Iranian Firms Research Articles

The impact of U.S. economic sanctions on corporate innovation and fraud

AbstractEconomic sanctions have increasingly become a pivotal tool in modern foreign policy, especially in the context of U.S. international strategy. Despite their growing significance, there is a notable lack of empirical research on how these sanctions affect corporate behavior. This study aims to explore the impact of U.S. economic sanctions on innovation and fraudulent activities within Iranian firms subjected to these measures. Utilizing a difference‐in‐differences approach, the findings reveal a weak and negative relationship between sanctions and innovation, while no significant link is found between sanctions and fraudulent activities. Notably, the study uncovers a substantial divergence in companies' responses to sanctions based on their innovation background. Companies with a strong innovation background experience a significant increase in innovation efforts and a corresponding decline in fraudulent behavior upon facing sanctions. In contrast, companies lacking an established innovation background exhibit a reduction in innovation and, in turn, an escalation in fraudulent practices in response to sanctions. These findings remain robust across various sensitivity analyses. This research contributes to the expanding body of empirical literature on sanction outcomes by highlighting the profound impact of innovation background on the responsible and ethical decisions made by sanctioned companies.

Supply chain integration, competitive strategies and firm performance

Purpose This study aims to examine the interaction between different types of supply chain integration (SCI) and competitive strategies on firm performance. Design/methodology/approach The research method is quantitative. The study develops a structured model and a set of hypotheses based on the related theories. Empirical data is collected in a cross-sectional manner using an online survey to test the model and its hypotheses. The survey comprised standard scales to measure study variables. The scales had high reliability and validity and were commonly used in the literature. The study was conducted on Iranian firms working in steel and auto parts industries. Based on official reports, a total of 305 active companies were found in these two industries. Due to the small population size, all companies in the two industries were contacted for participation. Overall, 84 firms completed the survey. To test the research hypotheses, the authors used hierarchical regression analyses using SPSS 27 software. Findings Results showed that internal integration improves financial performance when firms follow a cost leadership strategy. Differentiation strategy and process integration interact positively and improve operational performance. Type of industry had no significant effect. The results add to the SCI literature by showing that a match between competitive strategy and integration type can influence both operational and financial performance. In total, firms should focus on the appropriate dimension of SCI based on their competitive strategy to improve the performance of the firm. Originality/value The impact of competitive strategy as a moderator on the SCI-performance relationship has not been widely addressed in the literature. In one study, Huo et al. (2014) investigated this relationship using data from 604 manufacturing companies in China. The results provided support for financial performance but not for operational performance. However, the influence of competitive strategies on the SCI performance may vary in different countries and contexts with dissimilar environmental, social and cultural characteristics. As several supply chain scholars have argued, understanding contextual conditions that influence the effect of best practices such as SCI on performance are critical

The Role of Dynamic Capabilities in Internationalization Performance of Technology-Based Firms in Iran

The Role of Dynamic Capabilities in Internationalization Performance of Technology-Based Firms in Iran

Enhancing Job Satisfaction and Productivity through Knowledge Management Infrastructure: A Case of Construction Industry

This study rigorously investigates the influence of knowledge management infrastructures (KMI) on employees’ job satisfaction (JS) within the Iranian construction sector. It specifically investigates how structural, cultural, and technological facets of KMIs affect this satisfaction. The research adopts a quantitative methodology, utilizing established measurement tools from Gold et al. for KMIs and Hackman and Oldham for JS. The empirical Information was gathered via a survey distributed to stratified random sample of 150 employees and managers from five diverse construction firms in Iran. Examining the collected data with the Partial Least Squares Structural Equation Modeling (PLS-SEM) approach, the study presents nuanced insights. It identifies that while cultural and technological infrastructures of KMIs significantly contribute to JS, the structural infrastructure does not exhibit a similar impact. Additionally, demographic factors such as age and professional experience were found to be non-contributory in the dynamics between KMIs and JS. However, gender and educational background emerged as significant moderating variables. Remarkably, employees with advanced academic qualifications reported higher satisfaction, likely due to the alignment of specialized knowledge with their professional roles. This research contributes to the current knowledge base by outlining the distinct components of KMIs that bolster JS in the construction industry, thereby offering a targeted framework for industry practitioners and policymakers to enhance employee well-being and organizational efficiency.

