Firms In Manufacturing Sector Research Articles

A different ballgame with its own set of rules

PurposeThis paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting‐edge research and case studies.Design/methodology/approachThis review is prepared by an independent writer who provides context and commentary.FindingsOnce upon a time doing business in emerging economies was a simple game. Companies based in the developed world knew the rules and by and large, called the shots. Relocating manufacturing in emerging economies meant a supply of inexpensive labor, boosting profits for firms supplying markets in the developed world. Today the world of commerce is both more equitable and increasingly complex. Emerging economies are developing an awareness of their own powerful position in the manufacturing and commercial sector and western firms need to learn to play by a new set of rules to remain competitive.Originality/valueThe paper provides strategic insights and practical thinking that have influenced some of the world's leading organizations.

Does services liberalization benefit manufacturing firms?: Evidence from the Czech Republic

While there is considerable empirical evidence on the impact of liberalizing trade in goods, the effects of services liberalization have not been empirically established. This study examines the link between services sector reforms and the productivity of manufacturing industries relying on services inputs. Several aspects of services liberalization are considered, namely, the presence of foreign providers, privatization and the level of competition. The results, based on firm-level data from the Czech Republic, show a positive relationship between services sector reform and the performance of domestic firms in downstream manufacturing sectors. Allowing foreign entry into services industries appears to be the key channel through which services liberalization contributes to improved performance of manufacturing sectors. This finding is supported by evidence that foreign acquisitions of Czech services providers result in profound changes in the labor productivity and sales of acquired firms. As most barriers to foreign investment today are not in goods but in services sectors, the findings of this study may strengthen the argument for reform in this area.

THE EFFECT OF PROFITABILITY AND RISK MANAGEMENT ON WORKING CAPITAL MANAGEMENT

This study aims to examine the impact of working capital management on profitability and risks of business companies. Furthermore, this study also examines what are the differences of working capital management industries in the manufacturing sector. Some researchers proved that influence of working capital management on profitability (Rahemanand Nasr 2007; Marc Deloof, 2003 and Hadori, 2005). In addition, Gitman (2009) also states that working capital management has an impact on firm profitability and risk. Business risk of each industry is different, thus working capital management will differ among industries. This study used data from 2001 until 2007 at the manufacturing sector firms which have coherent of annually financial statements during the study period and have been audited. In order to test the hypothesis, this study used regression analysis and analysis of variance. The research proves that working capital management affects profitability and risk of firm manufacturing sector during the period 2001-2007. Moreover, it also proves that there is a difference among working capital management industries in the manufacturing sector.

Labour Contracts and Performance of Cameroonian Firms

The aim of this study is to evaluate employees' productivity in relation to their contract status. This study uses (a) survey data collected among manufacturing sector firms, having more than 15 employees, in Cameroon between April and May 2006 and (b) information issued by the National Institute of Statistics. Information collected concerned 45 firms spanning the period 2003 to 2005. This study uses the stochastic production frontier, distinguishing employees holding fixed-term contract (FTC) from employees that do not have fixed-term contracts (indefinite-term contract (ITC)). Results are estimated in 2 stages. First, we evaluate the determinants of the utilisation of FTC workers and second, we estimate the level of efficiency and productivity of two types of workers. Empirical results indicate that employees holding FTC are twice more productive than those holding ITC. Likewise, parameters indicating returns to scale are 1.3. This parameter, though not significant, is greater than one indicating constant returns to scale in the firm production function.

Decision of institutional cooperation on R&D

PurposeThe paper aims to examine the differences between manufacturing and service sector firms regarding the determining factors for the decision to cooperate with research institutions to perform R&D activities. The second key contribution provided is the identification of institutional cooperation profiles, based on the determining variables of institutional cooperation.Design/methodology/approachOn the one hand, drawing on the Community Innovation Survey for Spain, a Logit Regression Model is used to study the determining factors for institutional cooperation decision. On the other hand, in order to identify institutional cooperation profiles a confirmatory analysis was carried out applying the cluster methodology.FindingsThe empirical study confirms that the differences are fundamentally related to transaction cost theory and resource‐based view with respect to the costs. Specifically, these theories' proposal dealing with the variable cost is not empirically confirmed for firms in the service sector.Research limitations/implicationsThe principal limitation of this paper derives from the data available, which made it impossible to extend the research to cover a longer time period and affected the manner in which some variables were constructed.Practical implicationsThe main implication of the paper can be understood in terms of managerial implications due to the importance of the institutional cooperation on R&D as an innovation management decision. Along this line, the results of the study indicate the existence of various options associated with the active posture on institutional cooperation.Originality/valueThe contribution of the paper is the identification of institutional cooperation profiles, based on the determining variables of cooperation with institutions on R&D activities as well as the identification of the differences between manufacturers and services related to them.

