Firm Level Research Articles

Legal Trends in the Analysis of Air Cooperation Contracts

Since it impacts airlines' capacity to sustain their capacities in the aircraft sector market, air cooperation and its different processes are regarded as significant issues at the level of air transport firms. Furthermore, the legal aspect of these alliances is given a lot of attention due to the various legal interferences of the countries whose airlines are part of the alliance. This adds a legal complexity to the contracts that are concluded, especially since these alliances deal with companies that are nationals of different countries. These international commercial contracts are unique in two ways: first, they are connected to the transportation sector market and the significant changes that always take place in it because of their relationship with governments and international agreements; second, they are connected to businesses that have strong economic capabilities that set them apart from others. Importance of the research: The research's significance lies in creating a concept for these air alliances for the Iraqi transport industry, determining how closely they relate to the financial aspects of transport companies, examining the key mechanisms used in this collaboration, and thoroughly identifying the most significant of these alliances. Research Problem: The lack of organizational plans and internal instructions for the transportation sector and Iraqi Airways to reach organizational mechanisms that would contribute to their entry into these air cooperations.

Social responsibility and corporate borrowing

We study the impact of social capital, measured by corporate social responsibility (CSR) performance, on corporate borrowing. Using a sample of 120,204 bank loan applications of China's listed firms, we find that an increase in CSR performance increases the loan amounts of approved loans, although it does not alter the likelihood of loan approval. Using aggregate loans at the firm level, we show that CSR performance positively impacts firms' long-term borrowing from banks but does not affect their short-term borrowing. The economic magnitude of the positive effect is large at both the loan and firm levels. We attribute this positive relationship to reduced information asymmetry and improved risk mitigation. Surprisingly, we find that banks do not discipline their borrowers' CSR investments through the lending relationship. Specifically, when borrowers exhibit high CSR performance and borrow from banks with high CSR performance, further increases in CSR no longer correlate with larger loan amounts. Our findings suggest that China's state-led green credit policies should be more market-oriented.

Adoption of digital transformation from a firm’s creation to decline: the role of China’s mass entrepreneur and innovation campaign

Following the global economy’s shift toward a digital-based system, the significance of digital transformation (DT) at the firm level has become increasingly important. Accordingly, this study aims to enhance understanding of a firm’s DT by examining the varying impacts ofirm life cycle (FLC) stages on DT adoption. We consider the impact of the mass entrepreneur and innovation campaign (MEIC) on this relationship. Based on the data of China A-share non-financial companies listed on the Shanghai and Shenzhen stock exchanges from 2010 to 2020. The baseline findings reveal that firms in the growth stage are likelier to adopt DT than firms in the introduction and decline stages; however, DT adoption in the maturity stage is uncertain. MEIC encourages DT adoption during the introduction, maturity, and decline stages. Furthermore, the univariate test demonstrates a relative enhancement in DT after implementing MEIC, underscoring its role in effectively allocating resources within the firms to embrace DT. This study’s results are robust across various estimation techniques and instrumental variables. The empirical results offer insights into policy implications, highlighting the factors shaping firms’ DT adoption decisions at different FLC stages and endorsing resource-based and agency theories.

Not that simple: unraveling contingent factors linking firm R&D investment and patenting performance

PurposeExisting research suggests a positive relationship between firms’ research and development investments (RDIs) and their patenting performance (PP) according to assumptions of linear productivity and homogeneous behavior. This study unravels the RDI–PP relationship by taking a strategic view to reveal its underlying mechanisms.Design/methodology/approachWe study the effects of firms’ RDI on PP in the context of China’s listed firms in 16 patent-intensive industries, including the pharmaceutical, computer communication, electronic equipment and electrical machinery and equipment manufacturing industries. To test our hypotheses, we use panel data from 2010 to 2017. We apply generalized estimating equations to estimate our models.FindingsThe study finds an inverted U-shaped relationship between RDI and PP that arises from the transition of innovation portfolios and the strategic balancing of patenting costs and benefits. The study further examines two contingencies: (1) top management team (TMT) education level and (2) TMT compensation. It shows the turning point of the inverted U-shape shifts to the right when TMT education level is high; the curve flattens when TMT education level and TMT compensation are high.Originality/valueWe contribute to literature on innovation and appropriability strategy in three ways: First, we reveal the underlying mechanisms of the inverted U-shaped relationship between RDI and PP. Second, because previous research on appropriability strategies pays little attention to how innovation portfolios influence patenting decisions at the firm level, we provide evidence and insights on how the tension between exploitative and explorative innovations affects appropriability strategies. Third, we connect appropriability strategy literature with two streams of literature: corporate governance and upper-echelon theory.

