Local Business Conditions Research Articles

Dynamic Capabilities and Firm Performance: Moderating Effect of Environmental Dynamism

This paper, therefore, conducts much detail with regard to the moderating role of environmental dynamism between dynamic capabilities and firm performance, with special reference to Small and Medium Enterprises (SMEs) of Pakistan. The conceptual framework leans on the proposition by Teece, Pisano, and Shuen (1997) that dynamic capabilities allow reconfiguration of resources for the changing market demand and hence the source of competitive advantage to the firm. It is theoretically possible that empirical studies on the moderating effect of environmental dynamism are possible, and still scarce within this domain—an even more rare context in the case of Pakistani SMEs. Thereby, this research intends to fill that gap by empirically examining how the influence of environmental dynamism plays out at the dynamic capabilities-performance nexus in Pakistani SMEs—a sector pivotal for the economic growth of the nation but also challenged by a unique blend of local business conditions. Understanding how firms can benefit from their dynamic capabilities in relation to their performance in volatile markets has become important within this fast-changing business environment. This paper, therefore, through an intensive review of the literature, traces the development of the dynamic capability theory in highlighting its relevance for firm performance and the critical roles environmental dynamism has played as one of the most emphasized contextual factors in firm performance. Quantitative research design will be used for data collection from a broad base of industries under the SME sector of Pakistan, and it will be collected through cross-sectional surveys to explore the proposed relationships. Findings have revealed an environmental dynamism-relevant moderating effect on the relationship between dynamic capabilities and performance. That is to say, in the most volatile environments, SME performance will be more dependent on dynamic capabilities, and that dependence will imply that the strategic value of the capabilities would become contingent on the level of environmental dynamism. This is congruent with the resource-based view (RBV) theory of strategy: the strategic value of resources and capabilities depends on the fit that such resources will have with the external environment. Implications for managers and policymakers, therefore, could be said to be very pragmatic, since SMEs operating within such dynamic markets would have a crying need to develop and deploy dynamic capabilities in a strategic way to effectively steer through the environment. First, these findings contribute to theoretical development in that they draw and support from the dynamic capability view (DCV) and RBV literature in verifying the contingent value of the dynamic capability with respect to environmental dynamism. It not only adds some fertile insights into the dynamic capabilities framework within an emerging market context like Pakistan but also substantiates some interesting facets for SMEs to gain an edge on their competitive advantage within the fast-changing global business environment.

Greasing the wheel through bribes: interaction of national culture and local business conditions

Purpose: Corruption, which includes payments of bribes to government officials, poses a serious impediment to the advancement of developing countries. In this study, a model is developed based on anomie theory and research on ethical behaviour, culture and decision making to predict whether and to what extent small business owners bribe government officials.Design/methodology/approach: Using hierarchical linear modelling on a large World Bank data set, the study hypothesises that the business environmental conditions of crime prevalence, theft and disorder, transportation difficulties, and time-resource requirements for dealing with the government, function as obstacles that enhance small business owners’ informal payments to government officials. The study further proposes that the national culture constructs of masculinity and power distance moderate the relationship between business environment conditions and small business owners’ bribes.Findings/results: The study found support for the role of the proposed business environment conditions, as well as partial support for the role of masculinity and power distance as factors that strengthen the positive relationship between challenging business environments for small business owners and corrupt behaviour.Practical implications: The study proposes ways governments can address structural uncertainties which are impediments to small business survival. It also offers ways small businesses can counteract cultural and economic challenges that influence corrupt behaviour.Value: This study improves the understanding of the role of the supply-side of corruption. It also explains how the lens of anomie theory leads to a better understanding of the mechanism of action of inducements to deviate from the norm, as happens in corrupt behaviour practices.

