Firm Market Research Articles

Emerging Market Firms’ Internationalization Pricing Strategies: The Role of Country of Origin and Organizational Learning

Over the last decade there has been significant interest in international expansion of emerging market firms (EMFs) due to their distinctive patterns compared with developed market firms (DMFs). In this article, the authors develop an analytical model to generate prescriptive insights for pricing strategies when EMFs enter new foreign markets. Grounded in the international marketing and organizational learning literatures, the model accounts for local and multinational competition, the influence of country-of-origin effects, and the role of organizational learning in foreign markets. The results suggest that when an EMF enters a host market with a local competitor, it could generate higher profits even when charging a lower price than the local competitor. Additionally, the authors find that DMFs enjoy greater profitability than EMFs in foreign markets as a result of positive country-of-origin effects. Finally, the authors propose and validate the use of organizational learning as a process EMFs can use to surmount the negative impact of country-of-origin effects and achieve greater profitability than DMFs.

Package-type strategies and packaging's carbon reduction decisions in the take-out industry

Using environmentally friendly packaging (E-packaging) instead of non-environmentally friendly packaging (N-packaging) can mitigate pollution and reduce carbon emissions. However, the market penetration rate of E-packaging is low, and the packaging carbon reduction level is uneven. This study uses game theory models to examine the factors affecting packaging carbon reduction levels and fees as well as firms' package-type decisions. First, we obtain the optimal solutions for packaging manufacturers and firms when they use different types of packaging under monopoly and competition, respectively. We find that green competition reduces the carbon reduction level of E-packaging, whereas price competition can increase it under certain conditions. The unit manufacturing cost of N-packaging and cost coefficient of carbon reduction are critical considerations for package-type decisions. When the unit manufacturing cost of N-packaging is low and the cost coefficient is large, no firm uses E-packaging. We also demonstrate that firms in a competitive market may become trapped in a prisoner's dilemma after making package-type decisions. Interestingly, we show that the firms' package-type decisions can hurt consumers and welfare under certain conditions, depending on the N-packaging's unit manufacturing cost and pollution damage factor. Our findings provide insights for packaging manufacturers, firms, and environmental regulatory agencies, and can help promote E-packaging.

The impact of high-speed railway on firms’ productivity

Using a multi-sector trade model with heterogeneous firms, this paper examines how the high-speed railway (HSR) results in changes in market access, and affects firms’ productivity. The model shows that with the opening of HSR in cities and decrease in trade costs, firm productivity increases through “competition effect” (proxied by consumer market access, CMA), but decrease through “scale expansion effect” (proxied by firm market access, FMA). To distinguish between these two competing effects empirically, we manually compile data of 110 prefecture cities which are sequentially connected with HSR during 2007–2013, and match these cities with China Industrial Firms Database during same period. We find that firm productivity increase by 0.0318 percentages due to one percentage increase in CMA, and decrease by 0.0552 percentages due to one percentage increase in FMA. We find significant heterogeneity in the effect of HSR opening on firm productivity in that the effect is the largest in the central area and mostly insignificant in the west; and the effect turns out the largest for technology-intensive firms, less for capital-intensive firms and the least for labor-intensive firms. We also find the impact of HSR opening on firm revenue, output, decision of entry or exit, as well as on regional productivity. Further analyses suggest that the effect of scale expansion dominates in the period after 2009 and hinders firm productivity, which explains the puzzling divergence of rising GDP and decreasing average TFP in that period.

E-procurement Adoption Barriers encountered by Small and Medium-sized Enterprises (SMEs) in the Republic of South Sudan

E-procurement adoption is not without its challenges despite facilitating the purchasing process. Hence, this quantitative cross-sectional survey study aimed to examine the e-procurement adoption barriers encountered by small and medium-sized enterprises (SMEs) in the Republic of South Sudan. The 300 SMEs selected out of 1215 SMEs through systematic sampling methods resulted in 213 valid responses with a 71% response rate. Empirical data were derived from the survey questionnaires distributed through Google Forms and Portable Document Format (PDF) via email and evaluated with descriptive and principal component analysis (PCA), relative importance index (RII), and analytical hierarchy process (AHP). Resultantly, multiple national e-procurement implementation methods and incorrect reassembly of data transmitted were ranked the highest barrier among the technological factors, followed by delays in the transmission of data and information, and the technology immaturity due to political and legal factors, lack of widely acceptable e-procurement software solutions and flexibility for management factors, company culture and cost of IT investment for organizational factors. Future works could compare the e-procurement adoption barriers perceived by SMEs in emerging and developed nations and ascertain their e-procurement acceptance. Meanwhile, stakeholders could attract more IT firms in the current market through adequate training, a unified platform, holistic e-procurement adoption techniques, high public awareness, employment of IT experts, forums to exchange ideas on e-procurement, and utilization of passwords, information encryptions, or data. This study proposed employing mixed-method techniques to examine and alleviate SMEs' e-procurement adoption barriers.

