Firms In Economies Research Articles

Improving Innovation Quality in Responding to Rigorous Intellectual Property Logic in Emerging Economies? The Role of Subsidy Policy for Patenting Overseas and International Imprinting

AbstractThis study investigates the link between subsidy policy for patenting overseas (SPPO) and the innovation quality of emerging economy firms, focusing on the role of international imprinting. Through the theoretical lenses of institutional logics and imprinting, we hypothesize that SPPO, which embodies a rigorous intellectual property (IP) logic, enhances innovation quality, particularly in firms with international imprinting. Analysing Chinese listed firms in the computers, telecommunications and electronics sectors during 2004–2021 using matching and difference‐in‐differences techniques, we find that firms responding to SPPO show improved innovation quality. This effect is amplified by international imprinting at the board and organizational levels, both separately and jointly. These findings highlight that international imprinting enhances the effectiveness of government policy that embodies rigorous IP logic, offering valuable insights for managers and policymakers seeking to foster high‐quality innovation in emerging economies.

PODUZETNIČKA ORIJENTACIJA, UMREŽAVANJE I RAST PODUZEĆA: DOKAZI IZ TRANZICIJSKOG GOSPODARSTVA

Entrepreneurial Orientation (EO) has become an important research domain in the entrepreneurship literature to analyze the ability of firms to maximize the opportunities in the market. Similarly, considering the distinct context of firms in transition economies, networks have become an integrated part of analyzing firms in these contexts. Therefore, the purpose of this study is to examine the impact of EO dimensions (innovativeness, proactiveness, and risk-taking) and networks on micro-, small-, and medium enterprises' growth. This study employs a cross-sectional study on 438 firm owners/managers in four sectors in the case of Kosovo. Findings show highly statistically significant and positive results for all three dimensions: proactiveness, risk-taking, and innovativeness, and a positive and statistically significant relationship between networking and firm growth. All control variables remain consistent regarding statistical significance after introducing EO dimensions. Only when introducing the networking variable does the variable denoting university-level education become negative and statistically significant compared to the non-university education of managers.

How does outward FDI in developed economies affect the R&D of emerging economy firms? An attention-based view

How does outward FDI in developed economies affect the R&D of emerging economy firms? An attention-based view

China's technological catch-up through foreign IP acquisitions: Disaggregating the effects of cross-national distance

While the effects of proximity on the technological catch-up of emerging economy firms are well documented, little is known about how the sub-dimensions of cross-national distance impact such firms' acquisition of foreign IP. Cross-national distance is a complex, multi-dimensional construct that has the potential to influence catch-up in different ways, especially for Chinese firms. We use the established Wharton indicators of cross-national distance (Berry et al., 2010) to understand foreign IP acquisition by Chinese firms over a 10-year period. Results show: (1) different sub-dimensions of distance have different direct effects on foreign IP acquisition, (2) a positive effect of knowledge distance on IP acquisition interacts with three other forms of distance, (3) the most aggressive foreign IP acquisition strategies are linked to only three forms of distance, and (4) the impact of disaggregated distance depends on IP asset type and whether the acquirer is in manufacturing or services. Results provide new insight into China's technological catch-up and the complex, multi-dimensional nature of international proximity influencing technological catch-up through acquisitions.

Beyond geopolitics: Agency and modularity in mobile telecommunications in Kazakhstan

Much of the discourse on U.S.-China tech decoupling has centered on trade and geopolitics, often overlooking the ground-level realities of developing countries and their strategic digital choices. The telecommunication industry, with its international supply chain and long-term orientation, is a particularly interesting locus to explore distributed and ground-up agency in countries that depend on Western and Chinese tech giants. In this article, we draw on fieldwork in Kazakhstan conducted in 2022 and 2023, primary and secondary sources, to describe the decision-making process in building and maintaining mobile telecom infrastructure. We identify three key constraints shaping this process - market and network structures, distribution and procurement process, and (geo)political and security considerations. Within these constraints, we uncover spaces for agency at different levels and highlight the ability of different actors – from engineers to telecom companies' management - to influence choices in hardware, software and financing. We argue that the strategic role of telecom firms in national economies, the industry's long-term orientation and modularity, and the firms' ownership structures serve as important counterbalances to sudden disruptions caused by international politics. In a digital world increasingly shaped by competition between U.S. and Chinese tech giants, findings from Kazakhstan highlight the potential for developing countries to carve their own digital trajectories and offer a framework for future research to extend this analysis to other sectors and regions.

Enterprise digitization and marine economic performance: An empirical study of listed enterprises in China's maritime economy.