On the Economic Consequences of Mass Shootings

Abstract In this paper, we investigate the economic consequences of mass shootings. We find that shootings have negative effects on targeted counties' economies. Estimates using three different comparison groups yield similar results. Examining the mechanisms, we find that residents of targeted areas: (i) develop pessimistic views of financial and local business conditions; and (ii) are more likely to report poor mental health, which hinders usual activities such as work, suggesting that shootings lead to decreases in productivity. Further, we find that greater national media coverage of shootings exacerbates their local economic consequences.

Data versus Collateral

AbstractUsing a unique dataset of more than 2 million Chinese firms that received credit from both an important big tech firm (Ant Group) and traditional commercial banks, this paper investigates how different forms of credit correlate with local economic activity, house prices, and firm characteristics. We find that big tech credit does not correlate with local business conditions and house prices when controlling for demand factors, but reacts strongly to changes in firm characteristics, such as transaction volumes and network scores used to calculate firm credit ratings. By contrast, both secured and unsecured bank credit react significantly to local house prices, which incorporate useful information on the environment in which clients operate and on their creditworthiness. This evidence implies that the wider use of big tech credit could reduce the importance of the collateral channel but, at the same time, make lending more reactive to changes in firms’ business activity.

Uloga top-menadžmenta u upravljanju kvalitetom prema BFC SEE standardu

Business Friendly Certification South-East Europe (BFC SEE) is a unique program for improving the quality of services in municipalities in the region of South-East Europe, which is available to companies and potential investors. BFC SEE provides the top management of municipalities with a clear roadmap on how to create a favorable business environment and introduce internationally recognized standards of efficient and transparent local administration. For investors looking to invest or expand their business in Southeast Europe, BFC SEE serves as a standardized tool for assessing local business conditions, indicating which municipality in the region provides the best investment climate. The problem that will be addressed in the paper is focused on analyzing the effects of the introduction of standards and determining the justification of their application in local self-government units in order to improve the organization of business and quality of service provision. The goal of the research is to examine how quality management using the BFC SEE standard affects the creation of a favorable business environment and the increase in the number of business entities in local self-government units. In the framework of this research, important aspects related to the attitudes of the top management of local self-government units are questioned regarding their perception of the importance of standards and improvement of business processes that determine the attractiveness of the business environment. The research sample will include at least 50% of the local self-government units that have implemented the specified standard in the Federation of Bosnia and Herzegovina.

From subsistence farming to agribusiness and nonfarm entrepreneurship: Does it improve economic conditions and well-being?

To eradicate poverty, governments across developing countries have adopted programs to promote business ownership, with varying levels of success. The mixed success of such programs underscores the importance of local business and economic conditions. Yet, empirical evidence on how local context shapes outcomes of entrepreneurship-focused poverty initiatives is sparse. In this paper, we use data from the 2015 Smallholder Survey to examine the impact of farming as a business (agribusiness) and nonfarm entrepreneurship (NFE) on household income and economic well-being in Uganda. We find that, in comparison to subsistence farming, engaging in agribusiness and NFE boosts household income and economic well-being, especially in rural areas with high poverty rates. Our research contributes to the literature by offering new evidence on the efficacy of entrepreneurial initiatives in the specific context of a developing country with a large rural and agricultural economy. In terms of policy, our analysis provides support for the promotion of agribusiness and NFE initiatives to reduce poverty and overcome disparities between urban and rural settings.

