Firm Experience Research Articles

Can Analysts Elicit Useful Information by Asking Unique Questions in Earnings Conference Calls?

We examine whether analysts can gather useful information based on their public interactions with firm managers. We use measures of textual similarity to capture the uniqueness of an individual analyst’s question(s) on a firm’s quarterly earnings conference call relative to the questions of other analysts on the same call, relative to the analyst on prior firm calls, and relative to the management-prepared narrative. We first examine the associations between the uniqueness of analysts’ questions and analysts’ characteristics. We observe that the uniqueness of individual analysts’ questions varies systematically with analysts’ access to private meetings, experience, broker size, forecast frequency, and number of firms followed. Next, we examine how differences across analysts’ questions impact topics discussed, analysts’ revisions and their accuracy, and the market’s reaction to the conference call in general as well as the reaction when analysts’ unique questions engender a revision. Overall, we provide evidence about how analyst question uniqueness helps analysts form their forecasts and how the market interprets differences across analysts’ public interactions with firm managers.

Information Disclosure and Competitive Dynamics: Evidence from the Pharmaceutical Industry

This paper studies how competitive dynamics shape innovative firms’ voluntary disclosure of product quality information. Our empirical context is the pharmaceutical industry, where firms must decide whether to disclose private drug quality information acquired in clinical trials. Using a difference-in-difference strategy, we show that the approval of a competitor’s drug lowers the likelihood of a firm reporting its clinical trial results by 13%. We explore how these effects vary based on the project quality, competitor type, and firm experience. These findings suggest that strategic considerations play a role in firms’ disclosure decisions; in response to a competitor’s drug approval, firms may selectively withhold information to maintain and improve their competitive position. This paper was accepted by Joshua Gans, business strategy. Funding: This work was funded by the National Institute on Aging [Grant T32-AG000186] and the UCLA Society of Hellman Fellows Program. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.01161 .

Advancing Small Business Inclusion in Public Procurement: Evidence From U.S. Federal Government R&D Contracts

To encourage small business inclusion in public procurement, the U.S. federal government has established the set-aside program that mandates government agencies to award a portion of their contracts to small businesses. We study whether and to what extent the performance of R&D contracts awarded through this program differs from those awarded through open competition. Analyzing a large dataset of federal R&D contracts, we find that despite restricting competition to small businesses, set-aside R&D contracts experience lower schedule and cost overrun than R&D contracts awarded through open competition. Furthermore, although set-aside R&D contracts experience lower schedule and cost overrun when they are awarded to more experienced contractor firms, this benefit arises primarily from a contractor firm's experience in executing R&D contracts across different agencies compared to the firm's experience with the same agency. Finally, set-aside R&D contracts awarded early in a fiscal year experience lower schedule and cost overrun than those awarded later. Post-hoc analysis examining the underlying dimensions of different-agency experience highlights the asymmetric effects of related-agency experience and unrelated-agency experience of contractor firms on the performance of set-aside R&D contracts awarded by the Department of Defense. While related-agency experience improves contract performance, unrelated-agency experience has a detrimental effect on contract performance. These findings demonstrate that small business inclusion policies may not necessarily compromise contract performance. Importantly, they emphasize the need for federal agencies and contracting officers to consider the underlying dimensions of contractor firm experience and contract award timing to improve contract performance and taxpayer money utilization.

The Role of Top Management Involvement and Supply Chain Integration on Smes’ Innovation Performance: Moderation Impact of Firm Experience Capability

The Role of Top Management Involvement and Supply Chain Integration on Smes’ Innovation Performance: Moderation Impact of Firm Experience Capability

The Role of Digitalization During Supply Chain Disruptions: Lessons from the Experiences of Family-Owned Austrian Firms During the COVID-19 Pandemic

The COVID-19 pandemic strained global supply chains, and companies faced numerous production, logistics, or material management problems. It is claimed that the digitalization of supply chains can have the potential to make supply chains more resilient to interruptions and disruptions. This article focuses on describing the experiences of three large Austrian family-owned business during the supply chain disruptions caused by the pandemic and the Russia-Ukraine war. This assessment is done from the perspective of the supply chain leaders in the organization. We provide insights on what worked and what did not for these firms and what lessons we can take away from their experiences.

