Industrial Firms Research Articles

Explore the Influencing Factors of Manufacturing Industry Agglomeration

As the result of the amount of greenhouse gas emission, many countries has developed green economic that achieve sustain economy and protect environment. Sustainable economic development has became a trend, and an important part of its industrial agglomeration. There are theoretical and practical implementation of industrial agglomeration. This paper is going to talk about the industrial agglomeration of manufacture. Industrial agglomeration refers to firms in the same industry locating in the same geographic area. The regional similarity of their location results in so-called industrial externalities, referred to as external economies of scale by Marshall and localization externalities by Henderson. In this paper, the factors that cause industrial agglomeration of manufacture will be discussed. First of all, the raw materials is one of the factors. Raw materials are the resources used to make goods. Secondly, the labor market is also an important factor of industrial agglomeration. Thirdly, the policy will have a great impact on the industrial agglomeration in a certain region. The policy refers to the directives and targets set by the state, government and enterprises. In the case study, this paper has chosen California, which is famous for its home industry, and confirmed the above three influencing factors.

Accrual-Based Earnings Management and the COVID-19 Pandemic

In this study, we document the accrual-based earnings management of Old Economy firms and New Economy firms (firms in the technology industry) and loss-making firms (firms with negative earnings in the pre-pandemic year, 2019) and profit firms in each economy, respectively, before, during, and in the recovery year of the COVID-19 pandemic. Using both univariate and difference-in-difference regression analyses, we find that old and new economy firms adopt different accrual-based earnings management, and Old Economy Loss firms changed their accrual-based earnings management the most during and in the recovery of the pandemic. During the 2020 pandemic, Old Economy Loss reported the lowest amount of accrual-based discretionary accruals. This suggests that Old Economy Loss firms are engaged in the most conservative approach to reporting their earnings, consistent with the big bath proposition. In the recovery year of the pandemic, 2021, we find that accrual-based earnings management reversed, with the old economy losing firms reporting the highest amounts of discretionary accruals. However, we do not find that the explanatory power of earnings on the variance of stock prices for the old economy loss firms is affected by their discretionary change in accounting accruals.

Do audit attributes impact earnings quality? Evidence from India

PurposeThe present study's goal is to analyze the impact of audit quality (AQ) on earnings quality (EQ) using different audit attributes. The study shows empirical evidence from India, considered an emerging market.Design/methodology/approachThe sample selected represents the 376 non-financial firms listed on the Bombay Stock Exchange (BSE). With a 20-year time frame, the authors used the absolute value of discretionary accruals (McNichols, 2002) (DA) as a proxy for EM, which is inversely related to EQ. The authors analyzed data using OLS, fixed effect (FE), 2SLS and Panel-IV estimators.FindingsThe authors found that most audit attributes positively affect EQ. In the Indian context, joint auditor (JA), auditor size (A_SIZE), auditor fee (A_FEE) and auditor tenure (A_TENURE) have a negative association with EM indicating high EQ. In contrast, auditor rotation (A_ROTATON) positively affects EM confirming low EQ.Research limitations/implicationsThe present study uses Big-4 and its member firms as a proxy of auditor size (A_SIZE); instead, other bases may be taken for it, like the dominant audit firms in a particular industry in sample data, etc. The authors have started audit tenure from the base year, i.e. 2001, which may ignore the association of auditor and auditee just before 2001.Practical implicationsThe study findings would enhance policymakers' willingness to prepare appropriate regulations regarding JAs and auditor rotation, which might improve financial market efficiency and reduce financial fraud among Indian corporates.Originality/valueTo the best of the authors' knowledge, this is the first study to incorporate “Joint Auditor” (JA) as a proxy for audit quality in the Indian context, which might significantly contribute to the literature.

Common institutional ownership and the cost of debt in Taiwan

We examine the impact of common institutional ownership (CIO) of firms in the same industry on their cost of bank loans using data on Taiwan-listed firms from 1996 to 2021. The evidence shows that CIO is negatively related to loan spreads. When decomposing our sample according to a firm's life cycle and family ownership, the negative relation is significant only in the mature stage of a firm's life cycle and for family-owned firms. The subsample evidence suggests that CIO enhances effective monitoring to increase firm value, lowering loan spreads. We also find that the negative relation becomes statistically insignificant during the financial crisis period because that CIO tends to reduce investments in the same industry, thus weakening its effect during the global financial crisis.

