Firm Productivity Research Articles

Efficiency of Financial Interns in CA firm

The efficiency of financial interns in a chartered accountancy (CA) firm is pivotal to its operations and client service. These interns serve as integral members of the team, contributing to tasks ranging from data entry to financial analysis. Their role involves assisting senior staff in auditing, taxation, and advisory services, thereby gaining practical experience crucial for their professional development. Efficient interns exhibit a blend of technical skills, such as proficiency in accounting software and financial modeling, coupled with strong analytical abilities and attention to detail. They play a vital role in ensuring the smooth functioning of day-to-day operations, aiding in meeting deadlines, and delivering accurate reports to clients. Moreover, their presence allows for the delegation of routine tasks, enabling senior staff to focus on strategic planning and client management. In essence, the efficiency of financial interns not only enhances the firm's productivity but also nurtures talent for the future of the accounting profession.

Research on home appliance circular design strategy in response to carbon border adjustment mechanism

In May 2023, the EU formally adopted the Carbon Border Adjustment Mechanism (CBAM) bill, which requires that from 2026 onwards, high-carbon imports must use the appropriate Carbon Border Adjustment Mechanism (CBAM) certificates. At the initial stage, the mechanism has gradually covered eight high-carbon industries, and is likely to be expanded to include more industries, including the already highly competitive home appliance industry. In order to cope with the challenges that the CBAM may bring, and in line with the general trend of international green trade and circular economy, the government and the international trade industry in multiple categories, including home appliance enterprises, should react quickly and take feasible countermeasures. This study adopts a case study analytical framework to understand the responses of Chinese home appliance enterprises to CBAM through cluster analysis of 240 samples, and to explore the impact of CBAM on individual enterprises, as well as their product development and design strategies in the transition to a carbon-reducing economy. The results show that, firstly, CBAM has both negative and positive impacts on Chinese home appliance firms. Second, four product development strategies were summarized in the cluster analysis, including technological advantage, customer orientation, cost advantage and imitation. Third, 20 strategies related to product cycle design were summarized in the case interviews. In addition, there is a correlation between the product design strategies adopted by the sample firms and the firm attributes (firm size, business form and product development type). The results of this study can provide product design strategy references for the sample companies to deal with CBAM and future competition, as well as practical experience for companies in other fields to deal with CBAM.

Market orientation, corporate governance, and organizational learning: the rise of Korean popular culture

ABSTRACT Investors and managers of firms producing cultural products have long confronted the problem of low success rates. This study proposes a model arguing that corporate governance, in addition rates organizational learning, improves market orientation, which in turn influences the performance of cultural products. To support our model, this study collects 607 music videos produced by South Korean and Taiwanese entertainment companies. We measure their market orientation via the simple market research technique of data mining and examine the degree to which the characteristics of firm products are consistent with the results of market research. We find that market orientation is positively related to product performance. We also find that both corporate governance and organizational learning improve market orientation. Building on past research that has exclusively conceptualized market orientation as firm capabilities that could be improved by organizational learning, this study further suggests that agency problems between investors and artist managers hinder firms’ market orientation, and could be mitigated by strong institutions in corporate governance.

Optimization on Providing Schema of Digital Products with Characteristics of Users and Target Market

The decision of providing schema is vital significant for the digital products firms, and firms need to decide whether they should sell the whole (or parts of) functionalities or adopt the subscription strategy (allow the users to pay-per-use when they intend to enjoy these functionalities). The characteristics of users’ preference and firms’ target market are the important perspective to explore this problem. The current work develops a matrix from the dimension of the characteristics of users’ preference and firms’ target market and shows that, if the users’ preference is stable, the digital products firms are supposed to sell the whole (parts of) functionalities when the firms’ target market is the common (specialized) market; however, if the users’ preference is variable, the digital products firms are supposed to adopt the subscription strategy for the whole (parts of) functionalities when the firms’ target market is the common (specialized) market. Moreover, the current work also provides the cases in reality for each providing schema shown in the matrix. The current work provides support for the digital products firms when they decide the providing schema facing the complex market.

