Dimensions Of Firm Performance Research Articles

Quality management, environmental management and firm performance: direct and mediating effects in the hotel industry

Abstract Although much has been written about the effects of quality management (QM) and environmental management (EM) systems on firm performance, little attention has been paid to the potential influence of QM on EM. The aim of this study is to examine the joint impact of QM and EM on firm performance, and the influence of QM on EM. The population of this study is formed by 3-, 4-, and 5-star Spanish hotels. We propose a structural model considering QM and EM as formative constructs tested using partial least squares (PLS) as the statistical tool. The results show that QM and EM affect several dimensions of firm performance positively, and also that QM implementation facilitates the development of skills for EM in the hotel industry. Our findings may help hotel managers to realise that QM and EM influence some performance variables within their industry and that a real commitment to QM will promote EM and reduce its costs.

Real effects of private equity investments: Evidence from European buyouts

This study investigates the effects of buyout deals on the ex-post performance of target companies. The analysis is based on a sample of 241 private-to-private buyouts involving European companies between 1997 and 2004 and a control sample of non-buyouts selected through a propensity score matching methodology. The paper explores three different dimensions of firm performance: size, profitability and productivity. The results indicate a positive impact of buyouts on the growth of total assets and of employment in target firms in the short- and mid-term. An equivalent clear pattern cannot be identified for productivity, while we estimate a lower operating profitability for buyout companies with respect to the control group three years after a deal is made. When we restrict the analysis to the sub-sample of buyout companies, we find that generalist funds negatively and significantly impact the mean ex-post operating profitability of PE-backed firms, while turnaround specialists are positively associated with operating profitability. The evidence also highlights that target companies whose lead investor is located in the same country show relatively higher ex-post profitability performance.

International trade and firm performance: a survey of empirical studies since 2006

The literature on international trade and firm performance grows exponentially. This paper attempts to summarize what we learn from this literature to guide future empirical and theoretical work in this area. The focus is on the empirical part of the literature that consists of recently published papers using data for firms from manufacturing or services industries to study the links between international trade (exports and imports) and dimensions of firm performance (productivity, wages, profitability and survival).

Multimarket contact and firm performance: The moderating effect of Confucian culture

This paper examines the effect of Confucian cultural value on the relationship between multimarket contact and two dimensions of firm performance, i.e., firms’ innovation and profitability. It is hypothesized that firms with a high level of multimarket contact are more likely to show mutual forbearance towards their competitors, which in turn influences their innovative behavior and financial performance. Taking into account the possible moderating effects of Confucian cultural value, we also hypothesize that the effect of multimarket contact is more pronounced among firms from the Confucian culture. In other words, it is argued that firms from the Confucian culture are more likely to innovate and obtain better financial performance. Empirical tests were conducted after the hypotheses, and the findings support the arguments on multimarket contacts and mutual forbearance hypotheses. Through facilitating tacit collusion, multimarket contact does seem to help create superior economic performance.

Corporate Reputation And Technical Efficiency: Evidence From The Chemical And Business Services Industries

<p class="MsoNoSpacing" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-family: "Times New Roman","serif"; color: black; font-size: 10pt; mso-themecolor: text1;">Recent financial scandals have created uneasiness in our financial markets. This resulting crisis of confidence increases the importance of reliably assessing firm performance. How can investors and creditors confidently assess firm performance? Can firm reputation provide signals about firm performance and efficiency? The purpose of this paper is to examine the association between corporate reputation and efficiency, a dimension of firm performance. We obtain a measure of a firm’s technical efficiency by using Data Envelopment Analysis (DEA), a non-parametric technique. We use firms from America’s Most Admired Companies list of 2006 as our measure of firm reputation. Results support the hypothesis that firms with superior reputation operate more efficiently than matched firms in the business services (SIC = 73) and chemical (SIC = 28) industries. The results should be of interest to managers who engage in behavior leading to or maintaining a positive corporate reputation. Also, the results can increase individual investors’ confidence in investing companies with superior reputation. </span></p>