Local government fiscal stress and corporate risk-taking: Evidence from a quasi-natural experiment in China

This study investigates the effects of local government fiscal stress on corporate risk-taking and its potential mechanisms by employing a difference-in-differences (DID) approach in the context of a unique pilot program in China to replace the business tax (BT) with the value-added tax (VAT). Using a sample of Chinese listed firms from 2009 to 2015, this study finds that (1) local government fiscal stress has a causal and negative effect on corporate risk-taking; (2) this effect is more pronounced for firms in regions with higher tax intensity, privately owned firms, firms with lower sales growth, and service industry firms; and (3) to mitigate fiscal stress, local governments issue more government debt, strengthen tax enforcement and sell more land, which increases external financing constraints, decreases internal cash flow and intensifies corporate financialization, respectively, leading to a decline in corporate risk-taking. The above findings offer a rationale as to why higher local government fiscal stress might be associated with lower levels of corporate risk-taking.

Ownership Structure, Capital Structure and the Audit Committees’ Effectiveness:

ABSTRACT
 The main purpose of this research is to investigate the impact of the capital structure and the ownership structure on the audit committee effectiveness. A sample of 35 service firms and 47 industrial firms that were continuously listed on Amman Stock Exchange during the years 2014 to 2018 with a 388 observation was used. Descriptive statistics and multiple regression analysis were used to analyze the data and test the hypotheses. The independent variables included ownership structure and capital structure, whereas the dependent variable represented by the audit committee effectiveness. A set of variables that formed the effectiveness index were taken into consideration, including the independence of the committee, the independence of its chairman, knowledge and expertise of its members, size of the audit committee and frequency of meetings. The study results revealed that there is a negative significant impact for the concentrated ownership and managerial ownership on the audit committee effectiveness, whereas, the institutional and the foreign ownership don’t show a significant impact. The results also revealed that there is a positive significant impact for the capital structure on the audit committee effectiveness. Based on the results of the study the researchers would recommend that more attention should be given by decision-makers to take the appropriate measures to improve the effectiveness of the audit committees in order to direct the attention of the various investing groups to the fact that these committees are in their interest and that they are already in their service.

Stakeholder influences on management control systems for ESG governance and reporting in the global automotive industry

AbstractDrawing on Simons’ levers of control, we develop a theoretical model to explore the influences of stakeholders (customers, suppliers, employees, regulators, communities, industry associations, and investors) on Management Control Systems for achieving strategic environmental, social, and governance (ESG) objectives. We then test the model using data from over 600 firms in the global automotive industry by linking the eleven largest automotive manufacturers with over 500 of their tier‐1 and tier‐2 suppliers and examining whether stakeholder‐relevant metrics impact supplier retention and whether management compensation is tied to ESG governance. We also examine whether stakeholder influences lead to higher ESG scores. We find that stakeholder‐related metrics for emissions, human rights, customer health, employee empowerment and industry associations are related to management compensation systems tied to ESG. We also find significant linkages between stakeholder influences and ESG scores.

Unveiling the role of supply chain parameters approved by blockchain technology towards firm performance through trust: The moderating role of government support

This research study aims to reveal the role of supply chain parameters approved by blockchain technology toward firm performance through trust. This study has also examined the moderating role of government support between trust and firm performance. The underlying theories reinforce the usefulness and flexibility of a supply chain in regulating daily fluctuations and uncertainties in supply and demand. Blockchain technology adoption with supply chain tactics provides a more suitable environment for better firm performance. Governments address legal and security concerns related to blockchain technology and provide clear guidelines and standards for its use in supply chains, which build trust among firms and stakeholders. A conceptual model has been developed with the assistance of past empirical research studies and associated theories. This research study has examined the following relationships from a sample of 465 employees from textile industrial firms listed on the Pakistan Stock Exchange. The current research study assesses these parameters using the partial least squares structural equation modeling (PLS-SEM) method. The analysis showed that supply chain parameters (alignment, agility, adaptability) approved by blockchain technology positively correlate with firm performance. Trust positively mediated the relationship between supply chain parameters approved by blockchain technology and firm performance. Furthermore, government support positively moderated the relationship between trust and firm performance. The study would provide directions for further research. These findings will give the global supply chain industry valuable insights into blockchain technology for firm performance. In theory, this research study would contribute to the scientific literature by answering how trust and government support affect the overall firm performance.

