Expansion Of Firms Research Articles

Spatiotemporal changes of manufacturing firms in the flood prone Yangtze Delta

ABSTRACT Manufacturing firms in flood prone areas (FPAs) are a vital component of flood exposure, driving the non-stationarity of flood risks. This paper explores the spatiotemporal patterns of manufacturing firms in the FPAs of Yangtze Delta in China during 1998-2013. It is found that the number of firms in the FPAs increases remarkably by 44,385, with an annual growth rate of 10.2%. Established firms are located much closer to water bodies, mainly agglomerating along the coasts, the Yangtze River, and around the Taihu Lake. Several vulnerable sectors, including chemical feedstock and chemical manufacturing, computer and communication equipment, maintain a high growth and share in the FPAs. The small and medium-sized enterprises (SMEs) with less flood coping capabilities increase rapidly. The main drivers of firm expansion in the FPAs include policy promotion, agglomeration benefit and levee effect. Exposed firms show a high spatial co-locality with industrial parks and an upward trend similar to the length of levees, suggesting that government policies and flood defense strategies encourage flood exposure. The increase in exposed firms is positively correlated with the rise of flood losses in industrial sectors. Besides defense strategies, more attention should be paid to enhancing flood resilience at regional and firm levels.

The Effect of Firm Expansion in Sustainable Business on Incumbent Product Evaluation

Despite a rising number of firms expanding into market categories with sustainable benefits, we know little about how it affects incumbent market audience. In this study, I explore the extent to which firm expansion in sustainable business may improve consumer evaluation on incumbent products. In particular, I highlight the enhancement effect of prosocial signaling through which firms emphasize their prosocial intention during such expansion. I argue that prosocial signaling has a stronger effect on well-known firms compared to their less-known counterparts, especially when quality perception on incumbent products is low. Using empirical context of the US lightbulb market, I find strong support that salient prosocial signals improve rating on traditional lightbulbs when firms expand their business into energy-saving lightbulbs; this is especially true for brick-or-mortar retailors and when prior product ratings are poor. This study provides one of the first evidence that indicates the benefits of sustainable market expansion on incumbent products. I contribute to research in corporate prosocial engagement, as well as nascent scholarship on the value-laden nature of market category.

Multinationalization of family firms: The influence of family ownership and family management

Drawing on family business, international business, and emerging market literature we theorize in this study how family ownership and family management affect important dimensions of family firm multinationality. Results of empirical analysis involving a sample of Indian family firms demonstrate that family ownership and family management impact three dimensions of multinationality (scale, scope, and location choice) somewhat differently. By offering findings that are new to the literature our study extends the growing literature on international expansion of family firms in general, and those from India in particular.

Competition, Firm Financial Pressure, & Location Strategy: Evidence from the Micro-Mobility Industry

This paper examines the relationship between location traits, firm capabilities—including firm financial pressure—and expansion timing and location choice in a competitive environment. I first build a formal model of firm expansion and entry timing based on Cournot competition that is driven by heterogeneity in firm, location, and competitor traits. Using Monte-Carlo simulation, I identify firm best responses and Nash Equilibrium which serve as predictions for empirical inquiry. I then consider how changes in firm traits and location traits lead to different expansion outcomes including whether firms expand at all, whether firms enter a market early or later, and which geographical location firms choose. There are trade-offs to each expansion outcome. While similar firms will have similar monopoly and duopoly rents, as firm relative capabilities differ so too do their ability to extract rents. Staggered entry becomes more appealing as firm relative capabilities and financial conditions change. Additionally, expansion strategy becomes more nuanced when considering the interaction between firm, competitor, and location traits. For instance, I find that less capable firms prefer to expand after more capable firms, but pressure for revenues may push less capable firms to expand earlier than they would prefer. I discuss one set of propositions that can be explored given my empirical setting. I test predictions from the model using a unique hand-collected dataset of firm expansion in the micro-mobility industry including all firms operating scooter, bike, and moped share businesses in the U.S. Increased financing from venture capital funding and the increased quality and availability of platform technologies have led to rapid expansionary behavior in industries with a large start-up presence. The empirical results support some model predictions and illustrate the importance of different levels of data in explaining expansion strategy. The data also highlights several areas to extend the model.