Effects of M&A Type on Top Management Turnover: Moderating Role of Industry Similarity & Target Experience

Based on samples of domestic and inbound merger and acquisitions (M&A) in the United States from 2010 to 2020, this study explores whether different M&A types have differing effects on the turnover rates of CEOs and non-CEO top management teams (TMT) in target firms. The study contributes to the antecedent theory of top management turnover. The results showed that, compared with domestic M&As, cross-border M&As reduced the turnover rate of CEOs and non-CEO teams. Furthermore, in technology-intensive cross-border M&As, industry similarity had an obvious negative moderating effect on decreasing CEO turnover rates, and the M&A experience of the target firms had a positive moderating effect on reducing the overall turnover rate in the target TMT.

HOW THE IMPACT OF FINANCIAL PERFORMANCE OF SMEs ON BANK CREDIT ACCESS DIFFER DEPENDING ON EXECUTIVE-LEVEL CHARACTERISTICS?

Financial performance of SMEs (small and medium-sized enterprises) plays a crucial role in bank credit access of these enterprises and the economies of countries where they operate. However, firm’ executives' Resource-based View (RBV) characteristics can differently affect financial performance of SMEs that they manage, therefore, credit access of SMEs can differ. In this regard, this paper purposes to analyze whether the impact of financial performance on bank access to finance differs depending on executives’ educational status, gender and sectoral experience or not. In line with this aim, this research collects data from 479 randomly selected respondents by directing an online questionnaire. After that, the research data is analyzed by employing a Binary Logistic Regression Test. According to the results, the impact of financial performance on credit access differs depending on gender and sectoral experience of firms’ executives. However, educational status of firm executives does not play any role in the impact of financial performance on access to finance.

Experience-dominant logic: laying the groundwork for an experience-dominant view of firm practices in the marketplace

PurposeThis paper aims to introduce the experience-dominant (Ex-D) logic model, which synthesizes the creation, perceptions and outcomes of Ex-D logic. It is designed to offer valuable insights for strategic managerial applications and future research directions.Design/methodology/approachEmploying a qualitative approach by using eight selected product launch events from reviewed 100 event videos and 55 in-depth interviews with industrial managers to develop an Ex-D logic model, and data were coded and analysed via NVivo.FindingsResults show that the firm’s Ex-D logic is operationalized as the mentalizing of the three types of customer needs (service competence, hedonic excitations and meaning making), the materializing of three types of customer experiences and customer journeys (service experience, hedonic experience and brand experience) and the moderating of three types of customer values (service values, hedonic values and brand values).Research limitations/implicationsThis study has implications for adding new insights into existing theory on dominant logic and customer experience management and also offers actionable recommendations for managerial applications.Originality/valueThis study sheds light on the importance of Ex-D logic from a strategic point of view and provides an organic view of the firm. It distinguishes firm perspective from customer perspective, firm experience from customer experience and firm journey from consumer journey.

ESTIMATION OF EFFICIENCY AND THE IMPACT OF COVID-19 ON THE EFFECT OF ACCESS TO FINANCE ON EFFICIENCY OF SMALL AND MEDIUM ENTERPRISES (SMEs) IN THE WESTERN AREA OF SIERRA LEONE