Acoustic Localization of Drones in Precise Landing: The Research and Practice with MicNest

Delivery drones have the potential to revolutionize transportation and distribution of goods. With their autonomous navigation capabilities, they offer an efficient solution to bypass the challenges posed by complex urban traffic and enable instant package delivery. Many industrial firms are actively exploring the commercial feasibility of instant drone deliveries. Meituan, one of the largest companies in this area, devised a systematic approach to instant delivery using drones. The process begins with loading the package onto the drone, which then takes off, ascends to cruising altitude, and sets a direct course towards the designated destination. Typically, this destination is a Meituan-operated self-collection station located near the customer.

The impact of market orientation on logic-oriented marketing performance in small and medium-sized firms: The mediation role of knowledge management

This study examines the effect of market orientation on logic-oriented marketing performance concerning the mediating role of knowledge management. This research is descriptive-exploratory and a type of applied research. The statistical population in this research is managers, employees, and workers of the Manufacturing and industrial firms of agricultural machinery, The size of the statistical sample using Cochran's formula, 196 people were selected as a sample. A questionnaire was used to collect data. Experts' opinions were used to determine the validity of the questionnaire. The structural equation model method and SPSS and Smart PLS 4 software were used for data analysis. All the assumptions of this research were confirmed and the results of this research showed that the most positive impact is related to market orientation on knowledge management. Also, knowledge management has the lowest impact on logic-oriented marketing performance. According to the results, knowledge management has been able to play a positive and meaningful role in mediation. As far as we know, such this research has not been done so far This paper paves the way for further research on the impact of market orientation and knowledge management on logic-oriented marketing performance and can help senior managers in this field.

Does digital transformation reduce the labor income share in enterprises?

This paper investigates the impact of firms' digital transformation on labor income share utilizing a large sample of Chinese-listed enterprises from 2003 to 2020, and we find a negative correlation between digital transformation and enterprise labor income share. The results are robust to changing variable indicators, instrumental variable approach, and Difference-in-Difference method. The impact of enterprise digital transformation on labor income share is more pronounced for industrial industry, technology-intensive, and state-owned firms. Product market competition, employee wage bargaining power, and market size are essential in the relationship between enterprise digital transformation and labor income share. This study reveals that protecting employee rights and maintaining fair competition help weaken enterprise digital transformation's negative impact on labor income share.

Role of government as moderator: Porter’s diamond firm strategy, structure, and rivalry attribute and industry’s performance

The prime purpose of the research was to examine, through empirical study, and help determine the government’s role as moderator in the relationship between Porter’s diamond firm strategy, structure, and rivalry construct and the firm’s performance in Pakistan’s automotive sector. In the study, the research philosophy was positivism, and a deductive approach was applied as the main reason to establish generalizations in the results. With a view to determining the magnitude, direction, and significance, researchers emphasized descriptive and inferential statistical techniques. Data was solicited from 166 sample respondents through a structured questionnaire. To establish the reliability perspective and validity context of the questionnaire constructs, a pilot study was part of the research study. Parametric and nonparametric statistical techniques also became an integral part of analysis for drawing objectively based conclusions. For moderation purposes, the tool was macro, Process v3.0 (model 1). The study findings aptly indicate that in a theoretical context, the relationship is not significant, whereas the practical perspective reflects that government policy does influence industry firms’ performance; however, the mediating role of government between Porter’s constructs, viz., firm strategy, structure, and rivalry, and industry firms’ performance documented no impact. In the constituencies of academia, automotive sector players, and policymakers, the moderation results shed light on theoretical and practical contextualization.

ESG and debt structure: Is the nature of this relationship nonlinear?

The relationships between environment, social, and governance (ESG) scores and debt structure are examined using the two-stage least square model with annual data from Chinese listed firms over the 2011–2020 period. The research results suggest that the ESG composite scores and long-term debt have a U curve based nonlinear relationship. The results are robust to endogeneity concerns, alternative regression model specifications, alternative ESG scores, and after controlling for additional variables. In addition, the relationship between debt maturity and S scores (but not the E and G scores) is significant in the nonlinear model. Second, the effect of ESG on long-term debt is stronger for firms within polluting industries when compared to firms in less polluting industries. Third, the effect of ESG on long-term debt is stronger when economic policy uncertainty is low. Fourth, dynamic effect investigations show that ESG activities generate long-term effects on debt maturity. Finally, an inverse U curve relationship between ESG scores and cost of debt is documented. All these results are consistent with the well-established trade-off theory. Policy wise, firms should pay attention to the S dimension when considering debt structure, and to the economic policy environment when considering the impact of ESG activities on debt structure. Academic research can focus on verifying whether these results are generalizable across countries and the stage of economic development of markets investigated.