A configurational approach to strategic change in family firms

ABSTRACT Strategic change is essential for an organization’s long-term performance and survival. Research has investigated how governance structures, organizational values, capabilities, and firm size, in isolation from one another, influence family firms’ strategic change, yet insights in family firm literature suggest the need to examine the fit among these dimensions. We employ a configurational approach and a framework built from models of fit in family firm literature to examine the interdependence among these dimensions. Using a primary dataset of 275 Belgian private family firms and fuzzy-set qualitative comparative analysis (fsQCA), we identify six configurations leading to high levels of strategic change and three configurations explaining low levels of strategic change. This study contributes to the literature by advancing our understanding of how multiple interdependent dimensions, namely, governance structures, organizational values, capabilities, and firm size, combine to better explain strategic change levels in family firms. The findings also provide concrete formulas for practitioners to create a fit among specific factors in these dimensions to promote strategic change.

Effects of Bank Capital and Lending on Leverage, Risk, and Growth of Nonfinancial Firms

ABSTRACTThis paper examines the impact of bank capital on the capital structure of nonfinancial firms, focusing on lenders and commercial borrowers from 2000 to 2019. We find a positive relationship between firm leverage and bank capital, with lending serving as a key channel for this effect. Additionally, increased lending is associated with higher firm risk and slower growth. Our deal‐level analysis reveals consistent findings with those at the firm level: greater lending is linked to higher spreads, more tranches, more secured loans, fewer lenders per deal, and longer maturities, all of which indicate increased borrower risk. This study offers new insights into how bank capital structure policies influence the financial structure of nonfinancial firms and contributes to the broader debate on the spillover effects of risk‐reduction measures in the financial sector, such as capital regulation, on the real economy.

The artificial intelligence impact on Russian labor market

The paper studies the association between the artificial intelligence (AI) and employment characteristics. As a theoretical framework, we use the Acemoglu et al. model, which introduces opposing effects of the AI algorithms on labor employment on the firm level such as substitution effect and complimentary/ productivity effects. Depending on their relative strength, the AI algorithms may both decrease and increase employment. The overall effect is estimated using the data on 3.5 million of vacancies for about 35 thousand firms published up to 2022 spring on the HeadHunter website. According to the results, the existence of tasks realizable using AI is consistent with a higher AI employment, which implies the substitution effect. The other, less intuitive, result is that the same tasks suggest a higher non-AI employment, supports complimentary/productivity effects. The overall employment effect is positive as follows from the positive AI tasks—total employment association.

Are companies responding to minimum wage increases by reducing corporate social responsibility?

Corporate social responsibility (CSR) has been widely discussed. However, the existing literature does not delve into the theoretical mechanism to show how companies adjust their CSR in the face of minimum wage increases. This may be due to the lack of a theoretical framework that clarifies the relationship between minimum wage increases and CSR adjustments. The objectives of this study is to fill this gap by investigating the impact of minimum wage increases on CSR, employing both cost stickiness and optimal distinctiveness theories. We use the data from the CSMAR database, the Human Resources and Social Security Administration, and Hexun rating system. The subject of this study is China’s A-share listed companies during 2010–2020. This study employs fixed-effects models for a panel data. The findings reveal that minimum wage increases are significantly associated with a reduction in both strategic CSR and responsive CSR. Notably, the decrease in responsive CSR outweighs that of strategic CSR. Furthermore, our results indicate that customer concentration or CSR sensitivity significantly moderates this relationship. More particularly, firms with higher customer concentration are less responsive to minimum wage increases in their CSR activities. Firms with higher sensitivity in CSR are more likely to mitigate the reducing effect of the minimum wage on CSR. By revealing how minimum wage increases affect CSR and its economic consequences, our study provides scientific recommendations for policymakers to measure the impact of minimum wage policies at the firm level.

