Firm Engagement Research Articles

Firm Engagement and Social Issue Salience, Consensus, and Contestation

Facing an increasing number and variety of issues with social salience, firms must determine how to engage with issues that likely have a significant impact on them. Integrating issues management (IM) and salience theories, the authors find that firms engage with socially contested issues—where there is a high degree of societal disagreement—in a different manner from issues that have social consensus, or high agreement. Examining social issue resolutions filed by shareholders from 1997 to 2009 (3,887 total observations), the study finds that socially contested issues, as well as those issues with social consensus, are both likely to result in engagement by the firm. For social issues with consensus, a firm is more likely to opt for a low level of shareholder engagement whereas resolutions regarding contested issues lead to engaging shareholders at a higher level. These findings shed new light on the IM and issue salience literature streams that have suggested firms will react differently to these types of issues, even while they remain largely untested. Finally, firms become less engaged with perennial issues over time. rather than more, providing new guidance to researchers, shareholder activists, and firms alike. To the authors’ knowledge, such fined-grained insight into expected levels of firm engagement with social issue salience has not been put forth previously.

Measuring and Managing Consumer Sentiment in an Online Community Environment

As social media and virtual communities increase in popularity, the spread of word of mouth becomes easier, challenging firms to measure and manage the success of marketing initiatives in online community environments. This research examines how consumers react to firms' active participation in consumer-to-consumer conversations in an online community setting. The authors develop a tailored community-matched measure of consumer reaction (consumer sentiment) and analyze more than 115,000 consumer posts from ten online forums with active firm participation. The results indicate that consumers show diminishing returns to active firm engagement, which, at very high levels, can undermine consumer sentiment. Further subgroup analyses by conversation type indicate that these relationships hold for conversations that address consumers' functional needs but do not hold for conversations that address social needs. Finally, the results show diminishing returns to firm engagement for consumers primarily interested in product-related support but show no relationship for consumers primarily interested in inspiration and entertainment. These findings provide insights for marketing performance measurement and resource allocation in online communities.

Effect of Firmss Fan Page Strategy on User Engagement

Organisations continue to invest in fan pages on social media platforms to improve user engagement. However, less than 1% of fans actively engage with brands online (Nelson-Field et al., 2012). Though a firm fan page has become an integral part of any firm’s social media strategy, we are yet to understand how firms’ fan page strategies affect user engagement on social media platforms. The diversity of firms’ business, user’s motivation for engagement and functionalities of social media platforms have made it challenging to manage the fan pages. This research proposes a framework and outlines a content and timing strategy for firm fan pages to increase user engagement. Practice theory and uses and gratification theory are adopted to conceptualise the relationships between firm strategy and user engagement. A quantitative content analysis is designed to empirically validate the research model.

New Organizational Arrangements for Public-Private Research Collaboration

This paper studies Cooperative Research Centres (CRCs) as organizational platforms for Targeted Open Innovation. Specifically, the concept of Targeted Open Innovation is used to interpret the engagement of firms with other stakeholders within an innovation ecosystem in order to better collaborate and share their knowledge. The paper analyses the funding structure of CRCs in Spain using a sample of 123 CRCs. We aim to determine the effect of the degree of intersectoral collaboration on the CRCs’ funding portfolio. We characterised CRCs—“market-oriented”, “academic-oriented” and “government-oriented”—according to the degree of involvement of each sectoral actor in diverse organisational aspects, setting their objectives, executing the R&D and establishing the managerial processes and evaluation practices. We find that CRCs with market-oriented characteristics rely less on public competitive funds and CRCs with academic-oriented characteristics have a more diversified funding portfolio.

