Macroeconomic Environment Research Articles

Do ICT firms manage R&D differently? Firm-level and macroeconomic effects on corporate R&D investment: Empirical evidence from a multi-countries context

Technological firms invest in R&D looking for innovative solutions but assuming high costs and great (technological) uncertainty regarding final results and returns. Additionally, they face other problems related to R&D management. This empirical study tries to determine which of the factors favour or constrain the decision of these firms to engage in R&D. The analysis uses financial data of 14,619 ICT listed companies of 22 countries from 2003 to 2018. Additionally, macroeconomic data specific for the countries and the sector were used. For the analysis of dynamic panel data, a System-GMM method is used. Among the findings, we highlight that cash flow, contrary to the known theoretical models and empirical evidences, negatively impacts on R&D investment. Debt is neither the right source for R&D funding, as the effect is also negative. This suggests that ICT companies are forced to manage their R&D activities differently, relying more on other funding sources, taking advantage of growth opportunities and benefiting from a favourable macroeconomic environment in terms of growth and increased business sector spending on R&D. These results are similar in both sub-sectors and in all countries, both bank- and market based. The exception is firms with few growth opportunities and little debt.

INSPECTING THE EFFECTS OF NATURAL RESOURCES, ECONOMIC GROWTH AND TRADE OPENNESS ON FIRM PERFORMANCE: A CASE OF DANISH ECONOMY

The performance of the firms is effected bythe changes in the macroeconomic environment in any economy. Considering this perspective, the research study explores the role of economic growth, foreign assets, trade openness, natural resourcesand the rule of law while targetingtheperformance of 36 multi-sector Danish firms. After considering fully modified and dynamic ordinary least square methods from 2015 to 2022, this research provides evidence of the significantly accelerating role of economic growth, foreign assets, natural resources and the rule of law in promoting the performance of selected firms in Denmark. The results further reveal that trade liberalization is, in fact, significantly discouraging the firm performance. Based on these results, we propose that promoting natural resources and domestic production may help expand Denmark's firms' return on assets and equity.The administrative authorities may also need to look into the trade openness factor that is not increasing the performance of the firms in Denmark.

Banks Amid Economic Recovery: Understanding Macroeconomic Influences, Firm Valuation, and the Investor Confidence Paradox

This study investigates the intriguing relationship between a robust macroeconomic environment during economic recovery and the signaling of increased firm value within the banking sector. It underscores the importance of macroeconomic factors in investors' evaluation of banking firms and examines the rationale behind investors not exhibiting strong reactions to favorable macroeconomic signals. Utilizing an explanatory research method, the study analyzes secondary data from financial reports of 42 companies listed on the Indonesia Stock Exchange during 2010-2020. A panel data regression approach is employed, incorporating common effect, fixed effect, and random effect models, validated through Chow, Hausman, and Lagrange Multiplier (LM) tests. Resulting insights explain the paradoxical absence of a robust investor response despite banks' resilience amid the economic turmoil. The theoretical implication is that a stable macroeconomic environment typically projects positive signals for the banking sector, enhancing investor confidence and potentially driving up share prices. The study reveals substantial practical implications concerning the macroeconomic influences on firm value signals in the banking industry during economic recovery. Banks are advised to recalibrate their strategies and operations to capitalize on or navigate the risks associated with recovery periods.