Family firms between territory and internationalization: an authenticity based perspective

ABSTRACT Being authentic implies maintaining a character of genuineness and honesty, while remaining coherent with oneself and one’s surrounding context over time. It can represent a critical asset to be preserved and exploited, especially in the case of family firms. This paper explores the role of authenticity as a driving force for foreign sales expansion in those family firms that are rooted in a territory. While previous studies emphasize the emergence of a trade-off between maintaining linkages with local traditions and foreign sales expansion, this paper proposes an original perspective. We aim to answer the following question: How does a family business maintain a territorial-based identity by going international? Methodologically, this study presents the cross-case analysis of six Italian family firms whose products are expressions of the cultural legacy, history, and traditions of a territory. The results of the study find their synthesis in a model for family business internationalization driven by a territorial-based authenticity. We identify four building blocks that allow for pursuing the maintaining of the links with local traditions as well as helping family firms to grow on foreign markets, namely, integration, retention, evangelization, and reinforcement.

Current Status and Issues for Japanese Firms Expanding into Thailand: From the Perspective of Local Core Human Resource Development

Purpose - The purpose of this paper is the debate on human resource development and the investment and expansion of Japanese firms in Thailand, with the aim of providing suggestions on the aspect of human resource development in Japanese firms operating in Thailand. Design/Methodology/Approach - Based on the contents of a field survey in Thailand, the current situation of local human resource development of Japanese firms was ascertained and examined through comparison with Chinese and Korean human resource development in Vietnam, Myanmar, and Mongolia. Findings - The surveys themselves reveal that the timing of the determination of core personnel tends to be later and the positions to which they are promoted tend to be lower in Japanese firms than in Chinese and Korean firms in Asia. Further research and analysis are required on how this affects the corporate management of local subsidiaries. Research Implications - Human resource development and personnel evaluation are clearly defined and systemized, and clear compensation is provided. The motivation of capable personnel can be expected to increase, and they can be expected to demonstrate their abilities.

Entry Regulation and Competition. Evidence from retail and labor markets of pharmacists.

We examine a deregulation of German pharmacists to assess its effects on retail and labor markets. From 2004 onward, the reform allowed pharmacists to expand their single-store firms and to open or acquire up to three affliated stores. This partial deregulation of multi-store prohibition reduced the cost of firm expansion substantially and provides the basis for our analysis. We develop a theoretical model that suggests that the general limitation of the total store number per firm to four is excessively restrictive. Firms with high managerial effciency will open more stores per furm and have higher labor demand. Our empirical analysis uses very rich information from the administrative panel data on the universe of pharmacies from 2002 to 2009 and their affiliated stores matched with survey data, which provide additional information on the characteristics of expanding firms before and after the reform. We find a sharp immediate increase in entry rates, which continues to be more than five-fold of its pre-reform level after five years for expanding firms. Expanding firms can double revenues but not profits after three years. We show that the increase of the number of employees by 50% after five years and the higher overall employment in the local markets, which increased by 40%, can be attributed to the deregulation.

International Expansion of Family Firms in the Arab World

Stemming from the ongoing and growing debate about the individualities of family firms and their internationalization behavior, this article aims to explore how family-owned firms can also achieve a high performance in markets at a greater distance, like the Arab World, which is still one of the fastest-growing economies globally. Using data on 128 German family firms, we found that the best strategy to achieve higher levels of international sales (as a proportion of total sales) in these markets is to enter multiple countries and opt for a single market entry mode, especially among family firms with only a few years of experience in the region. However, some family firms may decide to initiate business in a single Arab country, which leads to higher performance when family firms have more experience of the Arab World.

E-Commerce Calls for Cyber-Security and Sustainability: How European Citizens Look for a Trusted Online Environment

The pandemic has changed the citizens’ behavior, inducing them to avoid any real contact. This has given an incredible impulse to e-commerce; however, the complexity of the topic has not yet been adequately explored in the literature. To fill this gap, this study has a twofold purpose: (1) to investigate how European countries comparatively perform in e-commerce, and (2) to describe what are the most important challenges for the further expansion of e-commerce. To this end, we adopted a hybrid methodology based on multi-criteria decision analysis (MCDA) and a Likert scale survey. The first method allows to us rank the e-commerce performance of different European countries, while the second one looks at the problems and barriers that characterize online shopping. The results of the study show that European countries have different sensitivities to the issue of cyber-security, and among them it is possible to identify three groups with different levels of attention to the critical issues of e-commerce. The Netherlands, Sweden and Denmark belong to the group of countries most responsive to e-commerce. This request is part of a broader framework of transition toward sustainable development, i.e., a reliable digital environment where citizens and businesses can exercise their rights and freedoms in complete security. Finally, from a theoretical perspective, this paper adds a new baseline to the literature on the state of the art of e-commerce in Europe that addresses the effects of the pandemic. From a managerial point of view, decision makers can find in the results of this analysis a support for the setting of business strategies for the expansion of firms in certain markets and guidance for public authorities when defining regulatory policies for e-commerce.

