Impact Firm Performance Research Articles

Rhythm and shift frequency of strategic renewal in Indonesian firm performance

Purpose This study aims to explore how manufacturing firms in emerging economies can effectively adjust the rhythm and shift frequency between exploitation and exploration renewal. The authors also examine how these strategic adjustments can significantly boost firm performance, offering insights into the dynamic process of strategic renewal. Design/methodology/approach This study analyzes annual reports of 127 Indonesian manufacturing firms from 2014 to 2019, applying both linear and curvilinear regression models to examine the hypotheses. Data on exploration and exploitation renewal were meticulously gathered using computer-aided text analysis, using targeted keywords to identify strategic renewal efforts. Findings The study shows that a rather irregular balance rhythm between exploitation and exploration renewal surprisingly enhances firm performance. A curvilinear relationship emerges as performance peaks when the shift frequency of renewal occurs about three times. This relationship optimizes the strategic renewal processes, emphasizing that firms need to remain agile and adaptable in today’s dynamic market environment. Originality/value This study leverages organizational learning to assess how the paradoxical dimensions of exploration and exploitation renewal impact firm performance. By focusing on the temporal transition of these tensions, it provides insights into optimizing the rhythm and shift frequency of renewal, transitioning from a static to a dynamic accord.

Climate-related risks, firm performance and role of risk reserve funds: empirical evidence in Vietnam

ABSTRACT This study examines how climate-related risks and risk reserve funds affect the financial performance of Vietnamese-listed firms in climate-sensitive sectors. Using data from 464 firms between 2003 and 2022 and employing dynamic estimation methods, the research reveals that climate change indicators, such as environmental protection taxes, extreme weather events, temperature fluctuations, and carbon emissions, negatively impact firm performance. The study also finds that increased rainfall benefits these firms. The effects of most climate indicators, except rainfall, became more pronounced after the 2015 Paris Agreement (COP 21). Additionally, firms with risk reserve funds are better equipped to mitigate climate change risks. These findings were validated through alternative econometric methods and different dependent variables. The results underscore the urgent need for corporate managers, investors, and policymakers to incorporate climate risks into decision-making processes, fostering the development of strategies to address the financial impacts of climate change.

Digital-based business model design and firm performance: the mediating role of ambidextrous innovation

Purpose Business model design (BMD) is essential for firms to interact with stakeholders and gain competitive advantages in a changeable business environment. The advances in digital technologies create plenty of opportunities for the transformation of BMD. However, the effect of digital-based BMD on firm performance and the underlying mechanisms are unclear. Based on dynamic capability theory, this paper aims to introduce a framework elaborating on how digital-based novelty- and efficiency-centered BMD impact firm performance. Design/methodology/approach To examine the hypotheses, the authors collect data from 277 Chinese manufacturing firms and use hierarchical regression analysis to process the data. Findings The results indicate that ambidextrous innovation partially mediates the impacts of digital-based novelty- and efficiency-centered BMD on firm performance. Interorganizational learning only strengthens the impact of digital-based efficiency-centered BMD on ambidextrous innovation. Originality/value This study reveals the impacts of two distinct digital-based BMD on firm performance and uncovers the underlying mechanisms, which enrich the BMD literature and provide a deeper understanding of B2B marketing.

Size matters: The market–non-market strategy nexus and firm performance in South Africa

Purpose: This study seeks to discover how a firm’s size and its use of both market and non-market strategies (MS and NMS) impact firm performance in South Africa.Design/methodology/approach: We used the Prolific platform to gather survey data from 247 executives and managers across the country representing a variety of firm sizes and industries. Cronbach’s alpha, analysis of variance (ANOVA) and structural equation modelling via partial least squares (PLS-SEM) were then employed to test constructs and hypotheses. Configuration theory and social exchange theory (SET) are the conceptual foundations for this study.Findings/results: Firm size is a driver of the market strategy of differentiation, but not cost leadership. Larger firms are also more likely to pursue both political and social NMS. Differentiation and social NMS positively impact firm performance, but cost leadership and political NMS do not.Practical implications: Managers should emphasise differentiating their products and services rather than being a low-cost provider. When considering various non-market strategies, they should emphasise social NMS. Although large firms are more likely than small firms to pursue political NMS, they do not appear to accrue any benefit.Originality/value: This study fills gaps in the strategy-performance literature by directly linking firm size to strategic choices and by analysing the effects of different types of MS and NMS on firm performance. As such, it is valuable to both academics and practitioners. This study also advances our understanding of MS and NMS in South Africa.