Business environment and productivity in Africa: macro evidence

PurposeAfrica's business environment (BE) is characteristically unfriendly and poses severe development challenges. This study evaluates the impact of business climate on productivity in sub-Saharan Africa (SSA).Design/methodology/approachMacroeconomic data for 51 sub-Saharan African economies from 1990 to 2018 are employed for the analysis. The seemingly unrelated regression model is used to address inter-sectorial linkages.FindingsThe study uncovers several findings. First, a high start-up cost substantially leads to productivity losses by limiting the funds available for investment in productivity-enhancing labour and technology and limiting the number of businesses that see the light of day. The productivity impacts of start-up costs are most enormous for industry, followed by services and agriculture. Second, economies with favourable financing environments tend to be more productive economy wide and sector wise. Third, high taxes and tax inefficiency lower productivity by reducing the resource envelope of firms, thus lowering investment amounts. Fourth, poor business infrastructure inflicts the most damage on productivity. Lastly, business administration and macroeconomic environments impact sectoral and economy-wide productivity.Practical implicationsSSA economies must strive to lower the cost of starting a business as high start-up costs injure productivity. One way of reducing start-up costs is to create a one-stop shop for registering and formalising a business. Another way is to automate business registration and administrative processes to reduce red tape and corruption.Originality/valueThe authors extend the body of knowledge by analysing sectoral and economy-wide productivity effects of various business climate indicators while accounting for inter-sectoral linkages, cross-sectional dependence and endogeneity.

The Impact of Consumer Behavior and Product Innovation on Enterprise R&D Decisions in a Macroeconomic Environment

With the intensification of market competition and the continuous progress of technology, enterprise R&D decision-making is becoming more and more important to the development of enterprises. Enterprise R&D decision-making involves product R&D direction, R&D investment, technological innovation and other aspects, which directly affects the market competitiveness of enterprises. However, the R&D decision of enterprises is influenced by many factors, such as market demand, consumer preference, competition pattern, product innovation and macroeconomic environment. These influencing factors affect the formulation and implementation of R&D decisions of enterprises to varying degrees. This paper discusses the influence of consumer behavior, product innovation and macroeconomic environment on enterprise R&D decision. Through the analysis of these influencing factors, the corresponding development suggestions are put forward to help enterprises better cope with these influencing factors and formulate more scientific and reasonable R&D strategies.

Corporate price dynamics during and after the COVID‐19 pandemic: Insights from a partial equilibrium model

AbstractThe COVID‐19 pandemic created an unprecedented demand and supply shock to the world economies. To understand its impact on corporate prices, we define a partial equilibrium model where non‐financial corporations operating in three sectors (suppliers, end‐producers and service providers) optimize their production under monopolistic competition and are subject to demand and supply shocks of different intensities. Our model confirms that when the demand shock dominates, prices tend to decrease. We then introduce data from the COVID‐19 pandemic in the European Union into our model and find that prices are expected to fall in the most acute phase of the pandemic, when lockdowns and similar health measures decrease demand, and to increase later as a result of tensions in the supply of intermediate goods and of the persistence of the supply shock. Inventories could play a decisive role in avoiding price increases in the moderate phase of the pandemic. In the post‐pandemic period, higher prices may continue for a time until the shock to suppliers vanishes. These are relevant insights on the macroeconomic impact of worldwide pandemics, also considering the current macroeconomic environment.

State support for small and Medium-sized businesses as the Most important factor in Political stability

the purpose of the article is to study the mechanisms and instruments of state support for small and medium enterprises (SMEs) as a factor of political stability. To do this, it is necessary to substantiate the relevance of state support for SMEs in Russia; consider strategic priorities and directions for expanding its capacity; highlight the urgent problems of the systemic strategic development of SMEs in the current market macroeconomic conditions; outline the prospects for the development of SMEs based on the construction of a matrix of predictable risks. Materials and research methods. In the course of the work, a wide range of research methods was used. The use of the legal and regulatory method makes it possible to characterize the key elements of the domestic legal field related to state regulation of SMEs. Within the framework of the statistical method, the formation of the information base necessary for the study of the current state and development trends of SMEs is carried out. On the basis of the logical method, causal relationships are built between the patterns of development of SMEs and market factors that influence it. The analytical method creates conditions for the use of verified diagnostic tools for key performance indicators of SMEs. When using the monographic method, the most important regularities and features of the development of SMEs are focused in the current macroeconomic environment.