The effects of cluster collaboration and the utilization of big data on business performance: A research based on the expansion of open innovation and social capital

This study examines the influence of firm cluster collaboration and the utilization of big data on the expansion of open innovation. We also investigate the effect of open innovation on business performance and test the moderating effect of social capital. We surveyed 409 global firms (193 large enterprises and 216 medium enterprises) located in Asia, Europe, North America, and Africa over a one-month period. We limited the scope of the survey to employees working at the level of team leader (or executive) or above in the R&D department. This study used SmartPLS (Version 3.3.3) to perform the statistical analysis. Our results indicated that, first, corporate cluster collaboration had a positive effect on the expansion of open innovation. Second, firm use of big data had a positive effect on the expansion of open innovation. Third, firm expansion of open innovation had a positive effect on business performance (market and financial performance). Fourth, in the relationship between cluster collaboration and open innovation expansion, social capital had a negative moderating effect. This research proved that cluster collaboration and big data could accelerate open innovation, ultimately improving business performance. However, there are limitations regarding SEM analysis.

Newcomers from the Periphery: The International Expansion of Polish Automotive Companies

The rapid growth of Central European economies has been related to inward FDI, so these countries are often regarded as dependent market economies. What is interesting in this context is the international expansion of some domestic-owned manufacturing companies from Central Europe. Looking through the lens of global production networks (GPN) and evolutionary resilience perspectives, the paper aims to identify paths and mechanisms of development of new multinational companies, namely Polish automotive firms expanding from around 2010 onwards in the global markets through acquisitions and greenfield investments in Western Europe, North America, and Asia. The authors ponder on the underlying motives and barriers of this process, the capabilities, and features of Polish-owned companies. In order to do it, both qualitative (13 interviews with representatives of new multinationals and the other stakeholders preceded by content analysis of various documents, including company annual reports in particular) and quantitative (analysis of international trade, revenues, employment, locational data) insights are used for the period covering the time span between 1999 and 2020. As the result, the international expansion of domestic-owned firms is interpreted as a specific critical conjuncture of three mechanisms: (1) development of Central-Eastern European economies since the end of communism, (2) the evolution of the Western European core, and (3) the trajectory of individual Polish firms. We argue development trajectories of the firms going global cannot be understood without taking into account the dynamic interdependence between firm-specific capabilities (including the position within GPNs) and the changing characteristics of the countries (e.g., evolving regional assets).

Family Control and Cross-Regional Expansion: Empirical Evidence from Listed Companies

Cross-regional expansion is an important way for firms to solve resource constraints. Through cross-regional expansion, firms can not only find substitutes for current resources, but also make full use of surplus resources and get access to new resources to cope with challenges in the current market. However, the existing literature rarely pays attention to the geographical expansion cross different administrative regions, and seldom discusses the agency conflict between controlling family and non-family member executives, the risk preference of non-family member executives and the incentive effect of equity. Based on the agency theory and the behavioral agency model, this paper attempts to explore the relationship between family control, the proportion of non-family member executives’ involvement and the cross-regional expansion of firms, and the effect of executive incentive mechanism based on equity. Based on the data of listed companies from 2007 to 2018, the main conclusions of this paper are as follows:（1）Family control inhibits the intensity of cross-regional expansion. Compared with non-family firms, family firms are less likely to be engaged in cross-regional expanding in order to maintain family members’ control over the firm and avoid damage to social emotional wealth.（2）With the increase of family involvement, the intensity of cross-regional expansion of family firms will decrease. In addition, the incentive measures based on equity have asymmetric risk characteristics, which will affect the time orientation and risk preference of executives in investment decision-making, and eventually lead to different decisions in the process of cross-regional expansion strategy formulation. Specifically speaking, non-family executives with stock ownership pay more attention to short-term interests and prefer to risk aversion, which alleviates the inhibition of family involvement on the cross-regional expansion intensity of family firms; stock options make non-family executives pay more attention to the long-term development of firms, and strengthen the inhibitory effect of family involvement on the cross-regional expansion intensity of family firms.（3）With the “de-familialization” of family firms, more and more non-family member executives join the governance of family firms, and family firms will be more inclined to make cross-regional development decisions.（4）Cross-regional expansion is conducive to increasing the value of firms, but family firms do not necessarily adopt this strategy, which shows that financial objectives are not the only one to concern for family firms, and the holding family pays more attention to non-financial goals such as social emotional wealth. The possible contribution of this paper is to verify the influence of family control on the cross-regional expansion strategy of firms, explore the effect of stock-based incentive mechanism, enrich the relevant research on the social emotional wealth theory, agency theory and behavioral agent model, and expand the research related to the risk-taking decision of family firms to a certain extent. The conclusions of this paper provide theoretical guidance and empirical evidence for the cross-regional strategy and incentive mechanism of non-family members in family firms.