<p>To estimate efficiency and the impact of COVID-19 on the effect of access to finance on the efficiency of small and medium enterprises (SMEs) in the Western Area of Sierra Leone, the study adopted the stochastic frontier estimation method of determining the efficiency of firms. A model of maximum performance (capacity) was estimated using 450 SMEs randomly selected from the population of registered SMEs in the Western Area of Sierra Leone from 2018 to 2020. The model of net business earnings was estimated using the Maximum Likelihood procedure and the firm efficiencies were consequently estimated. The mean inefficiencies are estimated by various categories, including SMEs' access to bank credit to determine firm characteristics that are associated with higher mean efficiencies. The empirical results reveal that the potential of firms is determined positively by capital productivity and labour productivity and negatively by the experience of firms, the latter results suggesting that more experience does not push their production outwards but inwards. However, other factors found significant in efficiency differences among firms include gender of the head of the SME, educational level, professional training of the firm heads, sector of operation and the area of operation of the SMEs. Moreover, firm mean efficiencies are not found to vary across the three periods 2018, 2019 and 2020, suggesting the COVID-19 pandemic did not affect firm efficiencies.</p><p><br /><strong>JEL:</strong> F13, F15</p><p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/soc/0787/a.php" alt="Hit counter" /></p>

Job-hopping executives and corporate social responsibility

PurposeThe purpose of this study is to examine the relationship between the corporate social responsibility (CSR) performance of job-hopping executives at their former and subsequent firms.Design/methodology/approachWe conduct regression analyses using a sample of firms listed on the Shanghai and Shenzhen Stock Exchanges from 2010 to 2020 to examine whether CSR performance is similar from one firm to the next as executives switch jobs.FindingsWe find a positive relationship between the CSR performance of former and subsequent firms under job-hopping executives. This relationship is the strongest in the year of the job switch; it weakens in the second year and eventually disappears in the third year. In addition, we show that this relationship benefits different CSR stakeholder groups and is contingent on executive and subsequent firm attributes and job-hopping characteristics. Furthermore, we demonstrate that firms that hire a new chief executive officer from a firm with a strong track record in CSR, the new firm experiences a significant surge in CSR performance compared with firms that do not experience such a shock.Practical implicationsThis study has implications for executive hiring decisions.Originality/valueThis study extends the understanding of CSR determinants through the lens of inter-organisational ties associated with job-hopping executives.

Business Strategy and M&A Transactions

This paper establishes the relation between the target’s business strategy and M&A transactions. We find that acquirers purchasing an innovation-oriented firm (prospector) experience significantly lower announcement returns and worse long-run operating performance than when they purchase an efficiency-oriented firm (defender). The effect is more pronounced for the acquirer with severe agency problems. Further analysis finds that synergies can be obtained from combining business strategies. We also show that acquirers respond to the presence of a prospector target by using stock payment in their offers.

Why do low productivity agricultural firms export?

ABSTRACT We use data from Chinese agricultural firms to confirm that low productivity agricultural firms (LP-AFs) export; AFs still have an ‘learning by exporting effect’, and increasing productivity promotes the AFs’ exports scale. China’s domestic market segmentation, the supply and demand capacities of agricultural products, and export experience of firms are key variables that determine the export of LP-AFs in China.

Antecedents of radical innovation speed from a knowledge network perspective

In the context of radical innovation, we draw from knowledge network theory to investigate how the firm can manage its alliance portfolio to speed up radical innovation that relies predominantly on scientific knowledge. Specifically, we examine how the firm's innovation alliance network composition and its position in the network affect radical innovation speed. In analyzing empirical data on COVID-19-related radical innovation projects, we find that the presence of an industry partner reduces radical innovation speed, while the presence of a research partner increases it. The presence of government partners does not influence innovation speed unless the firm has a high level of collaboration experience with the partners. As for the firm's alliance network position, a more centrally located firm experiences faster radical innovation speed. However, we find that an industry partner's presence in the project's network attenuates the positive effect of network centrality on radical innovation speed. This study contributes to the literature by linking knowledge network theory and innovation speed to identify the individual and joint effects of the firm's innovation alliance composition and its position in the network. Implications regarding accelerating radical innovation and coordinating among firms, research labs, universities, and government partners are provided.