Trade Facilitation and Global Value Chain Participation: Cross-country Analysis

In this article, we examine the role of trade facilitation in fostering firm participation in global value chains (GVCs). We use cross-sectional data for 115 economies spanning 2006–2018 sourced from World Bank Enterprise Surveys. We employ four trade indicators which are as follows: customs, regulation quality, loans and digitalization proxying for trade facilitation measures and we correct for reverse causality using the instrumental variable approach. Our empirical findings highlight that customs requirements deter GVC participation of the firm. Further, adhering to government regulations, having access to loans and digital communication adoption fosters supply chain integration of the firm. The present study also finds favourable heterogenous effects of trade facilitation on GVC participation of less productive firms and larger firms. Our findings are robust to alternative methods of endogeneity correction and GVC definitions. JEL Codes: F1, F19, F14

Employee allocation efficiency in the context of the digital economy: Evidence from “Broadband China” demonstration cities

This study examines the impact of the “Broadband China” policy on the efficiency of employee allocation in firms, with an emphasis on the role of digital economy development. Utilizing data from Chinese listed companies from 2011 to 2019 and city-level statistics from the China City Statistical Yearbooks, we employ rigorous econometric methodologies, including Difference-in-Differences and multi-period multi-entity Difference-in-Differences, to analyze the policy effects. Our findings suggest that “Broadband China” demonstration cities significantly reduce staff redundancy and enhance the efficiency of employee allocation within firms. This effect is attributed to the stimulation of entrepreneurial activity and the promotion of digital transformation driven by the demonstration city pilot program. Furthermore, the policy’s effectiveness is found to vary based on city location, workforce scale, the nature of enterprise ownership, and growth stage. Importantly, the improved efficiency of employee allocation resulting from the demonstration cities leads to favorable economic outcomes, augmenting total factor productivity for firms. In conclusion, this research highlights the crucial role of digital economy policies in optimizing the structure of human resources within firms, emphasizing the importance of fostering digital transformation to achieve efficient talent allocation and enhance production efficiency.

Financial technology and firm productivity: Evidence from Chinese listed enterprises

Recent data show that the number of fintech investment deals is increasing, implying that fintech is gradually penetrating various industries and may have far-reaching impacts on industrial production and operations. This paper studies the impact of fintech on firm productivity and the mediating effects of financing constraints, information asymmetry and technological innovation. This paper collects data from 1662 samples of Chinese listed firms from 2011 to 2022 and screens the number of firms that meet the fintech criteria to construct the regional fintech development level. Our analysis shows that fintech has a positive effect on enhancing firm productivity. Path analysis reveals that digital transformation indirectly enhances firm productivity by reducing information asymmetry, easing financing constraints, and improving technological innovation. Our research introduces innovative approaches for developing indicators in financial technology. The insights generated from this study hold potential value for both entrepreneurs and governmental bodies.

Import, Productivity, and Export Performances

Abstract The aim of this article is twofold. First, we analyze whether the decision of where to import from is affected by firms’ ex-ante characteristics. Second, we analyze how the origin of imports affects firms’ productivity, export sales, and the number of export markets. Using extensive data on Swedish manufacturing firms from 2007 to 2020, we uncover several significant insights. Nearly 80% of the firms engage in international trade. The smallest firms operate exclusively as exporters, medium-sized firms as importers, and the largest firms engage in two-way trading. While most imports originate from high-wage countries, there has been a gradual shift to low-wage countries over time. Self-selection is evident, with highly productive firms importing from all sources, followed by firms that exclusively import from either low-wage or high-wage countries, and the lowest-productive firms not importing. By controlling for self-selection using the Event Study approach and difference-in-differences matching estimator, we find that large importing firms exhibit no significant differences in productivity and export sales in comparison to their non-importing counterparts. However, small importing firms show increased productivity growth, driven by high-wage imports. Both small and large firms importing from high- and low-wage countries tend to access more high-wage export markets than non-importers.

Did work from home “really” work during COVID-19?

PurposeIn this study, we examine whether work from home (WFH) had an impact on firm productivity during the COVID-19 period.Design/methodology/approachWe employ a panel fixed-effect model using 79,201 firm-quarter observations in a cross-country setting of 68 countries.FindingsFirst, we find that firms that employed WFH contributed to real sector growth during the pandemic due to greater capital expenditure compared to otherwise. Second, we find that WFH amenable firms turned over assets better than less WFH amenable firms.Originality/valueTo the best of our knowledge, this is the first study to examine the impact of WFH on firms’ investment and efficiency using a cross-country setting.