Servant leadership and knowledge employee performance: the mediating role of employee innovative behavior in knowledge-based firms

PurposeThe purpose of this paper is to examine the relationship between servant leadership, employee innovative behavior and knowledge employee performance in knowledge-based firms.Design/methodology/approachA quantitative approach was used to conduct the present study. The respondents were sampled from knowledge-based firms in Iran. Overall, 726 knowledge employees in 121 firms were selected using convenience sampling. A confirmatory factor analysis was conducted to ascertain the validity and reliability of the observed items, and a structural equation model was employed for testing the hypotheses.FindingsIn the studied firms, servant leadership has a significant effect on employee innovative behavior. Moreover, the findings of this study show that firms that enhance their employees’ innovative behavior have higher knowledge employee performance.Research limitations/implicationsThe study was conducted in knowledge-based firms in Iran. Therefore, our conclusions may not be applicable to other countries. Future studies should be carried out with samples from other contexts.Practical implicationsWe found that servant leadership is conducive to employee innovative behaviors, and this effect leads to high knowledge employee performance. Accordingly, knowledge-based firms’ leaders should encourage employees’ innovative behavior through stimulating employee thriving at work, supporting employees’ development and empowering them with decision-making discretion.Originality/valueThis study contributes to advance research on servant leadership literature by linking servant leadership to knowledge employee performance in knowledge-based firms through employee innovative behavior as a mediator.

Knowledge-enhancing HR practices and sustainable competitive advantage: the mediating role of intellectual capital in knowledge-based firms

PurposeThe purpose of this paper is to examine the relationship between knowledge-enhancing HR practices, intellectual capital and sustainable competitive advantage in knowledge-based firms.Design/methodology/approachA quantitative approach was used to conduct the present study. The respondents were sampled from knowledge-based firms in Iran. Overall, 320 managers in 157 firms were selected using convenience sampling. A structural equation model was employed for testing the hypotheses.FindingsThe study confirmed that knowledge-enhancing human resource (HR) practices established a very strong connection with intellectual capital. The results further disclosed a positive relationship between intellectual capital and firms' competitive advantage. A mediated relationship between knowledge-enhancing HR practices and firms' competitive advantage through intellectual capital was also affirmed.Research limitations/implicationsThe study was conducted in knowledge-based firms in Iran, which limits the generalizability of the research findings. Therefore, future studies should be carried out with samples from other contexts. Moreover, as the study was cross-sectional, the causal relationships could not be inferred directly.Practical implicationsThe paper underscored the importance of intellectual capital in improving knowledge-enhancing HR practices and firms' competitive advantage. It suggests to human resource managers to make the organizational arrangements to design knowledge-enhancing HR practices, thereby developing the intellectual capital that brings competitive advantage to knowledge-based firms.Originality/valueThe results of this study contribute to advance research on the intellectual capital literature by trying to explain how intellectual capital as a mediator variable can influence the relationship between knowledge-enhancing HR practices and sustainable competitive advantage.

How to flourish under constraints: imitation or innovation? The mediation role of innovation and absorptive capacity on firm performance

PurposeThe purpose of this study is to simultaneously investigate a comprehensive analysis of the extent to which strategic orientations, namely, imitation and innovation orientations, and knowledge management affect firm performance.Design/methodology/approachDrawing on the theoretical frameworks of the resource-based view and dynamic capability theory, this scholarly inquiry has proposed a comprehensive framework that delineates the relationships amongst imitation, innovation, absorptive capacity (ACAP), innovation performance and financial performance. To scrutinize the proposed research model, bootstrap routines were used through Smart partial least squares to estimate the procedures. To collect the necessary data, a questionnaire and financial statements were acquired from a sample of 100 Iranian firms listed on the Tehran Stock Exchange. The findings of the study have important implications for both scholars and practitioners seeking to enhance firm performance through the effective utilization of imitation, innovation and ACAP.FindingsThe results indicate that imitation activities have directly led to the improvement in innovation performance, even in the presence of innovation and ACAP. However, the relationship has not been confirmed by financial performance.Originality/valueImitation and innovation orientations have been identified as pivotal strategic orientations that can significantly affect firm performance. As far as the authors know, this investigation represents the first comprehensive examination of both imitation and innovation activities as a critical transition in emerging markets (EMs) characterized by complex economies, such as Iran. The findings may aid firms in enhancing their performance by providing insight into the strategic importance of imitation and innovation orientations in EMs.