Auditor-provided tax services and long-term tax avoidance

Purpose– The purpose of this paper is to determine the association between auditor-provided tax services (APTS) and long-term corporate tax rates.Design/methodology/approach– The paper uses empirical data and multivariate regression models to explore the relationship between a firm’s use of APTS and their long-term effective tax rate.Findings– An economically and statistically significant long-term negative relationship was found between firm levels of APTS and taxes paid. Further, a portion of this benefit is lost for some firms when returning to their auditor for tax services even after a short break.Originality/value– This paper contributes to the debate regarding the value of APTS by providing evidence of the apparent long-term negative consequences to firms who reduce their reliance on APTS, perhaps even through the engagement of separate accounting firms for their audit and tax functions, although these consequences may be mitigated upon return with a significant increase in APTS. However, this is the first study, to our knowledge, to explore, in a long-term setting, the consequences of a firm’s return to their auditors for a non-audit service previously reduced or terminated. Additionally, further incremental contributions are made to other studies that look at APTS and tax avoidance by studying the long-term relationship which allows firms to consider the cumulative cost/benefit relationship between independence and knowledge spillover.

Toward New Engagement Paradigms For Intraocular Lenses: Light-Initiated Bonding of Capsular Bag to Lens Materials

Successful intraocular lens procedures, that is, implantation of accommodating intraocular lenses (A-IOL), require firm engagement of the IOL haptics to the capsular bag. We evaluated the use of photochemical bonding to engage IOL materials to the capsular bag. Freshly enucleated eyes of New Zealand rabbits were used in two types of photobonding experiments using Rose Bengal (RB) photoinitiation and green light (532-nm) irradiation. First, RB-stained capsular bag strips were photobonded ex vivo to IOL polymer [poly(2-hydroxyethyl methacrylate) pHEMA] strips in an atmosphere of air and of nitrogen. Second, IOLs were implanted intracapsularly and photobonded intraocularly. Irradiation times were between 30 and 180 seconds, and laser irradiance was between 0.25 and 0.65 W/cm(2). The strength of the bonding was tested using a custom-developed uniaxial extensiometry system and the breakage load (the load that caused breakage per bonded area) was calculated. The breakage load of ex vivo capsule-pHEMA bonds increased exponentially with irradiation time, using 0.45 W/cm(2). In air, the average breakage load across all conditions was 1 g/mm(2) and 1.6 times lower than that in a nitrogen atmosphere. Intraocularly, RB-stained IOLs were strongly photobonded to the capsule bag with breakage loads > 0.8 g/mm(2). Breakage of the photobonded linkage between IOL material and capsular bag required loads substantially greater than the maximum force of ciliary muscle, suggesting that this technology may introduce a new paradigm for engagement of A-IOLs. The bonding produced in air was stronger than that in nitrogen atmosphere, suggesting that oxygen is involved in the chemical mechanism for photobonding.

Why Do Firms Engage in Selective Hedging? Evidence from the Gold Mining Industry

The widespread practice of managers speculating by incorporating their market views into firms’ hedging programs (“selective hedging”) remains a puzzle. Using a 10-year sample of North American gold mining firms, we find no evidence that selective hedging is more prevalent among firms that are believed to possess an information advantage. In contrast, we find strong evidence that selective hedging is more prevalent among financially constrained firms, suggesting that this practice is driven by asset substitution motives. We detect weak relationships between selective hedging and some corporate governance measures but find no evidence of a link between selective hedging and managerial compensation.

Is audit quality impacted by auditor relationships?

The objective of this study is to provide empirical evidence on the association of audit quality with audit tenure which would support the argument for auditor rotation being prescribed by regulation. Auditor tenure is measured having regard to both the duration of relations between the lead audit partner and client firm management (person-to-person relations), as well as the duration of the audit firm's engagement by the client (firm-to-firm). Using the setting of when Australian firms were adopting the International Financial Reporting Standards (IFRS), we examine 266 publicly listed Australian firms and find evidence of a negative association between the length of tenure between the lead audit partner and client firm management (person-to-person relations) and audit quality. Conversely we find a positive relation between audit firm engagement by the client (firm-to-firm) and audit quality. This suggests there may be quality benefits from prescribing audit partner rotation, and quality costs from prescribing audit firm rotation.