Nonbank lenders as global shock absorbers: Evidence from US monetary policy spillovers

We show that nonbank lenders act as global shock absorbers from US monetary policy spillovers. For identification, we exploit monetary policy surprises and the global syndicated lending market, where detailed loan-level data allow us to compare the participation of banks and nonbanks in the same loan. When US policy tightens, dollar credit to non-US firms falls, but nonbanks increase credit supply (relative to banks), thereby mitigating the total credit reduction. This relative increase is stronger for riskier non-US firms, proxied by emerging market firms, high-yield firms, or firms in countries with stronger capital inflow restrictions. Finally, there are real effects associated with the international nonbank channel of monetary policy, as firms with better access to nonbank credit relatively increase total corporate debt, investment, and employment.

R&D investments in emerging market firms: the role of institutional investors and board interlocks

Despite the increase in institutional investor shareholdings in emerging market firms, their impact on R&D investments has received scant attention in the literature. By integrating agency and resource dependence perspectives, we examine the role of different types of institutional investors and their interactions with board interlocks in shaping their preference for R&D investment in their portfolio firms. We test our hypotheses on a sample of 2,478 Indian firm‐year observations from 2005 to 2019, using various estimation techniques. Our results indicate that different categories of institutional investors have distinct preferences for R&D investment. Specifically, we find that ownership by both foreign institutional investors and mutual fund investors negatively impacts R&D investments in firms. While board interlocks positively moderate the impact of institutional investors such as banks and financial institutions and foreign institutional investors on R&D investments in firms, this moderation is negative in the case of mutual fund investors and R&D investments in firms. We contribute to the understanding of the determinants of R&D investments in emerging market firms, with a specific focus on institutional investor ownership and add to the nascent literature on the interaction between two forms of governance, i.e., ownership and board characteristics, in shaping this firm strategy.

Capital market internationalization and firms' ESG performance: Evidence from the inclusion of China A-shares in the MSCI Emerging Market Index

This paper explores the impact of capital market internationalization on firms' ESG performance, utilizing the event that China A-shares were officially included in the MSCI Emerging Market Index. Using a sample of A-share non-financial listed companies, we find strong evidence that the ESG performance of companies included in the MSCI Emerging Market Index has been significantly improved. This finding remains robust after several robustness checks and the adoption of instrumental variables to circumvent endogeneity issues. Heterogeneity analysis shows that this effect is only significant for non-state-owned firms, firms located in provinces with higher levels of marketization, and firms in eastern cities. Further analysis verifies that the inclusion of China A-shares in the MSCI Emerging Market Index promotes firms' ESG performance by promoting institutional holdings and enhancing external supervision. Our findings shed light on the possible impact of capital market internationalization on corporate behavior in emerging markets.

Do blockchain capabilities help overcome supply and operational risks: Insights from firm market returns during COVID-19

Uncertainty and risk have become increasingly prominent issues in firm operating environments. Addressing uncertainties and risks brought by the historically disruptive COVID-19 pandemic crisis requires organizations to establish reliable, visible, and traceable information processing and sharing capabilities. Blockchain is a disruptive technology that can build capabilities to support operational resilience where uncertainty may manifest as risk or opportunity. Using an event study, we examine the COVID-19 pandemic relationship to stock returns for 217 blockchain-related firms—those that develop or apply blockchain technology—over five major pandemic life cycle periods. Our results indicate firms with blockchain capabilities have less mean negative stock price reaction—on average, a reduced 8.24 % shareholder value loss across crisis stages. Different blockchain application fields exhibit varied shareholder value effects—in general, production blockchain applications can help firms reduce more negative impact while financial blockchain applications show no significant mitigation effects. We further demonstrate how blockchain operational characteristics affect stock returns. Overall, blockchain technology provides effective risk buffer capabilities and can help manage shifting institutional fields—which the market views as building resilient capabilities resulting in competitive advantage to overcome known and unknown uncertainties and risks.

