Sample Of High-technology Firms Research Articles

The impact of intellectual capital – knowledge management strategy fit on firm performance

PurposeThe purpose of this paper is to focus on the fit between intellectual capital (IC) and knowledge management (KM) strategy and its impacts on firm performance.Design/methodology/approachBased on the fit view, the authors posit that firms can enhance performance by aligning the structure of their IC with KM strategy, as reducing the extent to which their actual IC profile deviate from the “ideal” profile when implementing certain type of KM strategy. Using survey data collected from 328 high technology firms in China, the authors tested the research model.FindingsThe more fit a firm’s IC is to its KM strategic type, the better operational and financial performance it can achieve.Research limitations/implicationsThe sample of high technology firms in China might limit the generalization of the findings. Nonetheless, this study is based on and extends prior research, which provides a deepened understanding of the role of IC-KM strategy fit in organizational settings.Practical implicationsThe paper suggests that firms should adjust their IC according to KM strategy they employ. According to the findings, managers can selectively develop IC to achieve performance goals under certain type of KM strategy.Originality/valueAs one of the first studies to investigate the relationship among IC, KM strategy and firm performance in a holistic way, it indicates that the IC-KM strategy fit can be a novel explanation for performance variances through the alignment of knowledge-based capability and strategy.

Knowledge sharing, intellectual capital and firm performance

Purpose– The aim of this paper is to investigate the impact of knowledge sharing (KS) on firm performance and the mediating role of intellectual capital (IC).Design/methodology/approach– A research model was developed based on prior KS and IC studies. A survey was administered to a sample of high technology firms in China and 228 usable responses were collected. Structural equation modeling (SEM) was employed to test the research model.Findings– Tacit KS significantly was found to contribute to all three components of IC, namely human, structural and relational capital, while explicit KS only has a significant influence on human and structural capital. Human, structural and relational capital, enhance both operational and financial performance of firms. The effect of KS on firm performance is mediated by IC. Explicit KS has a greater effect on financial performance than operational performance, whereas tacit KS has a greater impact on operational performance than financial performance.Research limitations/implications– The sample of high technology firms in China might limit the generalization of the findings. Nonetheless, this study takes its lead from and extends prior research, thus providing a deepened understanding of the role of KS in organizational settings.Practical implications– The paper suggests that managers can enhance firm performance by enhancing their KS and IC. Managers can develop corresponding strategies based on the findings to achieve their specific performance goals.Originality/value– This is one of the first papers to examine how KS contributes to firm performance through the mediation of IC. It will add significant value for organizations trying to enhance their performance though KS practices.

Global Diversification and Hedging by High Technology Firms

This paper examines the operational hedging strategies of high technology firms and how they are related to financial hedging. We use a sample of 216 firms, consisting of 108 operationally-hedged high technology firms and a size and industry matched sample of 108 non-operationally-hedged firms. We find that derivatives users are larger and are more R&D intensive than non-derivative users. Our regression analysis results show that operational hedging and financial hedging are complementary. However, firms that use financial hedging are able to significantly lower their exchange rate exposure. Finally, our results show that financial hedging adds value for our sample of high technology firms, while operational hedging does not.

Flexibility-Oriented HRM Systems, Absorptive Capacity, and Market Responsiveness and Firm Innovativeness

Although market responsiveness and firm innovativeness are important aspects of firm performance, little is known about which human resource management (HRM) systems foster these performance aspects and how. Building on prior research, we delineate flexibility-oriented human resource management (FHRM) systems in terms of resource- and coordination-flexibility-oriented HRM subsystems. In addition, we draw on organizational learning theory and the concept of absorptive capacity (AC) to articulate the mechanisms through which these systems might influence market responsiveness and firm innovativeness. We develop and validate measures of FHRM systems using a series of four independent samples. Our findings based on a sample of high-technology firms indicate that FHRM systems are positively associated with firm-level potential and realized AC and that potential AC, in turn, is positively associated with market responsiveness and firm innovativeness.

CEOs on a Bed of Thorns: The Effects of the CEO Labor Market on R&D Investment in High-Technology Firms

Previous governance research has paid little attention to the role of CEO labor markets in controlling CEO behaviors. The CEO labor market has been described as inefficient because the market is short-supplied and firms have a low tendency to hire external CEOs. With the increasing mobility of top executives among firms, however, the potential of CEO labor markets to serve as an external disciplining force has been growing. In this study, we have developed a theory on the role of the CEO labor market in disciplining CEO behavior. We argue that CEOs who are assumed to be risk-averse will actually take more risks by increasing investments in research and development (R&D) as the CEO labor market becomes more efficient. Using a longitudinal sample of high-technology firms from Standard and Poor’s (S&P) 500 firms from 2001 to 2004, we found that CEOs invest more in R&D as the supply of CEO candidates increases. We also found that the tendency of CEOs in a well-supplied CEO labor market to increase R&D investment is greater when more firms in the market are hiring external CEOs. These findings demonstrate that CEO labor markets have the potential to function as an effective external governance mechanism in controlling CEO self-serving behaviors. Our study suggests that more research on the role of the CEO labor market is needed.

