Firm Responses Research Articles

Expressions of customer rumination in online posts and firm responses

Expressions of customer rumination in online posts and firm responses

Research on the Impact of ESG Performance on Stock Price Volatility of Enterprises: Empirical Evidence from A-share Listed Companies

As socially responsible investment and sustainable development gain traction, the ESG performance of companies is increasingly attracting investor and public attention. ESG ratings help identify responsible firms, enabling assessment of their contributions to sustainable growth.This article examines Shanghai and Shenzhen A-share data, focusing on the impact of ESG performance on stock price volatility. Key findings include:A significant negative correlation exists between stock price volatility and ESG performance; higher ESG ratings correspond to lower volatility;he nature of property rights affects this relationship, with non-state-owned enterprises benefiting more from ESG performance in reducing volatility than state-owned enterprises;Policy uncertainty in a company's location significantly moderates the relationship, with greater uncertainty intensifying the negative impact of ESG performance on stock price volatility.This research enhances understanding of the economic consequences of ESG performance and helps investors recognize its value, improving capital allocation efficiency.

Enhancing supply chain resilience through the supply network approach

Purpose This study aims to investigate the efficacy of the supply network approach in bolstering supply chain resilience amidst escalating global uncertainty. With enterprises worldwide facing increasing threats that disrupt supply chains, this research explores how firms enhance supply network resilience during crises. Design/methodology/approach Using a multi-case study design, this research thoroughly examines interactions within firms’ supply networks to uncover new insights on supply network approach and how firms enhance supply network resilience against global uncertainty. The selection of cases was methodologically aligned to represent diverse industries and geographical locations to ensure a comprehensive analysis. Findings This study’s findings reveal how firms develop supply network resilience during global crises. The supply network perspective provides a deeper understanding of how firms manage supply chain interactions, interdependencies and strategic positions to survive and thrive during crises. The conceptual framework developed here provides insights that can foster improved coordination and facilitate effective temporary organising. The framework highlights the need for firms to proactively seize opportunities and mitigate risks within their global supply chains during crises to boost overall resilience. Originality/value Offering novel insights into the domain of supply chain networks, this study underscores novel perspectives of the supply network approach when firms develop supply chain resilience during global crises. Highlighting the adaptive responses of firms that integrate these approaches enriches the understanding of strategic manoeuvres firms can use to navigate global uncertainty and secure supply chain continuity.

Supply Chain Plasticity: A Responsive Network Capability to Ensure Resilience

ABSTRACTIn the face of supply chain disruptions, firms are expected to swiftly recover and resume operations. Traditional strategies focus on restoring operations to pre‐disruption states while largely maintaining the existing supply network structure. Recent cases, however, highlight a different approach: supply chain plasticity, wherein firms undergo significant structural shifts in supply network design as a response to disruptions with the goal to improve performance. Drawing on the foundations of supply chain responsiveness and network theory, we investigate how (and if) firms redesign their supply chains against a backdrop of increased disruptions and the implications supply chain plasticity has on resilience. Rooted in network theory, this study not only theoretically compares, contrasts, and connects prior concepts with supply chain plasticity but also empirically investigates whether firms exhibit a plastic response by modifying their supply chain network structures—specifically focusing on structural holes, centrality, and clustering network dimensions. Furthermore, we hypothesize that network plasticity impacts firm performance in the form of time to recover from a disruption. The findings demonstrate that the existence and significance of network plasticity in shaping firm responses to disruptions are indeed present and can be beneficial. We also provide evidence that supply chain plasticity is an efficacious strategy to enhance resilience and recovery performance amidst heightened disruption frequency. As firms increasingly face dynamic and complex environments, understanding and leveraging network plasticity will be vital for sustaining competitive advantage and achieving long‐term success.

Green vs. brown: Climate risk showdown – who’s thriving, who’s diving?

