Firm Performance Research Articles

Influence of educational composition on firm innovation and performance

ABSTRACT Despite a strong focus on innovation from both politicians and managers, our current understanding of the relationship between managers’ education level and the educational composition of the workforce in terms of innovation and their joint association with performance remains limited. For example, while most studies include workforce quality as a control, and recognize its importance, there is still little knowledge about how it influences the innovation process. The data and estimation framework used in this study enable for a detailed analysis of the importance of both managers’ and workers’ skill intensity and workers’ skill diversity throughout the sequential innovation process that transforms ideas into valuable innovation in three stages. In addition, the availability of panel data allows us to account for various econometric issues, such as sample selection bias, reverse causality, simultaneity, and measurement errors. We conclude that educated managers, together with a balanced workforce across education length and field enhance both innovation and performance. Even more interestingly, we show that the educational level of managers influences the innovation process primarily through the recruitment of more educated workers with diverse educations. And the importance of including the indirect effect of educational composition through R&D decisions on the likelihood of innovation.

Female Presence and Leverage in Firm Performance with Firm Size as Moderating Variable

The aim of this research is to analyze the influence of firm size in moderating female presences, leverage on firm performance. The influencing variables are female presences and leverage. The variable influenced is firm performance. The variable that strengthens or weakens is firm size. The sampling technique in this research used a purposive sampling technique, so that 126 data were obtained from 18 firms that met the criteria. Quantitative research is a research method and data analysis technique using Partial Least Square (PLS) analysis using SmartPLS 3 software. The results of the research show that female presences have an influence on firm performance. Leverage has no effect on firm performance. Firm size is not able to moderate the relationship between female presences and firm performance. Firm size is able to moderate the relationship between leverage and firm performance.

Firm strategy, employee retention and organizational performance: a moderated mediation study of New Zealand SMEs

PurposeAn effective firm strategy is key to sustained financial performance, while interactions between strategy, employee retention and top talent retention have been seldom explored. We test hypotheses using New Zealand SMEs which are defined as having up to 250 employees. We initially explore firm strategy using Porters competitive advantage model predicting employee retention (including top talent), with study 1 (n = 208) using firm size as a moderator, finding a direct significant relationship from firm strategy toward employee retention. Next, we explore firm strategy predicting firm performance with employee retention mediating and include firm size as a moderator, testing a moderated mediation model in study 2 (n = 474) and study 3 (n = 300, with time-lagged performance).Design/methodology/approachThere are no open databases holding NZ firms’ performance data and thus data was sourced from a Qualtrics survey panel. Such panels have become more common (e.g. Haar et al., 2021a, b) and a recent meta-analysis by Walter et al. (2019) showed that this type of panel data was no different from data sourced through conventional means (i.e. mail survey). We focused on NZ private sector SMEs using senior managers across a range of industries and geographic locations. Because the influence of firm strategy on employee retention remains unknown in the literature, we conducted study 1 (n = 208) to test the initial part of our overall model. Study 2 (n = 474) and study 3 (n = 300) tested the full model (with organizational performance), with study 3 having organizational performance time-lagged by one month.FindingsAll direct effect hypotheses are supported, although firm size interacted significantly with firm strategy showing smaller not larger-sized firms leverage firm strategy to achieve superior retention benefits. This was against hypothesis 5a in all three studies. Studies 2 and 3 supported the moderated mediation hypothesis, with firms of larger size having a stronger indirect effect from firm strategy on firm performance while employee retention mediated the influence of firm strategy on firm performance. Finally, dominance analysis found that a quality differentiation strategy was the key strategy across all studies and outcomes. We discuss the implications for organizations.Practical implicationsThe first managerial implication from the study is that small and medium sized firms would benefit both from developing a deeper understanding of the strategic alternatives open to them and placing a greater emphasis on the implementation of their selected strategic approach. A second managerial implication relates to findings indicating that retention generally, and top talent retention specifically, is positively related to firm strategy and firm performance. Given the importance and challenges of staff retention, particularly in the current environment where there are significant skill shortages, these results suggest that small and medium sized business would benefit from considering how strategy can create an organizational environment that is attractive to employees and support stronger retention outcomes as a mechanism for driving both retention and performance.Originality/valueThe study makes three major contributions. First, it examines firm strategy and extends the focus on firm performance by including not only employee retention but also top talent retention, responding in part to the call to develop and refine performance measures (Lieberman, 2021). Second, beyond using retention as a mediator, firm size is included as a moderator and a moderated mediation model is ultimately tested. Third, we conduct dominance analysis to identify the key firm strategy that influences firm performance and retention. Ultimately, this paper asks: what is the role of firm strategy on New Zealand SME performance, and what influence does retention and relative firm-size play.

