Higher Financial Performance Research Articles

More ESG Practices, Higher Financial Performance? The U‐Shaped Pattern in China's Agricultural and Food Firms

ABSTRACTESG (environmental, social, and governance) practices, an internationally recognized concept of a firm's sustainability, can serve as a bridge to enhance effective communication between firms and various stakeholders. It is also a new tool for measuring firms' value. This study employs a balanced panel data set of 114 publicly traded agricultural and food firms in China from 2016 to 2022. It empirically investigates the relationship between ESG and financial performance based on shareholder primacy theory and stakeholder theory. Employing a two‐way fixed effects (FE) model, our findings reveal a U‐shaped nonlinear pattern in how ESG impacts financial performance. It differs from previous studies that found predominantly positive relationships: Specifically, the average ESG score for firms is 0.396, the median is 0.390, and the inflection point of the U‐shape occurs at 0.53. When firms' ESG investments are less than 0.53, the high initial ESG cost makes it difficult to transform ESG into financial improvement. However, once this threshold is surpassed, good ESG can convey an excellent reputation to the public and increase anti‐risk ability—which, in turn, significantly improves firms' financial performance and facilitates long‐term development. Also, our study demonstrates that firms' ownership and different positions in the supply chain differentially affect the relationship between ESG and financial performance. This paper also offers insights into promoting the sustainable development of Chinese agri‐food firms.

Comparative Analysis of Conventional (Financial, Network) and Optimized Mixed Integer Linear Programming Scenarios for Telecom Network Investment Decision Making

The telecommunications industry in Indonesia faces numerous challenges in allocating resources for network development, including network complexity, technological changes, market competition, and customer expectations. To achieve optimal financial outcomes and customer satisfaction, investments must be well-managed, well-placed, and well-executed. This study analyses network investment portfolio selection outcomes at Telkomsel; Indonesia's largest cellular operator, comparing conventional scenarios (financial and network) with an optimized scenario using Mixed Integer Linear Programming (MILP). The research evaluates these scenarios based on total portfolio score, incremental revenue, and Internal Rate of Return (IRR). Financial indicators such as net present value (NPV), IRR, EBIT margin, incremental revenue, and network indicators such as capacity and customer satisfaction (download/upload throughput, latency, packet loss, jitter) assess investment feasibility. The MILP optimization scenario strongly correlates with incremental revenue, NPV, and IRR, indicating higher financial performance. Sites selected in the MILP optimization outperscenario formed others in total score (22% better than the financial scenario, 63% better than the network scenario), incremental revenue (3.5% better than the financial scenario, 90.2% better than the network scenario), and portfolio IRR (4% better than the financial scenario, 70% better than the network scenario).

Roles of big data analytics and organizational culture in developing innovation capabilities: a hybrid PLS‐fsQCA approach

Big data analytics creates and consolidates competitive advantage by providing insights on data with enormous variety, velocity, and volume to firms. However, many companies' investments in big data analytics were unsuccessful, and they could not gain full advantage of these technologies. This study investigates the impacts of big data analytics capabilities on innovation quality and speed by considering organizational learning culture as a moderator. The study's data are obtained from a survey of 221 managers in the manufacturing industry. We integrate the Partial Least Squares (PLS) technique and fuzzy‐set Qualitative Comparative Analysis (fsQCA) to perform the analysis. The findings of PLS indicated that big data analytics capabilities positively influence both innovation quality and speed. However, innovation quality influences both market performance and financial performance, and innovation speed only affects market performance. Organizational learning culture negatively moderates the impacts of big data analytics on innovation speed and quality. fsQCA uncovered four solutions with varied combinations of factors that predict the high market and financial performance. The theoretical and practical implications are explained at the end of the paper.

