Firm-level Evidence Research Articles

Co-evolutionary decoupling in EMNEs’ internationalisation: A Chinese bank's journey of drifting apart from the US-led global financial system

We develop a co-evolutionary decoupling model to explain the decoupling process and its contributors, based on a Chinese bank's dynamic interdependency with the US-led global financial system. This decoupling is the joint outcome of the firm's strategic adaptations in response to economic, institutional, and geopolitical environmental challenges. By incorporating co-evolution and international relations perspectives into international business research, we reveal how and when non-economic environmental factors can decisively hinder a firm's, especially an EMNE's, internationalisation. This study provides new firm-level evidence on the ongoing Sino-US decoupling process, extending our understanding of international business through co-evolution and international relations perspectives.

Does Cooperation with Universities and Knowledge Intensive Business Services Matter? Firm-level Evidence from Spain

This manuscript contributes to the literature on firm cooperation with universities and Knowledge Intensive Business Services (KIBS) by framing the analysis according to the literature on causal effects, comparing the effect of each of the agents and exploring which firms benefit the most from cooperation with a specific partner. The results have shown that the bias-adjusted effect is around a 27-30% increase in sales from new products for both types of partners. After covariates and fixed effects are used, it is considered unlikely that this effect is driven by time-varying unobservable factors. Moreover, we have seen that firms that benefit the most from cooperation with universities are different from those firms that benefit the most from cooperation with KIBS.

Synergistic abatement effects of Broadband China and environmental regulation: Firm-level evidence

Based on the new era context of digital economy and green development, this study uses Broadband China (BC) as a quasi-natural experiment, combining its strategic interaction with environmental regulation (ER), to empirically test the policy synergistic abatement effect of BC and ER. BC has resulted in an average of 6 % reduction in corporate carbon emissions, and the BC–ER policy interaction has encouraged firms to further reduce their emissions. This policy mix mainly exerts an abatement effect on firms by increasing green factors at the input–output stage and improving production efficiency. Furthermore, the digitalization effect of BC reduces corporate carbon emissions. Our empirical results are stronger for firms with high financial constraints, non-heavily polluting firms, non-high-technology firms, state-owned enterprises, and developed urban agglomerations. Furthermore, BC significantly suppresses the sectoral and spatial spillover effects of corporate carbon emissions, and external shocks to ER exacerbate this suppression effect. This study provides empirical evidence supporting the “tripartite win–win” of digital construction, green transformation, and energy conservation.

Environmental regulations and export performance: firm-level evidence from China’s low-carbon pilot policy

The rapid increase in global carbon emissions has raised significant concerns, prompting various environmental regulations, including China’s low-carbon pilot policy. Prior studies have shown mixed results regarding the impact of environmental regulations on firms’ export performance. Using data from Chinese industrial firms from 2001 to 2015, this study investigates how the low-carbon pilot policy, a quasi-experiment, influences firms’ exports. We employ the Heckman Two-Step Method and the Difference-in-Differences approach to separate the effects on firms’ export participation and the effects on export scales. We find that firms in the pilot provinces/cities become less likely to export after the implementation of the low-carbon pilot policy compared to firms in the non-pilot regions, resulting in a relative decrease in export probability by 4.5 percentage points. For the firms that export, their export values relatively decrease by 10 percent after the policy implementation. The effects are mainly driven by firms in Eastern China. The policy leads to higher exit rates and lower entry rates in international markets for firms in pilot regions. After the implementation of the low-carbon pilot policy, exporting firms increase the unit price of their export products, reduce the quantity of export products, and diversify both their export destinations and product types. However, we do not find evidence supporting the Pollution Haven mechanism.

The effects of Artificial intelligence orientation on inefficient investment: Firm-level evidence from China's energy enterprises

The effects of Artificial intelligence orientation on inefficient investment: Firm-level evidence from China's energy enterprises

Environmental regulation and renewable energy technology innovation: Firm-level evidence from China

This paper deploys a quasi-natural experiment formed by the implementation of China's New Environmental Protection Law (NEPL) and evaluates the impact of environmental regulation on renewable energy technology innovation (RETI). The findings indicate that the NEPL results in a substantial and robust increase in firm-level RETI. Further research show that this stimulus impact can be achieved by alleviating financing constraints and optimizing managerial levels. The effect appears more pronounced for state-owned enterprises, during the growth stage, and in regions with high marketization and high-income levels.

