Firm Perspective Research Articles

On the design of bail-in-able bonds from the perspective of non-financial firms

To prevent black swan events such as the financial tsunami or COVID-19 from crashing overall economic systems, governments provide bailouts to too-big-to-fail financial institutions and non-financial firms such as airline companies with tax payers’ money. To avoid unfair bailouts, using bail-in-able bonds to absorb an issuing bank’s losses and to fulfill capital requirements such as BASEL III has been widely studied. Without capital adequacy requirements, non-financial firms also issue bail-in-able bonds because the embedded loss-absorbing mechanism can cut debt repayments down to reduce bankruptcy risk and thus increase the overall benefits of these firms’ claim holders. However, bond investors require higher rewards to compensate for their potential losses once this mechanism is triggered. In addition, unlike financial institutions, which are strictly regulated, such a mechanism may induce non-financial issuers to take on excessive risk to benefit themselves at the expense of their debt holders. To investigate how the issuances of various (non)-bail-in-able bonds influence the equity and the existing debt holders’ benefits from a non-financial issuer’s prospective, we develop novel quadrature pricing formulas based on the structural credit risk model. We find that while non-bail-in-able bonds can be wise choices for low-leverage issuers, bail-in-able bonds with benefit-sharing mechanisms allowing investors to share issuers’ upside profits can efficiently suppress interest expenses and circumvent the asset substitution problem for high-leverage issuers. If the value of an issuer (such as an oil shale firm) mainly depends on the value of that asset (such as oil), issuing a bail-in-able bond referring to the asset could be a wise choice. Otherwise, issuing a bond referring to the issuer’s stock price could provide timely fund injections and low interest expenses for a high-leverage public firm.

Mixed ownership reform and the short-term debt for long-term investment of non-state-owned enterprises: Evidence from China

In this study, we provide evidence on the effect of introducing state-owned shareholders in non-state-owned enterprises from the perspective of firms' short-term debt for long-term investment. Using Chinese Non-SOEs listed companies from 2010 to 2020 as the sample, we find that the introduction of state-owned shareholders in Non-SOEs significantly promotes the level of short-term debt for long-term investment. We also find the scale of short-term debt, the scale of long-term investment and the quality of internal control play a mediating effect in the relationship between the mixed-ownership reform and the short-term debt for long-term investment. Regional marketization level, economic downcycle, regional banks competition level, the economic policy uncertainty and the firms' market competition power can influence the effect of introducing state-owned shareholders in Non-SOEs. Further, our analysis of the economic consequences of the short-term debt for long-term investment implemented by Non-SOEs demonstrates that it indeed can reduce the cost of debt financing. Overall, the results shed light on the effectiveness of the mixed-ownership reform, and our findings enrich the literature of investment and financing strategy and provides empirical evidence to promote the mixed-ownership reform.

The Islamization in the Malay Archipelago: a Study of Azyumardi Azra's Thought

Indonesia, with over 231 million Muslim people, is home to the world's largest Muslim population. However, the origins of Islam in Indonesia and the process of Islamization in the Archipelago are still highly debated topics among historians. Azyumardi Azra, a distinguished historian, and former UIN Syarif Hidayatullah Jakarta rector, has extensively researched Islamization in the Archipelago. This journal serves the purpose of delving into Azra's scholarly perspective, offering insights and analysis on the intricate process of Islamization within Indonesia. The present study adopts a literature review approach to comprehend and analyze Azra's writings. Azra postulates that the Islamic connections with the Archipelago can be traced back to Arab countries via trade routes, which were notably influenced by the triumphant spread of Islam into Persia and the Indian Subcontinent during the Umayyad dynasty (660-749H). In conclusion, Azra held a firm perspective regarding the significant Arab influence during the initial phases of Islamization in the Archipelago.

Avengers, assemble! A network-based contingency analysis of spillover effects in multi-brand alliances

Brand alliances are becoming increasingly complex, as marketers have begun to combine not only two but multiple brands to foster spillover effects. A particularly complex brand-alliance strategy is team brands, which combine various brands under a team-brand name. Using data from the Marvel brand universe, we examine contingency factors of sales spillover effects between team brands (e.g., Avengers) and their constituent brands (e.g., Hulk). We investigate the moderating role of key network characteristics, describing the team-brand networks and the constituent brands’ roles within these networks from both a firm perspective (brand-brand networks reflecting managers’ decisions about which constituent brands to combine) and a consumer perspective (brand-association networks reflecting consumers’ team-brand associations). The results show that network characteristics strongly affect spillovers and, more importantly, that their effect depends on both the direction (spillover from constituent brands to team brands or vice versa) and the network (brand-brand vs. brand-association network).

