Large Firms Research Articles

‘Economic constitutionalism in a turbulent world’: a critical review

Abstract The article analyses the book Economic Constitutionalism in a Turbulent World edited by Skordas, Halmai and Mardikian, criticising the assumptions of societal constitutionalism and ordoliberalism on which it is based. The book concurs with the view that the current crisis of global legal institutions cannot be tackled going back to Nation States. Such an assumption seems to be inspired by societal constitutionalism à la Teubner. In contrast to traditional constitutionalism, which hinges on the dichotomy between constituent and constituted power, societal constitutionalism assigns a central role to independent institutions, whose main function is to avoid any hegemony of one social sub-system over another, in particular of politics over economics. The limit of societal constitutionalism lays in its assumption that the economic sub-system has its own rationality that the political–constitutional system can only irritate, taking for granted that the paradigm of that economic rationality is the one established after 1989, thus implicitly adhering to the neo-ordoliberal vision and legitimising its absolute immanentism. Coming to the materiality of the issues underlying the book, most of the contributions conceive globalisation as an engine for the increase of global prosperity. This confidence rests in the Ricardian theory of comparative advantage. However, the latter is valid only under condition of restrictions on the movement of capital. Another assumption made by several contributions is the theory of the varieties of capitalism, according to which individual models of capitalism tend to stabilise around certain production regimes whose key actors are large firms and business associations. According to an alternative, neo-Kaleckian paradigm, there is no natural convergence of the actors of the economic system towards a mutually beneficial institutional set-up, and it is quite unlikely that, without the external intervention of politics, the system can return to equilibrium.

Empirical perspective of working capital management practices among large building construction firms in Ghana

Purpose This paper is a response to the failure of construction firms to use sufficient attention to their working capital management (WCM) practices, resulting in operational challenges, and leading to the collapse of firms in most developing countries. Hence, this study aims to explore the empirical perspective of WCM practices among large building construction firms (LBCFs) in Ghana, to help achieve the Sustainable Development Goal 9. Design/methodology/approach The study collected primary data through structured survey questionnaires from LBCFs in Ghana. The CEOs/Directors, General Managers and Accountant/Finance of LBCFs in Ghana formed the unit of analysis based on a simple random sampling technique. Mean score, standard deviation and one-sample t-test were used to perform the empirical analysis of the study. Findings According to this study's empirical results, LBCFs appear to have effective WCM practices in place. This was evidenced in the surveyed responses which indicate that the sector’s WCM practices sound good based on the mean scores and statistically significant as the t-values > 1.664. Notably, LBCFs in Ghana pay their suppliers early to reduce the fear of adverse effect of late payments on their credit history, making them conservative in their approach toward financial management. Originality/value This is a pioneering paper in a developing country like Ghana, highlighting the significance of gaining an in-depth understanding of WCM practices among LBCFs. The findings of this study are expected to provide valuable information to industry players toward ensuring WCM efficiencies and can serve as a solid foundation for further empirical studies.

“Have we lost a part of our soul … [to] the result on the bottom line”? Reconfiguring professional spaces and the development of lawyers’ pro bono work as a professional project in Denmark

ABSTRACT Danish lawyers have long positioned themselves as fundamental pillars of the Rechtsstaat, portraying their independence and adherence to professional ideals as central to serving the public good. However, this traditional image has been increasingly challenged by the rise of large law firms taking advantage of deregulation and globalization. This has placed lawyers under a cross-pressure forcing them to compromise on their traditional defining characteristics. Large law firms, serving as advisors to clients such as major corporations and organizations, have distinguished themselves from the rest of the legal field with new professional projects. To regain some of the lost credibility, the largest law firms reformulated voluntary work as a professional project from being legal aid to individuals to US models of pro bono directed at NGOs and charity leading to further differentiation between lawyers. This article examines this dilemmatic cross-pressure between the differentiation of professional spaces in Denmark and the development of voluntary work as professional projects to regain the lost credibility as a profession working for the common good. It is based on a qualitative document analysis of 632 issues of the Danish Bar and Law Society's trade magazine for the period between 1976 and 2018 and qualitative interviews.

