Firms In Taiwan Research Articles

Understanding the role of entrepreneurial orientation in creating ambidextrous competitive advantage: a comparative-design, longitudinal study

PurposeThis research aims to investigate how entrepreneurial orientation influences a firm’s differentiation–cost advantage ambidexterity (DCAA) and performance indirectly through dynamic capabilities, while also investigating the impact of the interactive effect of the level and consistency of entrepreneurial orientation on dynamic capabilities. The goal of this study is to better understand the importance of consistently following an entrepreneurial orientation, as well as the linkage of such a consistently implemented strategy upon gaining both a cost and differentiation positioning enhancement.Design/methodology/approachTwo empirical studies are conducted to test the proposed hypotheses – one longitudinal with multiple forms of data (i.e. text data, survey data and archival data) from 100 Taiwanese electronics firms and the other using primary data from a survey of senior managers.FindingsEntrepreneurial orientation improves dynamic capabilities, which in turn promote superior DCAA and enhanced firm performance. In addition, as captured through a unique measure of consistency allowed through computer-aided text analysis, the results indicate that the effect of entrepreneurial orientation on dynamic capabilities is amplified when a firm consistently adopts entrepreneurial decisions and actions.Research limitations/implicationsThe specific context was a sample of electronics firms in Taiwan. This limits the generalization of findings, as would be possible with assessing the hypotheses in other industries.Practical implicationsThis research clearly demonstrates the significance of consistency in pursuing a strategic orientation. The consistent support and deployment of resources facilitates an organization’s achieving positive outcomes associated with an entrepreneurial orientation.Originality/valueWhile entrepreneurial orientation contributes to firm performance, extant knowledge on the internal process through which entrepreneurial orientation affects performance is relatively limited. The findings not only highlight the full mediating role of dynamic capabilities and DCAA, but also shed light on the importance of consistency in entrepreneurial orientation over time.

The long-run abnormal returns and the subsequent SEO characteristics of profit-exempted IPO firms in Taiwan

<p>The deregulation of IPO requirements changes the industrial structure. Focusing on Taiwan’s unique profit-exempted IPO requirements, this study confirms that deregulation not only leads to IPO clustering, but also to a concentration in chemical and bio-pharmaceutical industry. The profit-exempted IPO issuers actively release optimistic information about future growth and take advantage of overvaluation to increase IPO revenue by misleading investors into mispricing the IPO. This results in poor long-run abnormal stock returns when stock price reverses after the IPO to correct the mispricing. In addition, some profit-exempted companies continue to use mispricing to raise equity capital and issue new shares after the IPO. For profit-exempted IPO companies, the characteristics of seasoned equity offerings within three years after IPO are significantly different from other companies. They are more likely to issue shares after IPO with shorter interval, larger size, and more frequent than non-profit exempted IPO firms. This study finds that the phenomenon of profit-exempted issuers raising capital is more consistent with the market timing theory.</p> <p> </p>

Influence of big data analytical capability on new product performance – the effects of collaboration capability and team collaboration in high-tech firm

PurposeAs the application of artificial intelligence (AI) becomes more prevalent, many high-tech firms have employed AI applications to deal with emerging societal, technological and environmental challenges. Big data analytical capability (BDAC) has become increasingly important in the AI application processes. Drawing upon the resource-based view and the theory of planned behavior, this study aims to investigate how BDAC and collaboration affect new product performance (NPP). Practically, a harmonic working team is particularly important for creating management synergies, this empirical analysis demonstrates the importance of BDAC and collaboration for NPP.Design/methodology/approachThis paper focuses on the performance of firms that applied AI in their operations. This study collected data from firms in Greater China, including China and Taiwan, as Greater China is currently the leading manufacturer of semiconductor, electronic and electric products for AI applications in the manufacturing process. Confirmatory factor analysis and structural equation modeling is employed for statistical analysis.FindingsThe analytical results indicate that BDAC positively relates to collaboration capability (CC) in AI applications but not to team collaboration (TC). CC positively correlates with TC, and both CC and TC positively correlate with NPP. Further, the mediating effect was examined using the Sobel t-test, which reveals that CC is a significant mediator in the influence of BDAC on NPP.Practical implicationsThe strategic implementation of BDAC and collaboration can allow an enterprise to improve its NPP when driven by the external environment to use AI, which further enhances NPP. These processes indicate that AI and BDAC are both crucial for the success of a company’s collaboration and for effective management to improve NPP in the face of global competition.Originality/valueThis study introduces the concept of BDAC to explain the relationship between CC and TC, as they pertain to NPP. This study presented a discussion of the theoretical and practical implications of the research findings and could provide a framework for managing BDAC.

