest the management and other regulatory bodies to understand the importance of intellectual capital along with governance and performance.

CEO TURNOVER AND CORPORATE PERFORMANCE RELATIONSHIP IN PRE- AND POST- IFRS PERIOD: EVIDENCE FROM TURKEY

This study investigates CEO turnover and corporate performance relationship as a measure of the effectiveness of a corporate governance system. The impact of different financial accounting regimes on the turnover/performance relationship is also analyzed. If systems replace poorly performing managers, they are considered as not ineffective. The results provide evidence that corporate governance systems with poor governance characteristics may not be ineffective, due to the existence of alternative governance mechanisms. The disciplinary CEO turnover is found to be more strongly associated with corporate performance compared to voluntary CEO turnover, whereas in the IFRS subsample the relationship is stronger with contemporaneous performance measures.

Strategic Planning and Corporate Performance Relationship in Small Business Firms: Evidence from a Middle East Country Context

This research aims to identify strategic planning system characteristics in Jordanian small industrial firms and toexamine its relationship with corporate performance. This is one of the first studies to examine such questions.Existing literature, both theoretical and empirical, is examined to identify the state of knowledge associated withthis question in both developed and middle East countries. The empirical research was co-ordinated via a surveyof small Jordanian industrial publicly quoted firms. A questionnaire survey of these firms yielded a 52.1 per centresponse rate. The results of the survey provided a rich source of data in relation to a variety of practicesassociated with strategic planning in small Jordanian industrial firms. Key findings provided empirical evidenceabout the involvement of top and line management in planning, the use of environmental screening, and the useof strategy tools and techniques. Furthermore, the study found a strong positive relationship between strategicplanning and corporate performance. This research gives a new empirical evidence about the value of strategicplanning to corporate performance from Middle East countries context.

Diversification and Corporate Performance in China: An Agency Theory Perspective

ABSTRACT This paper examines diversification and corporate performance relationship in the framework of agency theory. Contrary to most of the findings from Western developed countries and emerging markets, the study reports a statistically significant U-shape relationship. The finding is also inconsistent with the notion that managerial discretion contributes to the diversification decision and results in discount firm value. The robustness test confirms these results after controlling for other firm level variables. These conclusions suggest that the understanding in Western literature about diversification performance provided by the agency theory may not be automatically applicable to the case of China's companies, and a highly diversified corporate practice could still be beneficial in China.

Market Orientation and Organizational Performance: Is Innovation a Missing Link?

In recent years, a market-oriented corporate culture increasingly has been considered a key element of superior corporate performance. Although organizational innovativeness is believed to be a potential mediator of this market orientation–corporate performance relationship, much of the evidence to date remains anecdotal or speculative. In this context, the authors present a systematic framework to test the postulated “market orientation–innovation–performance” chain. To this end, the direct causality assumption of market orientation on organizational performance is examined with Narver and Slater's (1990) market orientation framework. Moreover, the authors take a componentwise approach and examine how the three core components of market orientation (customer orientation, competitor orientation, and interfunctional coordination) affect the two core components of organizational innovativeness (technical versus administrative) en route to affecting corporate performance. Using banking industry data, the authors empirically test and substantiate innovation's mediating role in the market orientation–corporate performance relationship.