Age-friendly human resource practices: a comparison of Baltic and Nordic countries

PurposeDue to population ageing, the European Union (EU) has adopted active ageing as a guiding principle in labour and retirement policies. Among the strategies for active ageing, age-friendly workplaces play a crucial role. This study compares age-friendly human resource (HR) practices in the Baltic and Nordic countries. The latter are pioneers in active ageing, and as the employment rate of older employees in the Baltics is like that in the Nordic countries, we may assume equally age-friendly workplaces in both regions.Design/methodology/approachWe used the latest CRANET survey data (2021–2022) from 1,452 large firms in seven countries and constructed the fuzzy logic model on age-friendliness at the workplace.FindingsDespite a high employment rate of older individuals in the Baltics, HR practices in these countries fall short of being age-friendly compared to their Nordic counterparts. Larger firms in the Nordic countries excel in every studied aspect, but deficiencies in the Baltics are primarily attributed to the absence of employer-provided health and pension schemes. The usage of early retirement is more frequent in the Nordic countries; however, its conceptualisation as an age-friendly HR practice deserves closer examination. Our findings suggest that the success of active ageing in employment has translated into age-friendly HR practices in larger organisations in the Nordics, but not in the Baltics. It is likely that high employment of older individuals in Estonia, Latvia and Lithuania is a result of the relative income poverty rate.Originality/valueOur model represents one of the few attempts to utilise fuzzy logic methodology for studying human resource practices and their quantitative evaluation, especially concerning age-friendly workplaces.

Employee share ownership in SMEs – extending benefits for start-ups to conventional firms and social enterprises

PurposeAs this article reports, in recent years most legislative activities focused on start-ups, with as many as 12 European Union (EU) Member States having introduced tax incentives for employee share ownership (ESO) in this type of small and middle-sized enterprise (SME). But incentivising ESO in SMEs should be extended to all SMEs, the engine of the European economy, including those from the social economy, having shown their crucial function for the resilience of our societies during the COVID-19 pandemic.Design/methodology/approachAgainst the background of this recent and very dynamic development this article, it provides an overview of the start-up business segment in comparison to other types of companies, particularly focusing on differences with the SME sector; examines the legal regulations that hinder a broader adoption of ESO in European start-ups; presents best-practice examples to demonstrate the favourable conditions already established in some EU Member States and discussed whether these reforms and best practice examples could be extended and – as is already the case in some countries – applied to the whole SME population including social economy enterprises.FindingsSince the European Commission launched the 2011 Social Business Initiative (SBI) followed by the 2016 Start-up and Scale-up initiative, many actions to support social enterprises in view of their potential to address societal challenges and contribute to sustainable economic growth have followed. Most recently, the 2021 Social Economy Action Plan of the European Commission gave important impulses. The potential of employee buyouts offering a continuation perspective to SMEs owners looking for successors was highlighted in the 2022 EC report “Transition Pathway for Proximity and Social Economy,” calling for the implementation of Employee Stock Ownership Plans (ESOPs).Originality/valueThe situation of employee share ownership in start-ups has some parallels with that in traditional SMEs, but in many respects, they differ fundamentally. Although, on the other hand, social enterprises may also have to compete with large firms for qualified staff and face challenges when growing or scaling their activities, the reason why ESO in this enterprise segment is not widespread in the EU is altogether different. In the absence of a prescribed legal form of incorporation, social enterprises operate in various forms (be it for profit or non-profit), e.g. cooperatives, closely held limited liability companies, mutuals, associations, voluntary organisations or foundations. Therefore, this article looks into the extension of the incentives for ESO to social enterprises inasmuch as they are organised in legal forms allowing for share ownership, above all in the form of limited liability companies.