Gender Diversity and Human Capital Efficiency in Australian Institutions: The Moderating Role of Workforce Environment Quality

We examine the relationship between board gender diversity and human capital efficiency and further consider the moderating role of workforce environment quality from the perspectives of profit-making and loss-making firms. Using a sample of 2700 firm-year observations from listed Australian firms for the period 2008–2019, we found a positive relationship between the presence of females on boards and human capital efficiency which was more pronounced for loss-making firms as against profit-making firms. Additionally, the relationship between gender diversity and human capital efficiency was moderated by the quality of workforce environment with the moderating effect being more pronounced for loss-making firms as compared to profit-making firms. Board gender diversity plays a substitutive role in the management of human capital efficiency for loss-making firms where investment in human capital development is limited.

Carbon emission trading scheme and corporate labor investment efficiency: evidence from China.

Under the dual pressure of environment and employment, it has been a hot topic whether government departments can achieve the double dividend of "environmental improvement" and "employment promotion" via reasonable market-based environmental regulation. In light of the exogenous policy event of the carbon emission trading scheme (ETS), this study investigates the impact of ETS on the corporate labor investment efficiency of a sample of industrial companies listed in China's A-share from 2007 to 2020. The study reveals that the ETS can significantly improve corporate labor investment efficiency. Further research finds that the promotion of green technology innovation and alleviation of financing constraints as crucial mechanisms by which ETS affects corporate labor investment efficiency; the ETS improves the corporate labor investment efficiency more significantly in enterprises with a lower marketization degree, lower labor intensity, and non-state-owned enterprises. The improvement of labor investment efficiency by the ETS is associated with the amelioration of labor under-investment and suppression of over-investment. Furthermore, the improvement of labor investment efficiency by the ETS can enhance enterprises' productivity. In light of these findings, this study provides suggestions for the improvement of ETS from the microscopic perspective of firms and offers ideas for the improvement of corporate labor investment efficiency.

External knowledge sourcing, organizational ambidexterity and manufacturing performance: a new insight for dynamic operation management

PurposeThis study intends to examine the relationships between external knowledge sourcing (EKS), organizational ambidexterity (OA), and manufacturing performance (MP) in the context of large manufacturing firms within a dynamic environment setting. The research framework and derived hypotheses are grounded in the knowledge-based view (KBV) and dynamic capability (DC) theories.Design/methodology/approachA self-administered online survey was used in this study to gather data. Respondents were the operation leaders representing large manufacturing firms. The collected data were screened for invalid responses, and hypotheses were tested using structural equation modeling.FindingsThe study reveals that OA and EKS play key roles in achieving a better MP. Likewise, OA also mediates the relationship between EKS and MP.Research limitations/implicationsCross-sectional data were collected from large manufacturing firms within five focus sectors in Malaysia. A similar study can be conducted with more sectors of different contexts to confirm the findings.Practical implicationsKnowledge is critical for the firm to react to environmental dynamism, and the ability to manage it ambidextrously will enable the firm to enhance its performance.Originality/valueThis study offers empirical insights from the perspective of the large manufacturing firms in Malaysia, which are undergoing an Industrial Revolution 4.0 (IR4.0) transformation. This study bridges the knowledge gap by revealing the value that EKS can facilitate MP, exploring OA as the prevalent factor and demonstrating how KBV and DC can be applied in this study.

한국 주요 산업의 GVC 현황과 쟁점

The recent GVC disconnection caused by the Russia-Ukraine war, COVID-19, US-China hegemony and technology competition requires strategic policy establishment and preparation at the national level as it goes beyond firm-level response capabilities. Since transactions under already established supply chains still account for a significant portion of trade in the perspective of firms, based on diagnosis and objective understanding of the current status, efforts are required to actively respond to changes in the global economic-security and industrial environment. Therefore, this study analyzes the current status of GVC, focusing on the electronics and automobile industries, which are the main industries that contribute the most to Korea's domestic value-added exports, and summarizes the implications related to GVC restructuring to respond to the changing trade environment.
 This study uses ICIO (2021), the most up-to-date data as of 2023, to analyze the results of value-added export decomposition of Korea's main export industries, electronics and automobiles. In particular, the study is meaningful in that it links recent changes centered on the US-China in the macro policy environment (country-industry) to the implications of the microscopic aspect (industry-item).