The scale and connectivity of marine resources make them more complex than land resource management. Although digitization has been recognized as an organizational change process that can effectively improve resource efficiency and enhance network resilience, however, gaps remain in establishing the theoretical links between digitization and marine economic performance. Based on a panel fixed-effects model, this study evaluates the interrelationships and potential mechanisms of different firms with data from annual reports of listed firms in the marine economy in the eastern coastal region of China. The results indicate that there is a 'U-shaped' relationship between digitalization and enterprise efficiency in the maritime sector, and significant heterogeneity exists in the characteristics of these enterprises. Notably, firms' technological innovation capability can modulate the 'U-shaped' relationship through the interaction of economies of scale and economies of scope. This paper highlights how digitization mitigates the fragmentation and sectionalization of marine information and addresses the digital overload and productivity paradox that firms may face in the early stages of digitization. The study suggests that institutional diversity shapes resilience. Governments need to promote top-down regulation and industry collaboration, while marine enterprises need to coevolve collaboratively with them through bottom-up internal communication and external interaction to enhance the value chain of marine enterprises.

Strategic collaboration between domestic and foreign firms on production outsourcing processes: Insights from a developing economy Firm's perspective

Worldwide fragmentation of production stages enable the developed and developing economies' firms to gain from ‘foreign outsourcing collaboration (FOC)’. Literature indicates that the majority of studies on foreign outsourcing are based on the perspective of developed countries. Nevertheless, a meager amount of literature is available from the perspective of developing countries. This study bridges the research gap by employing field survey based data collected from 217 textile and apparel firms located in Faisalabad-Pakistan, for the fiscal year 2022. This study mainly examines the impact of: (i) investment in information technology (IT) on FOC in the production process; (ii) strategic integration of outsourcing policies on FOC in the production process; and (iii) strategic policy firms' adopted on FOC in the production process. SmartPLS 4 has been utilized to estimate the partial least square structural equation model. The results signify that investment and utilization of IT induce a higher level of firm performance by enhancing firms' efficiency and improving product quality. Moreover, FOC in production processes increases product quality whereas investment in IT attracts FOC in production processes. The study concludes by offering specific policy recommendations.

Whither the Walking Dead? The Consequences of Artificial Intelligence for Zombie Firms

Abstract Zombie firms have been a prominent yet controversial subject of academic and policy debates in recent years. In this article, we first revisit the economic consequences and driving factors of zombie companies and then, based on this assessment, discuss the implications of artificial intelligence (AI) for zombie firms. We document that the share of zombie firms in advanced economies has risen considerably over the past three decades, and that this increase has been a significant drag on productivity growth. We further find that persistently low interest rates are a significant causal factor underlying the rise of zombie companies. Turning to AI, we argue that an AI-induced productivity boom may counteract the drag from zombie firms and improve firm performance, mitigating corporate zombification. Moreover, by leading to higher interest rates that force zombie firms to exit markets, AI may boost productivity further in the longer run – a so far overlooked channel in the debate on the economic implications of AI.

Acquirer ESG, Home Country Policy Enforcement, Country Distance, and Cross-Border Mergers and Acquisitions: Evidence from Chinese Firms

This paper examines the impact of ESG (Environmental, Social, and Governance) on cross-border M&A activities and outcomes from the perspective of emerging economy firms. Using cross-border M&A events of Chinese acquirers between 2009 and 2021 as a sample, we employ logistic regression and multiple linear regression for analysis and conduct robustness tests. The study finds that: (1) Acquirers with lower ESG ratings are more likely to choose other developing countries for M&A, and the home country’s policy enforcement significantly positively moderates this relationship; (2) Lower ESG ratings of acquirers have a significant negative impact on their M&A performance, while the country distance between China and the host country does not have a significant moderating effect on this relationship. These results suggest that under strong home country policy enforcement, emerging economy firms are pressured by their home country’s ESG ratings to choose host countries with lower ESG requirements for M&A. However, this approach is like “drinking poison to quench thirst”; while selecting an “ESG haven” can temporarily reduce ESG rating pressure, low ESG ratings ultimately result in lower M&A performance. Received: 19 July 2024 | Revised: 2 September 2024 | Accepted: 17 September 2024 Conflicts of Interest The authors declare that they have no conflicts of interest to this work. Data Availability Statement The data that support the findings of this study are openly available in this paper. Author Contribution Statement Jianquan Guo: Conceptualization, Methodology, Software, Validation, Formal analysis, Investigation, Resources, Data curation, Writing-Original Draft, Writing-Review & Editing, Visualization, Supervision, Project Administration, Funding acquisition. Jiao Kou: Methodology, Software, Validation, Formal analysis, Investigation, Resources, Data curation, Writing-Original Draft, Writing-Review & Editing, Visualization.

