Firm Decisions Research Articles

A data-driven operations management model: Implementing MIS for strategic decision making in tech businesses

In today’s rapidly evolving technological landscape, data-driven decision-making is critical for business growth and competitiveness. This paper presents a comprehensive operations management model that integrates Management Information Systems (MIS) to facilitate strategic decision-making in technology firms. The proposed model emphasizes the transformation of raw data into actionable insights, enabling organizations to optimize their operations and respond effectively to market dynamics. By systematically incorporating MIS into operational frameworks, the model provides a structured approach to data collection, analysis, and dissemination. It identifies key performance indicators (KPIs) that are essential for monitoring business performance and aligning operational activities with strategic objectives. Through case studies of leading tech companies, the model illustrates how data-driven methodologies can lead to improved forecasting, resource allocation, and overall operational efficiency. The framework is designed to be adaptable, allowing technology firms to customize the MIS components based on their unique business needs and market conditions. Key features of the model include real-time data analytics, predictive modeling, and user-friendly dashboards that enhance visibility across departments. These components empower decision-makers with timely and relevant information, fostering a culture of informed decision-making at all organizational levels. Moreover, the model addresses common challenges faced by tech businesses, such as data silos and integration issues. By promoting a centralized data repository and standardized reporting mechanisms, it enhances collaboration among teams and ensures consistency in data interpretation. The implications of this model extend beyond operational efficiency, influencing strategic initiatives such as product development, market expansion, and customer engagement. In conclusion, this data-driven operations management model not only supports strategic decision-making in technology firms but also positions them for sustainable growth in a competitive marketplace. By leveraging MIS effectively, organizations can harness the power of data to drive innovation and enhance overall business performance.

Financial Constraints and Firm Innovation Decision: The Roles of Corporate Governance and Risk Diversification

ABSTRACT Firm innovation decision is subject to the influence of financial constraints, but the mechanism through which this impact occurs remains unclear. Using a nationwide representative survey data set of private firms in China in 2016, we first identified the strengthening effect of financial constraints on firm innovation decision, and further demonstrated the influence of corporate governance and risk diversification on such a relationship. The results show that firms tend to increase investment in innovation to improve operations when facing tighter financial constraints. Firms with suboptimal corporate governance and better conditions of risk diversification tend to adopt riskier innovation strategy to cope with tighter financial constraints.

Capital structure decisions in the energy transition: Insights from Spain

The renewable energy transition depends heavily on capital structure decisions of energy firms. Most previous research has focused on the decisions of oil companies. This study investigates the financing of new investment in the Spanish renewable energy sector, including decisions about: i) equity versus debt, ii) short versus long-term debt, and iii) equity issuances versus retained earnings for new investment. Our analysis is based on data from over 22,000 energy firms from 2008 to 2021 and shows that these firms prefer debt over equity (more than 90% of changes in assets are financed through increasing debt) and have extended the term of the debt over the period studied (reaching a maximum of almost 73% long-term debt in 2021). The deployment of retained earnings is less usual than raising new equity capital. Our analysis points to a generalized use of project finance to support new investments. Policymakers should focus on increasing financing through equity and thus diversifying the financial risk of the energy transition. In addition, a supportive fiscal policy and a stable regulatory environment are desirable for achieving this goal.

A study on financing decisions of Indian firms using machine learning algorithm “LASSO”

A study on financing decisions of Indian firms using machine learning algorithm “LASSO”

Система государственного управления как актор политики по обеспечению жизнеустойчивости страны (на материалах РФ и стран Запада)

This study draws conclusions from the analysis of the activities of governmental bodies and the public administration system in ensuring the resilience of the country. Resilience is understood as the state and capacity of society to counteract both external and internal threats without significant losses to the vitality and integrity of the nation. The viability of a country depends on a variety of conditions and factors that affect its existence and position at a particular time. The study reveals the management subjects and the mechanisms for implementing state policy. Systemic errors in the implementation of state policies aimed at ensuring national resilience are identified. Furthermore, ways for improving the public administration system as a mechanism that fosters the achievement of this goal are proposed. The main task of public policy for ensuring national resilience is the development of society and the overcoming of uncertainty and chaos in the relationships among individuals, society, and the state under the influence of both internal and external threats. “Freedom” as a systemic category characterizes the quantity and quality of connections among the elements of the system. It can be stated that the greater the freedom afforded to social systems – characterized by fewer moral, ethical, spiritual, legal, and other ties – the lower the level of security within such a society. In addressing the challenge of ensuring the resilience of the country, enhancing the effectiveness of the public administration system demands firm political decisions and operational management.

