Theory Of The Firm Research Articles

A Look into the Future: The Impact of Metaverse on Traditional Theories and Thinking in International Business

Recent advances in technology (e.g., the Internet of Things, Augmented Reality, Virtual Reality, Cloud Services, Artificial Intelligence, and Blockchain), the shift towards digital products, and the increased use of digitalisation by firms have enhanced consumers’ experience and transformed how companies operate, create products/services, and offer value to multiple stakeholders on a global scale. These technological innovations have led to the phenomenon known as the Metaverse. The Metaverse does not refer to any one type of technology but is a broad (and often speculative) shift in how we interact with different technologies in the same space. In the context of International Business (IB), the recent emergence of Metaverse appears to make geographical, sectoral, and operational barriers less relevant, raising complex questions about how current IB theories can explain the world-spanning, sectorally fluid, and centrifugal behaviour of firms in the era of digital globalisation. In this paper, we obtain a critical understanding of the important opportunities and challenges that the Metaverse and the fluidity of digital technologies bring to the IB field. Specifically, we discuss how traditional theories can be effectively utilised to explain firms’ internationalisation, and adapted to reflect the new technological era. We propose a framework for new approaches to IB research to help advance research on Metaverse and IB, which can provide important opportunities for future work in this field.

The peer effects of corporate poverty alleviation behavior: Empirical evidence from China.

This study explores the peer and economic effects of corporate poverty alleviation behavior. Using the data of A-share non-financial listed corporates in Shanghai and Shenzhen of China from 2016 to 2020, the empirical analysis of this study finds that: corporate poverty alleviation behavior has significant peer effects; the guidance of local poverty alleviation policies weakens the peer effects of corporate poverty alleviation behavior; compared to private enterprises, the poverty alleviation behavior of the peer firms has a more significant impact on state-owned enterprises; and corporate poverty alleviation behavior can result in the backflow of economic benefits and achieve the organic unity of economic and social benefits. The purpose of this paper is to explore the peer effects of corporate poverty alleviation behaviors through empirical analysis using available public data. The results of the study not only increase the motivation of corporate to participate in poverty alleviation from a peer effects perspective, but also reveal key factors for sustaining corporate poverty alleviation behaviors.

Rapid credit expansion and firm behavior: A case study from Türkiye

This study examines the impact of a sudden and remarkable credit expansion experienced in Türkiye during the first half of 2022 on firm behavior by utilizing a novel dataset containing the universe of all incorporated firms in Türkiye. The results of the combination of coarsened exact matching and difference-in-differences methodology show that, amid the credit expansion coupled with the deterioration in expectations of inflation and depreciation in local currency, the firms with higher credit usage tended to engage in alternative channels rather than undertaking real economic activities in short term, such as pulling-forward imports and input demand and taking position against local currency to gain financial profit more than those with less credit usage during the first half of 2022. While SMEs with higher credit usage increased their imports, domestic input purchases, foreign currency purchases, and foreign currency-denominated debt settlement before maturity, large firms increased their foreign currency purchases relative to their counterparts with less credit usage.

Market competition and firm behavior: A comprehensive study on the impact of antimonopoly law

This study examines the impact of the antimonopoly law on corporate social responsibility (CSR) in China by analyzing the diverse effects on different types of enterprises and employee groups. The implementation of the law aimed to foster a fairer competitive market by dismantling monopolistic forces, particularly in their wage decisions. Utilizing a difference-in-differences (DID) approach, we find that the law significantly promotes CSR, especially in labor-intensive enterprises, which show a greater commitment to social responsibility compared with technology-intensive firms. The positive effect on ordinary employees’ wages is more pronounced than on managerial staff, highlighting increased wage fairness and transparency. These findings contribute to the understanding of how regulatory frameworks shape corporate behavior and social responsibility.