International Trade and Firm Performance: A Survey of Empirical Studies Since 2006

The literature on international trade and firm performance grows exponentially. This paper attempts to summarize what we learn from this literature to guide both future empirical and theoretical work in this area, and public debates and policy makers, in an evidence-based way. The focus is on the empirical part of the literature that consists of recently published papers using data for firms from manufacturing or services industries to study the links between international trade (exports and imports) and dimensions of firm performance (productivity, wages, profitability and survival). It discusses recent add-ons to the box of tools for empirical investigation in this field and suggests topics for future research.

Ambidextrous organizations and firm performance: the role of marketing function implementation

Managers continue to struggle with implementing a firm's approach to its market. Many potential pitfalls exist, particularly at the functional level. For firms that pursue an ambidextrous approach, simultaneously exploiting existing markets while exploring new opportunities, implementation is perhaps even more critical. Interestingly, the implications of functional implementation on multiple dimensions of financial and non-financial performance in the context of an ambidextrous approach are unknown. In light of these challenges, we examine the mediating effect of the implementation of the marketing function strategy in the ambidextrous organization–performance relationship. We find that the implementation of marketing strategy fully mediates the ambidextrous organization–performance relationship on important dimensions of firm performance, including key outcomes such as profits and customer satisfaction. Our results demonstrate that the benefits of developing an ambidextrous organization that can balance both exploitation and exploration are enhanced when the role of function implementation is incorporated into theory and research designs.

Innovation in Nigerian Small and Medium Enterprises

This article seeks to explore the types of innovation that are predominant in SMEs in developing countries and to investigate the impact of these innovations on different dimensions of firm performance based on an industry-wide innovation survey carried out in Nigeria in 2007. Although innovation is important for superior firm performance, our result found that the type of innovation that SMEs pursue is not a critical consideration in their performance. While there was no difference found in the focus of SMEs on either of product or process innovations, evidence showed that SMEs would focus more on incremental product and process innovations. Incremental innovation was found to be very important for Nigerian SMEs and a significant predictor of product quality and not of revenue. The authors conclude that SMEs chooses to pursue such innovations that most fit their strategies and available resources. Such level of innovation affords Nigerian SMEs to more extensively exploit the domestic market but cannot support extensive new product development required to enter export markets.

Social Responsibility and Firm Efficiency in the Business Services Industry

Assumed performance benefits are often used as motives to drive coporate social responsibility (CSR) initiatives. Is improved efficiency among these performance benefits generated by CSR initiatives? This study empirically examines the association between corporate social responsibility and the efficiency dimension of firm performance. The relationship between corporate social responsibility and financial performance has received increasing and conflicting attention in recent years. Its role in maximizing shareholder wealth is still a subject of continued debate. Turning attention to efficiency examines another dimension of performance. Specifically, we examine the association between corporate social responsibility (CSR) and efficiency in the business services industry from 2005 to 2007. We measure efficiency using the relative efficiency score calculated by Data Envelopment Analysis (DEA). CSR is measured using Kinder, Lydenberg, and Domini (KLD), Inc. data. Results document evidence to support a positive association between CSR and firm efficiency. Documenting these potential efficiency benefits from CSR has important implications for CSR activities and initiatives particularly in our current turbulent economy. It supports recent work that links CSR with dimensions of improved competitiveness (Vilanova et al., 2009) including efficiency. The documented efficiency benefits of CSR are useful to businesses and support CSR strategies focused on “doing well by doing good”.

Corporate Governance Ratings and Firm Performance

We examine the corporate governance ratings provided by three premier US rating agencies and find that summary scores are generally poor predictors of primary and secondary measures of future firm performance. However, some component sub‐ratings that focus on the eight key dimensions of dynamic governance structures provide more positive and reliable evidence of their information content in predicting the multiple dimensions of firm performance. These results reflect the recent observations by academic researchers and money managers that it is extremely difficult to distill all of the complex governance mechanisms into a single integrated, yet informative overall score.