Increasingly complex climate change poses unprecedented risks and challenges. We attempt to analyze the strategic responses of firms in dealing with climate risk and whether green firms outperform brown firms by exploring the relationship between climate risk and firms’ cash flow. To this end, this paper uses the high-dimensional fixed-effects model for empirical analysis based on panel data of Chinese listed firms from Q1 2010 to Q4 2022. We find that firms have the motivation to hold more cash in the face of climate risk, and that brown firms will be more proactive in cash flow management compared to green firms. In addition, there are significant industry and seasonal effects of climate risk on firms’ cash flow. Mechanism tests find that climate risk prompts firms to increase cash flow by forcing them to reduce financial leverage and erode operating costs, as well as by inducing increased media attention to the firm. Heterogeneity analysis shows that the positive effect of climate risk on cash flow is more significant among low digital transformation firms, high financial constraints firms, firms with low managerial myopia, and SOEs. An analysis of the economic consequences shows that climate risk leads firms to be more aggressive in capturing market share, increasing productivity and strengthening ESG performance. The above findings help to enlighten firms on how to manage their risk exposures and adjust their internal governance structures as a way to maintain stable operations in an environment of intensified uncertainty. In brief, this paper highlights the differentiated financial decisions that green and brown firms make in response to climate risk, providing empirical evidence and policy implications for advancing the green transformation of firms.

Do Supply Chain Characteristics Influence a Rival Firm's Responses to a Focal Firm's Product Preannouncements? A Competitive Dynamics Perspective

ABSTRACTThis study investigates how supply chain characteristics influence a rival firm's response to a focal firm's product preannouncements from a competitive dynamics perspective. Indeed, many firms recognize that it is critical to leverage their supply chains to gain a competitive advantage. We propose that common suppliers enhance a rival firm's awareness of the focal firm's credibility, reducing competitive responses. In addition, a rival firm's strong supplier inventory performance will motivate rivals to respond more aggressively, while the rival's supply–chain partnerships enhance its capability to react to the focal firm. Using panel data from S&P 1500 firms between 2007 and 2015, our findings provide support for our hypotheses, illustrating that supply chain characteristics can significantly influence a rival firm's responses to the focal firm's preannouncements. This research contributes to the competitive dynamics and supply chain management literature by highlighting the strategic role of supply chain characteristics in interfirm competition, offering practical insights for managers on leveraging supply chain resources to effectively navigate competitive threats.

Managing supply chain disruptions in the construction industry: an institutional approach

Purpose This study aimed to explore the institutional theory as a lens for investigating how construction firms adapt to supply chain disruptions. Specifically, the paper evaluates the interactions and interdependencies amongst various organizations, participants and institutions in the construction industry as a basis for a holistic, adaptive response strategy for managing supply chain disruptions. Design/methodology/approach Following the tenets of relativist philosophy and qualitative research methodology, this study explores the lived experiences of senior-level managers across major construction firms in New Zealand through in-depth semi-structured interviews, as a basis for understanding how their respective organizations adapt to supply chain disruptions. Findings The research findings suggest that aside from the formal rules that guide the conduct of construction firms as they adapt to supply chain disruptions, informal interactions that exist amongst various organizations and players in the construction industry could also enhance the development of innovative and practical response strategies to supply chain disruptions. Originality/value This study makes original empirical contributions to the supply chain management literature by providing insights into how construction firms demonstrate normative, coercive and mimetic isomorphic tendencies amidst the complexity of supply chain disruptions. Insights from this study could enhance the adaptive response of construction firms to supply chain disruptions while also improving the overall resilience of the built environment.

Does firm carbon risk matter to banks? Evidence from the US syndicated loan market

Using two measures of firm carbon-risk exposure to capture convergent materiality, we examine whether the syndicated loan market considers borrowers’ carbon-risk exposure in loan pricing. We find that carbon intensity does not constitute material information for banks, whereas environmental scores have a statistically significant but incidental economic effect on loan spreads. We also find inconclusive evidence that the market differentiates between firms in high and low environmentally sensitive industries. Finally, we show that green banks charge higher loan spreads to more environmentally responsible firms. Overall, we provide strong evidence that environmental scores matter in loan pricing decisions.

The persistence of environmental and social strategies under emission permits

In this paper, we analyse the long-run industry configuration of an oligopoly where profit-seeking (PS) and environmentally socially responsible (ECSR) firms compete in quantities. We adopt an evolutionary setting to determine the firms’ endogenous choice of statute (PS or ECSR). Pollution is regulated through an Emission Trading System (ETS) scheme that allocates emissions rights to firms. Firms may also invest in emission abatement technology to reduce the cost of emission rights. Our findings show that the introduction of an ETS favours the persistence of the ECSR strategy by reducing the share of PS firms in the industry. In contrast, an increase in the stringency of the ETS policy makes the PS strategy more competitive.