The effect of firm‐level economic policy uncertainty on labor share: Empirical evidence from China

AbstractIn the 21st century, various unexpected events such as the financial crisis and COVID‐19 have exacerbated the uncertainty of economic policies, whose influence, especially those at the firm level, on the labor share remains to be studied. This article constructs the firm‐level economic policy uncertainty (FEPU) through text analysis and empirically analyzes its impact on labor share. Empirical evidence suggests that FEPU can significantly decrease labor share, particularly among firms with financing constraints, low productivity, and high market shares. And the results hold up after a series of robustness tests. Moreover, mechanism analysis indicates that precautionary saving motives play a crucial role in driving firms’ reduction in labor share rather than capital substitution motives. Finally, we further find that although FEPU harms the labor share, it significantly reduces executive payment and has no significant effect on the payment of ordinary employees, thus reducing within‐firm inequality. This study enhances our comprehension of how economic policy uncertainty at the firm level affects firm behavior and provides theoretical and practical guidance for increasing labor share and employee welfare.

Narrative innovation disclosure and stock price crash risk: Evidence from Chinese listed firms

Using the 2012 revision of Guideline No. 2, we construct a difference-in-differences model to investigate the impact of narrative innovation disclosure on stock price crash risk among Chinese A-share listed firms from 2008 to 2020. We find that narrative innovation disclosure positively affects a firm’s crash risk. From the dual perspectives of the discloser and receiver, we reveal the mechanism. The strategic behaviors of firms with limited creativity, combined with investors’ challenges in fully comprehending innovations, contribute to increased information asymmetry and reduced the quality of disclosures, thereby rising stock price crash risks. Furthermore, we show that the impact of innovation disclosure on crash risk is more significant in firms operating within poor legal and market environments, and in those with overvalued stock prices. This study provides suggestions for improving the innovation disclosure system to reduce stock price crash risks and promote stability in capital markets for emerging countries.

FAMILY FIRM NARCISSISM: CONCEPTUALISATION, MEASUREMENT, AND RELATIONSHIP TO INNOVATION

Family firm behaviour can be a potential root of innovation in family firms. Building on the theoretical perspectives of socioemotional wealth and narcissistic organisational identification, we introduce a novel concept and new measure for family firm narcissism (FFN). We suggest that FFN influences family firms’ innovation orientation (i.e., strategic innovativeness) and realised innovation outcome (i.e., digital inventiveness). Additionally, we assume that industry IT intensity, as an indicator of environmental pressure regarding digital transformation, moderates these relationships. To test the hypotheses, we investigated a longitudinal cross-industry sample, comprising 1,302 firm-year observations of S&P 500 family firms and analysed it with regression models. The results indicate that FFN is positively related to strategic innovativeness and negatively related to digital inventiveness. We further find that industry IT spending intensity amplifies both linkages. Our study contributes to the discussion on the family innovation agenda by (1) introducing the new concept and measure for FFN and (2) underlining its controversial impact and effectiveness on two central manifestations of innovation under the boundary conditions of digital transformation.

A Overview on Decision Theory, Game Theory and Some Applications in Economics and Other Social Sciences

Decision theory and Game theory are the special branches of mathematics that are mostly applicable in social sciences, economics, and commerce as well as in engineering sciences, Biology etc. It is the study of strategy and conflict in which agent success in making choices depending on the choice of the other opponent. It was initially developed in economics to understand a large collection of economic behaviors of firms, markets and consumers. This theory has been used to attempt or to develop theories of ethical and normative behaviors as well. Applied game theory is helpful in understanding the rational behavior of economics and philosophy. The purpose of this paper is to clarify the following. First is to provide very brief overview of decision theory, game and game theory, second to discuss background and impact of game theory, third to analyze the prisoner’s dilemma game and finally to present applications of it and special attention to economics and other social sciences.