Internationalization and breaking the glass ceiling: An institutional perspective

Gender diversity continues to serve as a thought-provoking and challenging topic for society and business alike. Even as organizations implement policies to minimize discriminatory practices in the workplace, evidence of gender inequality in firms around the world persists. Drawing on institutional theory, this study focuses on the effect that foreign investors and host country corporate social responsibility (CSR) policies have on gender diversity, and how professional groups can moderate this relationship. In analyzing 608 observations from listed firms in Taiwan, the findings demonstrate these relationships. It is shown that both foreign investor ownership and good host country CSR in firms are positively linked to the promotion of women into managerial positions. The assurance of professional groups in home countries further enhances this positive relationship. Our results further indicate how institutions carried across borders by organizations can influence firm decisions such as gender diversity through global norms of corporate CSR and also by the assurance of professional groups in the home multinational firm.

Financially distressed firms' earnings management behavior: does audit partners' industry expertise matter?

PurposeThe purpose of this paper is to examine whether firms use different earnings management approaches when facing financial difficulties and the effects of industry-specialist auditors in constraining those choices. The empirical results suggest that (1) firms with lower risk of business failure but with stronger incentives to adjust earnings upward tend to use real earnings management (REM) income-increasing approaches while (2) at the same time, using discretionary accruals for income-decreasing earnings management, due to constraints imposed by specialist auditors on the use of accrual-based earnings management (AEM). This is consistent with the findings of Chi et al., and the authors do not find similar evidence for the firms with higher risk of failure. Also, (3) regardless of the level of failure risk, firms turn to REM while interestingly, such REM behavior is effectively curbed by industry-leading specialist auditors (specialist auditors with the highest client market share) on financially distressed firms. These results extend the findings of Chi et al. (2011), suggesting that industry-specialist auditors have different tolerance levels for earnings management approaches by firms with different levels of business failure risk. That is, when auditing clients with higher risk of failure, specialist auditors are more likely to maintain higher audit quality through more stringent audit testing and use of more audit staff time to prevent an occurrence of audit failure.Design/methodology/approachThe authors examine earnings management behavior across firms in Taiwan with different levels of business failure risk and the effects of audit partner industry specialization in constraining that behavior. Chi et al. (2011) studied low-risk firms with incentives to adjust earnings upward and found firms use REM when the auditors constrain AEM. The authors extend the work of Chi et al. and observe firms with different levels of failure risk.FindingsThe authors find (1) lower risk firms may use discretionary accruals to adjust earnings downward while the authors find no similar evidence for financially distressed firms, (2) lower risk firms may use REM when their industry-specialist auditors curb AEM and (3) the industry leaders among specialist auditors do the same for the financially distressed firms. The results demonstrate the extent to which industry-specialist auditors apply different tolerance levels for earnings management behaviors across firms with different levels of failure risk.Originality/valueThe study contributes to the literature in the following three ways: first, the authors fill a gap in the existing literature by comparing firms with higher risk of business failure to firms with lower risk of business failure to explore the possible difference in the two different kinds of earnings management behavior; second, the authors extend the findings of Chi et al. (2011) and examine whether specialist auditors, when auditing firms with higher risk of business failure, will input more audit effort to constrain their clients' use of REM and third, since business failures have a significant impact on the capital markets and any associated audit failures can have an even greater negative impact on investor confidence, the study provides information useful to auditors and regulators in the formation of salient policy regarding the use of REM by firms experiencing high risk of business failure.