A path towards sustainability through the circular economy phenom: indicators from the Spanish agri-food sector

PurposeThis study aims to propose a comprehensive framework for assessing circular economy (CE) performance in the agri-food sector. It identifies those indicators that should be used to measure circularity regarding CE strategies, applies them at a microeconomic level and examines the impact of key business determinants (financial, internalization, knowledge, awareness and digitalization).Design/methodology/approachA literature review was conducted with a focus on CE strategies and related indicators. The framework obtained is applied on a Spanish agri-food sector survey to provide an empirical CE analysis at firm level. A partial least squares based-structural equation modelling method is applied.FindingsThe research suggests a set of circularity indicators to assess CE strategies at micro level. The findings reveal the heterogeneity of CE sub-indicators related to narrowing, slowing, closing and regenerating strategies. It also highlights the strong effects that the drivers tested have on CE, especially awareness and knowledge.Practical implicationsThis study provides a framework that can guide public policies and business decisions in sectors with significant environmental impacts. It provides a conceptual framework that explains which CE indicators should be considered by governments and regulators when developing policies that seek to promote circular strategies.Social implicationsIn the case of companies, the results show that acquiring more environmental awareness and knowledge is essential for promoting more sustainable work habits that enhance CE.Originality/valueThe paper offers a novel contribution to the CE literature by introducing a multidimensional indicator framework comprehensively applied to the agri-food sector, integrating miscellaneous pillars of circular strategies and business determinants.

Ex-Military Commissioners and Firm Performance: The Case of Indonesia Manufacturing Companies

This investigation relates to the new corporate governance (CG) suggestions that using ex-military commissioners can lead to better firm performance. Quantitative analysis was used to analyze the sample of manufacturing sector public companies. The data comprised 906 firm-years (from 2016 to 2021). This study shows that companies whose CG practices involve employing ex-military officers exhibit high firm performance levels. This study emphasizes the value of using a configurational analytical approach to explore firm jointly- and country-specific CG practices that engage firms to achieve the necessary level of performance. The current study calls policymakers’ attention to evalu- ating the current state of regulatory and competitive development in their countries and establishing policies in line with that assessment. The methodology provides connec- tions between firm performance and CG with retired military commissioners. This study broadens the focus of CG studies to provide effective solutions for practitioners, especially Indonesian manufacturing firms. It also highlights the importance of ex-military commis- sioners in a particular company sector and CG procedures specific to a particular nation. It encourages enterprises to reach the desired level of performance. The research impli- cation relates to good governance in board diversity using ex-military as independent commissioners for supervisory roles.

Do Supply Chain Pressures Affect Consumer Prices in Major Economies? New Evidence from Time-Varying Causality Analysis

This study explores the dynamic causality between the consumer price index and supply chain pressure index in two large economies. Despite extensive research into the role of supply chains at the firm level, literature on their impact on time-varying inflation and macroeconomic stability is scarce. Using data from the United States and the European Union from January 2000 to December 2021, we employ novel time-varying causality techniques to examine the evolving relationships among inflation, supply chains, real gross domestic product, interest rates, and oil prices. Our findings show that supply chains have a significant dynamic relationship with consumer prices, particularly during economic crises like the 2008 global financial crisis and the COVID-19 pandemic. Robustness tests including impulse response functions and the autoregressive distributed lag model confirm this causality. These results are critical for policymakers, emphasizing the importance of supply chains in controlling inflation and achieving global economic resilience and stability.

Integrated reporting in China: a mission approach

PurposeDrawing on a mission approach, this study investigates the application of integrated reporting (IR). It also explores its role in shaping organisations' internal processes in Chinese state-owned enterprises (SOEs) and the China General Nuclear Power Corporation (CGN).Design/methodology/approachWe employed a case study method and collected data by conducting semi-structured interviews with CGN managers and analysing their reports and appropriate documents.FindingsOur findings reveal that the CGN is motivated by its mission and vision to adopt IR rather than by other common motivations, such as legitimacy, strategy and stakeholder pressure. IR practice contributes to implementing its mission and vision through direct and indirect methods, covering the changes in design archetypes and subsystems that meet the nature of reorientation changes that belong to first-order transition.Research limitations/implicationsThis study extends empirical evidence of IR at the firm level in China and provides in-depth insights into how IR is implemented in Chinese SOEs. Our findings may be helpful for policymakers to review and develop policies. For instance, the government might consider integrating IR frameworks into current reporting and mandate listed companies to adopt IR. However, our data are from one company, the only Mainland Chinese Company recognised by the IIRC database.Originality/valueThis study provides an innovative approach to analysing IR and offers managers insight into how IR practice benefits the mission’s implications.