The impact of organizational capabilities on the international performance of knowledge-based firms

This study aims to investigate the capabilities of knowledge-based firms in Iranian chemical industries and to analyze the link between these capabilities and the firms’ international performance in terms of exports. By combining 18 different output-based indicators and also using the analytic hierarchy process (AHP), six measures for technological, manufacturing, R&D, marketing, organizing, and financial capabilities were constructed. Accordingly, the impact of mentioned capabilities on the international performance of knowledge-based firms in the period of 2015–2018 was examined using regression analysis. The results show more or less the same results when we investigate total export in dollar amount and the number of export destinations: R&D, manufacturing, marketing, and financial capabilities are the factors that boost export in the firms. However, when we control the export performance with the number of employees, the results show that marketing capability is the only factor significantly affecting total export per employee. In other words, marketing capability is the only one always identified as the important factor of firms’ exports. This finding implies no “one-size-fits-all” solution for empowering firms to boost exports. Depending on the goals (total export, export per employee, and the number of export destinations), the government should target different sets of organizational capabilities as the support package for firms. The present study can be a basis for the decision-making approach of managers and policymakers to upgrade the capabilities and improve the competitiveness of these firms in the international environment.

Zombie firms, misallocation and manufacturing capacity utilization rate: Evidence from China

AbstractThis paper investigates the effects of zombie firms on Chinese manufacturing capacity utilization rate (CUR hereafter) from the perspectives of both the intra‐industry and supply chain propagation. The results show that zombie firms not only significantly reduce the CUR of healthy firms in the same industry, but also inhibit the increase of CUR through the supply chain propagation. Specifically, if the supply chain propagation effect is not considered, the inhibitory effect of intra‐industry zombie firms on the healthy firms' CUR would be overestimated on one hand, and the overall inhibitory effect of zombie firms on CUR would be underestimated on the other hand. The heterogeneity analysis demonstrates that the inhibitory effect of zombie firms on CUR is more pronounced for private firms, the firms in the industries with higher external financing dependence and the firms in the areas with a poorer institutional environment. In addition, this paper further studies the relationship among zombie firms, resource misallocation and the manufacturing aggregate CUR at the industry level, and finds that both intra‐industry and upstream (downstream) zombie firms have significant inhibitory effects on the growth of manufacturing aggregate CUR. However, there are differences in the ways of influence that, specifically, the upstream (downstream) zombie firms inhibit manufacturing aggregate CUR growth mainly through the within‐firm effect, while the intra‐industry zombie firms are more likely to restrain manufacturing aggregate CUR growth through resource misallocation. Our study contributes to a profound understanding of the causes of overcapacity in a large transition economy and also expands the research perspective of assessing the economic effects of zombie firms.

Scaling sustainable technologies by creating innovation demand-pull: Strategic actions by food producers

This research identifies the strategic actions that food companies take to foster sustainability transition by inviting innovations from the packaging industry. While much research has been devoted to the role of policy in creating the need for more sustainable products and services, little is known about the role of incumbent companies in scaling innovations that advance sustainability transitions. This study draws on data collected from food producers, food packaging producers, and food packaging material producers to investigate the role of food companies in scaling sustainable technologies by creating a demand-pull for packaging innovation. We illustrate five actions undertaken by food industry firms that help to scale up the technological innovations in food packaging. These are labeled (1) Signposting, (2) Demanding, (3) Incubating, (4) Orchestrating, and (5) Integrating. Our findings indicate that incumbent firms might not just work solely to protect their competitive positions but can also play a central role in scaling sustainable technologies by producing a demand-pull for innovation. The study also provides insights into how policy pressure on one socio-technical system (food production) creates pressure on another connected socio-technical system (packaging) to scale sustainable technologies through the supply chain.