The Forms of Social Engagement of Polish Firms

AbstractThe development of the idea of Corporate Social Responsibility (CSR) depends mainly on the changes in international market and growing competition between countries and enterprises. These factors influence on the behavior of enterprises. This means that the goal of business action is not only profit-making but also fulfilling social needs. The goal of this paper is to present and assess social in Poland. Starting with the concept and scope of CSR, the article presents benefits from responsible business activity and implementation of this idea in Poland.The research carried out in 2012 shows that the main implementers of CSR are large firms with foreign capital. They know the idea of CSR from the experience of Western firms. The main objective is their image and to build better relations with their environment. On this background the article shows the ranking of companies participating in “Leader of Philanthropy” competition. It allowed to choose four firms as an example of good practices in social engagement. Social activity of chosen firms was addressed to: employees,children,local community,the sick, the disabled and the poor,animals.The contacted research proves that social engagement of Polish firms is at the early stage of development. The number of firms increase, but there are mainly large companies. The main reason that the small business share in social engagement results from the limited amount of financial resources at their disposal.

Governance of Regional Innovation Systems:An Evolutionary Conceptual Model of How Firms Engage

This paper draws upon insights from social science, in order to propose a conceptualization of the governance of a regional innovation system. We are specifically interested in ones initiated through public policy and aiming to stimulate the competitiveness of firms through developing new technological knowledge through collaborative research involving different organizations. We are assuming firms choose whether, when and how to collaborate. This paper proposes a conceptual model, which focuses upon the governance processes at the regional level of this translation of knowledge into innovation and entrepreneurship. The underlying argumentation for the model is built from existing research. We interpret that regional innovation governance depends upon capacity building among three heterogeneous organizations – namely university-government-industry. This represents a case of a polycentric, adaptive, complex and self-organizing system, whereby collective action is supported by norms and institutions in order to develop a region resource pool. Hence, our expectation is that our conceptual model will help explain why different outcomes are possible. The concluding section discusses a future research agenda, by going further to explore how to define and analyze the attributes (mechanisms) enabling governance of a regional innovation system as well as to analyze how public policy and firms engage.

Firm Engagement in Community Resilience to Natural Disasters

Communities face the prospect of more extreme, frequent and damaging natural disasters and possible resilience failures. Firms are instrumental to the resilience of communities as they play a centr...

Fusing East and West Leads a Way to Global Competitiveness in Emerging Economy: Lessons from China’s Leap in Wind Energy Development

China has demonstrated world leading wind energy development in the last five years which can be attributed to the fusion between its design and manufacturing strength in indigenous wind turbine industry and newly emerging wind energy industry in absorption of global best practices. An empirical analysis of China’s wind energy development trajectory over the last decade focusing on the technology sourcing from foreign firms in support of domestic players for accelerating functionality development through enhanced knowledge identification, absorption, assimilation and acclimatization was attempted. Important lessons learned include (i) importance of supply chain in the technology diffusion, (ii) effective technology acquisition and assimilation through early domestic firm engagement, (iii) effect of relevant domestic firms involvement in technology transfer partnership to induce inter-industry spillovers, and (iv) a framework for an emerging nation to develop new functionalities. Similarity and disparity with similar success of fusion in solar industry (JTMGE 3, 2) were also identified.

What Explains Corporate Social Responsibility Engagement in Chinese Firms?

This study examines factors that explain corporate social responsibility (CSR) engagement in Chinese firms. Contrary to the developed markets, the Chinese government plays a determinant role in CSR engagement of Chinese firms. For the state-owned firms, several results are noted. First, a firm’s CSR engagement appears to serve the government interest rather than the various stakeholders. Second, managers will overinvest in CSR for political reasons or private reputation building. The behavior supports the overinvestment hypothesis. Third, a state-owned enterprises firm with more earnings management will likely reduce CSR engagement. SOEs that have CSR engagements tend to have higher research and technical development expenditures and lower financial performance. For non-state-owned firms, the CSR engagements appear to mitigate conflicts among stakeholders and associate with higher firms’ value, supporting the conflict-resolution hypothesis. Our results find that firms of a larger size are more likely to participate in more CSR engagement for both SOEs and non-SOEs.