Digitalization Intensity and Extensive Margins of Exports in Manufacturing Firms from 27 EU Countries - Evidence from Kernel-Regularized Least Squares Regression

The use of digital technologies like artificial intelligence, robotics, or smart devices can be expected to go hand in hand with higher productivity and lower trade costs, and, therefore, to be positively related to export activities. This paper uses firm level data for manufacturing enterprises from the 27 member countries of the European Union to shed further light on this issue by investigating the link between the digitalization intensity of a firm and extensive margins of exports. We use a new machine-learning based regression method, Kernel-Regularized Least Squares (KRLS), which effectively handles non-linear relationships in models and does not impose any restrictive assumptions for the functional form of the relation between margins of exports, digitalization intensity, and any control variables. We find that firms which use more digital technologies do more often export, do more often export to various destinations all over the world, and do export to more different destinations.

The Impact of Firm‐Level Political Risk on Eco‐Innovation: The Moderating Effect of CEO Power

ABSTRACTThis study examines the impact of firm‐level political risk on eco‐innovation at the firm level, particularly emphasizing the moderating role of CEO power in this relationship. Using a dataset from 33 countries from 2006 to 2022, we employ two‐step dynamic panel data estimations to address endogeneity concerns. The findings highlight a positive impact of political risk on eco‐innovation, which is further strengthened in the presence of a powerful CEO. This evidence implies that effective leadership from CEOs can assist firms in navigating political risks and advancing sustainable initiatives. The results remain robust across various specifications, including alternative measurements for firm‐level political risk. The study highlights the crucial role of CEOs in managing political risks and facilitating eco‐innovative practices within firms.

Digital Transformation and Corporate Innovation: Empirical Discovery Based on Machine Learning

With the flourishing development of the digital economy, the phenomenon of digital transformation at the firm level has attracted scholars’ attention regarding its impact on microeconomic activities. However, whether the transformational changes induced by digital technologies affect corporate innovation and the underlying mechanisms have not been fully explored. Based on panel data from Chinese listed firms spanning from 2012 to 2021, this paper constructs a measure of digital transformation using machine learning techniques and investigates its relationship with corporate innovation. The findings suggest that digital transformation effectively promotes corporate innovation, a result robust to a battery of sensitivity checks. Mechanism analysis reveals that digital transformation significantly enhances innovation by increasing R&D input and improving innovation efficiency. Further analysis indicates that the innovation-promoting effect of digital transformation is mainly manifested in high-quality innovation output, with greater benefits observed for state-owned enterprises and non-high-tech industry enterprises. Overall, our study provides valuable policy insights for enhancing innovation levels among enterprises in developing countries like China through digital transformation strategies.

Training Investments and Innovation Gains in Knowledge Intensive Businesses: The Role of Level Firm Human Capital and Knowledge Sharing Climate

ABSTRACTTraining investments are important in securing innovation gains. However, research on this relationship in knowledge intensive businesses is nascent. In particular, questions remain concerning what value different types of training hold for different types of innovation, and what mechanisms underpin these relationships. Drawing on human capital resources theory and collective learning theory, we develop and test a model explicating how specific and general training investments, through firm level human capital, lead to incremental and radical innovation. Additionally, we propose and investigate the supposition that the predicted positive relationships between training investments, firm level human capital, and innovation will be stronger when knowledge sharing climate is high. We test our model with two‐wave, multi‐respondent panel data gathered from 816 knowledge intensive businesses in France, Finland, Sweden, and the UK. We find that specific training is positively related to incremental innovation but not radical innovation, whereas general training is positively related to both types of innovation. With respect to firm level human capital, we find that it mediates these relationships and they are stronger when knowledge sharing climate is high. Furthermore, our analysis reveals that knowledge sharing climate moderates both the relationship between the two types of training investments examined and firm level human capital, and the indirect relationship via firm level human capital to incremental and radical innovation. We discuss the implications for theory, research, and practice.