Selective revealing for building ecosystems: a conjoint experiment with managers of established firms

Researchers have identified selective revealing, that is, the voluntary, purposeful, and irrevocable disclosure of information to third parties, as a mechanism in ecosystem building. However, there is a lack of understanding of the ecosystem‐level factors that drive managers' decisions to share such information in emerging ecosystems. To shed light on how managers of established firms engage in selective revealing when building ecosystems, we draw on the resource‐based view. We theorise about the information revealing behaviour of established firms' managers, based on the threats of substitution and imitation that cause trade‐offs in emerging ecosystems of established firms and new ventures. We test our hypotheses with a choice‐based conjoint experiment analysing 640 decisions of managers responsible for ecosystem building. We find that managers from established firms are more likely to engage in selective revealing when the ecosystem aims at radical innovation (over incremental innovation), when other established firms have high knowledge diversity (over a low knowledge diversity), and when new ventures demonstrate technological superiority (over being on par with established firms' technologies). Our study therefore illuminates which ecosystem‐level constructs influence managers' decisions to reveal information when co‐building ecosystems, even when no immediate payoff is recognisable.

Shaken to action: Natural disaster experience and enterprises' sustainable decision-making

This paper explores how early-life exposure to natural disasters, specifically earthquakes, induces environmental-friendly actions in China's manufacturing sector. We establish that early-life earthquake experiences lead to a reduction in enterprises' pollutant emissions, an effect that persists for up to a decade and gradually diminishing over time. Delving into the experimental economics and psychology literature, we identify key drivers of environmentally responsible behavior in firms, including long-term time preferences, prosocial behaviors, and risk-taking attitudes. The pollutant reduction effect is more prevalent in firms with stronger performance, those that are nonstate-owned, operate in heavy-polluting industries, and have endured severe earthquakes. Our research expands the understanding of climate risk, post-traumatic growth, and factors influencing corporate pollutant emissions, offering valuable insights into how individuals' preferences can be nurtured to support environmental protection efforts.

How transformational leadership impact on employee service innovation: the moderating effect of employee creative role identity

PurposeThis study examines the impact of transformational leadership on employees' service innovation behaviors in service firms and explores the moderating effect of employees' creative role identity on the relationship between the two from an employee psychological perspective.Design/methodology/approachThis study designed two questionnaires to be distributed to supervisors and employees as a means of conducting a questionnaire survey, which resulted in a sample of 328 leader–employee matches. The hypothesized relationships were tested using structural equation modeling and regression analysis.FindingsTransformational leadership has a significant positive effect on employee service innovation. The analyses further confirmed that creative role identity plays a moderating role between transformational leadership and employee service innovation.Originality/valueThis study confirms the effect of transformational leadership on employee innovative behavior and extends the theoretical basis of this relationship. It also hopes to provide inspiration and reference for local management in China.

COVID‐19 and global value chains: A discussion of arguments on value chain organisation and the role of the WTO

AbstractWe conduct an in‐depth analysis of the reasons for changes in global value chains as a result of COVID‐19 both from a positive angle, analysing expected changes in the behaviour of firms, and from a normative angle, assessing the different arguments for policy interventions by governments. The analysis generates three main conclusions. First, the COVID‐19 pandemic could contribute to diversification of sources of supply whose extent will vary by sector depending on the costs of value chain reorganisation. The pandemic, by contrast, is not likely to contribute much to re‐shoring, the return of manufacturing activities to industrialised countries, which is more likely to be driven by pre‐existing trends such as rising factor costs in emerging countries, increasing uncertainty about trade policy, and robotization and automation of production. Second, the pandemic has led to increased attention to the provision of essential goods in situations of crisis. Third, the largest risk for the global economy in the aftermath of the pandemic is a move away from open, non‐discriminatory trade policies, which would jeopardise the large benefits of open trade regimes in the current global economy characterised by scale economies, innovation spillovers, and a global division of labour.