Addressing Unemployment through the Coir Industry: An Analysis of National Efforts and Challenges

The coir industry in Kerala, the birthplace of Indian coir, is facing significant challenges due to mechanization, leading to widespread labour displacement and migration. This issue is not adequately addressed by government policies, as unemployment affects all segments of the industry and negatively impacts disadvantaged social groups. The decline in the coir industry is causing a shift in the manufacturing sector, with small-scale and household sectors being abandoned and large export firms moving to other states. This article provides insights into the difficulties in finding employment and the rising rate of unemployment in the context of the coir industry, a field often disregarded in national economic policies. Using a mixed-methods approach that incorporates surveys, structured interviews, and secondary data analysis, the study looks at the relationship between unemployment and the modernization of coir enterprises, concentrating on how these changes effect job prospects and the socioeconomic position of workers. According to the findings, despite consistent government support, other initiatives are insufficient, resulting in a significant loss of employment, labour displacement and frequent labour migration.

Impact of productivity drivers on the performance of manufacturing firms

A considerable number of research indicates that a nation's industrial sector plays a crucial role in its economic growth. Therefore, it is crucial to research the productivity drivers among businesses engaged in the manufacturing sector to create a sound, inclusive, long-lasting, and innovative industry. Thus, as a micro-perspective of industrialization, this study looks into the main productivity drivers of manufacturing firms in Nigeria. The study analyses an imbalanced panel firm-level dataset from 2007 to 2019 using the simultaneous approach of the stochastic frontier to achieve its goal. Our research shows that Nigerian manufacturing firms deal with growing returns to scale and a high labour intensity. For policy actions, it was recommended that a realistic industrialization strategy has to be micro-founded. This strategy should prioritise large-scale industrial companies, promote exports, and provide a steady supply of electricity. The findings also show that small and micro firms in Nigeria are more productive than large manufacturing firms, even though the frequency of power outages and average labour costs impede the productivity of these firms.

Broadband infrastructure expansion and labour income share: micro-evidence from Chinese industrial enterprises

ABSTRACT This study investigates the impact of broadband infrastructure on the labour share. We exploit the implementation of the ‘Broadband China Strategy’ (BCS) as an exogenous policy shock and use the staggered difference-in-differences framework with a panel dataset of Chinese industrial enterprises spanning 2011–2015. We find that the BCS leads to a significant reduction in the labour income share of firms in pilot cities compared with those in non-pilot cities, which remains robust after conducting various robustness checks. Rising market power and deepening capital are the two mechanisms underlying this effect. While our further analysis underscores significantly positive impact of broadband infrastructure on firm productivity and skilled labour structure, they do not highlight an elevated skill premium tied to broadband infrastructure. Heterogeneity analysis reveals that the effects are more pronounced among larger firms, industries with higher concentrations, and cities with higher innovation capacities. Overall, this study augments the existing literature on the firm-level determinants of labour share, providing a micro-level assessment of the labour market implications of broadband infrastructure.

Credit allocation and public credit guarantee schemes for small businesses: evidence from Japan

ABSTRACT We investigate the relationship between the use of a public credit guarantee scheme for small businesses and the efficiency of credit allocation using region- and industry-level data from Japan for the period from 1968 to 2005. Because credit constraints are more severe for small businesses than for large firms, a public credit guarantee scheme that mitigates this constraint on small firms’ growth could enhance social welfare. If credit-guaranteed loans are allocated to firms with high value added, a public credit guarantee scheme would enhance the efficiency of credit allocation. Conversely, however, public credit guarantee schemes can squeeze credit allocations for small businesses. When financial institutions offer loans through credit guarantee schemes, the incentives of the financial institutions to monitor the activity of small business borrowers may decline. In addition, because Japan’s public credit guarantee scheme is a component of a broader set of social policies aiming to eliminate inequality, credit-guaranteed loans can be offered to economically distressed firms. In this situation, we identify a negative relationship between the amount of credit guaranteed and value added. We show that Japan’s public credit guarantee schemes reduced the efficiency of credit allocations, with negative implications for industry and regional growth.