Financial Performance Measurement of Companies in the BIST Sustainability 25 Index with LBWA and MEREC-based CRADIS Methods

Abstract Financial performance refers to the assessment of a firm’s capacity to generate profits and manage its financial assets effectively during a specific period of time. This study addresses the evaluation of financial performance of companies in the BIST Sustainability 25 Index using a hybrid MCDM method. For this investigation, nine criteria, namely, acid-test ratio, asset turnover, current ratio, debt ratio, EBITDA, net profit margin, return on equity, stock return and stock turnover are used to determine the financial performance of companies. In this study, the weight of criteria is calculated using both subjective (LBWA) and objective (MEREC) weighting approaches. After the weight of criteria is determined, the financial performance of companies is ranked using the CRADIS method. The results showed that EBITDA and Stock turnover are the most and least important criteria, respectively. According to results obtained from the CRADIS method, Ereğli Iron-Steel, Enka construction and Ford Otosan have the highest financial performance, while Vestel, Arçelik and Çimsa have the lowest financial performance in the period of 2018 and 2022. Additionally, the robustness and validity of the results are tested by various MCDM methods, namely, ARAS, COPRAS, EDAS, MABAC, MAIRCA, MARCOS, TOPSIS, CoCoSo and MAUT.

EFFECT OF GREEN INVESTMENT, GOVERNMENT POLICY, AND RESOURCE MANAGEMENT ON THE FINANCIAL PERFORMANCE OF START-UPS IN CENTRAL JAWA

Indonesia, has become a hub for such start-ups, aiming for both financial success and environmental consciousness. Green investments, which fund projects with environmental benefits, play a crucial role. These investments range from adopting energy-efficient technologies to implementing sustainable supply chains, leading to long-term cost savings and improved corporate reputation. Government policy is also vital, as supportive policies in Central Java include monetary rewards, tax breaks, and assistance programs that encourage start-ups to adopt sustainable practices. Effective resource management, which optimizes the use of human, financial, and material resources, is crucial for start-ups facing limited resources and intense competition. Efficient resource management can significantly impact a start-up’s operational efficiency and financial outcomes. This study examines how green investments, government policy, and resource management collectively influence the financial success of start-ups in Central Java. Data was collected from 40 start-ups across various industries using a quantitative approach, and multiple regression analysis was performed. The results show that higher financial performance is primarily due to green investments, supportive government policies, and efficient resource management, with a positive interaction between these factors leading to significant gains. The study provides factual proof that effective resource management, sustainable practices, and compliance with government regulations are essential for successful start-up operations. It highlights the complementary effects of these elements, suggesting that a comprehensive corporate strategy enhances financial results. This study offers insights for start-ups to enhance sustainability and performance and provides recommendations for policymakers to create a supportive entrepreneurial environment.

WERE THE MANUFACTURING COMPANIES RESILIENT IN THE FACE OF COVID-19 OR DID THEY TAKE ADVANTAGE?

The research paper aims to build a composite index of the financial performance of companies, to find if the impact of the COVID-19 crisis was significantly positive for most manufacturing companies listed on Bucharest Stock Exchange, and to look if the manufacturing companies were resilient being prepared with savings that could have mitigate the effects of this pandemic crisis. The results of the FE model selected show that 31.67% of the company’s equity variation is justified by the two independent variables, the stronger correlation of equity being with reserves. Based on the composite index of financial performance built, the manufacturing companies were grouped in three clusters: a cluster with low financial performance companies (z < 4), a cluster with good financial performance companies (4 ≤ z ≤ 8) and a cluster with high financial performance companies (z > 8). The third cluster groups the most analysed companies, on which the pandemic crisis had a positive impact, which achieved the highest financial performance; they are those companies that “take advantage” from the COVID-19 crisis, adapting their business strategy to the market conditions imposed. The article adds value to the specialty literature by building the financial performance’s composite indicator, clustering the manufacturing companies by financial performance’ Z-score.

Capability configurations for successful advanced servitization

PurposeAdvanced servitization is the process that involves the combination of different services that facilitate both the use of a product and customer operations. Although servitization has emerged as a frequent strategy for manufacturers to differentiate themselves from the competition, its implementation can pose major challenges and may not always result in superior firm performance. Consequently, successful advanced servitization may require specific organizational capabilities to unleash performance-enhancing effects. To date, little is known about how to effectively configure advanced servitization to achieve such performance gains.Design/methodology/approachAdopting a fit theory perspective and using a configurational approach, we examine the interplay between servitization, organizational capabilities, contextual factors and financial performance. Specifically, we focus on advanced servitization and assess its necessity and sufficiency for achieving high financial performance. In addition, we study how the alignment of servitization approaches with organizational capabilities and contextual factors affects financial performance. We analyze data from 151 manufacturers in an emerging economy using fuzzy-set Qualitative Comparative Analysis (fsQCA).FindingsOur findings indicate that advanced servitization is sufficient, but not necessary for high financial performance. In addition, the findings indicate that the alignment of servitization approaches with specific service-related capabilities unfolds complementarity effects that contribute to achieving high financial performance for manufacturers with different firm size and competitive intensity. The findings indicate three configurations that may serve as templates for managers to orchestrate resource allocation and successfully deploy advanced servitization.Originality/valueOur study advances the servitization literature by further illuminating advanced servitization as a more complex servitization process. We show how high-performing manufacturers align servitization and organizational capabilities across different contexts, and thus provide design choices for managers in configuring servitization.