Global and local technical changes: A new decomposition of the Malmquist productivity index using virtual units

In estimating productivity change over time, technical change is frequently miscalculated as the geometric average of technological changes between two periods based on firm-specific information in the dataset. However, the frontier shift over time is a global phenomenon linked to relative technological progress or regress across the entire frontiers. In this paper, we fill this gap by determining the technical change using synthetic observations generated at random within a unit hypercube and calculating the distances between them and the two frontiers being evaluated. Accordingly, we propose a decomposition of the Malmquist index's traditional technical change into two components: average global technical change, which is shared by all production units, and local technical change, which captures how each firm experiences global technical change. In this way, our approach establishes a new research avenue in production economics based on using randomly generated virtual points to assess overall phenomena.

The influence of board interlocks and sustainability experience on transparent sustainability disclosure

AbstractWe investigate board interlocks and their relationship to the transparency of sustainability disclosure, drawing on the theoretical perspectives of resource dependence theory and agency theory. We ascertain that board members who gain sustainability experience by serving on another board will influence the transparency of sustainability disclosure for the focal firm. The study analyzes data from S&P 1500 firms in the U.S. from 2009 to 2018, using ordinary least squares regressions. Our findings demonstrate that the focal firms' sustainability disclosure will be more transparent if their boards have interlocking directors with experience gained from other boards in current or prior years. Furthermore, we find that the sustainability experience of interlocked firms interacts with both gender diversity and board independence, leading to an enhancement in the transparency of sustainability disclosure. In addition, we conduct robustness tests such as performing propensity score matching, controlling for firm fixed effects, and applying entropy matching. These additional tests provide consistent results to confirm and strengthen our findings.

Community Enterprise Flexibility Competency Affecting Firm Survival in the Product Manufacturing Sector in Northeast Thailand Via New Product Creation, Market Fulfillment Efficiency, and Product Advantage

This study aimed to investigate the relationship between community enterprise flexibility competency and firm survival of the product manufacturing sector in northeast Thailand in terms of new product creation, market fulfillment efficiency, and product advantage.We postulated five dimensions of community enterprise flexibility competency (i.e., continuous process improvement, product research and development orientation, dynamic learning capability, intensive knowledge-based operation, and proactive operation mindset). The data were collected from 380 community enterprise CEO working in the product manufacturing sector in northeast Thailand using a self-reported questionnaire. Data were analyzed using multiple correlations and multiple regression analysis. The results showed that the community enterprise flexibility competency in the aspects of continuous process improvement, intensive knowledge-based operation, and proactive operation mindset were positively associated with new product creation and market fulfillment efficiency significance level test 0.01. New product creation and market fulfillment efficiency were positively associated with product advantage and firm survival significance level test 0.01. Product advantage was positively associated with firm survival significance level test 0.01. Firm experience above 5 years has positive relate to product advantage significance level test 0.01. Community enterprise flexibility competency in terms of product research and development orientation and dynamic learning capability demonstrated non-association with new product creation and market fulfillment efficiency. Firm reword has not relate to new product creation, market fulfillment efficiency, product advantage, and firm survival.

Development of a Prediction System for Design Defects of Buildings

The research aimed to establish a quantitative model to predict the occurrence of five types of design defects: unsafe design, incompatible design, inefficient design, design ambiguity, and design delays. It also examined the contractor's liability for design to determine who is ultimately responsible for design defects disputes between the employer and contractor. The study employed a descriptive methodology to identify fifteen potential influencing factors on design defects. Data were collected from 42 construction projects and tested using Design of Experiments (DOE). Out of these fifteen factors, only five—design schedule, design firm experience, stakeholders’ involvement, project delivery system, and information accuracy—had a significant impact on design defects. These factors were used in the development of a new model to predict the occurrence of design defects. The model was validated using data that was held separate from the model development process for validation purposes. The calculated Mean Absolute Percentage of Error (MAPE) for the new model is 19%, which is considered a "good" prediction accuracy. The research achieved three significant milestones: 1) It identified the ultimate responsibility for the consequences of design defects in construction projects across different jurisdictions. This information can be used to resolve potential disputes between employers, designers, and contractors’ organizations. 2) It provided guidelines on how to minimize design defects in construction projects, thereby mitigating the consequences of such defects. 3) It developed a new model to predict the occurrence of design defects in construction projects. This model aids decision-makers in responsible organizations during the process of predicting the appropriate reserve to be added to the project schedule and budget. Consequently, it helps mitigate the risk of design defect-related delays and cost overruns. Doi: 10.28991/CEJ-SP2023-09-017 Full Text: PDF