Strategic Thinking and Competitive Advantage: Evidence from the Nigerian Pharmaceutical Industry

The focus of this study is on strategic thinking and competitive advantage in the Nigerian pharmaceutical industry. Competition is now based on knowledge, technology and the ability to serve customers fast and repeatedly. These are functions of strategic thinking in an organisation. We disaggregated strategic thinking into systems thinking, reflective thinking and creative thinking to ascertain their level of impact on the competitive advantage of firms in the pharmaceutical industry. Using data obtained from 91 employees drawn from three pharmaceutical companies in Nigeria, we adopted the Principal Component Analysis (PCA) technique in analysing the data. The analysis found significant effects of systems and creative thinking on the competitive advantage of pharmaceutical firms in Nigeria. In contrast, reflective thinking was not a significant component of the firm’s competitive advantage. The extraction effects of the components revealed that encouragement of individual employees through seeking their ideas on key decisions, leaders being part of the feedback process in the organisation, participative discussions and enhancement of practical skills of employees accounted for high variance in the firm’s strategic thinking and competitive advantage. The study concluded that companies in the Nigerian pharmaceutical industry have more attachment to systems thinking and creative thinking than reflective thinking. Part of the recommendations was adopting the strategic thinking process of plan, act, observe, reflect and plan again to enhance their competitive advantage in the pharmaceutical industry.

Going Green: Evidence from Product-Level Exports and Firms’ Environmental Performance in China

The environmental impact of exporting is a topic of significant concern to both scholars and policymakers. Analyzing how exporting influences firms’ environmental performance concerning the product level is vital for better understanding its implications. Drawing on the data obtained from Chinese industrial firms, this study employs the PSM-DID (Propensity Score Matching-Difference in differences) model to establish a causal relationship between exporting intermediate goods or final goods and firms’ emissions. The findings indicate that, on the one hand, exporting intermediate goods leads to a rise in firms’ production scale and total factor productivity, ultimately significantly increasing total pollution emissions and reducing pollution emission intensity. On the other hand, exporting final goods decreases total pollution emissions and emission intensity through the technical effect. In general, this study provides important micro-level evidence of how exports affect pollution emissions at the product level in China. This evidence is valuable for policymakers in shaping environmental regulations and export policies.

Robot adoption and firm's capacity utilization: Evidence from China

We examine the impact of a firm's robot adoption on the capacity utilization rate for Chinese manufacturing firms between 2011 and 2019. Our result shows a significant positive relationship between a firm's robot adoption and capacity utilization rate. Further analysis finds that the main finding is only significant for non-SOEs, firms with low supply-demand balance, low-tech firms, firms in labor-intensive industries, high financial constraints firms, high-profit volatility firms, and under-hiring firms. The path analysis suggests that a firm's robot adoption improves the firm's capacity utilization rate by reducing its labor investment inefficiency. Our main result remains significant on the industrial level. Finally, the main finding held after alleviating the endogeneity concerns and several robustness tests.

The double-edged sword of forensic accounting services: litigation risks in Jordan’s industrial sector

Purpose This study aims to examine the association between forensic accounting services (FAS) and the risk of litigation within the context of industrial firms that are publicly traded on the Amman Stock Exchange by using the resource-based theory. Design/methodology/approach This study uses a data set consisting of 250 firm-year observations from 2017 to 2021, obtained from the annual reports of 50 selected firms. Logistic regression techniques are used to examine the specifics of the investigated relationship. Findings The findings strongly suggest that companies that use FAS are more likely to face increased litigation risks. This observation suggests that these firms are subject to a more thorough level of evaluation or scrutiny, which inherently increases their vulnerability to potential risks. The study incorporated several control variables such as firm age, size, profitability and working capital. However, it is noteworthy that the connection between FAS and litigation risk emerged as particularly prominent. Research limitations/implications Findings highlight the need for practitioners to tread cautiously with FAS. Although they provide in-depth evaluations, they can also unveil vulnerabilities, leading to increased legal action. Companies should balance the depth of FAS scrutiny against potential legal repercussions, ensuring they harness its benefits without inadvertently raising legal risks. Originality/value While most studies have emphasized the impact of forensic accounting on fraud, this paper covers a gap in the literature regarding the impact of FAS on litigation risks. The paper also facilitates the understanding of the correlation between firm characteristics and the likelihood of litigation.