Relative Effects of Marketing Effectiveness Dimensions on Firm Performance: An Empirical Analysis with a Multi-industry Sample

The aim of this study is to understand the influence of marketing operational efficiency and marketing system effectiveness on firm performance dimensions. Marketing operational efficiency and marketing system effectiveness are two dimensions of marketing effectiveness derived as a result of the exploratory factor analysis performed on the data. Firm performance dimensions used in the study are overall performance, ROI, percentage of new product sales, change in market share, and sales growth, all measured relative to competitors. Multiple respondent firm level data are collected through a survey of 74 firms operating in a variety of industries, resulting in 296 individual surveys. Findings indicate that marketing operational efficiency, a set of short-term, operational dimensions, positively influences all of the firm performance dimensions. On the other hand, marketing system effectiveness, measuring longer-term, strategic factors, does not have such an impact.

Offshoring and Firm Performance: Self-Selection, Effects on Performance, or Both?

This paper uses unique new data for German manufacturing enterprises from matched regular surveys and a special purpose survey to investigate the causal effect of relocation of activities to a foreign country on various dimensions of firm performance. Enterprises that relocated activities abroad in the period 2001-03 for the first time are compared to firms that did not relocate activities abroad before 2006. The comparison is performed for both 2004 (to document differences between the two groups of firms after some of them started to relocate abroad) and for 2000 (when none of them did relocate abroad). It turns out that, compared to non-offshoring firms, firms that relocated activities were larger and more productive, and had a higher share of exports in total sales. All these differences existed in 2000, the year before some firms started to relocate, and this points to self-selection of better firms into offshoring. This finding is in line with results from recent theoretical models and with results from other countries. To investigate the causal effects of relocation across borders on firm performance, six different variants of a matching approach of firms that did and did not start to relocate abroad in 2001-03 were performed based on a propensity score estimated using firm characteristics in 2000 and the change in the performance variable between 1997 and 2000. The performance of both groups was compared for 2004-06 when some firms were relocating firms and the others were not. Broadly in line with hypotheses derived from the literature there is no evidence that offshoring has a negative causal impact on employment in offshoring firms. The effect is positive and large for productivity, and weak evidence for a positive effect on the wage per employee, the proxy variable for human capital intensity used, is found. Contrary to what is often argued, therefore, we find no evidence for a negative causal effect of offshoring on employment in Germany or on other core dimensions of firm performance.

IT Assets, Organizational Capabilities, and Firm Performance: How Resource Allocations and Organizational Differences Explain Performance Variation

Despite evidence of a positive relationship between information technology (IT) investments and firm performance, results still vary across firms and performance measures. We explore two organizational explanations for this variation: differences in firms' IT investment allocations and their IT capabilities. We develop a theoretical model of IT resources, defined as the combination of specific IT assets and organizational IT capabilities. We argue that investments into different IT assets are guided by firms' strategies (e.g., cost leadership or innovation) and deliver value along performance dimensions consistent with their strategic purpose. We hypothesize that firms derive additional value per IT dollar through a mutually reinforcing system of organizational IT capabilities built on complementary practices and competencies. Empirically, we test the impact of IT assets, IT capabilities, and their combination on four dimensions of firm performance: market valuation, profitability, cost, and innovation. Our results—based on data on IT investment allocations and IT capabilities in 147 U.S. firms from 1999 to 2002—demonstrate that IT investment allocations and organizational IT capabilities drive differences in firm performance. Firms' total IT investment is not associated with performance, but investments in specific IT assets explain performance differences along dimensions consistent with their strategic purpose. In addition, a system of organizational IT capabilities strengthens the performance effects of IT assets and broadens their impact beyond their intended purpose. The results help explain variance in returns to IT capital across firms and expand our understanding of alignment between IT and organizations. We illustrate our findings with examples from a case study of 7-Eleven Japan.