The Engagement of Entrepreneurial Firms with Universities: Network formation, innovation and resilience

This paper examines the role of entrepreneurial firms as agents of economic resilience. It focuses on the networks these firms construct with universities in order to access knowledge for innovation. Drawing on data from a cohort of entrepreneurial firms in the United Kingdom and the United States it is found that networks between entrepreneurial firms and universities are an important feature of the complex adaptive innovation systems associated with resilience. Furthermore, entrepreneurial firms play a role in open innovation practices through the establishment of both horizontal and vertical ties with universities. However, there are numerous challenges that entrepreneurial firms often face when seeking to connect with universities, which may stymie resilience.

The rules of global engagement for developing country firms

Purpose– This study aims to examine how property rights, financial liberalization and the control of corruption at the country level influence the inward and outward global engagement of domestic firms from developing countries. The author also examines whether firms with certain resource endowments such as human capital or technological capabilities are better positioned to globalize as the aforementioned institutional factors evolve.Design/methodology/approach– Using a sample of 18,365 firms from 57 developing countries and multilevel modeling, the author shows that institutional factors are related to inward and outward global engagement.Findings– The author finds that firms with human capital are more likely to move outward in the presence of lower levels of corruption. Domestic firms possessing technological capabilities are more likely to engage inward as financial liberalization eases the access to capital.Originality/value– Many existing studies that have investigated the impact of institutional factors on internationalization by developing country firms have bundled different institutions together therefore sacrificing a focus on the effect of specific institutions on these firm decisions. While the author knows that institutions matter for developing country firm globalization, there is limited research on which institutions matter. There is also a debate on how institutions matter for developing country firms. The study sheds light on these aspects. The author also uses hierarchical linear modelling and uses both country- and firm-level variables.

Customers' relational models as determinants of customer engagement value

Purpose – The authors apply Alan P. Fiske's relational models framework to customers' engagement with service firms – specifically, they propose that customers who hold different relational models for the service firm are likely to engage with the firm in dissimilar ways, thus generating different types of customer engagement value for the firm. Fiske's relational models framework is eminently suitable for studying customer-service firm engagement because it is widely adopted in the social sciences as a rigorously developed framework for conceptualizing social interactions. Design/methodology/approach – The article bridges Fiske's relational models framework and Kumar et al.'s customer engagement value framework, and conceptually demonstrates that customers employing different relational models for the service firm are likely to generate different types of customer engagement value for the firm. Findings – The article demonstrates conceptually that customers' relational models, schemata, and scripts influence how consumers engage with the firm and the type of customer engagement value accruing to the firm. Research limitations/implications – This research has implications for service firms' relationship strategies. First, service marketers can determine the desired customer engagement value(s) and then craft their customer relationship strategy so that it maximizes those engagement value(s). The article suggests relationship strategies that service firms may implement for encouraging customers to adopt different relational models. Originality/value – No research has bridged relational models theories and customer engagement value theories.

Great Expectations! Analyzing the evolving discourse and practice of Corporate Social Responsibility

The turn of the new millennium saw considerable anticipation of improved business engagement with social and environmental responsibility. In this paper, we unearth key themes within the discourse of corporate social responsibility (CSR) as seen in the academic literature and among leading business practitioners and contrast these with the findings of a longitudinal analysis of trends in firm engagement with CSR which demonstrates the very modest progress made in this arena over the same period. Subsequently, we critically examine evidence in respect of the business case for CSR and draw a number of implications for research, practice, and public policy.

Understanding Verbal Response in Competitive Dynamics

Our study develops theory about the role of language in the competitive engagement of rival firms. We start with the widely- researched action-response model of Smith, Grimm and Gannon (1992), desc...

