Firm-level Survey Research Articles

Labour productivity improvements from energy efficiency investments: The experience of European firms

Energy efficiency investments are essential to transition to a carbon-neutral economy. Nevertheless, despite being financially viable, many energy efficiency investment opportunities do not materialise. The existing literature attributes this situation to financial and non-financial factors. Research suggests that many firms focus only on direct energy savings and neglect non-energy benefits that include increased labour productivity. Up to date, due to the lack of high-quality data, few studies attempted to quantify how the energy efficiency investments affect firm-level outcomes other than the reductions in energy consumption. This paper overcomes this barrier by using novel data from a firm-level survey conducted by the European Investment Bank. The survey covers more than 15,000 firms in 27 European Union member states and the United Kingdom during 2018–2019. This study investigates the relationship between the energy efficiency investments and the labour productivity of the European firms and uses instrumental variables methodology to account for potential endogeneity. The results show a positive and causal relationship between energy efficiency investments and labour productivity. The findings of the paper suggest that firms can benefit much more from the energy efficiency investment than what is often assumed, and highlight a need for government policies that would increase firms’ awareness of the non-energy benefits.

An ambidextrous approach on the business analytics-competitive advantage relationship: Exploring the moderating role of business analytics strategy

This study aims to develop a theoretical framework to understand how the Business Analytics (BA) strategy moderates the relationship between BA and competitive advantage through innovative ambidexterity. Theorizing from the Dynamic Capability (DC) perspective, we develop a model to investigate how different BA (descriptive, predictive, prescriptive) influence innovative ambidexterity (exploration and exploitation) and competitive advantage. Besides, we propose the construct of “BA strategy” (innovator, conservative, undefined) to differentiate between firms in the way they adopt, use, and implement BA. Based on the PLS analysis of the 181 firm-level survey data, we assess the proposed model. The results show that innovative ambidexterity fully mediates the BA – competitive advantage relationship. We also find that BA innovator and conservative strategy moderate the BA-exploration and BA-exploitation links while such moderation is not observed for BA undefined strategy. This study enriches BA literature in various ways. First, it extends our understanding of the link from different BA categories to innovative ambidexterity, explorative innovation, and exploitative innovation. Second, this study provides empirical support of how BA strategy moderates BA – innovative ambidexterity – competitive advantage relationship and shows that to what degree BA innovator strategy leads firms to greater competitive advantage than BA conservative strategy.

Managerial perceptions in Indian apparel manufacturing: a firm-level survey

PurposeThe paper explores the managerial perceptions in Indian apparel manufacturing firms related to production performance, challenges faced, causes of low efficiency and the government support needed.Design/methodology/approachA structured survey of Indian apparel manufacturing firms was undertaken in person and through the online mode; the questionnaire was designed to collect data on demographic profile of a firm using categorical questions and perceptions of its top managers using a five-point Likert scale.FindingsThe survey findings reveal that most apparel manufacturing firms believe that exporting promotes efficiency and adopt output orientation to production, which may not be suitable in a competitive and uncertain environment. Machines are not used much for value-addition and labour related issues are most pressing challenges. Government support is expected for several aspects such as power supply and skill development.Research limitations/implicationsThe paper is limited by the nature of the sampling method and sample size; perceptions should be explored without bias and with good judgement.Practical implicationsThe survey findings suggest that government policy should have a firm-specific approach to support improved production performance along with generic policies to build infrastructure and logistical facilities.Originality/valueTo the best of authors’ knowledge, there has been no such exercise to study managerial perceptions related to production performance in Indian apparel manufacturing in the past decade.

The impacts of policy measures on Japanese SMEs during the pandemic

ABSTRACT Using monthly firm-level survey data, this study examines the effects of the three major government support measures on labour costs of Japanese SMEs during the COVID-19 pandemic. Policy measures were useful for supporting troubled SMEs to mitigate the effects of the economic downturn. However, they may have supported not just otherwise viable corporations, but also unprofitable but still operating corporations – often referred to as ‘zombies’. Our empirical results suggest that policy measures have heterogeneous effects on corporate activities. ‘Employment adjustment subsidies’ and ‘COVID19 subsidies’ had persistently mitigated the decline of labour costs, suggesting that employment and wage adjustments might have been inappropriate for improving labour productivity. On the other hand, ‘funding supports’ by banks, which were accompanied by the obligation to repay the principal in the future, had a negative and persistent impact on labour costs. The results suggest that, unlike the other support measures, funding supports were policies that may have improved labour productivity by reducing labour costs during the pandemic.