The impact of carbon risk on the cost of debt in the listed firms in G7 economies: The role of the Paris agreement

The Paris Agreement, signed in 2015, sets ambitious goals for diminishing greenhouse gas emissions and restricting the rise in global temperature to achieve a less carbon-intensive and climate-resilient global economy. The Paris Agreement marked a defining moment in the worldwide response to global warming and has significantly affected the financial sector. Given this background, this research explores the effects of carbon risk on the cost of debt (CoD) in 1428 listed firms across seven economies from 2011 to 2020. The paper also reflects the post-Paris Agreement's involvement and the ESG factors' moderating effect in the empirical models. The study finds a significant impact of carbon risk on CoD following the implementation of the Paris Agreement. Notably, companies with higher carbon risk face higher borrowing rates. However, the effect of ESG on moderating the relationship between carbon risk and CoD is found to be insignificant. Further analyses confirm this finding, as individual pillars of ESG (governance and social aspects) also show insignificant moderating effects.

Untangling business model innovation in family firms: Socioemotional wealth and corporate social responsibility perspectives

Despite the increasing interest in business model innovation (BMI) as a way to improve the performance of firms, and the predominance of family firms (FFs) in modern economy, these two topics have so far not been combined. Drawing on socioemotional wealth (SEW) theory and the corporate social responsibility (CSR) concept, and on insights from research into BMI, we conduct a qualitative analysis using data from fifteen European FFs, examining the strategic and BM focus, the nature of the BM renewal, and the process and outcomes of BMI on their business models (BMs). Our results identify several BM configurations, with a focus on (1) growth by internationalization in combination with attention to increased quality in value creation, and (2) profit orientation based on increased efficiency, enabled by digitalization, mainly in the value delivery components of a BM. The latter reflects distinctive, innovative capabilities found in FFs, that contribute to the preservation of family objectives, as suggested by SEW theory and business orientation on CSR. Furthermore, there is a link between family involvement and limited, but specific, knowledge-related resources, and the way the dynamic BMI process is governed and executed.

Limitations of Managerial Attention and Role of Advisors: CBAs by Emerging Economy Firms

Limitations of Managerial Attention and Role of Advisors: CBAs by Emerging Economy Firms

Contingent Value of Political Connections in Cross-Border Acquisitions of Emerging Economy Firms

Contingent Value of Political Connections in Cross-Border Acquisitions of Emerging Economy Firms

The Effect of Internationalization on Innovation in Emerging Economy Firms: Role of Board Diversity

The Effect of Internationalization on Innovation in Emerging Economy Firms: Role of Board Diversity

Benefits for the Greek economy from resolving bad loans and zombie firms

We examine the type and magnitude of negative externalities stemming from “zombie” firms in the Greek economy, focusing on investment, employment and productivity. For this purpose, we use a panel dataset of Greek firms broken down by size and sector of economic activity for the period 2002-2021. A descriptive analysis reveals a high positive correlation in the trends between non-performing business loans and the number of zombie companies in the Greek economy over the last twenty years. Through quantitative analysis, significant direct and indirect effects emerge from the degree of density of zombie firms at the total economy and sectoral levels. First, healthy firms outperform zombie firms in terms of investment growth, employment growth and productivity levels. Second, a high concentration of capital in zombie firms negatively affects the rate of investment growth of healthy firms in specific sectors of economic activity. Third, a high concentration of capital in zombie firms forces healthy firms to increase their overall productivity in order to survive. Fourth, a high concentration of capital in zombie firms prevents the reallocation of capital to more productive investments across firms and sectors of activity. Finally, younger and larger companies generally perform better in terms of investment and employment growth, and productivity levels. Overall, a faster resolution of zombie firms and non-performing corporate loans, both on and off bank balance sheets, allows a more efficient allocation of resources and can boost investment, employment and growth rates in the Greek economy in the medium to long term.