Comparison of determinants for standards activities of Korean firms in manufacturing and service sectors

Summary This paper compares the determinants of standards activities between manufacturing and service firms in Korea. Dependent variables are standands management, adoption of domestic standards, and usage of international standards at firm level. Independent variables include innovation activities (R&D efforts and patent application), firm size, exports ratio, network characteristics, and organizational characteristics, such as CEO attitudes on standards. We estimate the logistic regression model using the data from 636 manufacturing and 102 service firms. The study shows that CEO concerns on standards is the most decisive factor for all the Korean firms. As for innovation activities, Korean firms, regardless of industry, implement domestic standards activities and in‐house standards management in part from R&D. Particularly, firms with low R&D intensity utilize international standards as means of technology transfer in the global market. We also found that manufacturing firms view standards activity as a technological innovation, rather than patent protection. However, service firms view it the opposite way. Although Korea is an export‐oriented country, export activity has no relation to standards activities in all Korean firms. Small‐sized enterprises in the manufacturing industry are likely to hesitate to invest their resources in standards activities. Network characteristics of industries have a positive influence on usage of international standards in manufacturing firms. Policy implications are presented in this paper as well.

Scalability versus flexibility: firm size and R&D in Indian industry

This article has examined the impact of firm size on R&D spending for a panel of several thousand Indian firms, for a period of seven years from 1999–2000 to 2005–2006. The average levels of R&D spending are low but for firms that do undertake R&D the average levels of R&D spending are much higher. The results of the analysis for all the manufacturing sector firms have shown that larger firm size is associated with a higher probability of R&D spending. In non-linear estimation the squared term is negative denoting that after a particular threshold firm size has no effect on R&D spending. When only the R&D spending firms are evaluated then size has a mild impact on R&D spending and in a non-linear framework the effect of size disappears signifying that both the relatively smaller and larger firm alike seem to be motivated in building capabilities in the post-liberalization period of the Indian economy.

The Innovation Patterns of Firms in Low and High Technology Manufacturing Sectors in the New Member States

For many years, analysis on innovations focused on high technology industries which were treated as synonymous with high competitiveness and growth. New research on low and medium technology industries has revealed that their growth is also based on innovations, though their sources differ from high technology industries. As the ‘catching up’ economies of the EU New Member States (NMS) are based on low and medium technology industries, the differences in innovativeness between high and low technology sector firms as well as within each of the sectors can play an important role in the future development of these countries. This paper aims to show the differences in innovation patterns among manufacturing firms operating in low and high technology sectors in the Czech Republic, Hungary and Poland. It is based on a survey of firms which took into account innovation inputs, cooperation among firms in R&D activities, the benefits of cooperation with business partners, innovation outputs and international competitiveness. The sample consisted of 358 firms operating in both low and medium technology industries (food and beverages and automotive) and high technology industries (pharmaceuticals and electronics). After employing cluster analysis, five types of innovation patterns were detected, characterised and compared in firms operating in the low and medium technology (LMT) sectors, and four in the high technology (HT) sector. Differences and similarities in innovation patterns between firms operating in each of the two sectors are discussed. The paper shows that external knowledge plays a crucial role in innovation activities in NMS’ firms. The ability to explore cooperation with business partners and the use of external knowledge are more important for the international competitiveness of the NMS’ products than in-house innovation resources.

DO STOCK MARKETS VALUE EFFICIENCY?

ABSTRACTAn empirical model determining the relationship between changes in firm‐level productivity and changes in firm value is estimated using an unbalanced panel of 706 public limited companies observed over the period 1996–2002. We find a positive relationship between efficiency and the market value of manufacturing sector firms controlling for traditional accounting measures of performance such as earnings per share and the return on capital employed. This evidence is consistent with the stock market valuing the adoption of better management practices that lead to better resource utilisation. By contrast, we find no such evidence for service sector firms.