How digital transformation impact firm performance? The unmet needs of Indian exporting firms

ABSTRACT The study argues on how digital technologies and digital transformation challenge exporting firms across the globe. To respond upon this challenge, present study attempts to solve multi-fold problems. The constructs that influence the digital transformation process are conceptualized. The empirical results of the study are based on 285 responses collected from export and international managers from Indian manufacturing exporting firms. The proposed hypotheses are tested by applying structural equation modelling (SEM). The results reveal that the technology, environment, ethics, and business process organization impact the ‘digital transformation adoption’, thereby increasing efficiency. The results confirm that the performance of exporting firms is correlated with advanced digital technologies, digital transformation capabilities, and strategic imperatives. The study offers critical decision variables and a complete transformation roadmap to exporting firms, especially those aspiring to digital transformation.

The Effect of Risk Management Committee Characteristics on Firm Performance: An Empirical Investigation

This research investigates how the characteristics of a risk management committee (RMC), as a recently emerging sub-committee within the board of directors, impact firm performance indicators. The investigation employs a dataset encompassing service and manufacturing firms that are listed on the Amman Stock Exchange (ASE) over the period 2019–2022, comprising a total of 236 firm-year observations. The primary statistical technique utilised in the study is fixed-effect regression with Huber–White standard errors. The findings demonstrate that RMC attributes such as size, independence and meeting frequency exert a significant and positive effect on return on assets, return on equity and Tobin’s Q. These insights hold practical implications for stakeholders, regulators and policymakers in assessing the influence of RMC characteristics on firm performance within the context of the ASE. Understanding these dynamics can inform decision-making and regulatory frameworks, promoting effective risk management practices in publicly traded corporations. The current study represents the initial empirical exploration within the corporate governance literature concerning the nexus between RMC qualities and firm performance in Jordan.

Impact of macroeconomic factors on firm performance: Empirical evidence from India

Understanding the macroeconomic factors is essential for all firms operating in the economy. Investment decisions, financing decisions, and risk management of firms are influenced by the existing macroeconomic factors, thereby impacting their performance. This paper examines the effect of macroeconomic factors on the performance of Indian manufacturing firms. Two-step generalized method of moments model is applied in this investigation to analyze the effect of firm performance from the financial year 2004-05 to 2021-22. Firm performance is proxied by two accounting-based measures and a market-based measure, namely, return on assets, return on equity, and Tobin’s Q, respectively, while the macro-economic factor is proxied by annual gross domestic product growth rate. The empirical findings show that firm performance has a positive relationship with macroeconomic factors. In addition, the findings reveal that firm size, firm age, leverage, sales growth, and operating profit impact firm performance. The study further extends to examine the moderating effect of financing constraints (measured by firm size and age) on macroeconomic factors and firm performance. The results show that the effect is more pronounced on small and young firms as compared to large and mature firms. The study also evaluates the impact of macroeconomic factors on firm performance excluding the crisis periods (the financial crisis of 2008 and the COVID-19 pandemic) and finds the impact on the market performance to be insignificant during non-crisis periods. This study recommends that lenders, managers, and other stakeholders should take proactive policy measures for any anticipated adverse changes in macroeconomic factors on the performance of Indian firms. AcknowledgmentsThe financial and infrastructural support provided by FORE School of Management, New Delhi, India in completing this paper is gratefully acknowledged.