How to enhance online reputation? An empirical study from a joint customer–firm perspective

Online reputation is critical for hotel firms, as evidenced by consumer ratings in online media. The present study aims to develop insights into the antecedents of the hotel firm's online reputation and thus make a dual contribution to the literature by (a) examining the strategies implemented via online media as antecedents and (b) combining the firm's perception of the value it has delivered with the market's perspective. A quantitative empirical study on hotel firms and their consumers was conducted. The results show that the firm's perception of the value it has delivered (“firm perceived value”)—the antecedents of which are strategic online reputation-management and the strategic use of revenue-management—has a positive and significant effect on online reputation (as measured from the customer perspective), and that strategic online reputation-management has a positive and significant effect on the strategic use of revenue-management.

The orchestration of green supply chain management practices to enable performance measurement and evaluation

This study aims at investigating the relationship between the implementation of green supply chain management (GSCM) practices and the implementation of environmental performance measurement and evaluation (EPME) practices. The theoretical model was empirically validated using structural equation modelling in a survey of 199 Brazilian managers working in sustainability areas. We introduce a novel framework that bridges systems theory with the practice-based perspective of firms. The framework advances the current understanding of factors influencing EPME adoption, structuring GSCM practices as system components: inputs, processes, outputs, and feedback loops. More specifically, we identify the direct effects of different GSCM practices in the implementation of EPME but also indirect effects cascading through input, process, output, and feedback loop practices. Our research addresses industry needs for guidance on how to implement GSCM practices and facilitate EPME. Managers need to orchestrate the adoption of GSCM practices in each of these system components by monitoring of inter-organisational and intra-organisational activities of their supply chains. Both EPME and feedback loop practices (e.g. customer collaboration) are key to achieving benefits concerning the environmental impact of supply chain operations.

Research on the Influencing Factors of Construction Enterprises’ Digital Transformation Based on DEMATEL-TAISM

The ongoing shift from an industrial to a digital economy is a significant global phenomenon. However, the driving forces behind and the tactical approach to digital transformation are still unclear to the construction industry, thereby posing challenges for construction enterprises seeking to undergo digital transformation. Therefore, this paper conducted an investigation on the subject, including the following: (1) the 17 influencing factors in the complex system of digital transformation of construction enterprises were screened and summarized from four perspectives: Environment, Technology, Organisation, and Resources. The attributes of the influencing factors were analyzed using the Decision-Making Experimentation and Evaluation Laboratory (DEMATEL) method, and the key factors were identified. (2) The Total Adversarial Interpretive Structure Model (TAISM) method was used to develop a multi-perspective adversarial recursive structure model with integrated impact values, which reflected the interrelationships between the influencing factors and the hierarchical structure. (3) Based on the analysis of the influencing factors of digital transformation of construction enterprises, the clear path mechanisms were elucidated and suggested measures from the internal and external perspectives of government and construction firms were recommended. The results can offer theoretical backing and serve as a stepping stone for the digital transformation of the construction industry.

OBILJEŽJA NEFORMALNOG RIZIČNOG KAPITALA U ČEŠKOJ: KVANTITATIVNO ISTRAŽIVANJE

In this paper, the demographic and investment profiles of business angels operating in the Czech Republic are evaluated based on a sample of 78 angel investors. This is the first attempt to use data on investor activities from the Pitchbook database, which has become increasingly popular in academic research. Beyond the framework of descriptive statistical analysis, a multidimensional statistical investigation using cluster analysis was conducted. The results show that there are two groups of angel investors in the Czech Republic. The first group is represented by investors who predominantly have a large active portfolio, as well as the number of total completed investments. On the other hand, the second cluster is made up of investors who conduct a smaller number of investments and are also in the position of the founder of a start-up. Not surprisingly, there are two main locations of angel investors in the Czech Republic, Brno and Prague. Both categories of typical investors are united by some demographic characteristics; for example, the market is dominated by middle-aged men with a completed Master’s degree in Economics who invest in start-ups in the field of information and communication technologies. The main contribution of the paper consists in evaluating the demographic and investment profiles of angel investors operating in the Czech business environment. The results of the research have implications for upcoming research, the informal venture capital industry, and public policy beyond the Czech business environment, while developing tools for fostering an angel ecosystem. In today’s globalized world, the boundaries of angel investors are often blurred. Just as start-ups have ambitions to expand internationally, informal venture capitalists are increasingly making cross-border deals. From the perspective of both investee firms and policy makers, it is thus important to know the profiles of not only domestic but also foreign business angels, e.g. with regard to the setting of public support for foreign capital inflows.