Strategic Corporate Purpose

ABSTRACTWe propose a theory of strategic corporate social responsibility (CSR). Value‐maximizing shareholders play an industry CSR game where they can opt for an objective function that extends beyond shareholder value, thus conditioning other strategic firm decisions. The theory provides a formalization of the “doing well by doing good” adage in an industry setting. We develop conditions such that the CSR game is a pure coordination game, which provides a natural and novel theory of strategic leadership in CSR: By committing to a CSR objective function, a first mover leads the industry to a Pareto superior equilibrium. The theory can rationalize recent evidence on correlated industry‐wide CSR adoption, and carries implications for competition policy.

Evaluation of real estate investment performance of insurance companies by NHF Act in curbing housing deficit in Nigeria

PurposeThe purpose of this study is to evaluate the real estate investment performance portfolio decision-making of the insurance firms by the National Housing Fund (NHF) Act in reducing the housing deficit in Nigeria. The insurance companies' gross premium, real estate investment and return on investment trends for the period 2014–2019 were evaluated, to determine the extent of their investment in real estate in Nigeria, this ought to have reduced the shortfall in housing.Design/methodology/approachBoth primary and secondary sources were used. Cronbach’s alpha was used for testing the reliability. The Friedman mean rank with Chi-square was used for different types of real estate investment properties and for reasons for investing in real estate by insurance companies in Nigeria. The test for normality was conducted using the Shapiro–Wilk and Spearman correlation for the significance. The percentage and the data envelopment analysis frontier model were used for measuring performance and efficiency.FindingsThe results showed that the majority of real estate investments made by insurance companies were in commercial and land buying and reselling and that their performance was below average. However, their motivation for investing is not toward the NHF Act but rather for diversification and increasing their capital.Originality/valueTo the best of the authors’ knowledge, this is one of the first studies in Nigeria that looked at how well insurance firms have performed investing in real estate as required by the NHF Act. However, the new Act, the National Housing Fund (Establishment) Act of 2018 which was put on hold due to flaws, affected data availability beyond 2019.

Reputational Costs as a Tax Avoidance Deterrent in Small to Medium Enterprises

Reputational concerns are considered a disincentive to tax avoidance. Prior literature examining tax avoidance in the context of large and listed firms attributes this relationship to the scrutiny to which large firms are subject. This begs the question if reputational concerns are a relevant tax avoidance deterrent in the setting of small to medium sized enterprises (SMEs) because SMEs have fewer stakeholders, lower disclosure requirements, and are subject to less media attention. Using survey data from Belgian SMEs, we find that SMEs with reputational concerns report an effective tax rate that is 8.57 percentage points higher than that of SMEs with low reputational concerns. We further examine which firm characteristics moderate the deterrent effect of reputational concerns on tax avoidance. We find that potential reputation damage is more important to the tax avoidance decision of firms with less financial freedom and firms with a higher need to maintain creditor relations. Finally, we document that reputational concerns act as a corporate tax avoidance deterrent against aggressive positions.

Financial decision dynamics: Environmental, social, and governance factors and managerial choices in emerging markets

This study examines the linkage between the ESG performance of firms and managerial decision-making. It uses 8 years of ESG performance data of 110 Indian firms collected from the Thomson Reuters database. The study finds that high ESG performance mitigates a firm’s cost of debt more than equity cost. Furthermore, increases in ESG performance are associated with higher capital expenditures, lower investment cash flow sensitivity, higher cash holdings, and lesser payout of increased cash flows to shareholders. The findings are in sync with the Slack resources view, suggesting that the requirement of financial Slack for ESG-related innovations and risk-bearing is large and impacts the major managerial decisions of firms. While the effects of environmental and social performance on these decisions are similar to that of the composite ESG performance, governance performance shows an independent impact on the payout decisions of firms. The Granger Causality test reveals a bi-directional association between debt issues and ESG performance. The main results obtained from the multiple panel regressions are robust to additional tests involving lead-lag analysis. The overall findings of this study highlight the importance of ESG performance screening in the managerial decision-making process of investors who would not like to risk growth potential for a short-term increase in dividends.