Operational decisions of public firms and feedback mechanism from stock market

We investigate the operational strategy of a public firm under feedback effect. We find that the manager who learns useful information from stock market will expand firm production in average. But the average selling price can remain unchanged, leading to the improved firm profitability due to managerial learning.

The inverted U-shaped association between digital economy and corporate total factor productivity: A knowledge-based perspective

This study aims to explore the association between the digital economy (DE) and corporate total factor productivity (TFP), as well as to analyzing the potential moderating influence of industry environment. The sample comprises Chinese A-share listed manufacturing enterprises, and the analysis utilizes the knowledge-based view of firms. The results reveal an inverted U-shaped association between the digital economy and corporate total factor productivity, with the industry environment playing a moderating role in this association. Specifically, the inverted U-shaped association is flatter in industries with higher levels of munificence and dynamism, while it is steeper in the higher complexity industries. These findings underscore the impact of the digital economy on firm productivity and provide guidance on how to effectively utilize the digital economy to improve productivity and competitiveness under different industry environments.

Agglomeration economies: different effects on TFP in high-tech and low-tech industries

ABSTRACT We study the impact of agglomeration effects on firms’ total factor productivity (TFP) for industry groups defined by technology intensity. This allows for non-uniform effects on firms depending on their technological level. We find that urban economies have the largest impact on firm productivity in high-technology industries, while they have no effect in low-technology industries. For firms in the latter industries, the diversity of the local economic structure is relevant. Localisation effects have a consistently positive and significant impact on TFP, with the effect increasing with the technology intensity of the industries.

The Effects of Vertical Separation and Competition: Evidence from US Electric Utility Restructuring

Competition usually increases firm productivity; but in network industries, effective competition requires vertical separation, which might reduce productivity and lead to a potential trade-off. We analyze the combined effect of competition and vertical separation on inefficient costs for US electricity industry restructuring. We estimate firm-level inefficiencies with the use of different nonparametric models of the technology and calculate net benefits with the use of difference-in-differences. The results depend on how we model the production technology and the length of the post-treatment horizon. The more flexible is the production frontier, the greater is the net benefit from divestiture and competition. Across our models the combined effect of divestiture and competition is positive.

Can money buy happiness? Bribery practices and ethical awareness in emerging markets

PurposeThis study aims to examine the relationships among senior managers’ reports of bribery practices, ethical awareness and firm productivity in Thailand. Bribery pervasiveness is examined as moderating the relationship between bribery practices and ethical awareness. Ethical awareness is examined as a mediating effect of bribery practices and managerial perceptions of firm productivity.Design/methodology/approachThis study uses a mixed-method approach consisting of interviews with more than 20 senior managers and surveys collected from more than 200 senior managers in Thailand’s manufacturing and construction industries. Hierarchical regression is used to test the hypotheses.FindingsSenior managers report that their firms are more likely to flout ethical principles when they perceive that their industries feature widespread bribery practices. However, the tests fail to support the hypothesis that the flouting of ethical principles leads to less productivity.Originality/valueThis study contributes to transaction cost economics theory by extending the concept of illegal transaction cost minimization to managerial perceptions of firm productivity. This study also integrates research on bribery rationalization by considering how managerial rationalization and justification of bribery practices impact managerial perceptions of firm productivity and ethical awareness. This research provides managers with an understanding of how attitudes toward ethical conduct and unethical actions impact perceptions of firm productivity.

Local Productivity Spillovers

Using Canadian administrative data, this paper presents evidence of revenue and productivity spillovers across firms at fine spatial scales. Accounting for the endogenous sorting of firms across space, we estimate an average elasticity of firm revenue and productivity with respect to the average quality of other firms within 75 meters of 0.024. We find scant evidence that the average firm benefits from being surrounded by a greater amount of economic activity at this spatial scale. Sorting of higher-quality firms into more productive locations and higher average and aggregate quality peer groups is salient in the data. (JEL D22, D24, G32, L25, R11, R32)

The Labor Market Effects of Loan Guarantee Programs

Abstract We investigate the labor market effects of a loan guarantee program targeting French SMEs during the financial crisis. Exploiting differences in regional treatment intensity in a border discontinuity design, we uncover a central trade-off for such interventions. While the program has a positive impact on workers’ employment and earnings trajectories that translates into positive aggregate employment effects, it dampens the worker reallocation toward more productive firms that happens following recessions, and particularly so for high-skill workers. This labor allocation effect is economically significant and translates into a reduction in aggregate productivity.