The nexus between economic policy uncertainty and access to finance: a study of developing countries

PurposeThis paper attempts to document the effect of economic uncertainty on financing constraints faced by private firms.Design/methodology/approachOrdered logistic regression is used to analyze the data of private firms from 101 developing countries. The data was provided by the World Bank's Enterprise Surveys and was gathered during the period between 2006 and 2019.FindingsThe findings show that firms headquartered in countries with high economic uncertainty face more financing constraints than firms headquartered in countries with low economic uncertainty. The authors argue that the increase in economic uncertainty allows capital providers to adjust their lending decisions by reducing the provision of capital to firms. The paper also shows that firms headquartered in countries with strong institutional infrastructure and well-functioning firms are less likely to be affected by economic uncertainty while accessing finance.Practical implicationsThe findings would help managers, investors, regulators, and policymakers better understand the implication of economic policy uncertainty on the real economy. This study also sheds the light on the importance of minimizing volatility, ambiguity, and randomness in governmental decisions and policies. Regardless of the pertinence of these policies, arbitrariness surrounding their development and communication can limit their effectiveness and produce unwanted effects.Originality/valueThis paper is closely related to prior literature that documents the behavior of credit providers and investors (the supply side) during the periods of economic uncertainty. The authors differ from this strand of literature by taking the perspective of firms – the demand side.

Ethnic Diversity and Firm Performance in Norway

Ethnic diversity has received increased research attention in Nordic countries; however, only a fewstudies have looked at it from the perspective of firms. In this study, we analyze whether changesin ethnic diversity among staff and in management affect firm performance. We also test whetherproductivity gains from diversity are due to immigrants being hired in low-paying jobs by analyzinghow the association between diversity and productivity is affected by immigrants’ positions in firms’wage distributions. Our results suggest a positive relationship between changes in ethnic diversitywithin firms and firm productivity. The association strengthens if firms have more diversity in management and immigrants higher up in their wage distribution. This suggests that our results are not driven by firms that hire immigrants in low-paying positions. Possible mechanisms to increase firm productivity through ethnic diversity include wider recruitment and activation of diversified humancapital and more inclusive firm policies.

Does the CEOs' hometown identity matter for firms' environmental, social, and governance (ESG) performance?

The environmental, social, and governance (ESG) performance is a vital pursuit of firms' strategy and has caused substantial influences on firms' behavior and outcomes. Therefore, exploring how to facilitate the firms' ESG performance is necessary. This paper examines the role of CEOs' hometown identity in facilitating firm's ESG performance. Based on a sample of Chinese listed firms during 2010-2018, we compare the ESG performance of firms with hometown CEO with that of firms without hometown CEO and find that CEOs' hometown identity is associated with significantly higher ESG performance. The benchmark results still hold after instrumental variable regression, placebo test, propensity score matching, lagging, and altering the measurement of CEOs' hometown identity. Additional analysis shows that CEOs' hometown identity exerts a more prominent positive effect on ESG performance among firms with higher financing constraints and SOEs. Our findings reveal a bright side of CEOs' hometown identity: it facilitates ESG performance. Therefore, this paper's conclusion sheds new light on the bright side of CEOs' hometown identity from the perspective of firms' ESG performance and provides insights into how to improve ESG performance.

Voting with their feet: Controlling shareholders' share pledging and other major shareholders' strategic response

This paper investigates whether and why other major shareholders “vote with their feet” when confronted with agency conflicts among shareholders by examining their stock selling behaviors after controlling shareholders pledge their shares. Using a sample of listed Chinese firms from 2007 to 2020, we find that when controlling shareholders increase their pledging, both the number of share selling transactions and the stock values sold by other major shareholders increase. This relation is stronger when a firm has a higher level of liquidity, more large shareholders, greater contestability of other major shareholders, and a higher information asymmetry, supporting the “exit” theory. Our findings imply that selling shares is a strategic response by other major shareholders to controlling shareholders' pledging. On the other hand, the liquidity and portfolio rebalancing needs or insider trading of other major shareholders are not the driving forces of their selling behaviors in the case of share pledging. We further document that other major shareholders' “exit” has significant economic implications from the perspective of themselves and the perspective of firms. “Voting with their feet” helps other major shareholders to avoid potential losses and improves firm valuation, profitability, and stock price efficiency.