Corporate Governance, Financial Performance and Macroeconomics: The Impact on Bank Profitability Information

Banks are institutions with stringent regulations related to corporate governance implementation and the demand for high financial performance. Macroeconomic conditions significantly affect the financial performance, including profitability, of banks. The study focused on Indonesia's four state-owned banks, Bank Tabungan Negara (BBTN), Bank Negara Indonesia (BBNI), Bank Rakyat Indonesia (BBRI), and Bank Mandiri (BMRI). The research sample or saturated sample was the entire population. The 10-year observation period ran from 2011 to 2020. The panel data regression model with a common effect was used to evaluate the data. The data showed that CGPI and LDR had no discernible impact on profitability. While NPL and FOREX had a large negative impact on profitability as evaluated by ROA, CAR, NIM, SIZE, and BIRATE had a significant positive impact. All independent factors simultaneously have a major impact on profitability. All independent factors were able to explain their impact on profitability to a degree of 94.39%, according to adjusted R-squared, while other variables outside the model were responsible for the remaining effects.

Influence of working capital efficiency on firm’s composite financial performance: evidence from India

PurposeThe objective of this paper is to investigate the effect of working capital efficiency (WCE) and its components on the composite financial performance of a sample of Indian firms.Design/methodology/approachOur sample includes 796 non-financial listed firms from 2015–16 to 2021–22. Sample firms’ profitability, liquidity, solvency, cash flow management, and financial and operational leverage have been used to classify them into companies with high composite financial performance (HCFP) and with low composite financial performance (LCFP) by using K-Means Clustering technique. A composite financial performance score (CFPS) of 1 has been assigned to HCFP and 0 to LCFP. We have used logistic regression models with fixed effect to estimate the effect of cash conversion cycle (CCC) and its components, i.e. inventory days, accounts receivable days and accounts payable days on CFPS in the presence of control variables such as growth, leverage, firm size, and age.FindingsThe study finds that CCC and inventory days are inversely associated with CFPS. This finding shows that the firms’ WCE leads to superior financial performance on a composite basis.Research limitations/implicationsThe research findings are based on samples drawn from the population of the listed Indian non-financial companies. Since the operation, financial practices, working capital policies, and management styles of firms vary greatly among nations, the results of this study should be extended to firms in other countries after taking into account the degree of resemblance to the sample firms.Practical implicationsThe findings of this study hold significant value for industry practitioners, as they provide guidance in determining the optimal allocation of funds for working capital and devising strategies for effectively managing inventory levels, credit sales, and vendor payments in order to increase the overall value of the company. This study aims to help investors in building their investment portfolios by identifying companies with superior composite financial performance. Investors can enhance the construction of their investment portfolios by strategically selecting companies that demonstrate superior overall performance.Social implicationsThe results of our study will help companies improve their WCM strategies to enhance their overall value, and their significance increases manifold during economic downturns. Business firms that perform well by efficiently managing their working capital have a multiplier effect on the economy and society at large in the form of GDP contribution, labor income, taxes to the government, investment in capital assets, and payments to suppliers.Originality/valueTo understand the impact of WCE on firms’ performance, the extant working capital literature focuses on some specific characteristics such as profitability, valuation, solvency, and liquidity. The limitation of employing a single parameter is its inability to present the comprehensive performance evaluation of firms. This study is among the earliest studies that focus on the holistic evaluation of WCE's impact on the composite performance of a company.