The downstream firm's decision over R&D for energy-saving

Although energy saving for a firm is very important, the R&D literature has rarely discussed this issue. This paper provides a vertically-related model to analyze how conducting energy-saving R&D affects the upstream firm's pricing decision and downstream firm's energy-saving and output decisions. We show that an increase in energy price may induce the downstream firm to purchase more energy, but less efficient R&D may not induce the downstream firm to purchase more energy. Moreover, more efficient R&D may not increase the energy price under the upstream monopoly case. Finally, social welfare may not improve when the upstream market becomes more competitive.

The costs of corporate debt overhang

We make use of rich U.S. data to show that debt overhang significantly reduces firm asset-, capex-, and employee-growth. We show these contractions are likely driven by firm decisions as opposed to the result of credit constraints or changes in investment opportunities. Our measure of overhang – liabilities to cash flow — aligns with traditional theory and focuses on the importance of a firm’s debt servicing capacity. It further allows us to capitalize on the COVID-19 shock as a quasi-natural experiment to confirm the impact of overhang on firm investment and growth.

Regional bombs and firm investment decisions: Evidence from the Vietnam War

This study examines the impact of historical bomb density on the investment decisions of Vietnamese firms, particularly in infrastructure. Employing an instrumental variable approach, this study examines the causal relationship between bomb density and tangible asset investments. The findings indicate that bomb density significantly influences these investments, with infrastructure quality and literacy rates as mediating factors.

Transmission of Monetary policy impulses on the Capital Structure of Manufacturing firms: Evidence from an Emerging Economy

A country's monetary policy influences a firm's economic decisions by influencing the cost of external debt offered to firms by commercial banks. However, research on the effect of monetary policy on the capital structure of firms located in bank credit-driven developing economies is limited. This research paper tries to fill that gap by examining the effects of monetary policy impulses on the short- and long-term capital structure of firms in an emerging economy. Using quadratic econometric equation and GMM regression model study analyzes annual financial data of 2575 non-financial firms belonging to 8 manufacturing sectors covering the duration of 13 years ranging from 2009 to 2021. The results show a curvilinear relationship between monetary policy impulses and firms' capital structure in different manufacturing industry sectors. Monetary policy was found to have a different impact on short-term and long-term borrowings of financially flexible and inflexible manufacturing firms.

Blockchain-enabled downward traceability to combat gray market

Cross-market brand owners have long been troubled by the gray market issues. This study examines a dual distribution channel model involving one brand owner, two retailers, and two independent markets. In this model, low-end retailers privately transfer products from the low-end to high-end markets, creating a gray market. The brand addresses this behavior by adopting blockchain. We examine the impact of blockchain on gray market invasion, firm decisions, consumer surplus, and social welfare through downward traceability. The results show that gray market invasion consistently benefits low-end market retailers while disadvantaging high-end market retailers. It is profitable for the brand to allow gray market invasion when the willingness to pay in the low-end market is substantial. Blockchain adoption can effectively inhibit gray market invasion, benefiting high-end market retailers while harming low-end market retailers and the brand, depending on the cost and penalty fee involved with blockchain implementation. When the cost of blockchain adoption is relatively low, brand adopting blockchain may achieve a win-win-win market situation. However, although consumer surplus and social welfare can benefit from a gray market invasion, adopting blockchain reduces this impact, especially when cost of blockchain adoption and penalty fee are both relatively high.

The Marginal Value of Cash: Corporate Savings, Investment, and Financing

The fact that internal liquidity is a key source of corporate funding puts the marginal value of cash at the center of a variety of firm decisions, including investment, payout, financing, savings, and risk management policies. The marginal value of cash is inherently a dynamic concept, because a firm facing financing frictions has to be forward-looking, managing its asset and liability structures in a unified framework and carefully trading off the use of liquidity across time and states. We present a dynamic framework for corporate liquidity management and survey the related literature, with a focus on the determinants of the marginal value of cash and its ubiquitous role in firm decisions.