Workplace Democracy as the Liberal Republican Default

Liberal republican justice requires adequate, reasonably equal protection against domination while giving everybody a reasonably equal opportunity to live their lives as they see fit. This article investigates which central policy follows from it for workplace non-domination, under realistic assumptions about the nature of our working lives and some structural characteristics of advanced economies (especially the presence of large firms). It argues for a legal default of workplace democracy, understood as any arrangement that gives workers equal individual control rights over the management of their firm, and, as a body, more control rights than any other groups of enfranchised stakeholders, taken together. The argument has two steps. The first demonstrates where the most promising alternative liberal strategy – that of enhancing all individuals’ power to exit from their job through granting unconditional resources – fails. The second shows how this failure leads to the specific conception of default workplace democracy outlined.

The effects of the functional and geographical breadth of collaborations on radical innovation performance: the moderating role of firm size

PurposeDue to the constantly increasing competitiveness along with the complexity of knowledge, firms perceive collaboration as a key strategy that preserves firms' radical innovation performance. In this context, this paper aims to examine how firms’ partners’ diversity in open innovation activities influences the development of radical innovations, critical for social development. In particular, this study analyzes how the functional and geographical breadth of the firm’s collaboration portfolio affects its radical innovation performance. Furthermore, it also explores the role of firm size as a moderator in the relationships proposed.Design/methodology/approachThis research employs panel data analysis, using a sample of 4,677 Spanish firms, with data sourced from the PITEC database.FindingsThe results of this study show that there is an inverted U-shaped relationship between the functional and the geographical breadth of collaborations and the firms’ radical innovation performance. Moreover, this study finds partial support for the moderating role of firm size, in the sense that small and medium-sized enterprises (SMEs) and large firms vary in their optimal number of diversity of partners.Originality/valueThis research provides a better understanding on how partners’ functional and geographical diversity, along with organizational characteristics such as firm size, affect how firms benefit from collaboration for innovation. This study shows that both SMEs and large firms experience diminishing returns when their collaboration networks become overly diverse in pursuit of radical innovation, due to increased costs. However, in SMEs, the turning point occurs at a later stage, consistent with the idea that small firms need broader functional networks to access complementary and novel resources they usually lack.

The Parabolic Relationship of Tax Avoidance and Cost of Public Debt

We find that, contrary to prior findings, tax avoidance has a non-linear relationship with cost of debt. Debtholders reward increasing tax avoidance with decreasing bond yields for “undersheltering” firms until reaching a minimum yield. Beyond that minimum yield, as tax avoidance increases, debtholders penalize firms with increasing costs of debt. We use secondary bond market as our empirical setting as the yields are not affected by market timing at issuance. We test several models to conclude that a quadratic function best captures the relation between tax avoidance and cost of debt. Our findings are robust to various specifications of the effective tax rate measure, to the exclusion of large firms, and in both investment grade and speculative grade subsamples.

The Effect of Twitter Messages and Tone on Stock Return: The Case of Saudi Stock Market “Tadawul”

This research aims to examine whether corporate Twitter messages and tone have an effect on corporate stock return (RET) for the Saudi Stock Exchange “Tadawul”. The study also investigates whether the association differs across large- and small-sized firms. We used a sample of 11,099 firm-daily observations for non-financial firms that were traded on the Saudi Stock Exchange “Tadawul” across the period 1 April 2020 to 31 December 2020. Using panel ordinary least square (OLS) and two-stage least square (2SLS), we found that corporate Twitter (currently renamed ‘X’) messages is positively and significantly associated with stock return (RET). The findings also suggest that the message tone increases the stock returns. Furthermore, our results show different effects of Twitter messages and tone on stock return across small- and large-sized firms. In addition, our findings show that Twitter tone is positively associated with RET when the firm is large in size. However, when the firm is small, Twitter messages has a stronger effect on RET. Our findings provide policy implications for regulators and investors. Regulators might monitor the information in accurate ways. Also, investors might start to show interest in Twitter channels to follow the firm’s news.