Exploring Sustainable Investments: How They Drive Firm Performance in Indian Private and Publicly Listed Companies

This research aims to present a holistic view of sustainable investments on firm performance by exploring the dimensions of sustainable investments and firm performance concerning Indian private and publicly listed companies. Panel data regression has been used to explore the relationship between sustainable investment and firm performance. The data of 75 BSE-listed companies has been extracted from Prowess IQ from 2012–2022.Two panels based on different ownership structures were created to observe the impact of sustainable investment and firm performance. The findings of this study indicate that sustainable investments positively impact firm performance in private ownership but negatively impact the firm’s performance in public ownership. The study provides an extensive and holistic view of sustainable investments in Indian companies listed in the BSE, which can be helpful for researchers, professionals, and policymakers in the field. The findings of this research contribute to the solutions to socio-economic challenges and support sustainable development goals through sustainable investments. This research is one of the first attempts to provide a holistic view of sustainable investments by including various aspects of sustainability and firm performance in Indian listed companies and ownership.

Impact of corporate philanthropy on firm performance: The moderating role of board structure

Corporate philanthropy plays an important role in enhancing firm reputation and financial performance. Further, board structure has the responsibility to make philanthropic decisions. This study investigates the moderating role of board structure on the relationship between corporate philanthropy and financial performance. We apply fixed effect model for analysing the results, while generalized method of moments (GMM) is employed to check the robustness of the results. We find that corporate philanthropy has a significant positive impact on financial performance. Further, results provide support for the moderating role of board attributes. The findings suggest that the policymakers should take appropriate decisions regarding corporate philanthropy while considering other factors such as board attributes.

Does Digital Orientation Enhance Firm Performance?

Does Digital Orientation Enhance Firm Performance?

Effect of Sectoral Foreign Exchange Utilization on Manufacturing Firms Performance in Nigeria

Effect of Sectoral Foreign Exchange Utilization on Manufacturing Firms Performance in Nigeria

The implications of smart logistics policy on corporate performance: Evidence from listed companies in China

Since the emergence of smart logistics as a vital paradigm, it has garnered significant interest from independent firms and governments worldwide, including China. This study aims to examine the relationship between Smart Logistics Policy (SLP) and firm performance both theoretically and empirically. Utilizing data from A-share companies listed on the Shanghai and Shenzhen stock exchanges between 2012 and 2017, this study analyzes the relationship between SLP and firm performance using Propensity Score Matching (PSM) and Difference-in-Differences (DID). The results indicate that SLP significantly enhances a firm's financial performance. Additionally, a heterogeneity test on financial performance reveals that the impact of SLP varies based on ownership and industrial sector. Unexpectedly, SLP has a negative impact on corporate social responsibility (CSR) performance. The heterogeneity test on CSR performance shows that the SLP effect on CSR exhibits no significant difference based on ownership. Furthermore, the impact of SLP on CSR is significantly greater for manufacturing firms compared to non-manufacturing firms. Consequently, this study offers theoretical support and empirical evidence regarding the effects of SLP on firm performance.

Board expertise diversity and firm performance in sub-Saharan Africa: do firm age and size matter?

Our study delved into an analysis of 128 public companies in Ghana, Kenya, and Nigeria to explore the influence of diversified board expertise on firm performance. We also investigated the impact of firm size and age on this relationship. Our results indicate that a varied blend of professional experts on corporate boards significantly boosts a company's ROA, although there is no significant effect when Tobin's Q measures firm performance. Nevertheless, we discovered that combining firm size and age negatively impacts the correlation between board expertise diversity and firm performance. Our findings support the significance of integrating agency, resource dependence, and convergence theories, implying that businesses can improve their financial performance by including an appropriate mix of expertise on their boards, especially for relatively younger small-sized firms. In contrast, more prominent and ageing firms may not see the same financial benefits. Consequently, we recommend that corporate executives and practitioners consider implementing board expertise diversity to enhance their firms' financial performance.