The impact of energy consumption permit trading scheme on green development efficiency: firm-level evidence in China

The impact of energy consumption permit trading scheme on green development efficiency: firm-level evidence in China

Tax Policy Uncertainty and Investment in Tax Planning: Firm-Level Evidence

Tax Policy Uncertainty and Investment in Tax Planning: Firm-Level Evidence

Can Servicification Benefit Manufacturing Exports? Empirical Results for India

To enhance manufacturing exports, India, a major player in the services segment, has recently created an enabling environment through the launch of several programmes, for example, the ‘Make-in-India’ and the production-linked incentive (PLI) schemes. As the firm-level evidence on the synergies between services input use (i.e., servicification) and manufacturing exports in the country is relatively scarce, the current analysis studies the relationship between them by using the CMIE-Prowess dataset over a period of 2000–2019, for both new and existing exporting firms. At the firm level, the article uses a two-step system generalized method of moments (GMM) estimator for studying the impact on export intensity, while a dynamic panel probit model is used to study the impacts on the decision to export. Apart from the analysis at the aggregate level, the influence of servicification is also judged for the low-tech and mid-to-hi-tech sectors separately and the disaggregated industry level. The observed positive relationship between servicification and manufacturing exports implies that the integration of competitiveness in the field of services with hi-tech manufacturing sectors can enhance India’s exports on the one hand and deepen firm-level global value chains participation on the other hand. JEL Codes: C23, F12, F14, F23, L25, L80

How industrial robots affect employment: firm-level evidence from China

Using China’s Annual Survey of Industrial Firms (ASIF) and the China Customs Database (CCD) from 2000 to 2013, this study explores the impact of adopting industrial robots on the employment in Chinese manufacturing firms. We find a positive association between the adoption of industrial robots and the employment scale of China’s manufacturing enterprises. We also find evidence that the positive association is more pronounced in capital-intensive industries, non-state-owned firms, and firms in coastal areas. Mechanism test indicates that ‘scale expansion effects’ and ‘productivity effects’ are the main channels through which industrial robots promote employment growth. Further analysis indicates that the adoption of industrial robots did not have obvious industry spillover effects. Additionally, other labor market results demonstrate that the adoption of industrial robots significantly increases the average wage level of enterprises while decreasing their labor share. This study provides micro-level evidence revealing the impact of adopting industrial robots on employment in developing countries. It also provides important policy implications for countries worldwide seeking to promote automated production.

Financial structure and innovation: firm-level evidence from Africa

Financial structure and innovation: firm-level evidence from Africa

Inflated energy prices and capital structure: firm level evidence from Indian manufacturing sector

Purpose The purpose of this paper is to study the influence of inflated energy prices on the capital structure of Indian manufacturing corporations and to investigate whether the capital structure of Indian firms is driven by demand shocks or supply shocks during the study period. Design/methodology/approach After conducting a thorough review of the capital structure and inflation-based research studies, panel data-based regression model and correlation matrix have been used as statistical tools for Indian manufacturing sector available with the Centre for Monitoring Indian Economy Prowess database. Findings The results suggest that variables like the presence of inflated energy prices had adversely influenced the capital structure of Indian corporations. Not only this, the study also highlights that factors pertaining to the demand shock had induced Indian corporations to have higher debt levels in the capital structure. Practical implications This study has laid some ground work to explore the influence of inflation on capital structure of Indian firms upon which a more detailed evaluation could be based. Originality/value To the best of the authors’ knowledge, this study is the first that explores the influence of inflated energy prices on the capital structure of manufacturing firms in India by using the most recent data.

What a difference an OFDI makes. Firm-level evidence from the EU

Using a large panel of European firms covering the years 2007–2015, this study investigates the effects of outward foreign direct investment (OFDI) on performance. Controlling for self-selection through propensity score matching techniques at baseline in a two-way fixed effect difference-in-differences framework, we determine that OFDI firms exhibit higher productivity, value-added, sales, and profit compared with non-OFDI firms. Heterogeneity analysis by destination reveals that the highest performance premia accrue to firms that invested in non-European Union (EU) countries, developed economies and technology-advanced hosts. Heterogeneity analysis by ownership structure shows that OFDI established via joint-venture or wholly owned enterprises have similar, positive performance premia. Furthermore, investing abroad entails no reduction in the parent companies’ number of employees. Finally, we document an increase in research and development expenditure for OFDI firms at both intensive and extensive margins, indicating a potential driver of the observed performance premia.

Intangible capital as a production factor. Firm-level evidence from Austrian microdata

ABSTRACT We examine the role of intangible capital as a production factor using Austrian firm-level register data. The setting exemplifies the characteristics of an advanced, small, and open economy. Descriptive statistics show that intangible investment has increased over time. The intensive and extensive margins of firms’ investments are highly skewed. They differ across sectors. A series of sample splits show that the components of intangible capital play different roles as inputs in the production function. Software and especially licences are important for SMEs and exporters. Research and development play an important role in production in all specifications. For firms that continuously invest in intangible capital, all components of intangible capital gain importance in the production functions. These results complement those found in previous studies and have implications for the strategic orientation of industrial and innovation policy.

The Effect of Export Market Access on Labor Market Power: Firm-level Evidence from Vietnam

We examine the impact of an export market expansion created by the US-Vietnam Bilateral Trade Agreement (BTA) on labor market competition among Vietnamese manufacturing firms. We measure distortionary wedges between equilibrium marginal revenue products of labor (MRPL) and wages nonparametrically and find that the median firm pays workers 59% of their MRPL. The BTA permanently decreases labor market distortion in manufacturing by 3.4%, mainly for domestic private firms. The median distortion is 26% higher for women than men, and the decline in distortion for women drives the overall distortion reduction. We shed some light on the mechanisms for these results.

