Local Firms Research Articles

How can fisheries’ environmental policies help achieve a sustainable blue economy and blue tourism?

Fishing, fish processing, and tourism are important actors in the blue economy. These industries depend on fishery resources and natural environments. However, overfishing and congestion in tourist areas can also lead to environmental pollution and resource depletion. In addition, wastewater from the fish-processing industry can damage the environment and resources, hindering sustainable development. This study analyzes whether fishery environmental policies can lead to sustainable development in blue economies using an R&D-based growth model that includes firm location. Both policies promote economic growth, but fishery policy leads to pollution havens from North to South and increases tourism consumption through improved environmental quality. Under certain parameter conditions, environmental policy leads to pollution havens from South to North and decreases tourism consumption through worsened environmental quality. However, when these conditions change, the environmental policy leads to pollution havens from South to North. Then, fisheries and environmental policies have complementary effects on pollution havens from the South to the North. This study result stating that fishery policies, not environmental ones, can achieve sustainable blue tourism. This outcome relies on the cost of exogenous rent-seeking for ITQs being passed on to fishing prices. Hence, in the blue economy, this rent-seeking could have serious negative impacts on marine ecosystems. Besides, this study suggests that in the blue economy, fisheries and environmental policies may have unintended adverse government impacts on fisheries resources and pollution emissions through their interdependent effects. In achieving a sustainable blue economy, policymakers should consider the indirect effects of these policies on marine ecosystems.

Cultural norms and tax compliance: Evidence from China

Existing studies suggest that formal institutions can effectively constrain corporate tax evasion and increase tax compliance, but little has been said about the role of informal institutions regarding tax compliance. This study empirically examines the long-term effect of Confucian cultural norms on corporate tax compliance using unique cultural and historical data from China. We find that the intergenerational transmission of the Confucian culture can significantly promote the tax compliance of modern firms, thereby effectively reducing tax evasion. Simultaneously, the compliance effect is more pronounced in informal firms, such as small-scale, non-listed, and local firms. In terms of mechanism analysis, the normative effect of the Confucian culture is a key mechanism for explaining variations in corporate tax compliance behaviors under different cultural norms. Overall, this study fills a gap in the research on how informal institutions regulate the behavior of firms to a certain extent, and at the same time supplements the existing literature on understanding the long-term effects of the Confucian culture.

Subnational Institutional Differences and FDI Spillovers Behind the R&D–Performance Relationship in Russia

ABSTRACTThis study explores how subnational institutional differences in a large emerging economy—Russia—influence the relationship between research and development (R&D), foreign direct investment (FDI) spillovers, and firm performance. We find that the relationship between R&D and firm performance is positively moderated by subnational institutional development. Furthermore, we find that FDI will more positively moderate the relationship between R&D and firm performance if subnational institutional development is also higher, thus showing that subnational institutional development may foster the positive spillover effect of FDI on local firms.

The Role of Equity Crowdfunding in the Brazilian Entrepreneurial Ecosystem: An Empirical Analysis

This research provides the first deep and empirical look into Brazil’s increasing equity crowdfunding, or crowdinvest, market, and examines its peculiarities. It is a pioneering work dedicated to understanding which characteristics most impact the success of offers in the country, and whether there is any representative movement pointing to the inclusion of gender, firm age, and location or participation of small investors. We employ descriptive and quantitative research techniques and analyses all the offerings derived through this mechanism from 1 January 2017 to 31 December 2020—totaling 234 operations, considering successful offers (the ones that received investment) and unsuccessful offers (those that failed in raising funds), registered by 24 platforms in the country according to CVM (Comissão de Valores Mobiliários), the Brazilian SEC, under regulation Instruction 588. Furthermore, we use empirical and publicly available data from several sources. The findings reveal that mutual offers are more attractive to investors than those of equity, impacting the dependent variable of success. Besides this, firm location is the only inclusion aspect with representativeness among the independent variables tested. The main contributions of the research lie in providing the first empirical study that (1) consolidates a consistent database of the equity crowdfunding industry in Brazil, (2) reveals the role of crowdinvest in Brazil, related to bank credit to SMEs, and (3) provides recommendations to the main stakeholders that can improve the whole ecosystem.