Managements' competence, functional background, control systems, contextual factors of the planning system and cash flow management behaviour in Uganda's tourism firms

PurposeThe purpose of this paper is to examine the relationship between Managerial Competence Functional Background of Top Management Teams (FBTMT), Management Control Systems (MCS), Contextual Factors of Planning System (CFPSY) and Cashflow Management Behaviour (CFMB) in the tourism sector in Uganda.Design/methodology/approachThis is a correlational and cross-sectional study utilising a sample of 211 tourism firms (tour operator firms and hotels) and using a questionnaire to enlist responses. Data are analysed using SPSS software.FindingsResults show significant relationships between managerial competence, functional background of top management teams, management control systems, contextual factors of planning system and cashflow management behaviour. Among the independent variables, management control systems is the best predictor of cash flow management behaviour in tourism firms. It is also a significant mediator in the link between management competence and cash flow management behaviour and that between the functional background of top management teams and cashflow management behaviour.Research limitations/implicationsAppropriate cashflow management behaviour of actors in operating, investing and financing activities of tourism firms can be improved through highly developed management competence, strong management control systems, utilisation of varied functional background of top management teams and enabling contextual factors of the planning system. The study operationally defined cash flow management behaviour as any management behaviour that is relevant to cash flow management in a firm's operating, investing and financing activities probably for the first time and this speaks to those financial statement analysts and other stakeholders wishing to infer cash flow management behaviours from the statement of cash flows.Originality/valueAs far as we are aware, no research has been done on the relationship between the cash flow management behaviour of tour operator companies and hotels in Uganda's tourism sector and the internal contingencies of managerial competence, functional background of top management teams, management control systems, and contextual factors of the planning system.

The impact of green credit guidelines on environmental performance: Firm-level evidence from China

The Green Credit Guidelines (GCG) regulates the environmental behaviour of firms with high pollution, high energy consumption, and surplus production capacity (known as “two high and one surplus”, THOS) through environmental and social risk assessment and credit management, thereby improving firms' environmental performance. Adopting the panel data of 461 Chinese A-share listed firms from 2008 to 2020 and the Difference-in-Differences (DID) model, this paper employs the promulgation of GCG in China as a quasi-natural experiment to investigate the effect of GCG on THOS firms' environmental performance and its potential mechanisms. The main findings are reported as follows. Firstly, the promulgation of GCG significantly improves the THOS firms' environmental performance. Secondly, after dividing the firms' environmental performance into the environmental strengths and concerns, the policy effect is stronger on environmental strengths that focus on process control. Thirdly, the firms' environmental performance improvement effect of the GCG is mainly achieved by promoting green innovation and exacerbating financing constraints. Finally, the improvement effect of the GCG on firms' environmental performance is more pronounced in firms with weaker external monitoring, environmental information disclosure and lower capital dependence.

Editorial to the special issue “International entrepreneurial behaviors of African firms: Emerging issues, challenges and opportunities”

In recent years, the international entrepreneurial behaviors of African firms have garnered considerable attention within the global business context. As the world becomes increasingly interconnected, African firms are stepping onto the international stage with growing confidence and ambition. This trend is fueled by a combination of factors, including advancements in technology and communication, as well as evolving trade agreements. However, along with the opportunities presented by international expansion, African firms also face a myriad of challenges. Despite these challenges, African firms are demonstrating remarkable resilience and innovation in their pursuit of international entrepreneurship. In this Special Issue Editorial, we showcase and capture the emerging and diverse range of scholarly contributions to the international entrepreneurship field in Africa. The papers in this collection provide various ways to enhance the conversation on the constraints on development and the different dynamics of international entrepreneurship. We also shed light on the inherent challenges in attempting to unlock the full potential of African firms and national economies in the 21st century.

A Critical Review of the Common Ownership Literature

The rapid growth in index funds and significant consolidation in the asset-management industry over the past few decades has led to higher levels of common ownership and increased attention on the topic by academic researchers. A consensus has yet to emerge from the literature regarding the consequences of increased common ownership on firm behavior and market outcomes. Given the potential implications for firms and investors alike, it is perhaps not surprising that policy makers, legal scholars, finance and accounting academics, and practitioners have all taken a keen interest in the subject. In this article, we provide an overview of the theoretical underpinnings of common ownership and critically review the empirical literature. Measurement issues and identification challenges are detailed, and a discussion of plausible causal mechanisms is provided. Across the newest papers employing the most credible identification techniques, relatively little evidence has been found that common ownership causes lower competition. However, further research is necessary before broad conclusions can be reached.