МАЛЫЙ БИЗНЕС КАК БАЗИС ЛОГИСТИЧЕСКОГО БАРТЕРА

The article analyzes the development of small business using the example of that one in Naberezhnye Chelny. A competitive market is influenced by many factors. These are laws, state policy in the field of small business in the construction sector, as exemplified in this article, a competitive environment. The article presents the impact of Federal Law No. 135 “On Protection of Competition” on the competitive environment, including in construction. In our country,a lot is said about supporting small businesses, there are federal and regional programs. There is also an understanding of what kind of small business it is and what it is for. There are many definitions of small business. Each country has certain criteria for evaluating small businesses. The main thing is that the goal of small business is to increase jobs, and not just to employ people, but to increase the country’s human resources. It should be borne in mind that small businesses respond more quickly to local business conditions. The novelty of the research is that an important point of small business is the creation of a market close to perfect competition, and this is the basis of the concept of logistics barter, which will dominate the economy. The new concept of logistic barter involves the denial of monetary relations between manufacturers in the B2B segment. The B2C segment is not interesting for logistic barter. The money will remain in “households” who care about the market with ideally perfect competition. A market of perfect competition and antitrust laws will work in tandem. Banks will be relevant only for end consumers, namely “households”.

Determinants of regional fertility in Russia: a dynamic panel data analysis

ABSTRACTThe aim of this paper is to empirically examine the regional determinants of the fertility rate in Russia using panel data for the period of 2005–2015. The estimation results of a system GMM dynamic model revealed that economic growth, employment opportunity, favourable local business conditions, educational opportunity, quality of social infrastructure, and housing supply serve to increase the fertility rate in Russian regions, while the presence of a Slavic population, migration inflow, poverty and ecological risks tend to suppress it. Furthermore, we found that combinations of factors that strongly affect the reproductive behaviour of Russian women vary greatly among age groups and regions. To mitigate the declining trend of fertility in Russia, it is necessary to implement policies that take generational differences and regional heterogeneity into serious consideration.

Information asymmetries and identification bias in P2P social microlending

ABSTRACTThe Internet has created new opportunities for peer-to-peer (P2P) social lending platforms, which have the potential to transform the way microfinance institutions raise and allocate funds used for poverty reduction. Depending upon where decision-making rights are allocated, there is the potential for identification bias whereby lenders may be motivated to give to specific projects with which they have an affinity without regard to whether it represents a sound financial investment. Using data collected from Kiva, we present empirical evidence that distant upstream lenders do not have adequate information about local business and loan conditions to make sound microfinance funding decisions, but instead make decisions based on identification biases. Furthermore, more information provided on the P2P lending site about the prospective loan does not improve the lender’s information about the loan conditions, but rather exacerbates the identification bias effect.

When Shadow Banking Can Be Productive: Financing Small and Medium Enterprises in China

Small and medium enterprises (SMEs) represent the backbone of China’s economy, yet they face challenges in accessing bank credit. SMEs thus rely on a wide range of alternative sources, including informal finance, online peer-to-peer (P2P) platforms, registered non-banking financial institutions (NBFIs), and underground financiers. This article distinguishes among different types of ‘shadow banking’ to clarify popular misconceptions about the nature of risks associated with informal financial intermediation in China. Given their familiarity with local business conditions and needs, regulated and well-managed NBFIs could provide an enduring foundation for commercialised financial intermediation serving SMEs.

The factors affecting e-commerce adoption by Jordanian SMEs

Purpose – This paper aims to explore internal and external organizational factors affecting electronic commerce or e-commerce systems adoption by small- and medium-sized enterprises (SMEs) in Jordan. Design/methodology/approach – The authors developed a model containing factors that might support e-commerce adoption. The model was tested using confirmatory factor analysis and then used to explore the relationships between factors. The authors used qualitative and quantitative approaches, including interviews, to explore awareness and adoption of e-commerce systems by Jordanian SMEs. SMEs in Jordan were identified from the Annual Handbook Index of 2012, compiled by the Jordanian Chamber of Commerce, and 500 in the industrial and services sectors were randomly selected as the study sample. Findings – The effect of the adoption of e-commerce systems by SMEs is affected by both internal and external organizational factors, particularly readiness, strategy, managers’ perceptions and external pressure by trading partners. Readiness and external pressure are most important for achieving maximum benefit from e-commerce adoption. Research limitations/implications – The relative importance of factors affecting e-commerce adoption may vary depending on local business conditions. SME managers in Jordan who wish to benefit from e-commerce introduction must therefore invest in activities to improve SME readiness, especially information technology infrastructure. Originality/value – This study is the first to explore both internal and external organizational factors important for e-commerce adoption by Jordanian SMEs. It tells SME managers which factors are likely to affect e-commerce adoption.