Disruptions, Redundancy Strategies, and Performance of Small Firms: Evidence from Uganda

We study the impact of firm-specific business disruptions on the performance of small emerging market firms and test the effectiveness of building in redundancies to buffer against disruptions. Managerial disruptions result in the absence of the entrepreneur-owner, whereas operational disruptions lead to a shortage of critical resources, for example, inventory or electricity. We propose the use of relational redundancy—that is, the availability of a trusted and capable person with whom the entrepreneur-owner has an existing relationship, who can manage the business in his or her absence—to recover from managerial disruptions. We also examine whether resource redundancy—for example, maintaining safety stock or electricity backup—helps recover from operational disruptions. In the absence of publicly available data, we hand-built a panel data set by interviewing 646 randomly selected small firms over four time periods in Kampala, Uganda. We find that disruptions are highly prevalent and have a statistically and economically significant effect on firm performance. When a firm faces multiple exogenous and severe disruptions in a six-month period, its monthly sales decrease by 13.8% (p = 0.013), and its sales growth decreases by 18.8 percentage points (p = 0.070). Importantly, we find that both managerial and resource redundancies can help firms build resilience against the negative impact of disruptions. In some cases, firms with high levels of redundancy are able to completely overcome the negative effect of disruptions on sales and sales growth. We discuss implications for entrepreneurs, policymakers, and large multinationals that buy from or sell to small emerging market firms. This paper was accepted by Charles Corbett, operations management. Funding: This research was supported by grants from: Deloitte Institute for Innovation and Entrepreneurship (DIIE), the John A. and Cynthia Fry Gunn Faculty Scholar award, London Business School, Stanford Graduate School of Business, Stanford Institute for Innovation in Developing Economies (SEED), and STARS Foundation. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.4978 .

The Impact of Social Media Marketing on Increasing Individual PPH and PNBP in Indonesia: A Systematic Literature Review

Social media marketing methods frequently incorporate promotional, sales, and branding techniques that can provide supplementary revenue for individuals and corporations. This study aims to determine the impact of social media marketing on the computation and augmentation of Individual Income Tax (PPH) in Indonesia. The literature study of this research is organized systematically to examine the influence of social media marketing on the growth of Individual Income Tax (PPH) and Non-Tax State Income (PNBP) in Indonesia. Further investigation is required to comprehend the impact of firm marketing strategies in the digital domain on Individual PPH and its contribution to PNBP. To effectively address the challenges posed by the digital economy, the government and business entities must collaborate in formulating tax laws that are adaptable and efficient.

When and how digital novel technologies matter to firm marketing performance

When and how digital novel technologies matter to firm marketing performance

CSR disclosure, political risk and market quality: Evidence from the Russia-Ukraine conflict

In this study, we investigate the divergence in market quality between high-ESG (Environmental, Social, and Governance) and low-ESG firms in response to the Russia-Ukraine conflict. With an event-study approach, we find that better CSR (Corporate Social Responsibility) performance alleviates the market quality deterioration following the outbreak of the war for US-listed foreign firms. Such an effect is insignificant for US domestic firms. We also find that foreign firms experience more pronounced market quality deterioration compared to their US counterparts. Our findings align with the resiliency hypothesis regarding the link between CSR and financial performance, supporting that better CSR performance is associated with improved information transparency.

The Effect of Product Knowledge and Market Orientation on Business Performance in MSMEs

Globalization has had a significant impact on the business world, especially in terms of expanding market reach and increasing competition. In the growing digital era, information and communication technology has affected many aspects of human life, including the business sector. The development of digital technology has accelerated the pace of business and enabled access to global markets on a larger and more efficient scale. This study aims to analyze the effect of product knowledge and market orientation on firm business performance mediated by product innovation and omnichannel on MSMEs in Boyolali district. There were 100 respondents in this study through an online survey using google form with a Likert scale. The sampling technique uses non probability sampling using the slovin method. Data analysis using SmartPLS. Validity and reliability tests using smart PLS analysis on the outer model. Hypothesis testing using the SmartPLS inner model. The analysis results show that Product Innovation is able to mediate the relationship between Market Oriented and Firm Business Performance and Omnichannel is able to mediate the relationship between Market Oriented and Firm Business Performance.

CEO International Experience in Advanced Market Economies and Firm Investment Horizon in a Transitioning Economy

AbstractBuilding on the literature on managerial myopia, we investigate how chief executive officers’ (CEOs) international experience in advanced market economies affects their firms' investment horizons in a transitioning economy. To overcome myopia, CEOs should possess the knowledge needed to manage current tasks, thereby freeing up cognitive resources for future considerations. In the context of our theorizing, we argue that international experience in advanced market economies equips CEOs with knowledge about how to deal with their current tasks of market-oriented adaptation in a transitioning economy, freeing up cognitive resources for considering longer-term investment horizons. Additionally, the effect of CEO international experience in advanced market economies on firm investment horizon is stronger under conditions that increase the cognitive burden on CEOs to perform market-oriented adaptation tasks – specifically, when there is a high scope of pro-market reform, high intensity of foreign competition, analyst coverage, and a high level of institutional ownership. Our estimation based on a matched sample of 204 Chinese CEOs during the period 2002–2019 supports the majority of our predictions. Our study contributes to research on firm investment horizon, CEO international experience, and transition economies.