Effect of Firm Size on Financial Leverage of Firms: A Study on Kenyan Sugar Firms in Kenya

Sugar firms in Kenya have been facing challenges of operation and frequent closures unlike other global players. Miwani Sugar went under receivership in 2000 whereas Mumias sugar closed down in 2017 both being unable to meet their financial obligations. Report from the Kenya sugar Board portray The report by the departmental committee on Agriculture, Livestock and Co-operatives as presented by the Kenya National Assembly, Eleventh Parliament, third session (2015) raised an alarm on the crisis facing the sugar industry in Kenya and the imminent collapse of the sugar industry in western Kenya depicting these firms to be debt laden and unable to meet their short-term and long term financial obligations. Kenya Sugar sub-sector contributes for 7.5% to the National GDP and 15% to the Agricultural GDP. Previous studies concentrated on the effect of financial leverage on the financial performance of these sugar firms. However, there was lack of information on the relationship between firm size and financial leverage level of these sugar firms. Specifically, the study sought to determine the effect of firm size on financial leverage of sugar firms in Western Kenya. The study was anchored on the pecking order theory. The study adopted correlational research design on a population of 8 sugar firms in Western Kenya sampled using saturated sampling technique. The study used secondary Panel balanced data for June 2008-June 2018 comprising 80 data points. These were obtained from the various firms’ financial statements and Kenya Sugar Board. Panel co-integration tests estimating the long run co-integration relationship and Unit root on the data revealed stationarity of the study variables with p-value<0.05. Findings from panel multiple regression established a significant negative effect of firm size on financial leverage (R 2 =.1322, P=.0002) (coeff= -.2819). The study concluded that firm size negatively predicted financial leverage among sugar firms in Kenya. The study recommended the expansion of the sugar firms to tap the benefits resulting from economies of scale which will in turn help in the reduction of the financial leverage levels of the sugar firms to within the optimal levels. This thesis intends to inform management of the Kenyan sugar firms, policy makers and scholars.

Top management team’s formal network and international expansion of Chinese firms: The moderating role of state ownership and political ties

This article explores the role of the formal network centrality of top management teams (TMT) for foreign expansion, looking at the case of Chinese firms. The former is defined by the degree to which top managers are connected with TMTs of other firms in formal ways, through service as independent board members. We explore boundary conditions, comparing state ownership with political ties. The analysis of a panel data of 489 firms expanding to 72 developed and developing host markets in the period 2000–2012 confirms that network centrality facilitates internationalization. We found that TMT network centrality had a stronger effect on internationalization in developed than emerging markets. Conversely, state ownership had a positive moderating effect in the latter and political ties a negative effect in developed ones. The literature on comparative institutional analysis suggests that formal ties are more important in developed economies, and informal ties in emerging ones. However, formal political ties and/or links to the Chinese state may be more of value in internationalizing into other emerging markets, where the balance of diplomatic power may be more skewed in China’s favor.

Asset Securitization and Firm Expansion in Product Markets: Evidence from the Real Estate Development Industry

Previous studies found that through facilitating “bankruptcy remoteness,” asset-backed securitization can reduce firms’ borrowing costs and probabilities of facing credit constraints and increase their market values. However, little research has examined the real effect of securitization on firms’ product-market activities. We examine the real estate development industry and find that after securitization, developers become more aggressive in purchasing land and entering new markets. With extra funding from securitization, financially constrained developers become more likely to purchase a parcel independently, whereas developers with capacity constraints conduct more strategic alliances with other developers in purchasing a parcel to utilize more production capacities.