Bank lending and small and medium-sized enterprises’ access to finance – Effects of macroprudential policies

This paper examines the impact of macroprudential policies on small and medium-sized firms' access to bank finance. To this end, we use data from a firm-level survey covering European Union (EU) countries between 2009 and 2017, as well as a recently published database on the use of macroprudential policies in EU countries, the Macroprudential Policies Evaluation Database (MaPPED), which allows us to separately consider the tightening and loosening macroprudential policy measures. We develop several macroprudential indices based on the target of the macroprudential instruments. The results reveal a significant relationship between macroprudential indices and firms' access to finance. The indices are mainly associated with limited access to bank credit for SMEs, taking different firm- and country-level characteristics into account. While use of macroprudential measures could lead to higher capitalisation and make the financial sector more resilient and reduce its risk exposure, this could also mean restricted lending to firms, especially smaller firms with fewer financing options and considerable reliance on bank credit.

Zombies, again? The COVID-19 business support programs in Japan

We design and conduct a firm-level survey on the use of COVID-19-related government programs, in collaboration with Tokyo Shoko Research, LTD (TSR). Combining the survey results with the financial statements of the respondent firms, we investigate the factors behind the allocation of various government programs. We find that firms that had low credit scores in 2019, before the COVID-19 pandemic, were more likely to apply for and receive the subsidies and concessional loans offered by the Japanese government in 2020, controlling for the sales growth after the onset of the pandemic. Firms with low credit scores are not necessarily zombies, which are defined to be the firms that are non-viable but kept alive by assistance from creditors and/or the government. Our result suggests that the government assistance may have subsidized some poorly performing firms that were not yet zombies before the pandemic.

Effect of buyer dependency of subcontracting SMEs on R&D investment

PurposeThis study aims to focus on the subcontracting relationship between small and medium-sized enterprises (SMEs) and business group buyers and analyze the effect of the level of buyer dependency on R&D intensity. The primary prediction is that buyer dependency and R&D intensity have a non-linear relationship, showing an inverted U-shaped relationship. Furthermore, the moderating effect of founder CEOs and internationalization is explored.Design/methodology/approachA sample of 546 firm-level survey responses were collected from Korean subcontracting SMEs provided by the Ministry of SMEs and Startups and the Korea Venture Business Association.FindingsA lower level of dependency on business group buyers promotes R&D investment, while excessive dependence reduces R&D investment. Moreover, founder CEOs and internationalization decrease the effect of buyer dependency on R&D investment, implying that both firm characteristics are associated with a long-term focus and promote R&D investment.Research limitations/implicationsThis research contributes to the literature on the special form of the buyer–supplier relationship, that is, subcontracting. Subcontracting has a contradictory effect on R&D investment based on large group buyer dependency, and this relationship is moderated by the founder CEO and internationalization.Practical implicationsThis study provides insights to managers and practitioners governing SME subcontracting by showing that the level of buyer dependency is better managed in promoting innovation, and the long-term perspective allows SMEs to be less affected by buyer dependency.Originality/valueThis study extends the literature by focusing on the non-linear relationship between buyer dependency and R&D intensity of subcontracting SMEs. This approach addresses the contradicting results suggested by prior supply chain management literature and suggests that the level of buyer dependency should be considered when analyzing the subcontracting relationship.

Keep it simple: external resource utilisation and incremental product innovation in resource-challenged South African manufacturing firms

ABSTRACT This paper examines how firms in an emerging economy cope with resource challenges by implementing compensation strategies for incremental product innovations. The model is empirically tested using firm-level survey data from 497 South African manufacturing firms. Results show that higher diversity among a specific set of external knowledge sources is associated with a higher likelihood of incremental product innovation. Stronger embeddedness in non-domestic inter-organisational networks increases this likelihood as well. The positive effect of external knowledge diversity is more positive for higher levels of localised ties. Recommendations to enhance incremental product innovation concern the development of external relationships with domestic and international partners while limiting knowledge source diversity to a specific actor set. This paper shows that in an emerging economy firms have agency with which they can use contact learning leading to product innovations tailored to local market needs and opportunities.

The Ability to Work Remotely: Measures and Implications

<ns3:p>At the onset of the COVID-19 recession, a large share of the employed switched to remote work. Individual- and firm-level surveys indicated that the switch affected between 35 and 45 percent of workers.</ns3:p>

The Joint Impact of R&D and ICT on Innovation in Japanese Innovative SMEs by Panel Data Analysis Based on Firm-Level Survey Data

This study examines R&D and information and communication technologies (ICTs) in the innovation process, and how these two are integrated with each other for innovation by panel data analysis. The surveys were conducted in February 2012 and March 2017. The number of innovations is taken as an outcome variable, while explanatory variables related to R&D and ICTs were extracted from related questions by factor analysis. The fixed effect robust model with an instrumental variable is estimated, since the error term may contain heteroscedasticity. R&D autonomy and the cross-term of R&D autonomy and ICTs are significant, indicating that ICTs contribute to innovation via R&D autonomy.