Internal IT modularity, firm size, and adoption of cloud computing

AbstractCloud computing has achieved great commercial success to date, but its associated risks may impede firms from adopting it more effectively. This paper addresses the issue from the perspective of firms that use cloud computing and argues that the modularization of firms’ internal IT systems play an important role in enabling their adoption of cloud services. We performed detailed empirical analyses employing a dataset containing 457 firms classified as small and medium-sized enterprises (SMEs) as well as large enterprises. Our empirical results mainly suggest that internal IT modularity aimed for organization-wide, top-down strategic business transformation can help firms better adopt application-level cloud services regardless of their firm size. Bottom-up non-strategic internal IT modularity siloed in individual projects can foster the use of server-level cloud services for SMEs, but not for large enterprises. Our findings reveal support for the general prior understanding of (a) the negative effect of internal IT expenditure and cloud-based software’s quality and risk concerns on application-level cloud adoption, and (b) the positive effect of perceived benefits of cloud-based software on application-level cloud adoption for both SMEs and large enterprises. Finally, when SMEs develop more custom Web services in house, they tend to adopt fewer server-level cloud services externally. The theoretical development and empirical analysis of the effect of IT modularity and firm size on cloud adoption contribute to our understanding of how firms can be more internally ready to use cloud computing effectively.

Move to innovation: place-based industrial relocation policy and firm innovation in China

PurposeThis study investigates whether and how place-based industrial relocation policy affects firm innovation.Design/methodology/approachBy exploiting the establishment of China's National Industrial Relocation Demonstration Zones (NIRDZs) as a quasi-natural experiment in a difference-in-differences design, the authors examine the externalities of industrial policies that support sustainable development and growth from the perspectives of firms' patenting activities.FindingsThe study consistently finds that the NIRDZs policy significantly boosts local firm innovation, translating into a 60.46% increase in the patent applications of treated firms. The estimation results remain robust to a series of alternative specifications. Moreover, heterogeneity analysis suggests that the firms that benefited most were state-owned enterprises, firms with higher productivity, or firms in non-high-tech industries. Further, the authors find that the NIRDZs policy stimulates firm innovation mainly in the form of utility model patents, followed by designs and invention patents.Research limitations/implicationsThe results provide suggestions and implications for policymakers to improve the efficiency of state-led industrial policies and avoid “government failure” in policy implementation.Social implicationsThis study provides suggestions and implications for policymakers to improve the efficiency of state-led industrial policies and avoid “government failure” in the policy implementation.Originality/valueThis study fills the research gap by exploiting quasi-experiments to assess the effectiveness of state-led industrial policies for emerging economies. (2) The analysis sheds empirical light on how corporate innovation is motivated and financed by selective and functional industrial policies. (3) Theoretically, the results rationalize why state-led industrial relocation fuel innovation capabilities of localities from Marshall externalities and competition crowding-out effects.

International expansion and home-country resource acquisition: A signaling perspective of emerging-market firms’ internationalization

International expansion and home-country resource acquisition: A signaling perspective of emerging-market firms’ internationalization

Not All Friends Are Alike: A Categorization of Friendly Acquisitions Integrating the Acquired Firm Profile with the Acquirer's Approach

AbstractAlthough previous studies have examined the distinct motivations of acquirers and contrasted the differences between friendly and hostile acquisitions, the combination of the acquirer and target firm perspectives, particularly within friendly acquisitions, has not yet been addressed. By adopting a multidisciplinary approach and integrating the acquiring and acquired firms’ perspectives, this study identifies different types of friendly deals and investigates their impact on post‐acquisition performance. A unique dataset of 668 acquisitions was constructed by merging the Zephyr and Orbis databases. A regression analysis revealed that, in general, rescue and appealing targets obtain better post‐acquisition performance than average targets. The effect of rescue and appealing targets is accentuated by greater accumulated knowledge. Conversely, in partial acquisitions, the effect of rescue and appealing targets is diminished for high‐accumulated knowledge. This signal change of the knowledge‐moderating parameter implies that under general conditions, rescue and appealing targets outperform average targets. However, if the acquirer seeks to follow a collaborative approach to extract the accumulated knowledge of the target firm, then it is better to signal a more cooperative stance through a partial acquisition.