Sustainability practices and firm performance: The moderating role of firm‐, industry‐, and country‐level factors

AbstractThe purpose of this study is to examine the effect of sustainability practices on firm performance and the moderating role of firm, industry, and country‐level factors on that association. The samples of our study are listed firms in ASEAN 5 (Indonesia, Singapore, Malaysia, Thailand, and the Philippines), with total observations are 1069 from the years 2004–2019. We use regression analysis to test our hypotheses. We find that sustainability performance has a significant positive association with firm performance, which supports our prediction. By engaging in socially responsible activities, companies can gain trust and loyalty from customers and other stakeholders, maintain their competitive advantage, and thus higher financial performance. However, there are no significant differences in the financial performance between firms that issue stand‐alone sustainability reports and those that do not. We cannot find any significant moderating role of the firm, industry‐, and country‐level factors on the association between sustainability practices and firm performance. We have not found any extant studies that have examined firm‐, industry‐, and country‐level factors simultaneously on the association between sustainability practices and firm performance. Our study also contributes to a better understanding of the impact of sustainability practices on firm performance in ASEAN, where sustainability practices are expected to be in greater demand than in mature markets due to the higher social and environmental concerns in such regions.

How brand loyalty and its marketing activities affect Japanese fashion companies' financial performance

PurposeTo investigate (1) the relationship between young adults' behavioural brand loyalty (BBL) and Japanese fashion companies' financial performance (FP) and (2) FP improvement from the perspectives of social media brand engagement (BE) and loyalty programmes (LPs) by applying the complexity theory.Design/methodology/approachA mixed methodology was employed by combining qualitative and quantitative approaches to examine the prediction of outcomes by various variables in a realistic context. The integrated model associated BE and LPs with BBL and FP, which are essential for fashion companies. We selected 14 fashion brands belonging to 14 publicly traded Japanese fashion companies and surveyed 183 Japanese consumers (aged 18–25 years) who chose these brands as their favourites, engaged with the brands and participated in LPs.FindingsThe findings reveal the positive and negative effects of the variables (BE and LP) on the outcomes (short- and long-term FP). They offer marketing implications regarding brand strategy and financial improvement by considering various combinations of causal factors and complex situations, such as the fashion brands' and consumers' characteristics.Originality/valueExisting empirical studies consider consumers' symmetric reactions to the benefits and losses from variables (BE, LP and BBL) but do not realistically reveal the negative and positive effects on outcomes (FP). This study addresses this gap by applying the complexity theory and offers multiple solutions to target different consumer types to predict high FP.

Credit Management Implementation and Financial Performance of Microfinance Institutions in Calamba City

Microfinance institutions are vital to inclusive growth and development in the Philippines by providing tailored financial services to marginalized groups. Implementing credit management is crucial for their success since it can facilitate good financial performance while promoting financial inclusion, alleviating poverty, and driving rural development. The main objective of this study was to describe and determine the relationship between credit management implementation and the financial performance of microfinance institutions in Calamba City. This study used descriptive correlational design to describe the credit management implementation and financial performance levels of microfinance institutions in Calamba City and determine if there is any significant relationship between these two variables. With the aid of the G-power, the study was able to get 200 respondents based on a 0.2278 effect size and 95% degrees of confidence. The sample size was composed of management and clients of microfinance institutions and was selected using a simple random sampling technique. Data was collected through validated researcher-made questionnaires distributed personally to the respondents. The data gathered were treated using four-point Likert scales, mean, Independent T-test, and Pearson correlation coefficient. The study’s findings revealed that the microfinance institutions in Calamba City have fully implemented their credit management and exhibited very high financial performance. There was a significant relationship between the two variables. The r values ranging from .509 to .685 were interpreted as having a moderate positive correlation to credit management implementation and financial performance. As an output of the study, an action plan was proposed, a series of strategic activities intended to enhance the financial performance of microfinance institutions through credit management implementation.

Water and waste management strategies as drivers of the financial performance of food companies

Environmental degradation and resource overuse can affect business operations. Sustainable development is therefore a global economic priority. Food companies must develop strategies to ensure food security and seek business models to provide economic, social, and environmental benefits. This paper presents the combinations of water and waste management practices (water efficiency targets, water consumption ratio, water intensity ratio, waste recycling ratio, and waste intensity ratio) that lead to an overvaluation of food companies in the stock market (Tobin's Q > 1). These combinations of practices were identified using fuzzy-set qualitative comparative analysis (fsQCA) of a global sample of 61 listed companies from the food production sector. No necessary conditions were found for the outcome of a Tobin's Q >1. In contrast, the sufficiency analysis revealed five sufficient configurations for overvaluation. The presence of significant recycling and waste reuse performance and the absence of a strong intensity of water withdrawal and waste production are key conditions to achieve the presence of the outcome. The findings provide useful insights for managers, who can focus their business strategies on sustainable and efficient water and waste management to support high financial performance. The findings can also help investors in their decision making.