The effect of auditors’ work stress and client participation on audit quality in the COVID-19 era

Purpose This study aims to examine the impact of the COVID-19 pandemic on the relationship between auditors’ work stress and client participation with audit quality (AQ). Design/methodology/approach This study is a descriptive-survey type and the data were collected through a questionnaire distributed online. The statistical population consisted of auditors working in audit firms in Iran and the sample was selected using a random sampling method. Structural equation modeling was used to analyze the data. Findings The findings of this study suggest that the COVID-19 pandemic exacerbated the negative relationship between auditors’ work stress and AQ. In addition, the results indicate that client participation in the audit process did not significantly impact AQ during the COVID-19 pandemic. Originality/value Given the global and widespread impact of the COVID-19 pandemic on individuals’ lives and work settings, this study provides an opportunity to explore the challenges auditors face concerning health protocols and their well-being during the pandemic, specifically within the context of Iran. The unique circumstances of the pandemic have placed additional pressure on auditors to navigate and address the challenges arising from COVID-19 in their workplaces. Although research on the effects of the pandemic on accounting and auditing is ongoing, this study contributes to the literature by expanding our understanding of the specific implications and circumstances faced by auditors during the COVID-19 outbreak.

Auditors' narcissism and their professional skepticism: evidence from Iran

PurposeThis study aims to examine the association between Iranian auditors' narcissism and the auditors' professional skepticism.Design/methodology/approachThe authors' sample is comprised of 355 professional auditors working in the private and public sectors in Iranian firms in 2022. The authors use cross-sectional multivariate regression as the main methodology, along with the structural equation modeling (SEM) technique.FindingsThe authors find that a higher level of narcissism leads to a greater level of professional skepticism among auditors, which ultimately can enhance the quality of the audit process. The results provided via the robustness tests also supported this finding.Originality/valueThe authors' findings further the understanding of the role of narcissistic personality traits in improving professional skepticism among auditors of an Islamic and emerging country. In addition, audit firms and audit partners can also consider the findings of this study and enhance the effectiveness of audit processes by assigning appropriate employees with certain personalities to specific tasks.

The dynamic of discriminatory reform: how does discretionary pricing neutralize the productivity gains of energy subsidy reform in Iran?

ABSTRACT A distortion caused by previous policies could distort the results of reforms. This may explain why policies to reduce industrial fuel subsidies have not necessarily resulted in increases in aggregate productivity in countries with mandated pricing. To identify and measure these distortions’ effects, we estimate a structural dynamic firm model with endogenous technology adaptation using data from the manufacturing firms in Iran. By connecting two price distortions and their results on the real sector, results suggest significant room for a distributional policy. We estimated dispersion elasticity comparable to the price elasticity of energy consumption in the manufacturing sector. Results suggest that the intensive margin is the primary driver of energy price elasticity, whereas the other channels mostly offset it. Moreover, total factor productivity slightly improves in light of a reduction in energy consumption if, at the same time, the redistribution policy boosts the aggregate demands.

The Relationship between Capital Structure and Firm Performance: The Moderating Role of Agency Cost

Since it first appeared, agency theory has argued that debt can decrease agency issues between agent and principal and enhance the value of firms. This paper explores the moderating effect of agency cost on the association between capital structure and firm performance. A panel econometric method, namely a fixed-effect regression model, was used to evaluate the above description. This investigation uses secondary data collected from published annual reports of manufacturing firms listed on Tehran Stock Exchange (TSE) during 2011–2019. Empirical results show that capital structure is negatively related to firm performance. Agency cost also has a negative impact on corporate performance; however, in the case of ROA and EPS, the relationship is positive. Interestingly, the findings illustrate that increasing the level of debt can reduce agency costs and enhance firm performance. Moreover, robust correlations are revealing that agency cost significantly affects the relationship between capital structure and corporate performance. These findings provide proof to support the assumptions of agency theory, which explains the association between capital structure and performance of firms. This study provides new perspectives on the relationship between capital structure and firm performance by using data from listed manufacturing firms in Iran; hence, these new insights from a developing market improve the understanding of capital structure in Asian and Middle Eastern markets.

The influence of entrepreneurial culture and organizational learning on entrepreneurial orientation: the case of new technology-based firms in Iran

PurposeThis paper explores how entrepreneurial culture (EC) and organizational learning (OL) determine the entrepreneurial orientation (EO) of new technology-based firms (NTBFs). These NTBFs are located in Isfahan Science and Technology Town (ISTT), Iran. These entities face substantial challenges in a highly-sanctioned economy, which makes adopting, acquiring or transferring new technologies daunting.Design/methodology/approachThis paper analyzes a sample of 200 NTBFs. The participants were trained chief executive officers and observed by applying pre-test and post-test designs. As a final step, empirical data were collected using questionnaires and analyzed accordingly. The structural equation modeling (SEM) with the partial least squares (PLS) approach was used by the SmartPLS2 software.Findings OL was found to mediate the relationship between EC and EO in the studied NTBFs. Additionally, the indirect effect of EC on EO and the direct impact of OL on EO were significant (=1.96). Therefore, this study focuses on selected NTBFs within Iran's particular and distinctive context.Research limitations/implicationsThis study has several limitations. These were the time consuming nature, the lack of cooperation by managers and the COVID-19 pandemic-related challenges. Nonetheless, the findings offer several important implications for practitioners, scholars and policymakers.Originality/valueThe paper sought to explore how EC and OL determine EO in Iranian NTBFs. It, thus, investigates the case of a highly-sanctioned context during the coronavirus pandemic, which imposed several basic and technological limitations on their practices.