Environmental regulation and worker earnings: Evidence from city-level air quality standards in China

This study delves into the influence of environmental regulations on worker earnings, employing China's City Air Pollution Prevention and Control Program (CAPPCP) as a quasi-experimental framework. We employ a difference-in-differences (DD) approach and match two unique firm-level data sets that include information on firm's economic indicators, and various emissions and abatement equipment. The results show that CAPPCP causes an average of 3.2% reduction in worker earnings, which amounts to CNY 6.1 billion (USD 803.4 million) in forgone earnings. The estimated result is less than that of comparable US studies. In addition, the reduction in earning tends to be attributed at bonuses rather than regular wages, and firms pay more unemployment insurance for employees. In the channel test, CAPPCP leads to an increase of 4.7% in firm's pollution abatement equipment and 6.4% in pollution treatment capacity, which significantly increase firm's production costs. We also find different types of firm responses to the regulations, where high-polluting, smaller, labor-intensive and non-SOE firms show a higher reduction in worker earnings than their counterparts. A cost-benefit analysis suggests that the health benefits gained through CAPPCP significantly outweigh that of earning losses.

Fooled by Noise? Information Processing, Performance Feedback, and Firm Responses

Fooled by Noise? Information Processing, Performance Feedback, and Firm Responses

How Socially Responsible Firms Make International Investment Decisions?

How Socially Responsible Firms Make International Investment Decisions?

Blazing a Trail: Amsterdam Coffeeshops and Competitive Firm Responses to Social Control

Blazing a Trail: Amsterdam Coffeeshops and Competitive Firm Responses to Social Control

Catalysts of Green Innovation: Exploring Firm Responses to Climate Risk and Institutional Pressure

Catalysts of Green Innovation: Exploring Firm Responses to Climate Risk and Institutional Pressure

How do firms’ respond during recession – a review and future research agenda

PurposeOver the years, the impact of the business cycle on firm strategy has been neglected in the area of strategic management and remains one of the most important but least developed research streams in management scholarship. Studies in this area are scattered across time and domains, therefore, there is a need to consolidate this fragmented literature to provide a comprehensive review and thus avenues for further research. This study aims to address this gap.Design/methodology/approachIn this study, the systematic literature review (SLR) method is used to select and examine research articles in the area of firm responses and decisions during recession. This SLR examines 127 studies and carries out a thematic synthesis of the literature.FindingsBased on the SLR and thematic synthesis of the literature, the themes identified in this study include – severity of recession impact (Theme 1); firm specific characteristics (Theme 2); resource adjustment activities (Theme 3); and firm performance (Theme 4), based on these themes and analysis this paper maps and proposes various relationships and linkages in this research domain that can be explored further for the development of scholarship in this field of study.Originality/valueThis paper fulfills the need for a systematic review of the extant literature on firms’ responses during recession. The study synthesizes literature and carries out a thematic analysis from 1980 till the period February 2024 to provide directions to advance this domain of literature.

The Real Effects of Credit Supply Shocks: Evidence from an Emerging Economy

AbstractWhat role do credit supply shocks (CSS) play in macroeconomic dynamics in emerging economies? We exploit Russia's setting, including the 2014 Western sanctions, and show that a negative CSS normalized to 0.5 p.p. increase in the lending rate leads to a decrease of 2 p.p. in the output growth rate, 1.5 p.p. in the consumption growth rate and 5 p.p. in the investment growth rate within a quarter. The heterogeneity of the household and firm responses to CSS is driven by debt‐to‐income and leverage ratios, with indebted poorer households and larger firms being more sensitive to fluctuations in credit conditions.