Sustainable Competitive Advantage in the Legal Industry: A Review of Business Strategies and Market Entry Approaches for Gowling WLG in Japan and Nigeria

The modern business landscape has been notably disrupted by events like the COVID-19 pandemic, which reduced global trade by 13% to 23% in 2020, affecting the triple bottom line—profit, people, and planet—of the legal industry. This research develops a sustainable competitive advantage framework for Gowling WLG in emerging markets, focusing on Japan and Nigeria. The study compares Gowling WLG's business strategies and market entry approaches through a strategic management model and case study design, comparing the firm's operations in these diverse markets. Data was collected via document analysis, interviews, field observations, and megatrend articles to evaluate the competitive landscape. A context analysis of existing literature helped formulate relevant themes. Findings reveal the dynamic nature of the legal sector, influenced by political stability, economic conditions, technological advancements, and environmental concerns. Despite challenges like Brexit, global growth opportunities and threats coexist. Gowling's strengths include global recognition and advanced technology, but it also faces challenges in innovation and leadership. Opportunities lie in expanding the high-legal industry and offering sustainability-focused services, though cybersecurity risks and economic instability are significant threats. Strategic alliances with local firms for risk management and expertise are advised. Entering Japan requires thorough research, local collaboration, and cultural sensitivity. This research contributes to the empirical and theoretical literature, noting data reliability limitations, especially in Nigeria.

Gamification and economic behavior: Geospatial insights into mobile exercise app usage in South Korea

This study investigates how mobile exercise app-enabled gamified benefits (epistemic, personal integrative, and social integrative) independently and interactively influence economic outcomes from a nationwide perspective. Utilizing unique data on physical exercise and shopping activities collected from 7558 South Korean exercise app users over 3 years, we employed aspatial and spatial econometric models, along with visualization techniques, to examine the spatially varying relationships between gamified benefits and shopping behaviors at the municipality level. The results indicate that while social integrative benefits decreased shopping frequency and amount, the interaction terms of epistemic and social integrative benefits positively influenced shopping frequency. Furthermore, our spatial analysis suggests that the gamification–shopping relationship varied based on specific gamified benefits and across individual and clustered districts, cities, and counties across South Korea. These insights can guide local governments and tourism firms, suggesting opportunities to promote destination-specific gamified services for boosting the local economy.

Does foreign direct investment affect domestic firms’ social security contributions?

Foreign direct investments (FDI) in developing countries are found to affect local domestic firms by introducing competition and spillover effects. This study investigates the effect of FDI on domestic firms’ social security contributions. It exploits China’s 2002 FDI liberalization and applies the difference-in-differences strategy for a causal identification. Using a Chinese firm-level dataset of the manufacturing industry, the estimates show that foreign investments have a positive effect on domestic firms’ social security contributions as a share of the wage base. The estimated effects are more pronounced in private firms, higher-wage firms, and firms facing lower contribution costs. Evidence also indicates that the increase in firms’ propensity to contribute plays an important role in explaining the overall increase in social security contribution rates. The promotion of social security compliance among domestic firms by FDI inflow suggests that market competition could be an attractive and effective approach to combating non-compliance with social insurance regulations.

Sustainability, Local Environmental Behaviour and Firm Location Decisions

AbstractThis paper uses Mercantile Register data to analyse the location decisions of firms in Catalan municipalities (between 2010 and 2019). Using count data panel estimations, we focus on local sustainability characteristics. The identification of the location patterns and the effects of local environmental policies on firms belonging to different sustainability industries constitute a contribution to the empirical location literature. Our results help in understanding entry processes at the local level and how both citizens' environmental values and local environmental policies shape these. We show that (i) firms locate differently depending on their sustainability profile and (ii) local environmental policies have stronger effects on the location decisions of sustainability‐oriented firms.

Embedding spatial planning in contemporary multi-level governance: The sustainability entanglement

The burgeoning unplanned urbanisation and growing environmental risks across global South cities pose core questions to urban sustainability, planning theory and practice. Who are the agents of, and what are the control mechanisms in spatial plan preparation? To what extent are economic, social, and environmental sustainability principles considered and embedded in spatial plans and frameworks? And what are the possibilities for attaining sustainable urban future via spatial planning practice in the context of multi-level governance? Using Ghana as a case study, and critical literature review, interviews, and policy analysis, we contribute to the spatial planning and sustainability narrative in global South cities by evaluating the extent to which sustainability principles are integrated in Spatial Development Frameworks (SDFs) and Spatial plans (SPs) in Ghana. We show that whereas sustainability is entangled with spatial planning, integrating sustainability principles in contemporary multi-level governance continues to present a complex challenge in practice. The complexities necessitated the engagement of local and international planning firms to complement the efforts of street-level-bureaucrats (local planning officials) in the preparation of spatial development frameworks and plans. However, such collaborations did not result in comprehensive integration of sustainability principles in spatial plans in practice. Our study indicate that, the economic, social, and environmental principles of sustainability were marginally embedded in local spatial plans of the three-tier spatial planning system of Ghana. We argue that equitable prioritisation of the principles of sustainability are required to strengthen local based spatial planning practice.