The moderating role of financial managers’ honesty-humility on aggressive financial reporting: evidence from Iran

Purpose The purpose of this study is to investigate the moderating role of honesty-humility of financial managers on aggressive financial reporting behavior. Design/methodology/approach To test the research hypotheses, a scenario-based questionnaire taken from Brink et al. (2018) was used. Using a cross-sectional survey design, the authors collected primary data of 160 financial managers of firms in Iran using structured questionnaires. The research sample selected was based on Cohen et al.’s (2000) table. To test the research hypotheses, analysis of variance was used. Findings The results showed that increasing honesty-humility of financial managers decreases the impact of social pressure and risk appetite interaction on aggressive financial reporting. In addition, the results of further analysis showed that reducing the honesty-humility of financial managers increases the impact of risk appetite on aggressive financial reporting. Moreover, the results indicate that reducing the honesty-humility of financial managers increases the impact of social pressure on aggressive financial reporting. Research limitations/implications This finding provides significant evidence for auditor, managers and policymakers in Iran. Policymakers, auditor and company managers can emphasize compliance with the code of ethics, internal control and corporate governance to increase ethics and reduce negative economic consequences. Originality/value To the best of the authors’ knowledge, this is the first case in an emerging economy to survey the moderating role of honesty-humility of financial managers on aggressive financial reporting behavior. Also, this study contributes to understanding how factors at the individual, social and organizational level combine to influence financial managers’ aggressive financial reporting behavior.

The Effect of Logistics on The Overall Performance of Iranian Firms in The context of Supply Chain Management (Case: Aabsal Corp.)

The Effect of Logistics on The Overall Performance of Iranian Firms in The context of Supply Chain Management (Case: Aabsal Corp.)

The difference between exporter and non-exporter knowledge-based firms: the case of Iranian firms in the chemical industry

PurposeThis study aims to compare the level of organizational capabilities of the exporter and non-exporter Iranian knowledge-based firms in the sector of chemical technology.Design/methodology/approachBy combining 18 different indicators, a framework is designed to demonstrate organizational capabilities. The technological, manufacturing, R&D, marketing, organizing and financial capabilities of 732 Iranian knowledge-based firms in the sector of chemical technology (90 exporters and 642 non-exporter firms) are identified between 2015 and 2020. The analysis is based on the Chi-square test and logistic and probit regression.FindingsThe results indicate that technological capability, unlike the other five capabilities, is higher in non-exporter firms, and the level of marketing capability is greater in exporter firms, with the highest difference between the two groups.Originality/valueThe research suggests that knowledge-based firms should be evaluated based on export history; there should be some specialized export facilitating packages for both exporter and non-exporter firms; and some baskets from products with related and specialized fields of application should be formed to facilitate international marketing. The results can be a basis for managers and policymakers to improve the firm’s capabilities and competitiveness at the international level.

A Clustering Approach to Identify the Organizational Life Cycle

This is an analytical, descriptive, and cross-sectional case study to identify a pharmaceutical company’s organizational life cycle (OLC) situation using clustering methods. Data came from Iran’s pharmaceutical firms in 2001–2018. We used sales growth, dividend per ratio, and performance indicators, including the return on assets, return on equity, Qtubin, and net profit of 342 firm-years to identify the OLC situation of pharmaceutical companies. We used principal component analysis and cluster analysis to define the company’s OLC situation. Results show that 41.39% of the firm-years was in the growth stage, 34.14% in the maturity stage, and 17.22% in the decline stage. There was no significant difference between the average age in the three pharmaceutical companies’ clusters. Study findings may guide policymakers towards more evidence-informed planning, and generic producers by providing more insights about their situation from an organizational life cycle perspective, giving them proper strategies to overcome accompanying challenges in pharmaceutical firms in Iran and countries with similar situations.