Does firm culture influence corporate financing decisions? Evidence from debt maturity choice

This study establishes a relation between corporate culture and debt maturity choice. Specifically, superior corporate culture is associated with the choice of shorter-term debt, supporting the notion that superior culture reduces managerial agency problems resulting in managers being more receptive to external monitoring through the choice of shorter-term debt. The culture subcomponents of integrity, teamwork, and innovation are found to have a meaningful influence on the debt maturity structure choice. The relation between culture and debt maturity is more pronounced in firms with higher managerial stock ownership and those that are financially constrained, but is weakened in firms with a greater CEO sensitivity to stock prices. Additionally, firms with superior culture are shown to have higher long-term credit ratings. These findings contribute at the confluence of corporate culture and debt financing literatures. A battery of robustness tests, including addressing endogeneity concerns, validate the findings.

Natural disaster and corporate green innovation: Evidence from earthquakes

This paper investigates whether the occurrence of earthquakes affects firms' green innovation. Using Chinese non-financial listed companies from 2006 to 2020, we find that the occurrence of earthquake has a significant negative effect on corporate green innovation. This finding holds after a series tests to deal with possible endogeneity issues. We further verify that earthquakes inhibit firms' green innovation by reducing firms' sales revenue and increasing firms' agency costs. Heterogeneity analysis further demonstrates that earthquakes have a greater impact on firms with high innovation investment, lower analysts' attention, and those located in more economically developed regions. Overall, our findings suggest that earthquakes influence the behavior of market participants and the economic decisions of firms.

Manager political preferences and company investor bases

AbstractWe investigate how the personal political preferences of top managers shape the investor base of firms. Based on the risk‐aversion attitude of firm decisions that rely on conservative political ideologies, we find that Republican managers tend to maintain a lower leverage level; invest less in tangible assets and R&D to pursue near‐term profitability; and maintain a high quality of information disclosure to increase stock liquidity. We demonstrate that firms led by Republican managers can attract more transient institutions. This relationship becomes stronger during financially stressful periods and is robust after considering the moderating role of managerial discretion and potential endogeneity.

The effect of common ownership among supply chain parties on decision-making and surplus with manufacturer encroachment

In the financial economics field, several studies assess the effect of common ownership on the economic consequence, decision-making of firms, and social performance. In this situation, based on recent supply chain practices and manufacturer encroachment, we examine the effect of common ownership on supply chain parties composed of a retailer and a manufacturer and social performance. From our model analysis, we demonstrate that manufacturer encroachment improves the retailer’s profit under specific economic environments, while generally, manufacturer encroachment harms the retailer’s profit because the manufacturer obtains market share through a direct channel. Additionally, we demonstrate that increasing common ownership improves total surplus in a specific case. Therefore, our analysis does not only propose the positive effects of common ownership among all vertical supply chain parties for supply chain coordination, as opposed to what is indicated by the real world, but also implies that society should accommodate common ownership among supply chain parties in specific economic environments from the perspective of total surplus.

HMAE: a high-fidelity multi-agent simulator for economic phenomenon emergence

Economic models based on multi-agents are increasingly attracting attention and can provide a new perspective for exploring the causes behind social phenomena at the individual level. Existing research usually adopts society-level learning methods, and more research on micro-level heterogeneity among individuals is needed. For this, we propose a high-fidelity multi-agent economy (HMAE) model based on evolutionary game theory, including three types of agents: workers, firms, and the government. In particular, we characterize worker heterogeneity regarding laziness factors, work endowments, and commuting distances. These agents continuously and iteratively update their strategies by randomly exploring and imitating their neighbors to maximize their utility value. We simulated the evolution process of agent behavioral decisions through experiments and found that individual heterogeneity can significantly affect the decisions of workers and firms. These phenomena are consistent with some economic evolution trends in real life, and our research can provide an analytical tool for analyzing the causes of emerging economic phenomena.