Bütünleşik MPSI-MARA Modeliyle Çok Şubeli Bankaların Finansal Performans Analizi: Türkiye Örneği

In this research, the financial data of multi-branch deposit banks operating in Türkiye were analyzed with MPSI-MARA integrated ranking model and seven different financial ratios were selected as performance criteria. According to the analysis made according to the MPSI weighting method, it was understood that the criterion that most affected the financial performance of the banks was "Number of Branches/Net Period Profit". The second most important criterion was determined to be the "Net Period Profit/Total Assets" criteria. The most important result of the research is the finding that Akbank is the bank with the highest financial performance according to the MARA ranking method integrated with the MPSI weight method. This successful bank was followed by Garanti Bankası and Yapı ve Kredi Bankası. It has been determined that state-owned banks are not successful in 2022.

Brand, Quality, and CSR: Which Management Strategy Achieves High Financial Performance for Agricultural Small-Medium Enterprises?

This study aims to investigate the mechanism for the combined influence of brand, quality, and corporate social responsibility management strategy on financial performance. These management concepts are positively used in agricultural small-medium enterprises as three research streams. However, because of resource limitations, the cost of brand management would be a burden or corporate social responsibility activities may lead to harmful performance. There are many conflicting findings in the existing research. This study analyzed data from 371 agricultural small-medium enterprises in China using fsQCA 3.0. The result reveals four solution pathways for achieving high financial performance and highlights the attributes of each solution pathway. The findings suggest that integrating brand, quality, and corporate social responsibility management, or combining brand and quality management are effective options for achieving high financial performance in agricultural small-medium enterprises. These results have significant implications for managers seeking to improve their firm’s financial performance by optimizing their management strategies. JEL Classification: M14, M31, Q13

ANTECEDENTS AND CONSEQUENCES OF SUSTAINABILITY PERFORMANCE IN TOURISM INDUSTRY

Purpose- The idea of sustainability performance has grown significantly in importance for both practitioners and academicians as a result of the growing interest in environmental corporate operations in today's competitive climate. Companies in the travel and hospitality industries have also paid close attention to sustainability performance. To achieve sustainable performance, businesses in the tourism sector realize social, environmental, and economic components at the same time. This study aims to explore the antecedents and consequences of sustainable performance in tourism industry. Methodology- The study employs a literature review on articles concerning sustainability performance of tourism firms. The present research endeavors to synthesize the stream of literature on sustainability performance in the field of tourism published between 2018 and 2022. The relevant studies were systematically analyzed on the basis of the data gathered from the Scopus database. Findings- The findings of the study are presented along with the coding frame in three main sections: Research scope, research methodology, and empirical issues including antecedents and consequences of sustainability performance of tourism firms. The antecedents of environmental sustainability are categorized into four sub-categories namely ecology-related, resource-related, product-related, and management-related antecedents. The antecedents of economic sustainability is classified into four sub-categories namely consumer- related, marketing-related, financial and organizational antecedents. Social sustainability antecedents are summarized into four categories namely employee-related, community-related, stakeholder-related, and visitor-related antecedents. Further, sustainable performance is significantly related to high financial performance, market performance, perceived credibility and organizational culture. Conclusion- Tourism firms and destinations should concentrate on ecology-related antecedents, financial and marketing-related antecedents, employee-related and community-related antecedents in order to achieve sustainable performance. Although there are many studies that focus on the causes of sustainable performance, few researchers look into the results of sustainable performance. The effects of sustainable performance should be studied in further research. Keywords: Sustainability performance, environmental performance, tourism industry, antecedents, indicators JEL Codes: L25, L83, Q01

Intellectual capital, green innovation, and financial performance: The mediating role of sustainability