TMT's cognitive frame and breakthrough innovation

PurposeThis paper aims to reveal how different types of events and top management teams' (TMTs’) cognitive frames affect the generation of breakthrough innovations.Design/methodology/approachDrawing on the event system theory and upper echelon theory, this study chose a Chinese manufacturing enterprise as the case firm and conducted an exploratory single-case study to unpack how breakthrough innovation generates over time.FindingsBy conducting the in-depth case analysis, the study revealed that firms do not produce breakthrough innovation in the catch-up stage and parallel-running stage but achieve it in the leading stage. It also indicated that when facing proactive events in the catch-up stage, TMTs often adopt a contracted lens, being manifested as consistency orientation, less elastic organizational identity and narrower competitive boundaries. In addition, they tend to adopt a contracted lens when facing reactive and proactive events in the parallel-running stage. In the face of reactive and proactive events in the leading stage, they are more inclined to adopt an expanded lens, being manifested as a coexistence orientation, more elastic organizational identity and wider competitive boundaries.Originality/valueFirst, by untangling how TMT's cognitive frame functions in breakthrough innovations, this paper provides a micro-foundation for producing breakthrough innovations and deepens the understanding of upper echelon theory by considering the cognitive dimension of TMTs. Second, by teasing out several typical events experienced by the firm, this paper is the first attempt to reveal how events affect the generation of breakthrough innovation. Third, the work extends the application of the event system theory in technological innovation. It also provides insightful implications for promoting breakthrough innovations by considering the role of proactive and reactive events a firm experiences and TMT's perceptions.

Stealing the show: The negative effects of media coverage on peers’ stock liquidity

Prior research documents that media coverage attracts investor attention and improves the liquidity of the featured firms. However, increased attention to the covered firms may divert attention away from uncovered firms. In the setting of Wall Street Journal's coverage of firms’ earnings announcements, I find that industry peers of the announcing firm experience a decrease in stock liquidity around the article publication day. The decrease cannot be attributed to the earnings announcement per se, and is more pronounced when the peer is less visible and less related to the announcing firm. These findings shed novel light on the negative externalities of media coverage on peer liquidity.

Estimation of Efficiency and the Effect of Access to Finance on Efficiency of Small and Medium Enterprises (SMES) in the Western area of Sierra Leone

Abstract To estimate the efficiency of SMEs and the effect of access to finance on the efficiency of SMEs the study adopted the stochastic frontier estimation method of determining efficiency of firms. A model of maximum performance (capacity) was estimated using 450 SMEs randomly selected from the population of registered SMEs in the Western Area of Sierra Leone from 2018 to 2020. The model of net business earnings was estimated using the Maximum Likelihood procedure and the firm efficiencies were consequently estimated. The mean inefficiencies are estimated by various categories, including SMEs access to bank credit to determine firm characteristics that are associated with higher mean efficiencies. The empirical results reveal that the potential of firms is determined positively by capital productivity and labour productivity and negatively by experience of firms, the latter results suggesting that more experience (in terms of age) does not push their production outwards but inwards. However, other factors are found significant in efficiency differences among firms. These are: gender of the head of the SME, educational level, professional training of the firm heads, sector of operation and the area of operation. JEL classification numbers: F14, F18, G14, G21. Keywords: Efficiency, Finance, Small and Medium Enterprises.