Methodological Issues in the Estimation of Current Account Imbalances

The study outlines the main challenges when setting up a “current account (CA) model” in order to measure external imbalances. This model is a reduced-form relationship between the CA balance and a set of CA fundamental and policy drivers, from which a CA “norm” may be derived and against which the actual CA balance is appraised. After having formally outlined a standard CA model similar to those developed by the main international institutions, the paper raises several concerns in CA modelling, amongst which the measurement and selection of both the dependent and explanatory variables and some technical issues in the estimation procedure. Recent trends affecting the CA balance, such as the expansion of global firms and the rise in corporate saving, as well as the outbreak of the COVID-19 pandemic, are also discussed. The paper does not prescribe fully-fledged solutions to the manifold issues discussed, but rather aims to raise awareness of the latter, as well to provide some hints on how to tackle at least some of these challenges.

Benefits of Having a Female CFO

We examine gender differences in the language of CFOs that participate in quarterly earnings calls. Female executives are more concise, less optimistic, are clearer, use fewer idioms or cliches, and provide more numbers in their speech. These differences are particularly strong in the more spontaneous Questions and Answers (QA) section of the calls. The tone of female CFOs is positively associated with future earnings surprises, while for male CFOs it is more related to future firm expansion. Finally, firms with female CFOs earn higher abnormal returns around the call date than those with male CFOs after controlling for variables that are related to the contents of the call.

Market Power, Productivity and Distribution of Wages: Theory and Evidence With Micro Data

The declining labor share in national income and rising inequality over the last four decades raise questions about causes of these trends. In order to explain these trends, we develop theoretical model that links intra-industry distribution of wages to variation in market power of firms. The model predicts that wages depend crucially on the demand side characteristics – they decline with market power if and only if demand elasticity is increasing with firm’s output. Trade liberalization leads to expansion of more productive firms, which also increases their bargaining power, resulting in lower share of wage bill in total revenue. The model predictions are tested on a sample of Ukrainian manufacturing firms in 2001–2007. We document that an increase in firm’s size increases its bargaining power relative to workers. We measure firm level markups, and show that they increase with firm’s output and market size. We find that wage rises with firm’s productivity, but fall with its market power. The results are robust to various model specifications estimated at the firm and industry levels.

WHAT DRIVES INTERNATIONAL ENTREPRENEURIAL FIRMS TO EXPAND OVERSEAS: A CASE STUDY APPROACH

Despite the lack of resources, entrepreneurial firms are able to expand internationally from an early stage of establishment. This study aims to explore and identify the drives of expansion for international entrepreneurial firms. This study employed a multi-case analysis approach through in-depth interviews to identify the drivers of international expansion of such firms. Based on our findings we propose a model to enrich the current understanding on the factors that drive young entrepreneurial firms’ expansion to international markets.
 
 JEL: L10; L20; M16; F22
 
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Market Expansion of Domestic Gaming Firms in Shenzhen, China: Dilemma of Globalisation and Regionalisation

AbstractChina's domestic mobile gaming firms, such as Tencent, which has developed into the world's biggest gaming firm by revenues in a short span, have outweighed the leading counterparts in the Western advanced economies. Despite an increasing attention has been paid to the global investment of Chinese gaming firms, this paper argues that their market expansion has focused on the selected Southeast Asian countries. This arguement is developed through the aurthors' extensive field investigation and personal interviews with games developers and publishers in Shenzhen, where Tencent is located, during the early 2017 and late 2019. We showcase that the protective multi‐scalar institutions in which the Chinese gaming firms have dominated in the domestic market, have prevented the overseas market expansion of these firms. Although the government‐designated extra‐local inter‐firm collaboration has helped narrow the technological gaps and articulate China’s firms into the global production networks, the market gaps between the domestic and western economies have not been overcome in the expansion to overseas markets. This study sheds light on that the market expansion of Chinese gaming firms has stucked in a dilemma between globalization and regionalization. While China’s domestic gaming firms, particularly Tencent, have been evolving into lead firms in the global games production networks, their market power has been confined at domestic and regional levels.