Corporate basic research and technological capabilities: Evidence from China

AbstractWe empirically examine the effects of basic research on the technological capabilities of Chinese A‐share listed manufacturing firms. Using manually collected corporate publication data to measure basic research activities, our findings reveal that firms with higher quantities and quality of basic research tend to engage in innovation activities within their existing knowledge base. These firms explore a broader range of technological fields and demonstrate enhanced capabilities in utilizing and creating knowledge. They also exhibit higher levels of both quantity and quality in their innovation output, which remains stable over time. Moreover, firms with basic research maintain their technological advancement even after facing external sanctions from the U.S. Heterogeneous analysis reveals that the impacts of basic research are more pronounced in mature and larger firms. This study highlights the significance of basic research for corporate technological catch‐up efforts in transitioning middle‐income countries during the later stages of catch‐up.

Decarbonization types of medium‐sized and mid‐cap firms in the manufacturing sector

AbstractThe decarbonization of the manufacturing sector is needed to meet the climate goals set by the Paris agreement. Most research so far has focused on large firms. Yet, medium‐sized and mid‐cap firms also face increasing pressures to decarbonize, particularly in their role as suppliers of large firms. Prior research shows that these firms are very heterogeneous and that approaches to decarbonize are not adopted in isolation but within sets or configurations—hence, a detailed investigation of these configurations is fruitful to understand the multiplicity of responses to decarbonization. Such an understanding allows to develop an effective decarbonization policy for medium‐sized and mid‐cap firms and provide meaningful managerial advice. Using a latent‐profile analysis, our study identifies five distinct decarbonization types of medium‐sized firms in the German manufacturing sector that adopt a specific configuration of decarbonization strategies. These types can be described as decarbonization all‐rounders, internal supply chain decarbonizers, total supply chain decarbonizers, decarbonization laggards and decarbonization sceptics. A comparison of these five decarbonization types reveals significant differences in stakeholder pressures, green capabilities and green innovation as well as firm performance and (structural) firm characteristics.

Stakeholders’ Perceptions on Influence of Energy Efficiency Practices Adopted on Economic Performance of Selected Small and Medium Sized Manufacturing Enterprises in Nakuru County, Kenya

The adoption of environmental policy among large manufacturing firms has been recognized for enhancing their economic performance. This is crucial for achieving Kenya's Vision 2030, the fourth medium term plan (2023-2027) and the Bottom-Up Economic Transformation Agenda (BETA) for Inclusive Growth. Despite the slow pace, small and medium-sized enterprises (SMEs) are now adopting these policies to reduce their environmental footprint. However, there is limited documentation on how these practices affect their economic performance. Hence, this study aimed at examining stakeholders' perceptions on the influence of adopting energy efficiency practices on the economic performance of selected manufacturing SMEs in Nakuru County. The study was guided by the ecological modernization theory (Win-Win principle). An explanatory sequential mixed-method research design was employed, targeting SME proprietors in the manufacturing sector with a sample size of 76 respondents. Descriptive and inferential statistics (linear regression) was used to analyze quantitative data, while content analysis was used to analyze qualitative data. The study found out that SMEs largely adopted the use of energy-efficient bulbs and turned off lights when not in use. However, they used solar lighting as an energy efficiency practice to a lesser extent because they consider this practice expensive. The study also found that stakeholders perceived that energy efficiency practices adopted had a significant influence on the economic performance of selected manufacturing SMEs. This finding implied that energy efficiency practices adopted by manufacturing SMEs would have an influence on SMEs economic performance. This study recommends that the government, both national and county should sensitize the SMEs as well as allocate financial and technical resources to support SMEs implement and upscale their energy efficiency practices within their operations. The focus of energy efficiency practices should be on those that reduce production costs and enhance competitiveness such as those that improve SMEs customer base

The marginal cost of capital: a portfolio theory perspective

Markowitz’s portfolio theory is shown to have profound implications for one of the core issues in corporate finance: the marginal cost of capital. Most researchers and practitioners would agree that if a firm’s projects are all similar, they should all be discounted at the same marginal cost of capital (MCC), which is also the firm’s average cost of capital (ACC). However, when a firm expands by accepting a new project, its weight in investors’ portfolios increases, and investors will be willing to accept this only if the firm’s expected return increases. Thus, the new project’s MCC must be higher than the ACC. We derive the MCC in a portfolio context. The difference between the MCC and the ACC is economically significant for large and volatile firms, and for firms that are not widely held. The portfolio theory perspective provides a unified explanation for the price reaction to SEOs, IPOs, and stock repurchases.