Do specific investment and qualification of capability foster or impede firm performance: the moderating role of shared values

PurposeFirms aiming to enhance firm performance require specific investment and qualification of capability. However, the relationship between these factors and firm performance is influenced by boundary conditions. This study focuses on the role of shared values as a governance mechanism in moderating the relationship between specific investment, qualification of capability, and firm performance.Design/methodology/approachDrawing on transaction cost analysis, the authors develop a theoretical model to explore how shared values moderate the relationship between specific investment, qualification of capability, and firm performance. The authors collected data from 156 firms in Cote d’Ivoire, resulting in a sample of 216 observations. The authors employed hierarchical regression analysis and the “pick-a-point approach” to examine how specific investment and qualification of capability impact firm performance at different levels of shared values.FindingsThe results indicate that specific investment and qualification of capability have a partially positive impact on firm performance. Interestingly, shared values are an important moderating variable, acting as a boundary condition that affects the relationship between specific investment, qualification of capability, and firm performance. Specifically, specific investment leads to excellent firm performance only when shared values are not sufficiently high, whereas qualification of capability leads to superior firm performance only when shared values are sufficiently high.Research limitations/implicationsThis study has three research implications. First, this study enriches TCA literature by identifying shared values as a boundary condition and examining the moderating role of shared values. Second, the study findings discover new insights into how specific investment and qualification of capability enhance or inhabit organizational performance at different levels of shared values. Third, this study extends the existing research and reveals the specific conditions for positive or negative relationships between specific investment and organizational performance and qualification of capability and organizational performance.Practical implicationsFirst, compared to specific investment, qualification of capability has greater effect on organizational performance. Second, when considering whether to increase specific investment or/and improve qualification of capability, executives are encouraged to first evaluate their firm's level of shared values and then make appropriate strategic decision accordingly. Third, six tactics are recommended for enhancing shared values.Originality/valueThis study enriches the literature on transaction cost analysis and contributes to understanding the moderating role of shared values. The findings shed light on the specific investment, qualification of capability, and firm performance relationships. Additionally, this research highlights the importance of considering shared values as a boundary condition in examining these relationships.

The impact of entrepreneurial orientation on firm performance: Exploring the moderating influence of trust and organizational commitment in the Indian IT/ITE sector

The purpose of the research study is to test how entrepreneurship orientation influences Indian MSME’s performance and to delineate the moderation effect of trust in leadership and employee commitment on the relationship between entrepreneurial orientation and firm performance. Based on the social exchange theory, the study tested how firm performance is affected by Entrepreneurship Orientation such that relationships can be exchanged by trust and commitment. Applying descriptive research design, data were collected from randomly selected IT and ITE consulting firms located in Bangalore (A metro Tier I city in the country which presents close to 80 percent of Indian IT and ITE companies’ establishment (timesofindia, 2020)). The hypothesized model was tested using SEM analysis. This study aims to: (1) examine the relationship between entrepreneurial orientation and firm performance within the context of Indian Micro, Small, and Medium Enterprises (MSMEs), with a specific focus on consulting organizations; (2) assess the moderating influence of trust among members on the relationship between entrepreneurial orientation and firm performance; and (3) investigate the interaction effect of managerial commitment on the relationship between entrepreneurial orientation and firm performance, thereby enhancing our understanding of the dynamics at play within MSMEs, particularly in the consulting sector. The capability of being innovative which measures entrepreneurial orientation impact firm performance and being proactive in the business over entrepreneurial orientation positively impacts firm performance while risk-taking attitude and firm performance relationship are not significant. This result is in support of the previous research report that showed only the innovativeness and proactiveness variable. Further, it is noticed from the hierarchical regression analysis that proactiveness and firm performance are moderated by the level of trust that the employee has in his/her functional manager, and proactiveness and firm performance are also moderated by the employee’s level organizational commitment.

Applying the Resource Dependence Theory to Enhance Supply Chain Management of Small and Medium Scale Enterprises (SMEs) in the Context of Covid-19

The Covid-19 pandemic had deeply affected supply chain management across industries, necessitating firms to redefine their strategies to reduce the risk and imbalance caused by the disruption. The study highlights how external risk factors have influenced the internal and organizational factors of the small and medium enterprises (SMEs) in dealing with their supply chain disruptions. We applied the resource dependence theory to illustrate this aspect and also to understand the factors that impact supply chain management. The study applied the interpretive structural modelling (ISM) methodology and Cross Impact Matrix Multiplication Applied to Classification (MICMAC) methodology to understand the inter-dependence relationship between these factors of risk in supply chain management during Covid-19. Our study was specific to the ongoing COVID 19 pandemic as the external factor disrupting supply chains and impacting a firm’s internal and organizational factors in dealing with the impact. Our results showed that external factors deeply influence the internal factors governing supply chain management, which in turn, impact firm performance. Keywords: supply chain management, resource dependency theory, covid-19, small and medium enterprises, decision making