Impacts of Firm Internationalization, Corporate Governance, and Financial Performance on Dividend Policy — A Case Study of Taiwan Listed Firms

The capital market considers the corporate governance system when evaluating and investing in firms to cope with changes and challenges from firm internationalization. In response to the need for global economic development, Taiwan firms have enhanced their competitiveness to meet international standards and link with the world economy. A good corporate governance mechanism can bring good operating performance to a firm. The cash dividends declared each year reflects the operating status of the firm and explains its profitability and value each year, providing relevant and significant information for institutional and ordinary investors to make investment decisions. This study took Taiwan listed firms as the research object. Based on the annual data from 2005 to 2019 in the enterprise business database of the Taiwan Economic Journal, constructed a panel data regression model combining time-series and cross-sectional data. The aim was to empirically investigate and analyze the correlation of firm internationalization, corporate governance, and financial performance indicators with corporate cash dividend payouts. The findings showed that after the variables of firm internationalization, financial performance, and corporate governance were combined, the export ratio (a variable representing firm internationalization) positively impacted corporate dividend payouts. In other words, the higher degree of internationalization, the more cash dividends paid by the firm. In corporate governance, a firm with a higher shareholding ratio of financial institutions showed significantly more cash dividends. Regarding financial performance indicators, a firm with higher recurring earnings per share showed significantly fewer cash dividends

Bank Diversification and Financial Constraints on Firm Investment Decisions in a Bank-Based Financial System

The purpose of the study is to investigate whether bank diversification influences borrowing firms’ financial constraints on investment decisions. It also analyzes whether the different dimensions of bank diversification could alleviate financial constraints to firm investment. Further, the role of bank diversification in achieving firm financial sustainability is explored. By applying the Two-step System GMM, this study examines the effect of changes in bank diversification on financial constraints to borrowing firm investment in a reduced-form investment model with a sample of 810 listed firms in Taiwan over the period 1997–2019. The empirical findings indicate that firms are financially constrained as well as there being a positive relationship between cash flow and investment among Taiwanese listed firms. Additionally, bank diversification significantly reduces the investment-cash flow sensitivity of firms, suggesting that bank diversification mitigates the financial constraints to borrowing firms. Moreover, the multi-diversification of a bank compared to single-diversification will have greater impact on mitigating the firms’ financial constraints on investment. Thus, bank diversification strategies are proposed in a bank-based financial system, leading to the easing of the borrowing firms’ financial constraints to investments.

Neither Employee nor Contractor: A Case Study of Employment Relations between Riders and Platform-Based Food-Delivery Firms in Taiwan

There have been numerous legal battles in Western countries concerning employment relations between platform-based food delivery firms and their riders; however, no such legal battles have occurred in Taiwan. This qualitative case study applies the theory of institutional logics to examine the reason such legal action is absent in Taiwan, focusing on how different stakeholders apply different logics to employment relations in Taiwan’s platform-based food-delivery sector. Through this investigation, this article shows that most stakeholders in this sector quickly came to a consensus that the ‘quasi-employee’ hybrid logic should be applied to riders, and that this was due to a convergence of worker and capitalist theories of profit, motivation to maintain the profitability of these platform firms (who are regulatory entrepreneurs performing symbolic compliance) and the techno-developmentalism of the Taiwanese government.

Research on the Introduction of a Robotic Process Automation (RPA) System in Small Accounting Firms in Taiwan

This study explores the characteristics that influence the success factors of accounting firms in the introduction of a RPA system. The RPA system success factors used in this paper are based on the measurements of the Technology Acceptance Model (TAM) and the Information System Success Model (ISS). In this paper, a questionnaire survey method was used, and a total of 140 questionnaires were distributed to 70 small accounting firms in Taiwan. The results of this study showed that three characteristic factors—male, higher familiarity with the system and high CEO support—were significantly positively correlated with the success factors of the RPA system in accounting firms. Due to resource constraints, small- and medium-sized accounting firms have gone through a more difficult journey of digital transformation than the Big Four. Therefore, research on digital transformation with small- and medium-sized firms as samples is a topic worthy of attention. The research conclusions of this paper can provide a reference for the accounting digital transformation strategies of the accounting industry and educational institutions.