Does knowledge of digital technology affect corporate innovation? Evidence from CEOs with digital technology backgrounds in China

ABSTRACT Global economies are increasingly focusing on digital technology to break through the conventional innovation development pattern. This study examines the degree to which CEOs with digital technology backgrounds affect corporate innovation. In a broader sense, it investigates the significance of digital technology in the innovation transformation of global economies. We find that CEOs with digital technology backgrounds significantly enhance corporate innovation performance. Mechanistic tests indicate that CEOs with digital technology backgrounds promote corporate innovation performance through a stronger willingness for digital transformation, higher level of internal control management and focus on fostering a stronger culture of collaboration compared to CEOs without digital technology backgrounds. Additionally, CEOs with digital technology backgrounds are better at promoting corporate innovation within state-owned enterprises and enterprises that do not receive industrial policy support. Further analysis suggests that CEOs have a greater impact on corporate innovation when the macroeconomic environment is compatible with their personal traits. Therefore, for companies competing in the field of digital technology, talent construction is vital to gaining a competitive advantage.

THE IMPACT OF MACROECONOMIC FACTORS ON THE PERFORMANCE OF THE CONSTRUCTION SECTOR IN LITHUANIA

The construction sector is closely related to the economic situation in the country. The main products of this sector are residences, business structures. Demand for these products is highest when the economic situation in the country is good, but when the economy slows down, the demand for these products also falls. This is because when the economic situation is good the population has spare money, loans are cheaper and the risk of job loss is low. This leads to an increase in the rate of growth of residential construction, as there is more demand for this product. Similarly, businesses are expanding due to increased sales, higher demand, and the resulting increase in non-residential construction. Therefore, in order to maximize the performance of the Lithuanian construction sector, it is important to keep an eye on the macroeconomic environment and to understand when the economy offers opportunities and when it brings threats. To this end, the construction sector and the macroeconomic environment are analyzed, the theory of economic cycles and the impact of macroeconomic factors on the construction sector is analyzed, and an empirical study of the impact of macroeconomic factors on the construction sector is carried out. An analysis of the scientific literature on business cycles and the main macroeconomic factors that affect the performance of the construction sector. Economic cycles are closely linked to construction performance. The boom or peak phases of the economy provide opportunities for the construction sector, while the recession and crisis phases bring threats. Understanding potential threats or opportunities maximizes performance, and this understanding requires an analysis of macroeconomic factors. Therefore, the main macroeconomic factors to be taken into account when analyzing both the changes in economic cycles and the factors that directly affect the construction sector are identified. The main factors identified are: aggregate demand, employment levels, corporate profits, import levels, interest rates, gross domestic product. However, it is also very important to analyze the existence of a real estate bubble, especially in the construction sector. An empirical study has been carried out to analyze the relationship between the identified macroeconomic factors and the construction sector in Lithuania. For this purpose, the Eviews software is used to construct a correlation matrix, regression models, find the elasticity coefficient and forecast.

LEASING AS AN EFFECTIVE INSTRUMENT OF STATE SUPPORT OF ENTREPRENEURSHIP

To study the role of leasing as an instrument of state support for entrepreneurship in the development of the national economy, to identify the main problems in its implementation and to develop ways to solve them. The study has practical significance and can contribute to the development of the leasing services market and entrepreneurship in general, since it presents recommendations for expanding the availability of financing for small and medium-sized businesses, reveals the impact of leasing on the development of the national economy, which can be taken into account when developing economic road maps. The study assessed the state of fixed assets of enterprises in Kazakhstan and expressed substantial need for their renewal, including financing through leasing. Within the framework of this scientific work, the main aspects of the development of the leasing market in Kazakhstan and its impact on the development of the national economy were considered. Particular emphasis is placed on studying the impact of developed leasing relations on the macroeconomic environment as an external environment, which also influences the development of leasing services. The work assesses individual tools and levers for implementing state support for leasing in Kazakhstan. Recommendations have been developed on instruments of state support for leasing in Kazakhstan that require further research, namely the direction of the impact of leasing on macroeconomic indicators, the use of the refined leasing potential for the development of SMEs, as well as the experience of other countries in the development of the leasing market and its applicability in Kazakhstan. Resolving these issues can contribute to the development of more effective measures for the development of the leasing market in the country on the principles of responsible investment.