Financial ratios, credit risk and business strategy: Application to the PDO Parma ham sector in single production and non-single production firms

Food geographical indications (GIs) protected by the European Union collective protection mark (CPM) have been the subject of a growing interest. Several research has analyzed the economic, social and environmental role of CPM, which require Production Specifications (PS), imposing constraints to food production, with side effects on performance and corporate strategy.The research has the aim to analyze, through financial ratios (FRs), the performance of firms in the PDO Parma ham (PrH_PDO) sector; PrH_PDO is the third geographical indication (GI) in Italy among those protected by CPM of the European Union (PDO, PGI, TSG). The research considers, for firms associated with the PrH_PDO Consortium, a series of 10-year annual report, 739 observations, divided into two groups, first of 103 of 11 firms that sell only PrH_PDO and second of 636 of 78 firms that sell not only PrH_PDO. This categorization allows us to highlight and compare the effects of adopting PS in terms of FRs, credit scoring and firms’ strategy.Research highlights that PrH_PDO_Only firms perform slightly better, with less variable results. Research shows that the PS of Prosciutto di Parma PDO, determines reduction in turnover (T) and a longer duration of the INV_DAYS and, consequently, of the conversion cycle (CCC_DAYS). Research highlights that PrH_PDO_Only firms have a strategy based on higher margins (ROS) which compensates low T; research highlights that credit risk (EM-Score) is higher for PrH_PDO_Only firms.The research can be replicated in other GI sectors, where there are few studies that have compared firms that produce only GIs and firms that produce not only GIs. The research can be useful to operators in the sector, to financial intermediaries and to policy makers. Lines of applied action may include development of financial instruments to assist maturation period and establishment to assess creditworthiness, tailored to PrH_PDO firms’ characteristics.

How firms position and perform in global value chains with financial frictions: evidence from China

ABSTRACT This article clarifies the relationship between financial frictions, production line position and firm-level performance in China. We develop a stylized model in a partial equilibrium setting and incorporate financial frictions into the sequential production of firms. We use a sample of unbalanced panel data ranging from 19,929 firms in 2000 to 61,109 firms in 2013, by merging China’s Customs Dataset, Chinese manufacturing firm dataset and global input-output tables between 2000 and 2013. In the presence of lower financial constraints, we find that: first, the firm’s span of production stages becomes wider by its imports becoming more upstream and its exports becoming more downstream, and its average position becomes relatively downstream; Second, it tends to decrease debt financing relative to equity financing and obtains higher profits.

Innovation Strategies and Technical Efficiency

In the innovation literature, little attention has been paid to technical efficiency as a measure of performance, despite the fact that technical efficiency is key to explaining firm productivity. In this study we analyze the influence of internal R&D, external R&D and R&D cooperation on the technical efficiency of the firm. The data used come from the Panel de Innovación Tecnológica 2016 for Spanish companies, from whose database we have selected the set of innovative manufacturing firms. To estimate the coefficients of interest we have constructed a knowledge production function, estimated using Stochastic Frontier Analysis (SFA) and the Heckman correction. The results indicate that both internal R&D and R&D cooperation have a positive and significant influence on technical efficiency, while external R&D has a significant negative relationship. Knowing this type of information in advance is very important for business managers and policy makers, since it facilitates decision-making on innovation strategies, as well as the formulation of public policies to support innovation leading to an efficient allocation of public resources.

Merchant guild culture and innovation: evidence from China

ABSTRACT In this study, we explore the implications of merchant guild culture for corporate innovation. We find that merchant guild culture significantly improves corporate innovation, particularly strategic innovation. Further analyses show that merchant guild culture promotes corporate innovation by alleviating financing constraints and curbing earnings management. The results of the heterogeneity test show that the positive effect of merchant guild culture on innovation is more significant in firms owned by non-state, with high integration of foreign cultures, high government subsidies, and higher marketability. In addition, the stronger merchant guild culture influence is, the more innovation affects firm profitability and productivity. Collectively, our results suggest that merchant guild culture is a driving force that promotes trust and cooperation between firms. Therefore, merchant guild culture can effectively enhance innovation and performance as well as exerting a positive influence on innovative economic development.