The Presence of Foreign Firms in Ghana: The Role of Financial, Infrastructural and Institutional Constraints

ABSTRACT Using logit regression on firm-level survey data, this study examines the effects of various aspects of the business environment on foreign firm participation in Ghana. An analysis of the main constraints on non-mining foreign investment is important in terms of prioritizing reforms of the overall business environment. In addition, assessing the variation of effects according to different firm characteristics matters for government policy formulation aimed at incentivizing sub-categories of foreign firms. The findings suggest that financial factors (access to finance) and institutional factors (the judicial system and land access) are most important in constraining the probability of foreign investment. Distinct effects are obtained depending on firm characteristics relating to the degree of foreign ownership, the size of the firm and the industry in which the firm operates. The effects of the business environment also vary according to the firm’s regional location.

Labour Productivity Improvements from Energy Efficiency Investments: The Experience of European Firms

Energy efficiency investments are essential for transitioning to a carbon-neutral economy. Nevertheless, many energy efficiency investment opportunities do not materialise. The existing literature attributes this situation to financial and non-financial factors. Research suggests that many firms focus only on direct energy savings and neglect non-energy benefits that include increased labour productivity. Up to date, due to lack of high-quality data, few studies attempted to quantify the effects of the energy efficiency investments on firm-level outcomes other than the reductions in energy consumption. This paper overcomes this barrier by using novel data from a firm-level survey conducted by the European Investment Bank that covers more than 15,000 firms in 27 European Union member states and the UK during 2018-2019. It studies the relationship between the energy efficiency investment and the labour productivity of the European firms, utilising instrumental variables methodology to account for potential endogeneity. The results show a positive and causal relationship between energy efficiency investment and labour productivity. The findings of the paper suggest that firms can benefit much more from the energy efficiency investment than what is often assumed, and highlight a need for government policies that would increase firms’ awareness of the non-energy benefits.

Human Capital, Radical Product Innovation, and Product Proliferation: Evidence from China

ABSTRACT This paper examines how firm-level human capital indicators influence product innovation using firm-level enterprise survey data from China conducted by the World Bank. The human capital indicators we use include the number of highly educated workers, the general manager’s education and tenure, and the management team’s education and age. We use the Logit, Negative Binomial, and linear Hurdle estimators to estimate the knowledge production function models that are augmented by our human capital variables. We find that human capital indicators have much more important effects in mid-sized cities than in metropolitan cities where R&D is the most important factor. Radical product innovation involves more human capital than product proliferation. Also, GM’s tenure has a positive effect on product innovation in mid-sized cities, while it has a negative effect in metropolitan cities. After taking the endogeneity of human capital indicators into account, our results still hold. Finally, we also examine moderating effects of market instability and competition.

Measuring business-level expectations and uncertainty: survey evidence and the COVID-19 pandemic

Utilizing a unique firm-level survey in Japan that contains five-bin forecasts for sales, we document three findings. First, firm-level subjective uncertainty is highly and positively related to volatility of past firm growth. Second, there are substantial variations in subjective uncertainty across firms, with a long right tail with extremely high subjective uncertainty. In addition, firms that have exposure to international businesses either through international trade or foreign direct investment have both higher average expected sales and subjective uncertainty. Finally, the sudden escalation of the COVID-19 pandemic in January–February 2020 led to a substantial increase in firms’ subjective uncertainty. Our triple-difference estimation results show that this effect is especially large for firms that have direct exposure to China through international trade and foreign direct investment.

COVID-19 Is a Persistent Reallocation Shock

Drawing on data from the firm-level Survey of Business Uncertainty, we present three pieces of evidence that COVID-19 is a persistent reallocation shock. First, rates of excess job and sales reallocation over 24-month periods (looking back 12 months and ahead 12 months) have risen sharply since the pandemic struck, especially for sales. Second, as of December 2020, firm-level forecasts of sales revenue growth over the next year imply a continuation of recent changes, not a reversal. Third, COVID-19 shifted relative employment growth trends in favor of industries with a high capacity for employees to work from home.