This research aims to find out how internal resources, intellectual capital, and green innovation in West Java's creative industries can improve small businesses financial performance. Besides, this research also examines the sustainability of small businesses in mediating the effect of intellectual capital and green innovation on financial performance. The research sample consists of 335 respondents who are owners and creative industry workers in West Java, Indonesia. The data were collected using a questionnaire and analyzed using Structural Equation Modeling (SEM). The results indicate that Intellectual Capital (IC ) and green innovation improve financial performance and sustainability. This research establishes a mediator role for sustainability in the interaction between intellectual capital, green innovation, and financial success. This study demonstrates the significance of sustainability in helping small businesses achieve high financial performance. This study highlights the significance of integrating sustainability practices inside the small business sector to optimize revenues through the utilization of internal resources, including intellectual capital and green technologies. This study offers practical implications for small businesses in Indonesia, suggesting that sustainability should be implemented to improve financial performance.

Determinants of social innovation in hybrid organisations: The moderating role of technology readiness

AbstractA balance between economic, social, and ecological performance has emerged as a key concern for organisations around the world. The modern era emphasises achieving eco‐friendly business outcomes to drive social needs along with higher financial performance. However, hybrid organisations in developing countries frequently progress in ecological and economic terms but struggle with social innovation. Based on this backdrop, this study aimed to investigate whether or not technological readiness, organisational learning, transformational leadership, and sustainability orientation influence social innovation within hybrid organisations. Data from 447 hybrid organisations in Ghana are used in the study. Study findings reveal that transformational leadership promotes social innovation among hybrid enterprises, while sustainability orientation decreases it significantly. Technology readiness also reduced the social outcome associated with sustainability orientation by moderating their negative effects. To maximise social innovation outcomes, this study recommends managers of hybrid organisations to adopt policies regarding the efficient use of internal resources and processes through technological readiness. Furthermore, the organisation's future learning processes, leadership structures, and sustainability orientation policies should be aligned with its social innovation goals.

Exploring the asymmetric impact of sustainability reporting on financial performance in the utilities sector: A longitudinal comparative analysis

This paper explores the longitudinal impact of Environmental, Social, and Governance (ESG) scores on company performance, considering firm value and financial accounting performance. Using a longitudinal fuzzy set qualitative comparative analysis (fsQCA) on a sample of 185 global listed companies in the utilities sector from 2018 to 2021, we demonstrate that various combinations of sub-dimensions of ESG activities determine the level of financial performance (FP). We use two accounting metrics and two market-based indicators and identify different configurations across time from the perspective of each measure. According to the accounting-based indicators, a good performance on the S pillar and an absence on the E pillar generate high financial outcomes across time, regardless of their performance on the G pillar. However, from the market perspective, both the E and S pillars are determinants for generating high FP, indicating that the three dimensions of ESG do not need to exist simultaneously to lead to high financial outcomes. This research contributes to the understanding of needed improvements to sector and industry-specific analyses focusing on the utilities sector, an environmentally sensitive but scarcely studied sector. The study specifically sheds light on how publicly traded utility companies should strategically combine efforts in the E, S, and G pillars based on whether their focus is on short-term profits or, conversely, long-term profits. Additionally, it expands the application of longitudinal fsQCA to research related to sustainability.

Avrupa’da Faaliyet Gösteren Havayolu İşletmelerinin Finansal Performans Analizi: CRITIC Temelli MAUT ve MARCOS Yöntemleri

This paper aims to measure the financial performance of 6 airline operators operating in Europe between the periods of 2019-2021. For performance measurement, 8 financial criteria were used: current ratio, cash ratio, financial leverage ratio, equity multiplier, asset turnover rate, equity turnover rate, return on equity and return on assets ratio. For the analysis of these criteria, the importance levels of the criteria related to the CRITIC method, one of the MCDM methods, were determined. At the same time, with the MAUT and MARCOS methods, the financial performance ranking of the airline enterprises was obtained according to the relevant years. According to the findings of the CRITIC method; It was determined that asset turnover rate in 2019 and financial leverage ratio criteria in 2020 and 2019 were the most important criteria. As a result of the MAUT method, it was concluded that the airline with the best financial performance in 2019, 2020 and 2021 was Air France. According to the findings of the MARCOS method, the airline with the highest financial performance in 2019 was Pegasus Airlines and in 2020 and 2021 it was determined as EasyJet.