Mitigating the limited scalability of bootstrapping through strategic alliances to enhance new venture growth

Although the benefits of bootstrapping are widely known, decreasing returns to venture growth from this strategy are less understood; falls in returns. Decreasing returns may result from limited scalability and increased costs resulting from reduced legitimacy among stakeholders. Using a sample of high-technology firms, this article tests the non-linear relationship between bootstrapping and venture growth and the moderating effects of alliances on this non-linear relationship. We find that bootstrapping has an inverted-U relationship with venture growth; however, alliance diversity enhances the positive effects of bootstrapping while mitigating its negative effects on venture growth.

Does Enforcement of Intellectual Property Rights Matter? Evidence from Financing and Investment Choices in the High Tech Industry

Financing of and investing in R&D are prone to risks of appropriation by competitors, information asymmetry, and agency problems. Although legal protection of intellectual property (IP) rights at the national level is necessary to encourage investing in R&D, we show that the effective enforcement at the local level is also critical. We concentrate on the impact of provincial level IP rights enforcement on the financing of and investing in R&D, using a unique and rich sample of high technology firms. These firms are located in twenty-eight provinces/districts throughout China. The enforcement of IP rights differs at the provincial level, although the firms are under the same set of national and international laws. Controlling for provincial institutional factors such as economic development, banking system development, legal system performance, and local government corruption, we find that the enforcement of IP rights positively affects firms' ability to acquire new external debt (including formal and informal financing) and external equity. The firms in provinces with better enforcement of IP rights invest more funding in R&D, generate more patents, and produce more sales from new products. We also find better enforcement of IP rights helps mitigate the problem of appropriation by local partners in foreign and ethnic joint ventures. To deal with the problems of reverse causality and omitted common variables, we adopt the instrumental variable method and the approach used by Rajan and Zingales (1998), and the impact of IP rights enforcement is robust to different specifications. Our evidence confirms that enforcement of IP rights matters even in China. Furthermore, our results support that the enforcement of IP rights affects the growth in the economy via the channels of financing of and investing in R&D.

Experience-Based Human Capital and Social Capital of Outside Directors

In this article, the authors develop and test a theoretical model of the effects of outside directors' human and social capital on firm growth. They posit that outside directors' board memberships and managerial experiences have additive and interactive effects. Using a longitudinal sample of high technology firms, they test their theory and find that outside directors' membership on multiple boards, industry-specific managerial experience, and firm-specific founding experience have strong additive effects on firm growth. They also find negative interaction effects, indicating the costs of acquiring and combining certain types of outside director human and social capital within the board.

Sourcing Technological Knowledge Through Corporate Acquisition: Evidence from an International Sample of High Technology Firms

We investigate the prevalence of the motive to source technological knowledge externally through corporate acquisition. Drawing on make-or-buy and organizational learning theories, we infer the implications of this explanation for the acquirers’ pre-acquisition innovative characteristics. Using an international sample of 6106 high technology acquisitions during 1984-2000, we assess the contribution of innovative characteristics to the acquisition likelihood. For firms acquiring small private firms and former subsidiaries – but not public targets – the evidence is consistent with three propositions: (1) A firm’s commitment to internal RD (2) Low RD (3) A large knowledge stock predisposes firms to acquire because they perceive they are capable of selecting and absorbing targets. We conclude that acquisitions of small private firms and former subsidiaries are a viable R&D strategy to explore a range of potential future innovation trajectories for large public firms.

Experience-Based Human Capital and Social Capital of Outside Directors

In this paper, we develop and test a theoretical model of the effects of outside directors' human and social capital on firm growth. We posit that outside directors' board memberships and managerial experiences have additive and interactive effects. Using a longitudinal sample of high technology firms, we test our theory and find that outside directors' membership on multiple boards, industry-specific managerial experience, and firm-specific founding experience have strong additive effects on firm growth. We also find negative interaction effects, indicating the costs of acquiring and combining certain types of outside director human and social capital within the board.

Sourcing technological knowledge through corporate acquisition: Evidence from an international sample of high technology firms

We investigate the prevalence of the motive to source technological knowledge externally through corporate acquisition. Drawing on make-or-buy and organizational learning theories, we infer the implications of this explanation for the acquirers' pre-acquisition innovative characteristics. Using an international sample of 6106 high technology acquisitions during 1984–2000, we assess the contribution of innovative characteristics to the acquisition likelihood. For firms acquiring small private firms and former subsidiaries—but not public targets—the evidence is consistent with three propositions: (1) A firm's commitment to internal R&D is negatively affected by the decision to acquire; (2) Low R&D productivity increases the likelihood of acquisition; (3) A large knowledge stock predisposes firms to acquire because they perceive they are capable of selecting and absorbing targets. We conclude that acquisitions of small private firms and former subsidiaries are a viable R&D strategy to explore a range of potential future innovation trajectories for large public firms.