The “Other” Russian Economy: How Everyday Firms View the Rules of the Game in Russia

We report results from two original surveys of 500 firms conducted in 2000 and 2007 in eight regions in Russia that explore the business environment for manufacturing and service sector firms. We find that the formal and informal rules of the game for everyday firms in Russia have changed dramatically in the Putin years. Most importantly, while the informal and formal rules of the game in 2000 were quite similar for firms that were investing and those that were not, in 2007 regional governments had come to favor the former through a variety of informal and formal means. This shift in the rules of the game in favor of firms that invest suggests that a core group of firms in the regions under study have managed to cooperate with the regional government to temper the weak institutional environment in Russia, but also that the playing field for businesses in Russia is not level.

Footloose Multinationals in Belgium?

Using firm level panel data for the years 1996-2001, covering all sec- tors of the economy, the impact of multinational ownership on the exit decisions of firms located in Belgium is estimated. In this analysis, I clearly distinguish for nationality of ownership, allowing for differences between firms that are foreign- owned and multinationals rooted in the domestic economy. Controlling for vari- ous firm- and industry-specific factors, it is found that while foreign multination- als are more likely to shut down operations compared to national firms in both manufacturing and service sectors, domestic multinationals only exhibit signifi- cantly higher exit rates in the manufacturing industries. The analysis has import- ant policy implications, especially in terms of the desirability of the large impact of multinational firms on employment and output generation in Belgium. JEL no. D21, F23, L20, L25

Does Gibrat's Law Hold? Evidence from Canadian Retail and Manufacturing Firms

This paper investigates the validity of Gibrat's Law holding for firms in manufacturing and retail trade sectors. The object is to expand our knowledge of Gibrat's Law to include non-manufacturing firms. A unique longitudinal firm-level database, which contains information on Canadian incorporated establishments, enables the inter-industry comparison. The findings of the analysis are that Gibrat's Law is violated in both manufacturing and retail sectors. Violations of Gibrat's Law for both sectors include (i) growth rates that depend on firm size (ii) growth variability that depends on firm size and (iii) a negative persistence of firm growth. Finally, age effects or selection effects are not the causes of these violations.

Footloose Multinationals in Belgium?

Using firm level panel data for the years 1996-2001, covering all sectors of the economy, the impact of multinational ownership on the exit decisions of firms located in Belgium is estimated. In the analysis, I clearly distinguish for nationality of ownership, allowing for possible differences between firms that are foreign-owned and multinationals rooted in the domestic economy. Controlling for various firm- and industry-specific factors, it is found that while foreign multinationals are more likely to shut down operations compared to national firms in both manufacturing and service sectors, domestic multinationals only exhibit significantly higher exit rates in the manufacturing industries. The analysis has important policy implications, especially in terms of the desirability of the large impact of multinational firms on employment and output generation in Belgium.

Manufacturing and Service Supply Chain Performance: A Comparative Analysis

SUMMARYAs the economy evolves from manufacturing to services, it is important to understand whether the lessons learned in the manufacturing sector can be directly extrapolated to service supply chains. Unfortunately, the majority of existing supply chain research focuses exclusively on the manufacturing sector. To address this deficiency, this article compares the effect of traditional manufacturing‐oriented supply chain strategies on the operational and financial performance of firms in both service and manufacturing sectors. The results highlight similarities and differences between the two sectors — demonstrating that effective supply chain strategies in one sector may not be appropriate in the other sector. This suggests that practicing managers should identify appropriate benchmarks and competitive priorities before pursuing specific supply chain strategies. The insights provided by this research should help guide companies toward strategies that may positively affect their specific organization's operational and financial performance.

A Study on the Impact of Strategic Human Resource Practices on Organizational Performance

The aim of the study is to explore the possible relationship between use of strategic human resource practices and the financial performance of manufacturing and service firms in India. The study assumes that there is a link between the business strategy pursued by the firm and its human resource policies and practices. It is also assumed that there is a ‘fit’ aspect (external and internal) between the business strategy and the human resources policies. The ‘external fit’, is the extent the human resource planning and implementation process is part of the strategy process in the organization. Data was collected using a structured questionnaire from 115 firms representing manufacturing and service sectors in India. ANOVA results show that firms pursuing different business strategies have different degree of the ‘external-internal fit’ of human resources. Also, firms pursuing different business strategies use different levels of strategic human resource practices. The ‘external-internal fit’ of human resources shows significant variance in the use of strategic human resources practices. The multiple comparisons indicate that the use of strategic human resources practices is more among firms having higher fit. The ANOVA test also confirms that the degree of ‘external-internal fit’ of human resources and use of strategic human resource practices has significant variance for all the three financial variables, Return on Capital, Return on Net Worth and Tobin' s q. Regression results show a difference between the manufacturing and service sector firms in the variability of all the dependent variables viz. strategic human resource practices, and financial performance variables of ‘Return on Capital’, ‘Return on Net Worth’ and ‘Tobin's q’.