Supply chain flexibility and firm performance

PurposeTo explore the relationship between the dimensions of supply chain flexibility and firm performance in a sample of automotive suppliers.Design/methodology/approachEmpirical survey of a representative sample of 126 Spanish automotive suppliers during the months of September and October 2003. Data gathered through a mail survey to purchasing managers by using a structured questionnaire. Spearman correlation coefficients were used to analyse the relationship between the different supply chain flexibility dimensions, between supply chain flexibility dimensions and firm performance dimensions, and between supply chain flexibility dimensions and environmental uncertainty dimensions. A multivariate analysis studied the determinants of supply chain flexibility.FindingsThe research has found a positive relation between a superior performance in flexibility capabilities and firm performance, although flexibility dimensions are not equally important for firm performance. On the other hand, the results show that companies enhance more the basic flexibility capabilities (at the shop floor level) than aggregate flexibility capabilities (at the customer‐supplier level). However, aggregate flexibility capabilities are more positively related to firm performance than basic flexibility capabilities. Thus, companies might miss opportunities to improve competitiveness by underestimating customer‐supplier flexibility capabilities. Finally, the results indicate that flexibility capabilities are enhanced in supply chains with higher environmental uncertainty, technological complexity, and mutual understanding, but with lower interdependence among the agents involved in the supply chain.Research limitations/implicationsThere are other factors not included in the model that could impact the relationship between flexibility, supply chain characteristics and firm performance. On the other hand, the research has used cross‐sectional data, which are limited in order to explain causal relationships. Another limitation of the research is that we did not use any secondary data (like manual financial reports) to crosscheck firm performance.Practical implicationsThe results of the research contribute to a better understanding of the forces and constraints that companies face with flexibility capabilities.Originality/valueThe paper analyses the relationship between supply chain flexibility dimensions and firm performance. The model provides a framework of supply chain flexibility dimensions that may be used as a test base for further research.

TOTAL QUALITY MANAGEMENT AND THE BALANCED SCORECARD APPROACH: A CRITICAL ANALYSIS OF THEIR POTENTIAL RELATIONSHIPS AND DIRECTIONS FOR RESEARCH

Abstract Total quality management (TQM) practices have been implemented by firms interested in enhancing their survival prospects by including quality and continuous improvement into their strategic priorities. Using financial and non-financial measures, the balanced scorecard (BSC) approach appraises four dimensions of firm performance: customers, financial (or shareholders), learning and growth, and internal business processes. This paper attempts to establish a link between these two approaches and in so doing it identifies future research opportunities in relation to these two approaches. The paper suggests that TQM does not consider employee satisfaction in its search for continuous improvement, but the BSC does consider employee satisfaction. Therefore, by adopting a BSC a firm that has adopted TQM will overcome this oversight which will in turn increase employee satisfaction and subsequently firm performance. These issues are assessed from the managerial and critical literatures. The final part of this paper identifies research issues into the nature, impact and value of the TQM–BSC “fit”.

TOTAL QUALITY MANAGEMENT AND THE BALANCED SCORECARD APPROACH: A CRITICAL ANALYSIS OF THEIR POTENTIAL RELATIONSHIPS AND DIRECTIONS FOR RESEARCH

Total quality management (TQM) practices have been implemented by firms interested in enhancing their survival prospects by including quality and continuous improvement into their strategic priorities. Using financial and non-financial measures, the balanced scorecard (BSC) approach appraises four dimensions of firm performance: customers, financial (or shareholders), learning and growth, and internal business processes. This paper attempts to establish a link between these two approaches and in so doing it identifies future research opportunities in relation to these two approaches. The paper suggests that TQM does not consider employee satisfaction in its search for continuous improvement, but the BSC does consider employee satisfaction. Therefore, by adopting a BSC a firm that has adopted TQM will overcome this oversight which will in turn increase employee satisfaction and subsequently firm performance. These issues are assessed from the managerial and critical literatures. The final part of this paper identifies research issues into the nature, impact and value of the TQM–BSC “fit”.