The Impact of Organizational Ambidexterity on the Family Firm Internationalization

This study seeks to investigate the effect of organizational ambidexterity on the internationalization of family-controlled firms from emerging economies. Analysis of a balanced panel dataset of 130 publicly listed family firms in Taiwan spanning 16 years (2000 to 2015) reveals that family-controlled firms have a lower degree of internationalization than nonfamily-controlled firms, and that this relationship is moderated by the level of organizational ambidexterity. The results contribute to answer the question that how does family control influence the internationalization of firms and also help us better understand the contingency role of organizational ambidexterity. Furthermore, these findings show that organizational ambidexterity supports the internationalization of family-controlled firms.

Entrepreneurial Bricolage and Innovation: The Moderating Role of Knowledge

Innovation is crucial for firm growth but difficult to achieve, especially for resource-constrained firms. The extant literature suggests entrepreneurial bricolage entrepreneurial bricolage is an adequate action for firms in a resource-constrained environment. Most studies argue that resource-constrained firms engaging in bricolage achieve innovation; however, some studies raise limitations and downsides of entrepreneurial bricolage. Scant empirical evidence of entrepreneurial bricolage’s impact has resulted in mixed findings with no conclusive findings. The study proposes a contingency framework to clarify the impact of entrepreneurial bricolage on innovation exploratory and exploitative by examination of moderating role of knowledge diversity referring to research on entrepreneurship and innovation management. Our analysis of 172 CCI firms in Taiwan reveals resource-constrained firms utilizing entrepreneurial bricolage simultaneously pursue exploratory and exploitative innovation with two different conditions of high knowledge diversity. More specifically, knowledge diversity has a positive moderating effect on the influence of entrepreneurial bricolage on exploratory innovation, but it has negative moderating effect on the influence of entrepreneurial bricolage on exploitative innovation. In addition, this study finds that entrepreneurial bricolage can help resource-constrained firms in generating new knowledge to explore and exploit opportunities from the available resources, but this can succeed only to a certain extent.

How Does Partner Diversity Matter for Service Innovativeness?

The global and digital economy has witnessed a rising importance of the service sector. Along with this trend, service innovation has attracted growing academic attention. Service innovation is distinctive from product innovation in the manufacturing sector because service innovation involves more intangible characteristics and requires intensive interaction with partners. Previous studies on the linkage between partner diversity and product innovation indicate that partner diversity is a double-edged sword. How partner diversity matters for service innovativeness remains unclear. Utilizing a sample of 709 service firms in Taiwan, this study investigates how partner domain diversity and geographical diversity influence service innovativeness, and how firm absorptive capacity and scope of firm internationalization moderate the relationship between partner diversity and service innovativeness. The empirical result suggests that firm absorptive capacities and scope of firm internationalization matter for realizing the positive impact of partner diversity on service innovativeness. The study advances research in service innovation and has key implications for management practice.

The Effects of Expatriate’s Personality and Cross-cultural Competence on Social Capital, Cross-cultural Adjustment, and Performance: The Context of Foreign-Owned Multinational Firms

Expatriation is still a challenging task, although the determinants of expatriate adjustment and performance have been evaluated extensively. This study aimed to empirically investigate the influence of the expatriates’ personality and cross-cultural competence on social capital, cross-cultural adjustment, and performance with expatriates from foreign-owned multination firms in Taiwan. This study integrated three perspectives to explain expatriate success and failure. The first perspective involves expatriate-related factors, including the Big Five personality traits, and the emotional intelligence (otherwise known as emotional quotient or EQ) of expatriates. The second perspective is cross-cultural competence factors, including cultural intelligence, cultural adaptability, and cultural empathy. The third perspective is the social capital of expatriates, which includes leader-member exchange (LMX), perceived organizational support (POS). Furthermore, this study incorporated these perspectives into antecedents and identified their individual and combined effects on expatriates’ cross-cultural adjustment and performance. The findings of this study may be helpful for human resource managers in managing their expatriates. The findings may also help academicians in exploring expatriate management.