Interim CEO Successions: Implications for CEO Successor Selection and Subsequent Firm Performance

Prior research highlights that interim CEO successions are disruptive for firms. Yet boards appoint interim CEOs in order to focus on finding the right person to take over permanently, suggesting they may offer benefits to CEO selection. Considering these two views, this paper compares the firm performance of CEOs appointed following an interim period with that of CEOs appointed in a direct succession. We argue that, owing to the disruption caused by the interim appointment, firm performance under a CEO appointed following an interim period will be poorer than under a CEO appointed in a direct succession. However, we posit that, in circumstances in which obtaining and processing the information relevant to CEO selection is more difficult, the interim period may be particularly helpful in selecting the most fitting successor and ultimately weakening the associated performance penalty. Using a sample of CEO successions that occurred in S&P 1500 firms between the years 2002 and 2016, we find general support for our hypotheses. This paper, thus, demonstrates that the subsequent performance consequences of appointing an interim CEO depends on the difficulty of selecting the firm’s next permanent CEO. Funding: We gratefully acknowledge financial support from the Spanish FEDER/Ministerio de Ciencia e Innovacion – Agencia Estatal de Investigacion [Grant PID2021-123450OB-I00].

How does the technology environment impact supply chain strategy and operational performance?

PurposeThis paper investigates the relationship between technological uncertainty and the use of Industry 4.0 (I4.0) technologies, and its impact on the implementation of agile and lean supply chain strategies. It also examines the effect of both of these supply chain strategies on focal firm operational performance in terms of efficiency in manufacturing processes and delivery performance.Design/methodology/approachSurvey data were gathered from 256 focal manufacturing companies in Spain using a structured questionnaire. Covariance-based structural equation modeling (CB-SEM) is used to test the conceptual model.FindingsUnderpinned by the Contingency Theory and the Resource Orchestration Theory, the results indicate that technology uncertainty has a strong association with I4.0 technology use. Furthermore, the use of I4.0 technologies facilitates the implementation of the lean supply chain strategy and the agile supply chain strategy. Focal firm operational performance was also observed to be affected by the two strategies in different ways.Originality/valueThis study extends the literature on operations management by studying the fit between the external environment and strategy by incorporating an in-between element: the use of I4.0 technologies. This research provides a unique empirical analysis of the role of technology uncertainty and integration between I4.0 technologies and supply chain strategies.

Corporate social responsibility and firm value: the role of enterprise risk management and corporate governance

Purpose Corporate social responsibility (CSR) has gained tremendous importance after several corporate scandals, financial crises and the rise of the hyper-competitive world. Firms must address multiple stakeholders’ interests to increase firm value. This study aims to investigate the effect of CSR on firm value. This study also examines the mediating role of enterprise risk management (ERM) and the moderating influence of corporate governance (CG) in this CSR-firm value relationship. Design/methodology/approach The sample of the study comprises 119 Pakistan Stock Exchange (PSX) listed firms and the study covers the period from 2010 to 2021. The corporate social responsibility performance has been quantified across five dimensions. These aspects are product, environment, employee relations, diversity and community. Four proxies i.e. strategy, operation, reporting and compliance, have been used to measure ERM. The governance quality of the sample companies was evaluated using the governance index, which included 29 governance provisions. The authors used the dynamic panel data technique (system-GMM) is used to achieve the objectives of the study. Furthermore, a firm’s engagement in CSR activities can also be measured through a multinational financial approach to check the robustness of the result. Findings Based on the regression analysis, the authors discovered that CSR was positively connected with firm value, validating the stakeholder view of CSR. Furthermore, following Baron and Kenny’s (1986) mediation technique, the findings confirm that ERM mediates this association. These results are robust by using the bootstrapping tests by Preacher and Hayes (2004). Furthermore, the result shows that corporate governance (CG) is positively connected with firm performance, and this relationship is strengthened in the presence of an effective governance system in the organization. Practical implications This study provides useful insights to regulators, investors and policymakers to consider CSR as a value-enhancing factor and encourage the development of enterprise risk management and compliance with CG mechanisms to improve firm value. Originality/value The presented analysis strengthens the existing CSR–firm value relationship by analyzing the mediating and moderating roles of ERM and CG, which have not yet been tested, particularly in the context of Pakistan.