Does government regulations protecting employee privacy hurt employment? The Impact of Salary History Bans on Employment

There is a long-standing debate over the merits of confidential and transparent pay. Yet, as some states and counties in the U.S. have implemented policies that prohibit employers from asking about historical pay, many top tech companies such as Apple have introduced corresponding policies. In particular, this paper examines whether they have impacted employment. In this paper, we use the implementation of the salary history ban as a ”quasi-natural experiment” to assess the impact of the policy on employment using a staggered difference-in-differences method based on county-level panel data from 2013 to 2021. The study shows that the salary history ban does not significantly contribute to the increase in employment levels in general; even the implementation of the salary history ban reduces employment in local firms by an average of 1.04% relative to firms in areas where the policy is not implemented. This paper provides new empirical evidence on the effects of salary history bans and provides a reference for further improvements in corporate payroll management systems in practice.

STEM designation for accounting programs: Insights from accounting department directors

With the increasing demand for tech-savvy accounting graduates, numerous accounting programs are considering the value of obtaining STEM designation. We conduct semi-structured interviews of fourteen accounting department directors with STEM-designated graduate programs. The interviews encompass three broad themes: (1) Motivation for pursuing STEM designation and expected benefits; (2) Process for acquiring the STEM designation, including curriculum modifications and related challenges; and (3) Resources, faculty training and hiring, and outcomes of STEM designation. The interviewees submit that STEM programs are vital for attracting international students. They report other advantages, including increased program visibility, greater interest from domestic students in STEM programs, and enhanced career opportunities for students from a curriculum focused on data analytics. In addition, some interviewees report that their technology programs are the only ones gaining students. Participants further reveal that international students graduating from STEM accounting programs are securing employment with Big Four, regional, and local accounting firms. Finally, we relate the findings to change theory and discuss recommendations for university accounting programs.

Government incentives and firm location choices

Government incentives and firm location choices

The impact of tax enforcement on corporate energy efficiency: Evidence from a tax collection reform in China

The central Chinese government has transferred some of the authority to collect local firms' income tax from local tax bureaus (LTBs) to state tax bureaus (STBs) to strengthen its control over local tax sources, resulting in a change in the intensity of tax enforcement of firms. Exploiting this quasi-natural event, we use a regression discontinuity design to examine the association between tax enforcement and energy efficiency. We find that firms whose taxes are collected by LTBs have significantly higher energy efficiency than firms whose taxes are collected by STBs. Further analysis shows that more lenient tax collection by LTBs eases firms' financial constraints and prompts firms to adopt cleaner energy structures and conduct more green innovation activities to improve energy efficiency. Heterogeneity analyses show that the main effects are more pronounced when the local government has a larger fiscal surplus or faces greater environmental pressure and when firms have no foreign business or a poor financial condition.

Mobile manufacturing path for India: Lessons from other Asian countries

For almost two decades now Government of India has tried out numerous policies for establishing mobile manufacturing in the country. Though mobile production facilities started their operations in India in 2005, studies have shown that it is only low value assembly that is carried out in the country. In this paper, we infer a few policy lessons for India from the experiences of four Asian countries – South Korea, Taiwan, China, and Vietnam – that have walked down this path. We argue that for India to attain its goal, increasing public investment in mobile technology research will help. Our paper suggests that government should incentivise local firms to establish linkages with mobile manufacturing multinational firms. To capture more value, domestic firms that manufacture mobiles need to focus on R&D, marketing and branding activities.

Unveiling the role of different types of local absorptive capacity: The effects of inward FDI spillovers on regional innovation

The aim of our paper is to examine the role of different types of local absorptive capacity in moderating the relation between inward FDI spillovers and regional innovation. We use data on the investments of multinational companies (MNCs) in Brazilian regions from 2003 to 2014, linking them to regional innovative performance. Our results reveal that the transfer of technological knowledge from MNCs to local firms cannot be taken for granted since the positive effects of inward FDI spillovers on regional innovation occur when the new knowledge provided by inward FDI can be associated with the existing capabilities of local actors. The different types of absorptive capacity among local actors have diverse effects on their ability to benefit from inward FDI spillovers. Our findings reveal the distinct moderating effects of firm and local institutions capabilities, indicating that firms' absorptive capacity can derive greater benefits from the new knowledge provided by inward FDI. Finally, our study provides new empirical evidence of inward FDI spillovers and sheds new light on regional FDI attraction policies.