KNOWLEDGE CAPITAL AND INNOVATION ACROSS FIRMS IN ASIAN ECONOMIES: A BALANCED INVESTMENT APPROACH

The difference between knowledge capital and innovation and their combined impact on firm market performance remains a puzzle. Firms can utilise their accumulated stock of knowledge to create value, and at the same time, allocate their resources each year to create innovation, hoping to sustain their performance and make a better future. Using time fixed effects panel regression with industry and country dummies, this study investigates how knowledge capital and innovation impact firm performance by analysing the sample of 2,958 listed companies of Asian countries during 2015–2019. We observe that different sectors exhibit strong variations in their levels of knowledge capital and innovation. This study finds that more knowledge capital negatively impacts firm performance, but up to a certain point. The U-shaped relationship found suggests that learning and accumulating capabilities to exploit knowledge capitals’ potential is essential to achieve higher firm value. We also find that firms’ more spending on innovation positively impacts firm performance, but only up to a certain level. An inverted U-shaped relationship found suggests a balanced investment in innovation activities to attain improved firm performance. Implications for management and potential for further research are provided.

Corporate Political Activity and Firm Performance: The Moderating Effects of International and Product Diversification

Prior research has found that corporate political activity (CPA) can both positively and negatively impact firm performance. Combining agency theory with the resource-based view, we examine the relationship between domestic lobbying (a key form of CPA) and firm performance by explicating the moderating effects of international and product diversification. We argue that expansion into international and product markets increases a firm's resources and reduces agency costs in domestic lobbying. Our results, based on a sample of 737 firms, show that lobbying is positively associated with performance for firms that are diversified in both international markets and along product-lines; whereas lobbying is counter-productive for purely domestic and undiversified firms. Our results contribute to the literature on the firm performance implications of corporate political activity by highlighting the roles of international and product diversification.

A Case Study of Ghanaian Manufacturing Industry

The manufacturing industry has come to regard logistics to enhance their product or service rather than a place to save costs in recent years. It is also well acknowledged that logistics and supply chain management impact firm performance. Despite the expanding importance of logistics, little work has been done to create a theory of logistics' role in the manufacturing industry, and further research into this area is certainly needed. The first part of the literature review presents an empirical review of the concept of the supply chain and logistics in the Ghanaian context. The section touches in the ideologies of both the inbound and outbound logistics. The literature review provides an assessment from performance measurement before presenting an empirical review of what this paper presents. Following that, this paper reviews earlier studies that have thoroughly analyzed supply networks. The data analysis is reported in the results and discussion sections included in this research. Lastly, we conclude with some recommendations after this section.

How Do Various Forms of Ownership Impact Firm Performance?

Corporate governance and ownership structures are key factors affecting companies' management, operations and innovation. This study aims to provide a better understanding of the interaction between ownership forms and firm performance by addressing the key research question: How do various types of ownership forms impact on governance efficiency and firm value? We propose to address this issue by taking the mandatorily reported shareholders' ownership characteristic to determine each ownership form and to empirically test the governance role and the impact of ownership form on firms' value. The results show that there is a high concentra-tion of state ownership among the listed companies. In terms of market performance, it is shown that companies directly controlled by the state ownership generally perform worse than companies controlled by other ownership forms, namely legal person shares, state-owned legal persons shares, and tradable shares. Based on separate forms of ownerships, our investigation has found a significant negative relationship between ownership concentration and firm valuation.

THE IMPACT OF FINANCIAL LEVERAGE AND AUDIT QUALITY ON FIRM PERFORMANCE: THE CASE OF LISTED FIRMS IN VIETNAM

This research uses data from 60 listed manufacturing firms in Vietnam to determine the relationship between financial leverage, audit quality, and firm performance. By applying three different regression techniques named POLS, FEM and REM, the results show that short-term, long-term, and total debts have significantly impacted firm performance. On the other hand, audit quality does not influence the firm profitability of listed firms under the research. The other results from the research show that dividend payout policy does not impact firm performance while foreign direct investment has a significant effect on the dependent variable.