The Impact of Climate Risk on Firm Performance: An Empirical Analysis based on the ESG Perspective of Manufacturing Firms

The Impact of Climate Risk on Firm Performance: An Empirical Analysis based on the ESG Perspective of Manufacturing Firms

Synergistic governance and innovation: the positive effect of cross-holding partners

ABSTRACT Innovation within enterprises stands as a crucial component of effective enterprise management, serving as the primary determinant influencing the company's developmental trajectory, scale, and pace. The primary objective of this study is to analyze the effects of cross-holding partnerships on firms’ innovation performance, as well as the interplay between internal cross-holdings and innovation results. By examining data from 2011 to 2021 of A-share listed companies, this paper empirically analyzes the impact of cross-holding shareholders on firm innovation performance. According to the study, cross-holding shareholders positively impact enterprise innovation performance, indicating a synergistic governance effect. Besides, the study finds that both information transparency and internal control play significant mediating roles in enhancing the relationship between cross-holding shareholders and enterprise innovation performance. The study's novelty lies in its in-depth exploration of cross-holding intricacies and their specific influence on innovation. By dissecting various cross-holding scenarios, the research contributes valuable insights that refine the understanding of how shareholder dynamics can shape innovation within enterprises. Based on the findings suggestions for practitioners include a nuanced approach to cross-holding arrangements, emphasizing the need for strategic alignment between shareholders and innovation goals. Additionally, developing transparency and communication among cross-holding entities may mitigate potential negative effects on innovation.

The role of green marketing strategies for a competitive edge: A case study about analysis of leading green companies in Jordan

AbstractThis study aims to explore the relationship among green marketing practices, leadership commitment, and environmental performance specifically within Jordan's pharmaceutical industry. It explores the impact of green marketing strategies on the competitive advantage of leading green companies in Jordan. The limitations of this study focused on the Jordanian market, and its findings are not generalizable to other countries due to market contrasts. A quantitative approach was employed to address the research question of “to what extent” these strategies contribute. The theory of the resource‐based view (RBV) was applied to this topic because it suggests that a firm's competitive advantage and performance are primarily determined by its unique resources and capabilities. The research instrument consists of 9 factors clarifying the role of green marketing strategies in improving the competitive edge of leading green companies in Jordan. The population of this study includes all implementing managers of Jordanian leading green companies, while the sample of this study consists of 32 implementing managers. After distributing the scale to the participants of this study, their responses were collected and discussed carefully. Then, their responses were analyzed by using SPSS statistical tests. The results show a significant positive correlation between green marketing strategies and competitive edge. This indicates that leading Jordanian green companies actively gain “green marketing” initiatives to gain and maintain a competitive advantage in the market. The study concludes that embracing green marketing is crucial for Jordanian green companies to compete effectively and achieve sustained success. Novelty or originality in this research looks for specific statements that indicate to a novel theoretical approach, a new methodology, or an innovative application of existing theories, or a unique data. This adds new ideas to the knowledge of this study.

Managerial Performance and Economic Performance in the Technology Sector

The technology (tech) sector outperformed all other sector stock price averages in 2023. This paper addresses two issues regarding the tech sector. First, relative to other firms, are there any managerial areas in which the tech sector outperforms to explain their superior performance relative to all other firms? Second, within the tech sector, what managerial practices lead to higher profits? Four areas of managerial performance are considered: customer satisfaction, employee engagement and development, innovation, and social responsibility. This paper utilizes Bloomberg data and takes the novel approach of utilizing the Drucker Institute Indexes to assess performance in the tech sector. The Drucker Institute has computed a Corporate Effectiveness Index since 2017. The overall effectiveness index is based on performance regarding five dimensions: customer satisfaction, employee engagement and development, innovation, social responsibility, and financial strength. The firms they track are United States companies whose shares are traded on the New York Stock Exchange or Nasdaq Stock Market and meet certain size requirements. Among the four dimensions tested, customer satisfaction is the one dimension that is positive and significant when comparing across tech firms. Second, employee engagement is more important for tech firms than for other firms. The major contribution of this paper’s findings is that while innovation may be the hallmark feature of tech firms, innovation for its own sake does not drive firm performance. A focus on people (customers and employees) is the key to earning higher profits in the tech sector.