Efekty spillover chińskich inwestycji zagranicznych w Angoli i Zambii

SPILLOVER EFFECT OF THE CHINESE FDI IN ANGOLA AND ZAMBIAIn recent years, Chinese foreign direct investment (FDI) in Africa has attracted interest from both academia and the wider political world. Some postulate that Chinese companies – unlike Western corporations – have greater potential to initiate and carry out the structural transformation of the continent. Some researchers even indicate that thanks to the inflow of Chinese FDI, Africa may become “the next factory of the world”. The aim of this article is to analyse external effects (also called spillover effects) related to Chinese FDI in Africa using the examples of Angola and Zambia. According to the current state of knowledge, spillover effects are the most desirable effects of FDI in the host country, because the related increase in the productivity of local enterprises is key to the occurrence of structural transformation in local economies. The subject of the analysis presented in this article are three aspects (determinants) of spillover effects: (i) the potential of Chinese FDI to generate spillover effects, (ii) the absorptive capacity of local companies and (iii) local institutional settings favouring the occurrence of spillover effects. The findings indicate that due to the existence of weak and few linkages between foreign investors and local firms, spillover effects occur rarely and are relatively small. They are also not sufficient to initiate the transfer of valuable knowledge and technology. The presented research results were based on over 150 in-depth interviews and two rounds of surveys conducted among Chinese investors, Angolan and Zambian companies and representatives of local authorities.

Terror in the City: Local Terrorism and Firm Exports

Abstract In this paper, we examine the relationship between terrorism and exports at the firm-level. We use a panel data of 301 firms listed on the Pakistan Stock Exchange and records of terrorist attacks in Pakistani cities from 1999 to 2014. By calculating city-level terrorism indices, the study reveals significant variations in the frequency of terrorist incidents both between cities and within cities over different time periods. Our panel regressions show that firm exports are correlated with terrorist attacks in the cities where the firms are located, and these correlations are statistically significant even when terrorism is lagged up to six years. Interregional spillover effects of terrorism are less pronounced. While a negative correlation can be found between firm exports and our terrorism indices, the correlation with domestic sales tends to be statistically insignificant. The findings shed light on the persistent link between local terrorism and firms’ international and domestic operations.

Liability of Foreignness in Metals and Mining Companies in Brazil

This research evaluates the liability of foreignness (LOF) in metals and mining companies in Brazil by comparing the financial performance of foreign and local firms. The study also tests if the increase in the psychic distance index (PDI) reduces the performance of foreign companies. We estimated panel data regression models for a sample of 78 companies (29 multinationals in Brazil). Even though the performance differences between mining foreign companies and local ones are not significant, there is evidence that foreign firms face LOF and we confirmed a negative relationship between PDI and the performance of foreign metals and mining companies.

The role of auditing culture in sustainable mining practices: A review of Ghana’s mining sector

The study looks at Ghana’s mining industry’s audit culture and green mining practices about their social responsibility to the communities where their mines are located. Results: According to this study, the economic motivations of mines and green mining are inversely related. Even large mining companies incur significant costs associated with their green mining initiatives because they require a different budget each year, which has an impact on their ability to maximize wealth. Conversely, mines with strong green mining initiatives enjoy positive public perception, and vice versa. Ghanaian mines do not have pre- or during-mining strategies; instead, they only have post-social and post-environmental methods. The best method for evaluating mines’ environmental performance in the community in which they operate is, according to this study, social auditing. This is primarily influenced by the mine’s audit culture, but it is also influenced by the auditor’s compliance with audit processes, audit guidelines, and, ultimately, the audit firm’s experience. The analysis confirms that Ghana’s mine environmental performance is appallingly low since local audit firms are not used in favor of foreign auditors who lack experience or empathy for the problems encountered by these mining communities. Last but not least, corporate social responsibility (CSR) is connected to Ghana’s development of green mining, either directly or indirectly. Whether the mine adopts a technocrat, absolutist, or relativist perspective on mining will determine this. The study discovered that, in contrast to the later approach, the first two views generate work in a mechanistic manner with little to no consideration for CSR.

The Troubled Marine Resource Frontier between local Communities and Salt Firms in Kilifi County, Kenya

The Troubled Marine Resource Frontier between local Communities and Salt Firms in Kilifi County, Kenya