Enhancing Control of Engineering Worker-hours Using Semantic Analysis Model

An engineering firm requires a decent coding system to generate worker-hour accounts in which worker-hours spent on various engineering jobs are categorized. However, most engineering firms use a project number to group worker-hour data, providing little information of value to management. This work develops an enhanced work-time coding system that links worker-hours with engineering deliverables and expertise to support the estimation of costs and the allocation of staff engineers in current and future projects. An innovative semantic analysis model is proposed to evaluate the performance of a coding system, in terms of the completeness of the information it supports, the appropriateness of the information structure, the meaningfulness of coding, and the efficiency of wording. This work also provides in-depth information about coding systems that are currently used by five major engineering firms in Taiwan. A case study of the proposed coding system, including practitioners' feedback, is provided. Finally, the six-step methodology used herein can be utilized to improve other coding systems.

Antecedents of word-of-mouth communication in the life insurance industry

PurposeThis study explored the antecedents and mediators of word-of-mouth (WOM) behavior in the life insurance industry and investigated how to increase policyholders' positive WOM communication.Design/methodology/approachA sample of life insurance policyholders in Taiwan is surveyed. These respondents were chosen using purposive sampling. The author sent out 650 questionnaires to customers of the top six life insurance firms in Taiwan in proportion to each firm's market share as follows: Cathay (200), Fubon (150), Nan Shan (120), Shin Kong (80), China (60), and Taiwan (40). A total of 338 usable questionnaires were returned. Structural equation modeling was performed to estimate the influence of the identified antecedents of WOM communication.FindingsThe results support the proposed model and hypotheses, indicating that customers' positive evaluations of functional quality and technical quality help drive positive WOM communication. Corporate image and trust also play partial mediating roles.Practical implicationsDecision-makers should note that functional quality, technical quality, corporate image, and trust are antecedents of WOM communication. Functional quality and technical quality are the main factors influencing policyholders' perceptions. Therefore, life insurance firms must understand policyholders' quality expectations. Managers should also pay increased attention to promoting favorable WOM communication through strengthening corporate image and trust.Originality/valueThis was the first study to examine WOM communication in Taiwan's life insurance industry. Few studies have investigated the mediating effects of corporate image and trust in the relationships of functional and technical quality with WOM. The findings reveal the importance of WOM to the marketing of life insurance, providing new information for life insurance practice and theory.

The role of labour unrest and skilled labour on outward foreign direct investment in Taiwan, Republic of China, ROC

AbstractThis paper builds an estimation model to test whether improved labour standards necessarily lead firms to send work offshore to countries with lower wages and fewer employment protections; or improved labour standards influence the labour market, where with time, firms attract more skilled workers, which help deter outward foreign direct investment (FDI). When more firms comply with improved labour standards, the industrial relations climate also improves as non-compliance usually causes labour unrest. Using a model built on pooled cross-sectional time-series data from 2008–17, we studied the role of changes in labour unrest and the percentage of skilled workers in the labour force in predicting outward FDI in Taiwan. Per our estimation model, we found the percentage of skilled workers steadily increased as Taiwan maintained improved labour standards. The increase in skilled workers also increased labour costs making it challenging for firms to stay onshore. However, skilled workers helped firms improve productivity, which justified increased labour costs. As a result, firms in Taiwan that complied with labour standards found it less challenging to pay higher wages and stayed onshore.