Impact of Substantial Events and Leadership Style on Stock Market Anomalies: Evidence from the Pakistan Stock Exchange

This is an event based study focused on the stock market anomalies due to substantial events such as monsoon season, the holy month of Ramadan, and leadership style. Data for this research was collected from the Pakistan Stock Exchange from KSE All Shares, KSE-100, KSE-30 KMI-30, and KMI All Shares daily observations. ARCH family models (EGARCH) were applied to encounter volatility (Market Anomaly) in each selected event. Findings revealed that there is no such substantial impact of the holy month of Ramadan and monsoon on the stock market returns (No impact on any indices), however it is interesting to reveal that the market witnessed sizeable improvement & considerable stability in the Dictatorship regime in Pakistan, this is because of controlled market situation, stable macroeconomic environment and favorable investment opportunities due to trust on the government. Going forward, findings unveiled the importance of monitoring the market closely for all of the above-mentioned events and investors may get benefits from findings by making sound investment decisions. The core limitation of the research is that we could not cover more data and more countries which is a future direction for researchers and stakeholders.

What drives global competitiveness in the European Union countries?

AbstractThis paper examines the effect of factors of national competitiveness measured by the Global Competitiveness Index (GCI). It aims to identify the key factors that determine GCI of the European Union (EU-28) countries. We observe the composite indicator of GCI and the 12 factors of competitiveness in the period of 2008–2019 focusing on the links between the GCI and the factors of institutions, infrastructure, macroeconomic environment and its stability and market size. The GCI is determined using correlation and regression analyses and Structural Equation Model. A significantly positive relationship with the GCI is confirmed for institutions, infrastructure, macroeconomic environment and stability, labour market efficiency, market size, technological readiness in terms of information and communication technologies, and business sophistication and dynamism, but not for higher education and training and financial market development. The quality institutions are confirmed as a fundamental positive factor for the GCI together with macroeconomic environment and stability and market size. The study contributes with an empirical analysis that confirms the relationship between the selected factors of competitiveness and the GCI in the EU-28 countries.

A Surging Company Against the Odds of Adversity in New Normal: The Case Analysis of Tesla

As one of the most ambitious and innovative companies in the automobile manufacturing industry across the world, Tesla visions itself with the mission to change and redefine the industry landscape of future mobility empowered by innovation and new transportation technologies. This research is conducted to examine how Tesla manages to surge against the odds of all the adversity manifested in the new normal through the lens of financial analysis of Teslas annual reports. In light of the key concepts and financial performance and accounting data presented in the company report, the financial situation and growth of Tesla, specifically regarding its strengths and weaknesses, are analyzed. Besides, possible suggestions on risk control and financial viability, in the long run, are provided. Furthermore, the financial performance of Tesla analyzed from the key metrics are linked to the macroeconomic environment presented in the new normal, so as to consider the impacts on the companys revenues and the validity of the companys stock price performance for investment selection.

APPLICATION OF A SYSTEMATIC APPROACH FOR THE ANALYSIS OF THE ECONOMIC SECURITY OF ENTERPRISES IN THE AGRICULTURAL SECTOR OF UKRAINE

Implementing measures to increase the economic security of strategically essential branches of the national economy is necessary to support the stability of regions and the national economy. Management at all levels should contribute to preventing the occurrence of critical externalities in the macroeconomic environment that can lead to negative consequences in the context of ensuring the country's socio-economic development. The fundamental nature of achieving a high level of long-term economic security is identifying key determinants capable of identifying and eliminating potential threats. It is essential to emphasize the need to support the country's food security and the conceptual provisions that must be reviewed concerning global processes such as food embargo, geopolitical confrontation, etc. Modern agriculture is in a difficult situation, and the economic condition of the entire agro-industrial complex requires the search for solutions to the problems of permanent development of each enterprise, considering the development of long-term economic security. Searching for ways to form more favorable ways of functioning is a strategic direction of economic policy at all levels of management. It requires several global measures to support agribusiness enterprises' current, medium-term, and long-term efficiency. Economic security of the agricultural sector as an economic category has a complex multi-level system structure: food; ecological safety; biological (resource); financial and credit; social; inventory management; social indicators; insurance provision; state regulation; agricultural cooperation; monitoring; agricultural information; agriculture and animal husbandry; cars; population employment; trade; wholesale food markets; scientific support. The system of full-fledged economic security of enterprises of the agrarian sector involves the development of its effective organizational and functional structure, which may include the scientific theory of economic security of the agrarian sector, the concept of food security, food policy, state, and public institutions that ensure economic security, organizational and economic mechanism, indicators and indicators of economic security, monitoring of the actual state of economic security of the agrarian sector.