Entrepreneurial Orientation and Firm Performance of Malaysian SMEs: A Systematic Review and the Uncharted Parts

Entrepreneurial Orientation and Firm Performance of Malaysian SMEs: A Systematic Review and the Uncharted Parts

The effect of intellectual property rights on firm performance in service firms: the role of process and organizational innovation

PurposeThis paper aims to examine the effects of intellectual property rights (IPRs) on firm performance, considering the mediating effect of process innovation and the moderating effect of organizational innovation. Additionally, this study investigates both the direct and indirect effects of IPRs on firm performance.Design/methodology/approachWe employed partial least squares structural equation modeling (PLS-SEM) to examine proposed hypotheses. Our analysis attempted to analyze 3,750 Korean firms sourced from the Science and Technology Policy Research Institute (STEPI).FindingsProcess innovation mediates the relationship between IPRs and firm performance, and organizational innovation moderates the relationship between IPRs and process innovation. As a result, process and organizational innovation positively and indirectly affect firms’ financial performance. Also, IPRs can be regarded as a crucial resource for service firms, contributing to enhancing their performance.Research limitations/implicationsThe results of this study imply that IPRs can act as valuable intellectual resources for firms, improving financial performance. The mediating role of process innovation in the relationship between IPRs and firm performance highlights the significance of process innovation as a principal resource applicable to both the service and the manufacturing industries. Additionally, this study reveals that organizational innovation plays a vital role in determining firm performance by moderating the relationship between IPRs and process innovation. For the limitation of this study, it is important to acknowledge that the research primarily focuses on examining firms’ internal resources, while innovation activities can be significantly influenced by external knowledge resources as well. To address this limitation, future research should consider integrating the influence of external knowledge resources to provide a more well-rounded perspective on the relationship between IPRs, innovation, and firm performance.Practical implicationsThis study holds two significant practical implications. First, from a corporate management perspective, service firms can improve their financial performance by developing or improving process innovations. This underscores the importance of investing in and fostering process innovation within an organization to achieve better financial outcomes. Second, from the corporate managers’ perspective, organizational innovation is crucial in improving firm performance, particularly when combined with IPRs and process innovation. This suggests that a holistic approach to innovation, encompassing both organizational and process-oriented initiatives, can lead to more substantial positive effects on firm performance. Finally, managers should proactively manage and regulate IPRs at various organizational levels, especially in the rapidly evolving digital landscape. By safeguarding and strategically leveraging their IPRs, companies can position themselves advantageously and capitalize on the opportunities presented in the digital realm.Originality/valueThis study shows that firm innovations can dynamically shape the relationship between IPRs and firms’ performance. This highlights the significant potential for firms to leverage their intellectual resources strategically to create novel and competitive products or services. Adopting a resource-based view, this study suggests that firms can enhance their competitive advantage and overall performance by effectively utilizing and collaborating with IPRs and innovations.

Moderating Effects of Dividend Policy Consistency and ROA on Firm Performance in M&A

The occurrence of a positive abnormal return is the dream of every investor in dealing with the decisions taken by the company, because it can provide its own benefits for stakeholders. Therefore, what can create positive abnormality around the announcement of company decision-making, especially Merger and Acquisition (M&A) decisions? To reveal several factors that can create positive abnormal returns around M&A announcements, this study aims to determine the effect of dividend-paying firms on short-term M&A performance which is moderated by the consistency of dividend policy and Return on Assets (ROA) and controlled by size. company using multiple linear regression model. The data used in this research comprises companies in Indonesia that conducted M&A during the period 2002-2021. The total number of observations in this study is 150, and the research employs the Ordinary Least Squares (OLS) technique for analysis. The results of this study indicate that dividend-paying firm has a significant positive effect on short-term M&A performance. The consistency of dividend policy cannot strengthen the positive relationship between dividend-paying firms and short-term M&A performance, but the firm's performance as reflected in ROA, strengthen the positive effect of dividend-paying firms on short-term M&A performance.

Influence of Board Diversity on Firm Performance and Sustainability in Kenya

Influence of Board Diversity on Firm Performance and Sustainability in Kenya