Modular Store Design and Firm Performance

Modern stores are becoming increasingly modular in design. One example of the modular store design is a Wal-Mart Supercenter, which is a discount store-supermarket combination unit. The success of store chains can hinge on finding a right combination “ ” of store modules: While Wal-Mart has been able to expand its store base using Supercenters, K-Mart’s new format “Big K-Mart” has not fared well. Despite the growing importance of modular store design and its effect on firm performance, the extant literature does not provide any guidance to store managers on which store modules to adopt in order to improve store revenue. In this paper I study the effects of different store modules on firm performance. Specially, I estimate the effects of banks, ATMs, pharmacies and gas stations on weekly sales volume of grocery stores of the two largest supermarket chains in the state of Georgia. The results show that store characteristics account for the majority of variation in weekly sales volume of stores, whereas local business conditions? notably demographics and competition measures?do not possess much explanatory power. One thousand square feet of store size is equivalent to about five thousand dollars in weekly sales volume, about forty percent of store revenue on average. Adding a pharmacy leads to an increase of one hundred twenty thousand dollars in weekly store sales, a gas station eighty four thousand dollars and a bank sixty eight thousand dollars. The results illustrate the importance of choosing right modules in store design on firm performance.

Governance, Naval Intervention and Piracy in Somalia

Might criminals in weak states benefit from better governance? We test the relationship between Somali piracy and local business conditions as well as (naval) law enforcement. Anarchy on land is not helpful to pirates, but corruptible governance is. Increasingly effective naval measures in the Gulf of Aden displaced piracy into the Indian Ocean.

Exploring the role of the neighbourhood in firm relocation: differences between stayers and movers

Most firm relocations take place across rather short distances, indicating that firms are in general quite place-attached. Still, at the local level, weaker neighbourhoods are characterised by relatively high firm out-migration figures, which may be the result of unfavourable local business conditions. Through a qualitative study of 40 entrepreneurs from weaker neighbourhoods, equally divided between firms that relocated (movers) and firms that did not (stayers), this paper studies to what extent characteristics of the neighbourhood itself influence either past firm relocation decisions or future firm relocation propensity. The results show that the neighbourhood plays only a modest role in firm relocation decisions and propensity, and when neighbourhood characteristics are mentioned as push factors, they are in general outweighed by investments or relocation costs in the decision-making process. Because most firm relocation decisions, both in the past and in the future, are related to aspects of the business property, rather than consequences of other neighbourhood characteristics, maintaining or creating a diverse supply of business properties within a neighbourhood may prevent most potential movers from leaving the neighbourhood much more than neighbourhood liveability improvement measures.

The Location Choices of Foreign Investors: A District‐level Analysis in India

AbstractThis paper analyses the determinants of the location choices made by foreign investors at the district level in India to gauge the relative importance of economic geography factors, local business conditions, institutional conditions and the presence of previous foreign investors. We employ a discrete‐choice model and Poisson regressions to control for the potential violation of the assumption of independence of irrelevant alternatives. Our sample includes about 19,500 foreign investment projects approved in 447 districts from 1991 to 2005. We find that foreign investors strongly prefer locations where other foreign investors are. This effect is significantly positive and robust across different years, sectors and different types of foreign direct investment (FDI). Moreover, path dependence remains significantly positive when controlling for institutional conditions at the state and district level. Foreign investors tend to follow not only previous investors from the same country of origin but also investors from other countries of origin. They are also attracted to industrially diverse locations and to districts with better infrastructure and institutional conditions, although these findings are less robust. Surprisingly, districts in the neighbourhood of large metro areas do not benefit, in terms of attracting more FDI, from having easier access to these markets than remote Indian districts. On the contrary, our results suggest that large metro areas divert FDI projects away from neighbouring districts, thereby perpetuating or even widening the urban–rural divide. We conclude that the concentration of FDI in a few locations could fuel regional divergence in post‐reform India.