The impact of voluntary assurance of CSR reports on firms' operating performance: Evidence from Taiwan

This paper investigates the impact of the voluntary assurance of corporate social responsibility (CSR) reports on firms' operating performance. Using data from listed firms in Taiwan to test three theory‐driven hypotheses, we found that the voluntary assurance of CSR reports may not lead to firms' positive performance. However, both voluntary dual‐assurance and high confidence levels of assurance for CSR reports can positively influence such performance. We offer incremental insights into expanding the CSR literature by elaborating the importance of voluntary assurance. We suggest that firms voluntarily assure their CSR reports with a higher confidence level to further improve their performance.

Examining the Mediating Roles of Green Image and Readiness in Firms’ Green Information Technology Practices: An Organizational Legitimation Perspective

ABSTRACT This study proposes a dual-path view to explain firms’ green information technology (GIT) practices from the organizational legitimation lens. It explicates essential influence pathways that shape firms’ responses to essential external pressures for environmental sustainability, including the general public’s awareness of environmental protection, industry norms, and competitors’ green practices. This study emphasizes the mediating roles of a firm’s pursuit of a green image and its readiness for green practices, which represent symbolic and substantive legitimacy actions, respectively. Survey data from 152 leading manufacturers and 152 service firms in Taiwan are used to test the hypotheses empirically. The results show that the general public’s environmental awareness, industry norms, and competitors’ green practices influence firms’ GIT practices through their pursuit of a green image and green readiness. A comparative analysis further indicates that green readiness mediates the effects of external pressures for service firms but not for manufacturers, whereas the pursuit of a green image mediates the impacts of external pressures for manufacturing firms but not for service firms.

MASs, alliance and performance: an evidence of SOX effects

PurposeTo maintain auditor independence, Section 201 of the Sarbanes–Oxley Act of 2002 (SOX) imposes restrictions on audit firms in rendering management advisory services (MASs) to audit clients. Responding to the requirement, audit firms establish a strategic alliance with consulting companies to expand their scope of services to alleviate the impairment of auditor independence. Taiwan follows the spirit of SOX in related laws and regulations. To investigate the effects of SOX on Taiwanese auditing industry, this study aims to examine the relationship between MASs and operating performance of audit firms.Design/methodology/approachThis study obtains empirical data from the 1989–2017 Survey Report of Audit Firms in Taiwan, published by the Financial Supervisory Commission (FSC). FSC administers the survey across all registered audit firms annually to collect business information on the auditing industry for macro-economic analysis and industrial policy development. The authors group audit firms into three categories: national, regional and local firms. Based on the structure-conduct-performance (S-C-P) theoretical framework, this study establishes the following cross-sectional regression equation to test the authors’ hypotheses.FindingsMain results indicate that national firms have better post-SOX firm and alliance performance. Both firm and alliance MASs contribute more to the performance of national firms after SOX.Practical implicationsThis study claims that national firms establish alliance with consulting companies for resource sharing but regional and local firms for tax-saving.Originality/valueConsistent with the economic theory of regulation and resource-based theory, SOX matters in Taiwan.

Signing networks of audit partners and accruals quality: evidence from Taiwan

PurposeThe purpose of this study is to examine the association between audit partners’ signing networks and accruals quality, using the sample of Taiwanese publicly traded companies.Design/methodology/approachThis study uses four centrality measures as proxies in this study for the strength of the audit partners’ relationship networks and the absolute value of discretionary accruals to measure accruals quality.FindingsUsing the sample of publicly traded firms audited by the Big 4 accounting firms in Taiwan during the 2011–2017 period, this study finds that the centrality of an audit partner’s signing network is negatively associated with the absolute value of discretionary accruals. The result is robust to various discretionary accruals measures and survives the alternative explanation related to the endogenous matching between audit partners and their clients.Originality/valueThis study contributes to the understanding of the effect of the relationship network within an accounting firm on accruals quality. This is one of the few studies to empirically examine the strength of the audit partners’ relationship network as a factor in firms’ financial reporting quality, especially by using the sample from an emerging market. This study shows that the strength of the audit partners’ signing networks contains incremental information when assessing firms’ earnings quality. High-quality audit work is important to ensure high-quality financial reporting and the results of this study highlight that audit partners’ network linkages affect the quality of their work.