Pro Bono and Corporate Legal Sector in India

By undertaking a qualitative empirical research on the pro bono practices of the top tier corporate law firms in India, this paper seeks to fill up an important informational vacuum about pro bono culture among the elite law firms of India. The primary issues that this research inquires into are: the kind of pro bono work undertaken by law firms in India; their understanding of the term pro bono; interaction of indigenous elements with global trends with respect to the understanding and practice of pro bono; factors influencing, whether positively or negatively, pro bono culture among Indian corporate law firms; and briefly, linkage between the notions of pro bono, corporate social responsibility (CSR) and public interest.The corporate legal sector in India is growing at a spectacular pace in terms of size, reach, areas of expertise and the revenue generated. Within the last couple of decades, it has emerged as one of the most important constituents of legal profession in India and is also increasingly making its presence felt globally. Due to the recent origins of this development and the paucity of studies relating to it, there is a great deal of curiosity about the functioning of various aspects of corporate legal sector in India. One of such important aspects is the extent and kind of engagement of Indian law firms with pro bono activities. Owing to a wide range of rationales, pro bono work, especially in the U.S. and U.K. has become an important part of the overall corporate law firm culture. It has become, in Scott Cummings’ terms, "institutionalized." The top tier corporate law firms in India, which now share business spheres with a number of international law firms, collaborating or competing with them over business opportunities and human resources, couldn’t be expected to remain immune to the practices and ideologies predominant among their foreign counterparts. Since the institutionalization of pro bono practice is most visible among the law firms in the U.S., this paper makes frequent references to the trends and practices adopted by American law firms. This paper recognizes the importance of the forces of globalization on the culture of the corporate sector generally and on the pro bono practices of the corporate law firms in India particularly. With respect to the latter phenomenon, the effect of globalization of knowledge and practices is particularly manifest in a gradual move towards institutionalization of pro bono as observed among most of the top tier law firms in India, as well as in the recent emergence of matchmaking organizations (both domestic as well as foreign) that seek to connect the legal practitioners with those in need of legal advice, such as social entrepreneurs, public interest non-profit organizations etc. The paper puts forth that the external notion of formal pro bono is not received in vacuum among the law firms of India. Owing to the contextual specificity of Indian public interest law and litigation, predominantly transaction-based nature of work of most top tier law firms in the country, and traditionally embedded beliefs, practices, and cultural values relating to the notion of "doing good," the currently evolving understanding and practice of pro bono is acquiring a distinctive shape in the country.It needs to be clarified in the beginning itself that the use of the term "pro bono" is a fairly recent development in India. The current use and understanding of the term is considerably amorphous and overlaps with other socially driven initiatives like CSR. Beliefs such as "giving back" and "doing good" emerge as the common elements that fundamentally underlie these concepts and impart very broad definitional parameters to them. Unlike the case of the U.S. or the E.U., initiatives like pro bono and CSR are not understood as having clearly distinct meanings and spheres of operation in India. The chapter is divided as follows: Section 2 describes the research methodology used for this study. Section 3 maps out different elements constituting public interest law (PIL) in India, factors influencing its development, and the relationship between pro bono and PIL in the country. Section 4 reports the results of a qualitative study conducted on the engagement of Indian law firms with pro bono activities, primarily falling under the following three broad categories: litigation based, transaction based and non-transaction based. Legal advice on transactional matters is seen to be the most predominant form of pro bono undertaken by Indian law firms, and thus is dealt with in detail. This section also identifies various factors encouraging/discouraging Indian firms from undertaking pro bono work. Section 5 concludes the paper.

Do Fraudulent Firms Engage in Disclosure Herding?

Using text-based analysis of 10-K MD&A disclosures, we find that fraudulent firms produce verbal disclosure that is abnormal relative to strong counterfactuals. This abnormal text predicts fraud out of sample, has a verbal factor structure, and can be interpreted to reveal likely mechanisms that surround fraudulent behavior. Using a conservative difference-based approach, we find evidence that fraudulent managers grandstand good performance and disclose fewer details explaining the sources of the firm's performance. We also find new interpretable verbal support for existing hypotheses suggested in the literature, for example, that some managers commit fraud in order to improve their odds of raising capital at low cost.