Can climate-related information disclosures strengthen green innovation capacity? Firm-level evidence using textual analysis

This study presents novel insights on modelling the implications of voluntary climate-related information disclosure on corporate green innovation (GI) in China. Based on a constructed dataset of 13,664 firm-year observations between 2014 and 2020, we quantify climate-related disclosures under the Task Force on Climate-Related Financial Disclosures framework using computerized text analysis. Our findings show that climate-related information disclosure substantially bolsters corporate green innovation after addressing endogeneity concerns. However, the promoting effects vary drastically across industry attributes, ownership structure, and environmental regulations. Further channel analysis demonstrates that “greenwashing” behaviours and financial constraints adversely moderate the nexus between climate-related information disclosure and green innovation of firms, while digital finance positively moderates it. Overall, this study enriches the literature and offers practical implications for firms engaging in the green innovation process more effectively under a more transparent environment-related disclosure system.

The impact of sustainable development policy for resource-based cities on green technology innovation: Firm-level evidence from China

The sustainable development policy targeting resource-based cities (RBC) is a critical measure initiated by China's government to transform these cities. Green technology innovation (GTI) has surfaced as a pivotal route in achieving sustainable development in RBCs. However, whether implementing this policy can induce GTI remains underexplored. To fill this gap, exploiting the National Plan for Sustainable Development of Resource-based Cities (2013–2020) (NPSDRC) as a quasi-natural experiment, we employ the difference-in-differences (DID) method to examine the influence of NPSDRC on corporate GTI and potential mechanisms. We observe that NPSDRC significantly reduces the GTI of RBC enterprises. Mechanism analysis reveals that NPSDRC escalates environmental governance costs and decreases R&D investment, impeding corporate GTI. Meanwhile, our findings suggest that providing more bank loans and tax incentives could weaken this adverse effect on corporate GTI. Heterogeneity results indicate that non-SOEs, enterprises with weak financing capabilities, enterprises with long-sighted vision, and high energy consumption enterprises are more susceptible to the influence of NPSDRC. This study offers empirical evidence for countries seeking to employ policies to drive the transformation of RBCs.

Does economic policy uncertainty influence executive compensation stickiness? Firm-level evidence from China

This study conducts an empirical analysis of the effect of economic policy uncertainty on executive compensation stickiness and the underlying mechanism using data on A-share main board listed companies from 2007 to 2021. This study finds that economic policy uncertainty positively relates to executive compensation stickiness. Tolerance, information, and supervision effects are important mechanisms of this impact. Further studies show that the effect of economic policy uncertainty on executive compensation stickiness is also significantly affected by political uncertainty, industry competition, nature of property rights, executive career concerns, and management power.

Resource-based transformation and urban resilience promotion: Evidence from firms’ carbon emissions reductions in China

The current research investigating the effectiveness of policy-driven transformation in resource-based cities has focused mainly on city-level impacts and has overlooked firm-level evidence. This paper filled this gap by focusing on its impact on firm-level carbon emissions. Drawing on the quasi-natural experiment of China’s reform of resource-based city transformation, we utilize a difference-in-differences (DID) model based on nationwide firm-level tax survey data from 2009 to 2016. The findings indicate a noteworthy reduction in firms’ carbon emissions due to the reform, particularly in growing-type resource-based cities and within the manufacturing industry. The empirical results provide evidence that the implementation of the “Plan” has effectively enhanced the level of urban resilience. Moreover, the findings demonstrate stronger effects on large firms, publicly owned firms, and firms in municipal districts.

Is green place-based policy effective in mitigating pollution? Firm-level evidence from China

The green place-based policy is crucial for balancing economic competitiveness and environmental protection. However, there is scarce literature examining its impact on environmental pollution and the underlying mechanisms at the micro level. This paper treats China's National Demonstration Eco-Industrial Parks (EIP) as a quasi-natural experiment and systematically evaluates its effect on pollution using a difference-in-differences (DID) approach. With data from Chinese industrial firms and counties, this research reveals that the EIP leads to a significant reduction of 54.36% in firms’ sulfur dioxide (SO2) emissions. Moreover, increasing R&D investment, reducing SO2 emission intensity, implementing production process pollution control, and dynamic adjustments of firm entry and exit are significant influencing mechanisms. Heterogeneity tests indicate a stronger SO2 reduction effect of the EIP program on firms in eastern regions, capital-intensive industries, and non-state-owned enterprises. This study suggests that the Chinese government should support the establishment of EIP, conduct a coordinate system, strategically plan the industrial chain, establish a pollution monitoring and early warning system, enhance information disclosure, and give greater emphasis to the construction of EIPs in central and western China.