PATTERNS OF ESTABLISHMENT ENTRY AND STATE-LEVEL ANTITRUST

A large literature examines patterns of firm entry and relocation in response to local demand and cost parameters. Economists have studied tax incentives and local business conditions as drivers of business location decisions as well. In this article, we extend this analysis to consider the extent to which firms view state-level antitrust activity in the United States as an indicator of an adverse business environment, which in turn reduces that state's rate of establishment entry. We find some evidence of this effect, especially for larger firms and for more controversial types of antitrust enforcement.

Resources in vocational education and post‐schooling outcomes

PurposeThe purpose of this paper is to examine the determinants of labour market outcomes after the initial vocational basic education (ISCED 3).Design/methodology/approachA multinomial logit model is used for examining the effect of school resources and other factors on students' post‐schooling outcomes defined as employment, further studies, non‐employment and dropping out. Analysis has been done by using unique linked register data on students, their parents, teachers, educational organisations and business companies in Finland.FindingsThe results indicate that teaching expenditures do not matter but teachers' characteristics have a role to play. Teachers with a university degree increase the employment probability of the students, whereas the formal competence of the teachers does not have such positive effects. The students' characteristics and performance in comprehensive schools play an important role in determining the outcomes. Local business conditions affect the outcomes of boys but less those of girls. The official quality evaluations adopted in recent years seem to pay attention especially to such aspects of education production that are important for providing capabilities for further studies but less so for employability.Originality/valueEmployability seems to be a great challenge to the initial vocational basic education. The findings for local business conditions give support to the view that measures of education policy do not suffice but need to be complemented with those of regional or employment policy, for example, policies aiming to increase regional mobility of the labour force. Such complementary tools are particularly important for boys.

The effects of customer and competitor orientations on performance in global markets: a contingency analysis

Should companies adjust their orientations toward customers or toward competitors in global markets? To answer this question, we use contingency theory and examine how the effects of customer and competitor orientations on performance are moderated by different environmental conditions. Our results from the global hotel industry indicate that a customer orientation works better in economically developed markets, as well as in markets with good local business conditions, greater resource availability, and demanding customers. In contrast, a competitor orientation is more effective in markets that are economically developing, have poor local business conditions, and face resource scarcity.

Patent Activity and Financial Performance of Publicly Traded Companies in the U.S. Pharmaceutical Industry: The Role of Local Economic Conditions

This article looks at the spatial distribution of patent activity among publicly traded companies in the U.S. pharmaceutical industry. Data for two time periods show that patent introductions tend to favor the Northeast. Significant locational variations are uncovered in the innovation performance of firms in this industry. These variations are hypothesized to reflect the localized economic conditions that characterize Porter’s model of competitive advantage (the diamond paradigm). Our analysis suggests that patent counts respond positively to the degree of spatially concentrated production (density of competition). Furthermore, findings suggest that local business conditions play an important role in the innovation and financial performance of U.S. pharmaceutical companies.

Are aliens green? Assessing foreign establishments' environmental conduct in the United states

AbstractPrevious research has found that foreign‐owned establishments often lack specific capabilities needed to respond to local business conditions and are held to a higher standard by local stakeholders. These establishments compensate, however, by possessing offsetting capabilities such as technological excellence. In this article, we investigate how these conflicting forces shape the environmental conduct of foreign‐owned facilities. Using data from the Environmental Protection Agency, we find that foreign‐owned establishments generate more waste yet manage more waste than U.S.‐owned establishments. We also find evidence that both domestic and foreign‐owned firms generate more waste if they operate multiple facilities across multiple jurisdictions in the United States. Copyright © 2001 John Wiley & Sons, Ltd.