Consumer liability and firm responsiveness: evidence from automobile recalls

Regulations for product recalls differ internationally. In some countries, the responsibility rests entirely with manufacturers to quickly take corrective measures to ensure consumer safety. In other countries, penalties may also be imposed on consumers who persist in using products that have been recalled. We hypothesize that firm responsiveness (as measured by the time between the product release and the recall) will be higher in markets where product safety regulations that include consumer liability than in markets where product safety regulations focus solely on firms, and that firms that standardize their vehicles across such markets become more responsive in both those markets. We test our hypotheses using data on 569 automobile recalls issued during 2003 to 2019 in four different markets (the US, Australia, Germany, and the UK) that differ in their regulatory focus. Our empirical examination using survival analysis techniques with an accelerated failure time model confirms that the time to recall is shorter in countries that include consumer liability and for standardized vehicles that are sold across countries that include and exclude consumer liability.

Contemporary insights on corporate guidance: A discussion of Call, Hribar, Skinner, and Volant (2024)

Guidance is an important and long-studied topic in the accounting literature. Call, Hribar, Skinner, and Volant (this issue) survey managers who provide guidance and those that do not to generate insights on the costs and benefits of providing guidance. For managers who do provide guidance, perceptions regarding guidance characteristics are elicited. Firm responses are connected to archival data sources, enabling cross-sectional analysis of survey responses and facilitating comparison of self-reported guidance with common guidance proxies in the archival literature. I discuss key insights from the survey, considering the limitations inherent in the survey method. I also clarify what is meant by the term guidance, how it differs from other forward-looking information and how researchers operationalize the guidance construct. I conclude by offering six research questions for future consideration based on the survey evidence.

From code to connection: the role of responsible artificial intelligence (RAI) and leaders’ RAI symbolization in fueling high-tech employee innovation

PurposeArtificial intelligence (AI) radically transforms organizations, yet ethical AI’s effect on employee innovation remains understudied. Therefore, this study aims to explore whether responsible artificial intelligence (RAI) enhances high-tech employees’ innovative work behavior (IWB) through creative self-efficacy (CSE) and employee mental health and well-being (EMHWB). The study further examines how leaders’ RAI symbolization (LRAIS) moderates RAI’s effect.Design/methodology/approachThrough structural equation modeling, 441 responses of high-tech firms’ employees from Pakistan were utilized for hypotheses testing via SmartPLS-4.FindingsThe results revealed that second-order RAI enhances employees’ IWB. The effect was supported directly and indirectly through CSE and EMHWB. Findings also showed that LRAIS significantly moderates RAI’s influence on CSE, on the one hand, and EMHWB, on the other.Practical implicationsHigh-tech firms’ managers can fix AI-outlook issues that impair their employees’ IWB by prioritizing an ethical AI design involving actions like AI control mechanisms, bias checks and algorithmic audits. Similarly, these managers should facilitate RAI discussions and targeted trainings focusing on employees’ cognitive development and well-being. Likewise, RAI embracement programs and evaluations for leadership positions could be incorporated into high-tech firms.Originality/valueThis study advances the mainstream AI literature and addresses a notable gap concerning RAI’s influence on employees’ IWB while grounding in social cognitive theory. Moreover, this study unveils how CSE and EMHWB affect IWB within RAI milieus. Additionally, through signaling theory, it underscores the significance of LRAIS in amplifying the direct association between RAI, CSE, and EMHWB within high-tech firms in emerging markets.

Engaging Users on Social Media Business Pages: The Roles of User Comments and Firm Responses

Firms must strategically manage their responses to user comments to keep users engaged on their social media business pages. The question of whether, how, and when a firm should respond to user comments to achieve favorable outcomes is of great interest to researchers and practitioners. We focus on these questions and study the effects of initial user comments and firm responses on subsequent user engagement on social media business pages. In particular, we theorize and examine how two features of initial user comments (i.e., sentiment and controversialness) and two features of firm responses (i.e., uniqueness and timeliness) jointly affect the volume and sentiment of subsequent user comments. By analyzing data from the Facebook business pages of multiple U.S. retailers (10,312 firm posts from 37 firms and over 1 million user comments), we found that firms are more likely to respond to negative comments (than positive or neutral comments) but less likely to respond to controversial comments (which evoke diverse opinions and emotions). Further, we found that engaging with negative and controversial comments and promptly responding to comments are linked to an increase in the volume of subsequent user comments but also to a more negative sentiment in these comments. We also found that providing unique responses improves the volume and sentiment of subsequent user comments. Our findings offer theoretical and practical insights into firms’ response management on social media.