How Military Executives Shape Digital Transformation of Firms—The Moderating Role of Symbiosis Orientation and Market Power

The requirement of sustainable development has led to challenges for DTF (i.e., digital transformation of firms). Extensive studies have been conducted on how the personality traits of executives influence the behavior of firms. However, the effect of military experience on DTF has yet to be determined. This concern is addressed in this study from the imprinting theory (IT) and upper echelons theory (UET) perspectives. We aim to investigate whether and how military executives impact DTF. Analysis of data from listed firms in China between 2010 and 2020 indicates that military executives positively enhance DTF. This research also evaluates the moderating effects of symbiosis orientation and the market power of firms on the above relationship. Heterogeneity analysis reveals that the impact of executives’ military experience on DTF is only significant in non-regulated, high-technology, and low-pollution industries. Our findings expand the literature on leadership and DTF. We introduce the concept of symbiosis orientation and examine the moderating roles of symbiosis orientation and market power in the above effect, which elucidates the interplay between organizations and the external environment. Our findings provide insights into enhancing digital transformation efforts by strategically selecting suitable military leadership for firms and further promoting the sustainable development of firms.

Adverse impact of capital regulatory reform and policy remedy: theory and evidence

This paper studies the impact of capital regulatory reform on firm behavior. We develop a portfolio-choice model to investigate how capital regulatory reforms influence the risk-taking behavior of financial institutions with different capital adequacy levels. The model predicts that as regulation becomes more stringent, either all firms reduce their risk-taking, or there exists a capital-adequacy threshold below which risk-taking increases. The Chinese insurance solvency regulatory reform provides a unique natural experiment to examine firms’ risk-taking responses to the capital shock driven by the reform. We find that increasing regulatory pressure – i.e. a more stringent regulation – induces greater risk-taking for less capital-adequate insurers, the insurers whose risk-taking the regulator most wants to reduce. We rule out the potential reverse causality that insurers’ risk structures prior to the reform determine their degrees of capital shock and that insurers target low capital-adequate positions by taking more risks prior to the reform. Our results suggest that reinforcing the qualitative risk assessment, increasing the penalties of insolvent insurers, and increasing the risk sensitivity of capital requirements could be effective policy remedies for this backfiring problem.

Within‐ and across‐province agglomeration of LEED certifications in China

AbstractThis paper investigates the adoption patterns of Leadership in Energy and Environmental Design (LEED) certification in China, analyzing data from 2010 to 2021. We find that builders' choices of certification levels are positively correlated within each province. However, for commercial buildings, builders differentiate from each other in the choice of certification levels. The study also identifies spatial spillovers of LEED certification across nearby provinces. We propose potential explanations for these findings and discuss their policy implications. The results suggest that the design of certification schemes should account for the strategic behavior of firms. Additionally, regional policies promoting green building certifications may have spillover effects, encouraging adoption in neighboring regions.

Management innovation, digital capacity and enterprise innovation performance

Purpose Small- and medium-sized enterprises (SMEs) are key players in economic activities. Yet little research focuses on their management innovation’s effect on innovation performance, this paper explores the impact of three sub-dimensions of management innovation (new organizational structure, new processes and new practices) on innovation performance (innovation outcome performance and innovation process performance) of SMEs in the manufacturing industry. It elucidates the mediating role of external knowledge search (search depth and search breadth) and identifies the moderating effect of digital capability.Design/methodology/approach By collecting primary data through a questionnaire survey, this paper employs Mplus and SPSS to analyze data.FindingsThis paper finds that management innovation positively affects innovation performance, with a greater impact on innovation outcome performance. Search breadth partially mediates the relationship between new organizational structure and innovation performance. Digital capability positively moderates the positive relationship between management innovation and external knowledge search.Originality/value The theoretical contribution of this study is to supplement the research on the consequences of management innovation and to improve the theoretical relationship between management innovation and external knowledge search based on firm behavior theory.