A Study on the Impact of Market and Strategic Orientations on Business Performance by Emphasizing the Role of Innovation as a Mediator

This research aims to study the effects of strategic orientations as a broad spectrum of views on business performance. At the micro-level, the impact of market orientation as one of the main strategic orientations on performance was investigated. The statistical population of the study can be considered as 4,000 people. According to Morgan's table, we have tested the hypothesis using a sample of 351 people working in Iranian firms active in the healthcare field of supplying and manufacturing medical equipment and devices. So, we sent 351 questionnaires for data collection, and 247 were completed and then used for data analysis. This study emphasized the significant function of the market and strategic orientations on the organization's performance. By considering innovation as the mediator in this relationship, it has been found that innovation is critical in intensifying and improving business performance. Finally, we propose that managers, especially senior to middle ones, be alert and routinely seek appropriate strategies to implement in their department or firm following changes in a business environment and continuous technological advances.

Entrepreneurial orientation in family firms: the effects of long-term orientation

PurposeThis paper aims to shed light on the relationship between long-term orientation (LTO) and the dimensions of entrepreneurial orientation (EO) in family firms while adopting a stewardship perspective.Design/methodology/approachA survey of the top managers of family firms in Iran's science and technology parks was conducted, and partial least squares structural equation modeling (PLS-SEM) was used to analyze the collected data.FindingsThe research results showed that LTO has a positive effect on innovativeness and proactiveness and a negative effect on riskiness. Therefore, family firms' LTO pays off by enhancing their EO.Practical implicationsIn today's competitive world, EO is gradually becoming an inevitable necessity in many industries. Executives who want their firms to have a high level of performance should pay special attention to entrepreneurial behaviors. The present research informs the family firms' managers and practitioners to be long-term oriented to embrace more innovativeness and proactiveness, and less riskiness.Originality/valueSo far, the relationship between the LTO and entrepreneurial characteristics of family firms has remained ambiguous; this research is one of the first studies investigating this relationship.

Audit Qualification Paragraphs and Audit Report Lag: Evidence from Iran

ABSTRACT We investigate whether the number and type (the nature and repetitiveness) of audit qualification paragraphs (AQPs) play a role in audit report lag (ARL). We use a unique dataset of listed firms in Iran where the multitude and diversity of AQPs are very high. The results show that ARL is longer for firms with a greater number of AQPs, that there is a significant positive relationship between all AQP types and ARL except for misclassification of accounting numbers in financial statements, and that ARL increases with the number of non-repetitive AQPs. We employed several sensitivity tests, and the results did not change materially. Drawing on prior studies, we have developed two arguments, ‘additional audit procedures’ and ‘auditor-client negotiations’, to explain the role of the number and type of AQPs on ARL. The findings of this study have significant implications for investors, auditors and authority bodies in terms of paying close attention to the number and type of AQPs in their decisions.

Creating value via R&D, marketing costs and financial matters

PurposeThe aim of this study is to examine the effect of financial leverage impact on customer satisfaction and marketing costs including research and development (R&D) and advertisement costs. Furthermore, the authors aim to investigate whether customer satisfaction as well as financial distress moderates the effect of financial leverage impact on customer satisfaction and marketing costs including R&D and advertisement costs.Design/methodology/approachThe statistical population of this study consists of listed companies on the Tehran Stock Exchange manually obtained from different industries in 2017. Multivariate regression based on data compilation methodology is used to test research hypotheses.FindingsThe results indicate that financial leverage is negatively and significantly associated with customer satisfaction and this negative relationship is more pronounced in companies with lower sale growth. Furthermore, the authors' results suggest that customer satisfaction negatively (positively) and significantly affects firm value in companies with lower (higher)-financial leverage. The authors also demonstrate that there is no significant relationship between financial leverage caused by financial flexibility and firm value caused by customer's satisfaction (CS). The authors' findings also suggest that financial distress significantly affects the relationship between financial leverage and customer satisfaction. Finally, the authors' find that financial leverage significantly affects firms' R&D and advertisement costs.Research limitations/implicationsSince the fundamental institutional assumptions underpinning the Western and even East Asia financial models are not valid in the institutional environment of Iran, the authors' findings could provide substantial implications for the authors' understanding of the relationship between finance and R&D costs and contribute substantially to customer satisfaction and firm value literature as well. The sample country of the present paper has recently experienced a spate of financial collapses that somewhat contributes, indirectly, to financial distress incurred by the Iranian firms. Moreover, R&D costs are growing among the Iranian quoted firms.Originality/valueSince the fundamental institutional assumptions underpinning the Western and even East Asia financial models are not valid in the institutional environment of Iran, the authors' findings could provide substantial implications for our understanding of the relationship between finance and R&D costs and contribute substantially to customer satisfaction and firm value literature as well. The sample country of the present paper has recently experienced a spate of financial collapses that somewhat contributes, indirectly, to financial distress incurred by the Iranian firms. Moreover, R&D costs are growing among the Iranian quoted firms.