The Impact of German Works Councils on Profitability and Innovation: New Evidence from Micro Data / Der Einfluß von Betriebsräten auf Profitabilität und Produktinnovationen: Neue Untersuchungsergebnisse auf der Basis von Betriebsdaten

Summary This paper presents new evidence of works council impact on two dimensions of firm performance, namely, relative profitability as assessed by top management, and innovative activity as measured by new product development. The extant German literature is reviewed en passant, and some care is also taken to differentiate between the theoretical arguments that have been used to support greater worker involvement in their companies. Consistent with previous research findings based on different data sets, no support is adduced for the proposition that works councils favorably influence the outcome indicators. That being said, it is argued that further progress in the economic analysis of the works council awaits the availability of large-scale panel data, in the absence of which considerable ambiguity will perforce continue to attach all estimates of works council impact, including those reported here.

The Impact of CEO Role Behaviour on Firm Performance

AbstractThe impact of executive leadership on organisational performance has been the focus of study for many years. This study, of CEOs of Australian publicly listed companies, used the Competing Values Framework developed by Hart and Quinn (1993) to measure CEO role behaviour. It consists of four competing roles: Vision Setter, Motivator, Analyser, and Task Master. These roles were tested against three dimensions of firm performance: Financial, Business, and Organisational Effectiveness Performance. The results showed that there was little functional connection between executive leadership and firm performance.Further, the organisational effectiveness factor was the domain of firm performance most influenced by CEOs. Task Master role was the only role behaviour which had a positive relationship with any domain of firm performance.Behavioural complexity of leadership behaviour had a positive relationship with organisational effectiveness performance in large firms and for firms following an analyser type of strategy. Behavioural complexity also had a positive relationship with business performance for firms following an analyser type of strategy. However, there was no association between behavioural complexity and financial performance regardless of situational factors.These findings suggest that effective CEOs are required to demonstrate paradoxical skills, and that any approach for developing management skills must involve a heavy dose of practical application.

The Impact of CEO Role Behaviour on Firm Performance

AbstractThe impact of executive leadership on organisational performance has been the focus of study for many years. This study, of CEOs of Australian publicly listed companies, used the Competing Values Framework developed by Hart and Quinn (1993) to measure CEO role behaviour. It consists of four competing roles: Vision Setter, Motivator, Analyser, and Task Master. These roles were tested against three dimensions of firm performance: Financial, Business, and Organisational Effectiveness Performance. The results showed that there was little functional connection between executive leadership and firm performance.Further, the organisational effectiveness factor was the domain of firm performance most influenced by CEOs. Task Master role was the only role behaviour which had a positive relationship with any domain of firm performance.Behavioural complexity of leadership behaviour had a positive relationship with organisational effectiveness performance in large firms and for firms following an analyser type of strategy. Behavioural complexity also had a positive relationship with business performance for firms following an analyser type of strategy. However, there was no association between behavioural complexity and financial performance regardless of situational factors.These findings suggest that effective CEOs are required to demonstrate paradoxical skills, and that any approach for developing management skills must involve a heavy dose of practical application.

Ideal and actual product adaptation in US exporting firms

Investigates how export market characteristics such as local government regulation, infrastructure differences, export market lag, cultural differences, end‐user differences in tastes and preferences, and competitive intensity affect ideal and actual product adaptation. Explores how these effects varied by consumer versus industrial products. A mail survey of medium‐sized export firms provided the data for hypothesis testing. The results suggested the major market factors driving adaptation were government regulation, infrastructure differences and market lag. Evaluates the effects of adaptation on several dimensions of firm performance. Sales growth was the only dimension significantly affected by adaptation.