UKRAINE IN THE INTERNATIONAL INVESTMENT CAPITAL MARKET IN THE CONTEXT OF POST-WAR ECONOMIC RECOVERY

UKRAINE IN THE INTERNATIONAL INVESTMENT CAPITAL MARKET IN THE CONTEXT OF POST-WAR ECONOMIC RECOVERY

A high-resolution, data-driven agent-based model of the housing market

This paper presents a complex, modular, 1:1 scale model of the Hungarian residential housing market. All of the 4 million households with their relevant characteristics and all of the flats with detailed attributes like size, state and neighbourhood quality are represented, based on empirical micro-level data. The model features transactions in the housing and rental markets, a construction sector, buy-to-let investors, credit markets, house price dynamics, a procyclical banking sector regulated by a macroprudential authority and exogenous macroeconomic environment. While these features increase the complexity considerably, they also make it possible to surpass existing tools, most importantly in two aspects. First, the granularity of the model enables much higher resolution and heterogeneity in the results, and second, the detailed mapping to empirical data makes it possible to run the simulations in prompt time with only minimal burn-in effects. Thus, the model enables the study of the impact of selected macroprudential, fiscal and monetary policies on the housing market in a more detailed and plausible way than in the case of the traditional analytical tools. After calibrating the model on Hungarian data, it managed to reproduce the key characteristics of the housing market even at disaggregated levels based on regions and the income deciles of the households. To demonstrate the model's practicality, we also present two applications, assessing the impact of construction cost shocks and family support measures on the housing market.

Trends of development of Azerbaijan’s banking sector

Aim. To identify new trends in the development of the banking sector of Azerbaijan, one of the key links in the national economy of the country, based on the analysis of its condition in the last five years.Tasks. To analyse the mandate of the Central Bank of Azerbaijan (CBA), the structure of the country’s banking market, the level of banks’ capitalisation; to sum up the results of the analysis; to formulate proposals for improving the situation.Methods. The study relies on a systematic approach to solving the set tasks. The article presents different points of view of authors and analysts regarding reforms in the banking sector of Azerbaijan. The dialectical approach to the analysis of the main phenomena and regularities, as well as the systematic approach to the disclosure of the key factors of development of the national banking sector of the country served as the methodological basis of the study.Results. The main trends in the development of the banking sector of Azerbaijan were analysed, its current state was assessed, and the mandate of the CBA was determined. The research shows that the growth of the banking market, new trends in the expansion of banking services create significant qualitative changes in this market. During the year, the banking sector as a whole showed resistance to exogenous shocks.Conclusions. In the banking business of Azerbaijan, one of the special tendencies manifested in the activity of the banking services market is technological improvement and expansion of application of modern automatic systems. The analysis showed that in recent years, despite the growth of current expenses in the activity of banks, the most modern and productive communication technologies replacing labour-intensive processes are introduced. The mandate of the CBA was focused mainly on monetary policy, ensuring regulation and development of interbank centralised and other unlicensed payment systems. Monetary policy implemented by the CBA has been aimed at mitigating inflationary pressures. Although high global inflation remains risky in the context of uncertainty due to the global geopolitical and geo-economic situation, the accelerated recovery of economic growth, the country’s trade surplus and the increase in strategic foreign exchange reserves allow the macroeconomic environment of the financial system to remain stable.