Green Innovation and Export Performance in Emerging Market Firms: A Legitimacy-based View

AbstractWhereas emerging market firms (EMFs) face severe legitimacy barriers when entering global markets, whether and under what conditions green innovation can help them gain legitimacy remains under-examined. This article argues that green innovation can help EMFs obtain regulatory and social legitimacy in host countries and consequently boost their exports. Based on a panel dataset populated by 254 Chinese-listed manufacturing companies from 2011 through 2017, this article finds that green innovation is positively associated with EMF export performance. Moreover, this positive relationship is stronger when host-country political risk is lower or host-country buyer sophistication is higher but becomes weaker for state-owned EMFs. These findings enrich the legitimacy-based view and international business literature by identifying the role of green innovation in boosting EMF export performance and specifying important institutional contingencies.

Challenges to adopt digital construction technologies in the Jordanian construction industry

Purpose This study aims to examine the challenges facing the construction industry practitioners toward adopting digital construction technologies in the Jordanian construction industry. Design/methodology/approach Quantitative methods were used by reviewing the related literature to include 16 challenges that face the Jordanian construction industry in adopting digital construction. A questionnaire was used to achieve the desired study objectives for 373 respondents from various institutions and companies. The questionnaire was analyzed with SPSS using statistical tests such as mean score, Kruskal–Wallis H test and factor analysis. Findings After collecting the quantitative data, the study showed that the most challenges facing construction industry practitioners toward adopting digital construction techniques are lack of qualified workers, high requirement for computing equipment’s, high initial cost of bringing these technologies to the market and construction firms low investment in research and development. These challenges faced by respondents were divided into three main factors, namely, construction’s nature, financial constraints and poor management support. Originality/value This study provides information and statistics on the challenges that face individuals or companies toward adopting digital construction techniques in Jordan. It proposes recommendations and proper practical implantation strategies to overcome the challenges.

Reward or punishment? The impact of heterogeneous environmental regulatory intervention on the firm market value

AbstractEnvironmental regulations are important organizational strategic drivers. Environmental regulatory mechanisms include “carrots” or “sticks”—they can be incentive or coercion‐based. This study empirically investigates stock market reactions to various environmental regulatory mechanisms. Using a sample of 334 environmental regulatory events reported by 212 listed Chinese firms between 2010 and 2020, we find that monetary reward has a greater positive market reaction towards governmental reward than non‐monetary reward. We also find that governmental operational disruption penalties have a greater negative market reaction than operational non‐disruption penalties. Governmental levels of the environmental regulation implementation subject do not play a moderating role in the relationship between governmental regulations and firm market value. These findings provide various policy and organizational insights as businesses seek to meet legitimacy gains in response environmental regulatory mechanisms.

Decomposing Firm Performance in Emerging Markets: The Difference Between Growth and Profit

AbstractThis study adopts the resource-based view (RBV) to explain the difference in firm profit and growth determinants. We argue that profit is driven more by valuable, rare, inimitable, and non-substitutable (VRIN) resources, and growth is driven more by versatile resources. Since some versatile resources, such as cash, are less firm-specific, the firm effect is more critical in determining profit than growth. We also expect that emerging market firms are more capable of utilizing versatile resources than developed market firms, and developed market firms are more capable of utilizing VRIN resources than emerging market firms. As a result, the determinants of firm performance also differ between emerging and developed markets. The study employs multilevel mixed models to decompose firm performance in US, Chinese, and global samples. The findings confirm that the firm effect is more important in influencing profit than growth, persisting across all three samples. The firm effect is also more important in influencing performance in developed countries than in emerging markets.

Springboarding and activity load: Constraints on managerial attention and dependency on advisory firms in cross-border acquisitions

In this study, we aim to better understand the springboard perspective by examining how emerging market firms manage the process of ‘recursive’ cross-border acquisitions. Based on the attention-based view of the firm and resource dependence theory, we propose that ‘recursive’ CBAs augment activity load, limiting decision-makers' information processing capacity. As a result, acquiring firms depend on external resources in the form of more professional advisors. This relationship strengthens when the target firm has a greater degree of product diversity but weakens when the acquiring firm has context-specific experience. From 2000 to 2022, we used a multi-country sample of 2621 CBAs from Brazil, Russia, India, China, and South Africa and found support for our hypotheses.

Firm executive political leanings, Washington, and stock market returns

In this paper, we study the effects of political identity on firm market performance. Specifically, we investigate whether a shared political orientation between a firm's executives and Congress, or the President, affect the firm's stock performance. Using hand collected political contributions data from the Federal Election Commission (FEC) to identify an executive's political orientation, we find evidence that firms with executives' political orientations matching that of the President or the Senate are associated with higher excess and abnormal returns and outperform other firms. Our results are consistent with the hypothesis that the market perceives political alignment positively.