Unlocking the relationship between board of directors’ attributes and international diversification in Indian firms

PurposeThe study aims to investigate the relationship between certain key attributes of the board of directors as their international experience, tenure, age, independence and size and internationalization strategies of firms in an emerging economy.Design/methodology/approachThe study uses random effects panel Tobit regression on a data set of 418 Indian companies spanning over a time frame of nine years from fiscal year (F.Y.) 2009–2010 to F.Y. 2017–2018.FindingsBoard members substantially associate with internationalization choices of emerging economy firms. Specifically, board members with extensive international experience, shorter tenure, higher age, greater independence and larger board size are associated with high level of internationalization in these firms.Research limitations/implicationsThe study advocates that Indian companies should focus on recruiting board members with international experience, periodically refreshing their boards, valuing wisdom and experience, adhering to regulatory requirements of independent directors and increase the number of board members to expand internationally. By following this, Indian companies can successfully expand into international markets.Originality/valueThe study’s originality lies in its focus on the role of board members in the internationalization strategy of emerging economy firms, which remains an under-researched area.

Political connections and greenwashing: Chinese evidence

ABSTRACT Many firms are engaging in greenwashing, misleading claims about their Environmental, social, and governance (ESG) performances, which make the inclusion of ESG factors in investment decisions becomes challenging. However, little research has been conducted on its drivers. Given the prevalence of political connections and the impacts on firms’ behaviour, this paper investigates the unknown relationship between political connections and greenwashing in Chinese A-listed companies from 2011 to 2020. The study finds that firms with political connections exhibit a greater degree of greenwashing than those without, indicating that political connections significantly improve greenwashing. Moreover, analysis suggests that the lower external pressure from government regulations and media contributes to the greater degree of greenwashing in politically connected firms. Finally, the positive effects of political connections on greenwashing vary significantly depending on politician characteristics, political connection costs, marketization degree, and industry features. This study contributes to a better understanding of the business ethics and the impacts of political connections on greenwashing and the mechanisms for firms in transitional economies like China. The findings highlight the importance of strengthening market-supporting institutions to reduce greenwashing. Policymakers should take measures to reduce the prevalence of political connections and promote a more transparent and equitable business environment.

Cross‐ownership, business dynamism, and wage inequality in general equilibrium

AbstractThis study examines the distributive and welfare effects of cross‐ownership by firms in a general equilibrium economy on the product and factor markets. The cross‐ownership of equities, such as collusion, tends to be anticompetitive, thereby narrowing the wage gap between skilled and unskilled labor in the short term with the existing number of firms. In the capital market, reducing capital cost through cross‐ownership causes new firms to enter the market in the long term. This firm‐entry effect induced by cross‐ownership through an increase in the number of competitors generates a competitive force that exacerbates wage inequality and reduces welfare in the economy.

Unconventional Monetary Policy Transmission and Bank Lending Relationships

Firms with only one bank relationship make up the majority of firms in many economies. This paper explores whether policy-driven lending is differentially transmitted to single-bank firms in comparison with the multibank firms that are the focus of the literature. Using unique variation in the ECB’s very long-term refinancing operations (VLTROs), which affected lending to firms discontinuously across credit ratings but within banks, we find selective transmission of VLTRO liquidity to single-bank firms. Banks apply higher lending standards to single-bank firms, with banking relationships determining both new lending and lending maturity. By contrast, banks appear to transmit policy lending near-uniformly across multibank firms. This paper was accepted by David Sraer, finance. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.01871 .

The role of debt maturity in stock price crash risk: a comparison of developing and developed Asian economies

PurposeThis study examines the impact of debt maturity structure on stock price crash risk (SPCR) in Asian economies and the moderating effect of firm age on this relationship.Design/methodology/approachThe study utilized annual data from 432 nonfinancial firms publicly listed in six Asian countries: China, Hong Kong, Japan, Singapore, Pakistan and India. The observation period covers 14 years, from 2007 to 2020. The sample was categorized into three groups: the entire sample and one group each for developing and developed Asian economies. A generalized least squares panel regression method was employed to test the research hypotheses.FindingsThe results suggest that long-term debt has a significant negative influence on SPCR in Asian economies, indicating that firms with high long-term debt experience lower future SPCR. Moreover, firm age negatively moderates this relationship, implying that older firms may experience a more pronounced reduction in SPCR due to high long-term debt. Finally, firms in developed Asian economies with high long-term debt are more effective in mitigating the risk of a significant drop in their stock prices than firms in developing Asian economies.Originality/valueThis study contributes to the literature in several ways. To the best of the researcher’s knowledge, this is the first of such efforts to investigate the relationship between debt maturity structure and crash risk in Asia. Additionally, it reveals that long-term debt influences SPCR directly and indirectly in Asia through the moderating role of firm age. Lastly, it is likely one of the first studies by a research team in Asia to compare the nonfinancial markets of developed and developing Asian countries.