Analysis of Selected Macroeconomic Variables and Property Development in Kwara State, Nigeria: Implications on Investment Decisions

The widening gap between housing need and supply has created a void for private developers to fill in housing delivery in Nigeria. However, the uncertainty and instability of the economy across countries of the world as indicated by macroeconomic variables appears very important to be considered. Thus, the study's objective was to evaluate the effect of macroeconomic variables on private residential property development in Ilorin, Kwara state, Nigeria, for investment decision making. This study focused on three macroeconomic variables which include GDP, Interest rate and Inflation rate.
 The research utilized both primary and secondary data. The primary data were collected via structured questionnaires administered on Real Estate Development Association Practitioners (REDAN) in Ilorin, Kwara State. The secondary data which include GDP, Interest rate and Inflation rate from 2010 to 2020 was also obtained from the Central Bank of Nigeria (CBN) and Nigeria Bureau of Statistics (NBS). The information obtained were analyzed using Trend analysis and multiple regressions. Trend analysis aimed at projecting macroeconomic movement from 2010 to 2030, while the multiple regressions was used to investigate the effects of macroeconomic variables on private housing development in Ilorin Metropolis.
 The result of the analysis revealed among others that macroeconomic variables affect property development as they show significant effect on private residential property development with GDP producing positive significant effect on residential property development, while interest rate and inflation rate have negative significant effect on property development.
 Therefore, this study recommends that real estate investors in Ilorin metropolis should consider the macroeconomic environment, and evaluate their risk exposure to make informed investment decisions.

Risk-taking by banks: evidence from European Union countries

PurposeThe aim of this paper is to study the relationship between banks' ownership structure and their risk-taking behavior as well as the impact of banking regulation on banks' approach to taking risk, after the 2008 financial crisis.Design/methodology/approachThe empirical analysis considers a sample of listed banks from European Union (EU) countries, over the period of 2011–2016 and uses the generalized least squared (GLS) random effect (RE) method, following Baltagi and Wu (1999) and Pathan (2009).FindingsThe authors find that the structure of the board of directors can influence bank risk behavior but not the ownership concentration. No significant relation was found between the influence of the regulatory environment and bank risk, i.e., stricter regulation has no effect on risk taking by banks.Originality/valueThe paper contributes to the literature in risk measures and banks' corporate governance. It also considers the impact of regulatory framework on banks' risk-taking behavior. The aim of this empirical analysis was to examine in greater detail these subjects and the dynamics between them after the significant structural changes in the macroeconomic environment and in the financial system, particularly with regards the regulatory and supervisory framework following the 2008 financial crisis, using data from European Union countries.

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Purpose: The article aims to analyze the possible development of managerial and leadership skills of managers of business organizations through variable coaching models, the practice of which confirms their effectiveness and feasibility. Theoretical framework: The development of coaching to improve the quality of leadership and management skills of managers of Ukrainian business organizations is important for achieving economic stability in Ukraine and ensuring a sustainable macroeconomic environment. In particular, the use of coaching is becoming increasingly popular due to the potential for stabilizing the corporate sector through effective management. Design/methodology/approach: While writing the article, materials from periodicals on the organization of the coaching process and its dissemination as a practice of developing managerial skills of business organization managers were used. Findings: The article focuses on the functioning of the Ukrainian economy and key areas for focusing on the use of coaching as a tool for investing in improving the quality of business environment management and possible further development. The use of coaching is a priority area of research, as the application of this practice can be a factor in improving the quality of management of a business organization. Research, Practical & Social implications: Based on leadership skills and characteristics, managers of business organizations use innovative means of management, which is made possible through coaching programs. The key aspects of coaching and opportunities for its improvement in the context of the global environment are outlined. The development of leadership skills and managerial abilities of managers of business organizations will serve as a factor in the sustainable operation of the Ukrainian corporate sector, which is in difficult conditions due to the threat of hostilities. Originality/value: The results of the study can be used by modern managers of Ukrainian business organizations to improve management practices and ensure the stability of the functioning of structural units at the operational level.