The contextual nature of the predictive power of statistically-based quarterly earnings models

We present new empirical evidence on the contextual nature of the predictive power of five statistically-based quarterly earnings expectation models evaluated on a holdout period spanning the twelve quarters from 2000–2002. In marked contrast to extant time-series work, the random walk with drift (RWD) model provides significantly more accurate pooled, one-step-ahead quarterly earnings predictions for a sample of high-technology firms (n = 202). In similar predictive comparisons, the Griffin-Watts (GW) ARIMA model provides significantly more accurate quarterly earnings predictions for a sample of regulated firms (n = 218). Finally, the RWD and GW ARIMA models jointly dominate the other expectation models (i.e., seasonal random walk with drift, the Brown-Rozeff (BR) and Foster (F) ARIMA models) for a default sample of firms (n = 796). We provide supplementary analyses that document the: (1) increased frequency of the number of loss quarters experienced by our sample firms in the holdout period (2000–2002) vis-a-vis the identification period (1990–1999); (2) reduced levels of earnings persistence for our sample firms relative to earnings persistence factors computed by Baginski et al. (2003) during earlier time periods (1970s–1980s); (3) relative impact on the predictive ability of the five expectation models conditioned upon the extent of analyst coverage of sample firms (i.e., no coverage, moderate coverage, and extensive coverage); and (4) sensitivity of predictive performance across subsets of regulated firms with the BR ARIMA model providing the most accurate predictions for utilities (n = 87) while the RWD model is superior for financial institutions (n = 131).

Do the Merits Matter More? The Impact of the Private Securities Litigation Reform Act

This article examines the effect of the Private Securities Litigation Reform Act of 1995 (PSLRA) on stockholder lawsuits. We explore the role of restatements, earnings forecasts, and insider trading in the filing and resolution of lawsuits for a sample of high technology firms. Consistent with our predictions, there is a post-PSLRA shift away from litigation based on forward-looking earnings disclosures. Conversely, there is a significantly greater correlation between litigation and both earnings restatements and abnormal insider selling after the PSLRA. Finally, we find a post-PSLRA increase in the likelihood of settlement for cases involving earnings restatements.

Do the Merits Matter More After Securities Litigation Reform? Evidence from Restatements, Earnings Forecasts, and Insider Trading

This paper examines the effect of the Private Securities Litigation Reform Act of 1995 (PSLRA) on stockholder lawsuits. We explore the role of restatements, earnings forecasts, and insider trading in the filing and resolution of lawsuits for a sample of high technology firms. Consistent with expectations, there is a post-PSLRA shift away from litigation based on forward-looking earnings disclosures. Conversely, there is a significantly greater correlation between litigation and both earnings restatements and insider selling after the PSLRA. There is no evidence, however, of an association between litigation and abnormal insider selling either before or after the PSLRA, even though this measure conforms more closely with legal standards for assessing fraudulent intent. Finally, we find a post-PSLRA increase in the likelihood of settlement for cases involving earnings restatements and abnormal insider selling. Thus, unlike lawsuit filings, the outcome of litigation does conform with judicial doctrine regarding insider trading. Consistent with Skinner (1997), there is no association between the likelihood of settlement and firms' forward-looking earnings disclosures.

Globalised Research and Development: A Case Study of Bangalore, India

There is an increasing trend towards globalisation of R&D activities in high technology firms. The paper delineates the forces which influence this trend and then presents an analysis of the complexities and opportunities the process offers in the context of the regional cluster of Bangalore in India. The paper relies mainly on a sample of high technology firms, both multinational and local, and tries to understand how they behave in this cluster. The paper then attempts to draw some broader conclusions on the nature of this phenomenon, both from the management of technology angle as well as from the science and technology policy perspectives.

Barriers to Technology Transfer: Local Impediments in Oxfordshire

The author examines linkage patterns in Oxfordshire between a sample of high-technology firms and local universities and national laboratories with a view to identifying local impediments to technology transfer. Two kinds of impediment are identified: those which are ‘obstructions’, arising from the failure of mechanisms designed to create networks within the national and local innovation systems, and ‘barriers’, which are the weak links within the innovation process in general.

EFFECTIVE STRATEGIC DECISION PROCESSES IN HIGH TECH FIRMS: EMPIRICAL SUPPORT FOR COMPREHENSIVE RATIONALISM

An hypothesis relating comprehensiveness of strategic decision processes to strategic effectiveness was developed and tested using a sample of high technology firms. Results indicate a positive relationship between these two concepts. Implications to theory development and to high technology management are discussed.

Skills and job commitment in high technology industries in the US

This article, based on a study of workers, engineers and managers in a sample of high technology firms in the US, suggests extensive skill dislocation, labour market segmentation and a lack of participation in production decisions. There is a crisis of organisation and commitment among employees in such firms.