Determinants of profitability in European manufacturing and services: evidence from a dynamic panel model

Recent advances in panel data econometrics are used to investigate the determinants of profitability for manufacturing and service sector firms in Belgium, France, Italy and the UK, for the period 1993–2001. The paper synthesizes empirical models that have been used by researchers in industrial economics, strategic management and accounting and finance. Despite the formation of the European Union's Single Market in goods and services, abnormal profit still appears to persist significantly from year to year. There is evidence of a negative size-profitability relationship, but the relationship between market share and profitability is positive, and stronger in manufacturing than in services. The relationship between a firm's gearing ratio and its profitability is negative, but firms with higher liquidity tend to be more profitable.

Size and efficiency in African manufacturing firms: evidence from firm-level panel data

Three dimensions of the performance of firms in Ghana's manufacturing sector are investigated in this paper: their technology and the importance of technical and allocative efficiency. We show that the diversity of factor choices is not due to a nonhomothetic technology. Observable skills are not quantitatively important as determinants of productivity. Technical inefficiency is not lower in firms with foreign ownership or older firms and its dispersion across firms is similar to that found in other economies. Large firms face far higher relative labour costs than small firms. If these factor price differentials could be levelled out, substantial gains thorough improvements in allocative efficiency would be possible.

Inflation and Capacity Constraints in Australian Manufacturing Industry

In the present paper we estimate a model of price‐cost inflation for Australia using business survey responses of firms in the manufacturing sector. The data allow us to circumvent a number of key statistical problems, related in particular to the measurement of costs and structural changes in the model. Equally important, the data allow a new and more detailed perspective on the nature of supply constraints affecting inflation in the manufacturing sector. A new finding is that capital constraints have been more important in generating inflationary pressure than labour constraints or general indicators of capacity utilisation.

The diffusion of environmental biotechnology in Canada: adoption strategies and cost offsets

A 1996 study by Statistics Canada surveyed the use of 22 biotechnologies by firms with more than five million dollars (Canadian) in annual sales and in 17 sectors. Responses were received from 2010 firms or 87.5% of the survey population. The highest application rate for each of three classes of biotechnology (advanced biotechnologies including genetic engineering, environmental biotechnology, and bioculture/industrial process biotechnology) is for environmental biotechnology by firms in resource-based extraction and manufacturing sectors. The adoption rate for environmental biotechnology has increased among the cohort of 1996 resource-based firms by 9.2% per year since 1985, which is the fastest adoption rate for any of the biotechnologies. However, other results indicate that environmental biotechnology is a long way from achieving an “off-the-shelf” status. Firms require an extensive range of internal and external sources of expertise to be able to implement environmental biotechnology. One finding which could encourage the further diffusion of environmental biotechnology is that a majority of employee-weighted firms report cost savings from the adoption of environmental biotechnology to either control pollution or for use in their production processes. The exception is the wood, pulp and paper sector, where less than 14% of firms report cost savings.

The New Approach to Assessing the Marketing Effectiveness of Korean Firms

This study attempted to revise Philip Kotler's marketing effectiveness model to diagnose and offer managerial implications for Korean marketing practices. Nineteen Korean firms, divided into ten manufacturing and nine service sectors, were examined to assess their level of marketing effectiveness. By industry, these firms were further divided into five categories; electronics, machinery, chemicals, finance, and service-oriented. The five marketing effectiveness attributes — strategy, organization, operations, personnel, and information system — along with accompanying factor components were incorporated into the measurement of the marketing effectiveness. The findings showed that manufacturing sector firms were less effective in marketing operations than the service sector firms. In both sectors, relative to the predetermined factor importance weights, the Korean firms were found to underperform in planning and controlling functions. Managerial implications regarding the underperforming marketing functions and future recommendations are offered.