Balancing allocative and dynamic efficiency with redundant R&D allocation: The role of organizational proximity and centralization

AbstractResearch SummaryResource‐based‐view scholars have mainly examined two resource allocation approaches for competitive advantage in multiunit firms: resource sharing and resource redeployment. These approaches emphasize allocative efficiency—the optimal allocation of resources to maximize their current value. In technology‐intensive industries, firm success also requires achieving dynamic efficiency to increase its future value‐creation. We propose that the redundant allocation of resources—the parallel deployment of non‐scale‐free resources towards the same objective—although allocatively inefficient, increases dynamic efficiency by stimulating inter‐unit competition. Firms' structural features moderate these effects. An analysis of large pharmaceutical firms reveals that redundant R&D increases innovations with high firm‐specific value but simultaneously increases project terminations to reduce wastage. Organizational proximity increases the former effect and decreases the latter. Firm's R&D centralization amplifies the effect of unit proximity.Managerial SummaryIn technology‐intensive industries, multiunit firms often employ redundant allocation of R&D resources, that is, the parallel deployment of scientists and equipment in different units towards realizing the same business objective. Although common, there is little managerial guidance on how this practice impacts firms' R&D outcomes, and how organizational characteristics influence this relationship. An analysis of large pharmaceutical firms reveals that redundant allocation of R&D resources across units increases wastage but also stimulates competing units to create innovations with high firm‐specific value. Organizationally proximate units are less likely to have their redundant projects terminated, while creating more high‐value‐innovations. Centralization of the firm's R&D amplifies the effect of unit proximity.

Market orientation, integrated marketing communications, and small and medium-sized enterprises (SMEs) performance: A comparison between developed and developing economies

Drawing on dynamic capabilities theory, the study aims to contribute to the existing literature by investigating the mediating role of integrated marketing communication (IMC) in the relationship between market orientation (MO) and customer-related and market performance. Specifically, it focuses on understanding how IMC operates as a strategic tool for small and medium-sized enterprises (SMEs) in the international environment. The research uses data from 422 SMEs and large firms in both developed and developing economies. Hypothesis testing was conducted using structural equation modelling (SEM). The results show that IMC, as a dynamic capability, enhances the positive impact of MO on customer-related and market performance in both developed and developing economies. The firm's size moderates this mediation effect; however, the moderation varies depending on the economy type. In the developing economy, IMC mediation is stronger for SMEs than large firms, whereas in the developed economy company size doesn't impact IMC mediation. This research contributes to the marketing communications and business management theory, particularly by expanding the knowledge of the unique context of SMEs in developing economies. The practical implications of the study are particularly relevant for SMEs managers operating in diverse economic contexts, providing actionable insights that can inform decision-making and marketing strategies for SMEs.

Impact of female directors' foreign experience on green innovation: Evidence from China

AbstractThis study explores the realm of sustainability by examining the influence of female directors' foreign experience on green innovation across various industry sectors and corporate board structures. Specifically, the research focuses on the impact of female directors' foreign experience on green innovation in Chinese listed firms from 2004 to 2021. Our findings show that female directors with foreign experience have a positive and significant effect on green innovation. Further analysis indicates that this relationship is positively and significantly moderated by state‐owned enterprises, larger firms, firms operating in polluting industries, environments with low market competition, and the presence of foreign directors on the board. The robustness of our results is confirmed through the use of different econometric techniques, alternative measures of dependent and independent variables, and addressing endogeneity concerns. Overall, our study suggests that female directors with foreign experience enhance the transfer of environmental and sustainable knowledge and practices, thereby fostering green innovation within Chinese listed firms.