Do Environmental, Social, and Governance Performance Impact Firm Performance? Evidence from Indian Firms

This paper investigates the impact of individual environmental (E), social (S), and governance (G) and the overall ESG performance on the firms’ performance in Indian context. Three dimensions of a firm’s performance, i.e., operational, financial, and market performance, are measured through return on assets, return on equity, and firm value (Tobin’s Q), respectively. The study spans the period from 2012 to 2019, with NSE 500 firms as the first sample set and NSE 100 ESG enhanced index firms as the second sample set. Panel data analysis was performed with efficiency tests for the random and fixed-effects models. The study deduced that the ESG index listed firms have better operational and financial performance than the non-listed ESG firms. With the second sample set, the impact of ESG and its subcomponents’ performance on firms’ performance was examined. Overall, ESG had a positive and significant association with operational and market performance. All the subcomponents positively impact operational performance and negatively impact market performance. The impact of ESG and its subcomponents on financial performance could not be established except for the governance score. The study findings will be beneficial for investors, regulators, and corporate sustainability decision-makers in their different capacities and roles across global markets.

Effect of Change Agent Leadership Style on Successful ERP Implementation and Firm Performance

The study aims to measure change agent's leadership style on successful ERP implementation and organizational performance. The data was collected through a self-administered questionnaire from 290 employees working in 14 knowledge-based companies in the United Arab Emirates with a response rate of 69.04%. The study uses cross-sectional research design with snowball sampling method and data were collected using online survey method. Some of the findings, including all three leadership styles (transformational, transactional, and laissez-faire), significantly contribute to ERP implementation success and in turn impact firm performance. Transformational leadership style of change agent is found to have the highest impact on firm performance with ERP implementation acting as a partial mediator. The present study opened the doors by linking leadership style with ERP implementation towards multidimensionality of change agent's reach not being limited to some aspects. Practitioners can use the insights in understanding the impact of change agent's deployment in an organization.

The Power of Leadership Artistry

We introduce leadership artistry as a promising approach in contemporary leadership studies. While we know leaders should rely on innovation, courage, and aspiration more than on duplicating historical patterns of pragmatism for leadership decision-making under uncertainty, we know little about how these processes achieve. In this paper, we define leadership artistry as a subject aspect of the leadership attributes and characterize its dimensions which are distinct from other leadership approaches. Additionally, we propose a semi-supervised machine learning approach to create an artistry dictionary. Finally, by applying a weighted word frequency measure, we illustrate that corporate top management team's leadership artistry does impact firm creativity performance, furthering our contribution to theory and practice.

Moderating effects on sustainability reporting and firm performance relationships: a meta-analytical review

PurposeThe past sustainability literature on the effects of nonfinancial disclosures on a firm's performance is highly fragmented. Thus, the authors raise the following research questions to test potential differences: Is sustainability reporting (SR) based on the Global Reporting Initiative (GRI) or other systematic reporting framework associated with firm performance? Does quality or level of SR impact firm performance? Do firm-, industry- and country-level factors moderate the effect of SR on firm performance? Does the presence of publication bias affect this relationship?Design/methodology/approachMeta-analysis technique suggested by Hedges & Olkin (1985) was used to analyze a sample of 98 effect sizes reported in 60 studies published between 2010 and 2020 studying SR–performance associations. Meta-regression and subgroup analyses were used to investigate the moderating variables accounting for this heterogeneity in the relationship.FindingsResults reveal that level and quality of SR influence the market-, accounting- and operational-based measures of firm performance. Meta-regression results depict that for large, matured firms, or the ones with institutional investors as board members or the ones that actively participate SR quality awards, SR translates better into firm performance. Subgroup analyses demonstrate that the SR–firm performance relationship is moderated by the corporate governance (CG) system of the country and the firm's affiliation to environmentally sensitive industries.Originality/valueThese findings extend theoretical and practical understanding on effects of corporate sustainability communications on performance.

Does corporate social responsibility disclosure impact firm performance? An industry-wise analysis of Indian firms

Does corporate social responsibility disclosure impact firm performance? An industry-wise analysis of Indian firms