Locational and firm-level determinants of total factor productivity in Vietnamese manufacturing

Total factor productivity (TFP) has received much attention from both academics and policy makers in the past decade, as it promises an answer to the question of sustainable growth in the context of limited inputs. This article examines the TFP of manufacturing companies in Vietnam and the factors at the firm level, in addition to locational drivers, especially at the provincial level, that drive the change in TFP. We use a strongly balanced panel dataset of 1,130 manufacturing firms from 2014 to 2018 and the Wooldridge method to calculate the TFP and a general least squares estimator with a heteroskedastic and uncorrelated error structure to examine the determinants. The results show that the TFP of firms is driven by factors at both the firm and the province levels. Specifically, firm size and capital intensity have a positive impact on TFP, while differences in firm type also influence TFP outcomes. Furthermore, six locational factors significantly impact firms' TFP, with a particular emphasis on Information and Communications Technology (ICT) readiness, transparency index, and corruption index. Most importantly, we found that transparency and corruption have a nonlinear inverse U-shaped association with the TFP of firms, implying that there is an optimal midpoint of governance quality that maximizes the TFP of firms. The article then provides certain implications for both policymakers and firms in improving their TFP.

Forecasting the Volatility of US Oil and Gas Firms With Machine Learning

ABSTRACTForecasting the realized volatility of oil and gas firms is of interest to investors and practitioners trading on the energy spot and derivative markets. In this paper, we assess whether several machine learning (ML) techniques can offer superior forecasts compared to HAR models for predicting realized volatility at the firm level. Moreover, we investigate whether economically motivated variables and technical indicators contain valuable information for forecasting firm volatility beyond those contained in various volatility factors previously identified in the literature. Our results demonstrate that certain ML techniques provide superior forecasting accuracy compared to the benchmark model. Additionally, we identify variables such as the 1‐month treasury bill and the aggregate VIX index as significant drivers of realized firm volatility in the oil and gas industry.

Explaining New Product Performance Through Structural Social Capital: Mediation of Knowledge Assimilation and Marketing Capability in Tourism Destinations

ABSTRACT Given the contradictory antecedents of the relationship between structural social capital and new product performance, a research gap has emerged that leads us to propose the research objective of determining the indirect effect of knowledge assimilation and architectural marketing capability on the relationship between structural social capital and new product performance. The empirical study was conducted on a sample of 300 tourism firms in Arequipa (Peru). The results reveal that knowledge assimilation and architectural marketing capabilities have indirect effects on the relationship between structural social capital and new product performance. The findings have implications for the interest of academics at the theoretical level and practical implications for firms.

Effect of Genetic Polymorphism of Bovine β-Casein Variants (A1 and A2) on Yoghurt Characteristics.

The present study aims to evaluate the physicochemical and sensory characteristics of A2 yoghurts (made with A2A2 β-CN milk), in comparison with Control yoghurts (elaborated from conventional milk, a mixture of A1 and A2 β-CN milk). The pH, acidity, water-holding capacity, spontaneous syneresis, firmness and color of yoghurts were monitored during their cold storage (4 °C) for 35 days. Two independent sensory tests (with expert judges and consumers) were also performed. The A2 yoghurts showed only minor differences in some of their physicochemical and sensory characteristics compared to those made with conventional milk. At specific storage times, the A2 yoghurt exhibited higher levels of acidity, luminosity (L*) and firmness, compared to the Control. No differences were observed in the growth curves of the starter (Lactobacillus delbrueckii subsp. bulgaricus and Streptococcus salivarius subsp. thermophilus) during the yoghurt production, nor in the water-holding capacity or spontaneous syneresis of the two types of gels. Regarding the sensory evaluation of samples, the A2 yoghurts were described as firmer and more adherent (by the expert panel), and brighter and more homogeneous (by the consumers) than the Control. In all cases, both consumers and expert sensory panels showed a preference for the A2 yoghurts. Therefore, these results demonstrate the suitability of A2A2 β-CN milk for producing yoghurts with similar characteristics to those obtained with conventional milk.