Strategic intent as a contingency of the relationship between external knowledge and firm innovation

The effects of searching for external knowledge on firm innovation vary, as demonstrated by evidence reporting positive linear, negative linear, or curvilinear relationships. We use ambidexterity theory to explain how the exploratory and exploitative aspects of knowledge search and strategic intent can complement each other. Specifically, we theorize that a firm’s dominant logic creates an overall strategic intent – exploration or exploitation – through the firm’s structured interpretation and use of information, which creates a differential effect on the relationship between search practices and firm innovation. In particular, exploratory intent accentuates the positive effects of external search by enabling the assimilation of external knowledge, while an exploitative intent attenuates the positive effects of a search by limiting the use of external information to improving current products. Analyzing firm-level survey, financial information, and the number of patents of 380 firms, we provide empirical support for the effects of a dominant strategic intent on external searches and firm innovation.

Firm innovation and access to finance: firm-level evidence from India

PurposeBased on 9,281 firm-level survey data on micro, small and medium enterprises (MSMEs) in India, this study aims to investigate how access to different finance sources and collateral requirement facilitates the firm’s innovation activity across industries.Design/methodology/approachThis paper used ordered logit regression models using Stata software for explanatory variables to measure the impact of explanatory variables on firm innovation performance. Firms’ innovation performance is measured through the aggregate innovation index obtained by adding up the no. of “new-to-firm” activities.FindingsThe empirical results reveal that external sources of funding impact innovation activity than other financing sources. Also, the requirement of collateral for financing impacts innovation performance significantly. This paper finds that firms funded by state-owned banks or government agency are more actively engaged in innovation activities. The firm’s size, ownership structure and location of the firm also show the varying innovation performance. This paper found variation in innovation performance across industries as well.Practical implicationsFirst, the present study underlines the significance of funding sources. Second, minimizing the need for collateral to obtain external finance boosts small firms’ innovation activity and will also trigger overall economic growth. Finally, while making policies for ownership transformation of state-owned institutions, policymakers should discuss these policies’ impact on innovative firms.Originality/valueWhat facilitates innovation performance in an emerging market is missing in the literature for MSMEs, largely due to lack of data. It is reasonable not to generalize innovation knowledge in large firms to small firms because of the constraints, particularly MSMEs face.

Software development and innovation: Exploring the software shift in innovation in Swedish firms

A number of scholars and industry professionals have claimed that there has been a ‘software-biased shift’ in the nature and direction of innovation, in that software development is a core part of innovation activities in firms across a wide array of industries. Empirical firm-level evidence of such a shift is still scant. In this paper, we employ new and unique firm-level survey data on the frequency and nature of software development among firms in Sweden, matched with the Community Innovation Survey (CIS). We find robust evidence supporting a software bias in innovation, in that software development is associated with a higher likelihood of introducing innovations, as well as higher innovation sales among firms in both manufacturing and service industries. Furthermore, this positive relationship is stronger for firms that employ in-house software developers than for those that only use external developers, suggesting that there is a hierarchy but possibly also a complementarity between in-house and external software development. We also find support for complementarity between software-based technology and human capital; the estimated marginal effect of software development on innovation is particularly strong for firms that combine in-house software development with a highly educated workforce in both STEM and other disciplines.

COVID-19 Is a Persistent Reallocation Shock

Drawing on data from the firm-level Survey of Business Uncertainty, we present three pieces of evidence that COVID-19 is a persistent reallocation shock. First, rates of excess job and sales reallocation over 24-month periods have risen sharply since the pandemic struck, especially for sales. We compute these rates by aggregating over monthly firm-level observations that look back 12 months and ahead 12 months. Second, as of December 2020, firm-level forecasts of sales revenue growth over the next year imply a continuation of recent changes, not a reversal. Third, COVID-19 shifted relative employment growth trends in favor of industries with a high capacity of employees to work from home, and against those with a low capacity.

The impact of ICTs and digitalization on productivity and labor share: evidence from French firms

ABSTRACT Taking advantage of an original firm-level survey carried out by the Banque de France, we empirically investigate how the employment of ICT specialists (in-house and external) and the use of digital technologies (cloud and big data) have an impact on firm productivity and labor share. Our analysis relies on the survey responses in 2018 of 1,065 French firms belonging to the manufacturing sector and with at least 20 employees. To tackle potential endogeneity issues, we adopt an instrumental variable approach as proposed by Bartik (1991, Who Benefits from State and Local Economic Development Policies? Kalamazoo, MI: W.E. Upjohn Institute for Employment Research.). The results of our cross-section estimations point to a large effect: ceteris paribus, the employment of ICT specialists and the use of digital technologies improve a firm’s labor productivity by about 23% and its total factor productivity by about 17%. Conversely, the employment of in-house ICT specialists and the use of big data both have a detrimental impact on labor share, of about 2.5 percentage points respectively.