Signaling Theory Research Articles

Omnichannel operations in the automotive aftermarket: Consumer reactions to various strategies

The new retail mode in the digital era has forced firms to engage in omnichannel management. Although many companies have realized the importance of omnichannel operations, not all firms implementing omnichannel operations have achieved the expected returns. To explain why this is the case, we draw on signaling theory and use the automotive aftermarket as our research context to explore consumer reactions to various omnichannel strategies. We design two scenario-based experiments involving a total of 630 Chinese consumers. The results show that while implementing omnichannel operations is necessary, a wider scope of omnichannel operations (i.e., the breadth strategy) does not have a significant effect on consumers' service usage intentions. By contrast, increasing the density of omnichannel operations (i.e., the depth strategy) can significantly enhance consumers’ service usage intentions. More interestingly, we find that signal costs and perceived service quality are two key mediators in linking the depth strategy–service usage intention association. Our study contributes to existing omnichannel management research by highlighting the mechanisms behind the successful implementation of omnichannel operations. The findings also assist firms in effectively merging their online and offline channels.

Linking HRM with Sustainability Performance Through Sustainability Practices: Unlocking the Black Box

AbstractIn response to the triple‐bottom‐line sustainability challenges facing today's world, organizations are increasingly incorporating sustainability principles into their strategies; however, this is challenging for small and medium‐sized enterprises (SMEs) with limited resources. While sustainable human resource management (HRM) has recently gained scholarly prominence, the impact of sustainable HRM practices on an organization's sustainability performance remains under‐explored. Anchored on signalling theory, we address this gap by examining the impact of sustainable HRM on an organization's sustainability performance. Drawing upon survey data collected from 254 employees across SMEs in Vietnam, we found that sustainable HRM practices and managerial competency positively impact sustainability practices, which in turn predict sustainability performance, while sustainability practices mediate these relationships. Employee sustainability participation and long‐term orientation strengthen the relationship between sustainability practices and sustainability performance. Further, co‐worker sustainability support moderates the relationship between sustainable HRM practices and managerial competency and sustainability practices. We discuss the contributions to theory and practice and provide future research directions.

Firm growth and firm value: Moderation role of board size during Russia-Ukraine war

This study’s objective is to investigate the influence of board size as a moderator in a research model examining the impact of firm growth on firm value, considering the impact of the Russia-Ukraine war on Indonesia over the past seven years. The study consisted of 328 observations, ranging from 2014 to 2021. This study discovered that company expansion has a considerable beneficial impact on firm value. The board of directors has the ability to operate as a moderating variable, whereas the board of commissioners did not moderate the impact of firm expansion on company value. The results of the research aligned with the signaling theory, which posited that a company's ability to expand is a crucial indicator of its success. The market responded positively to this positive signal, drawing in new investors who subsequently increased the company’s value. This study revealed that, despite their important functions in a company, the board of directors and the boards of commissioners were unable to mitigate the impact of firm expansion on firm value. This could be caused by external factors like the Indonesian economy and market during the Russia-Ukraine conflict. The Russia-Ukraine war affected Indonesian companies, but they remained stable until now. The researcher was unable to acquire financial data from non-public firms impacted by the conflict between Russia and Ukraine, resulting in a small sample size.

When Failure Is Not Fatal: Examining Venture Resource Acquisition Following Product Development Failure

Product development in innovation-driven industries often fails. Although such failures cause new ventures to struggle to raise follow-on investments, some overcome this challenge. Why? Synthesizing insights from the research on signaling and social evaluation theory, we identify how certain resources can mitigate the risk of funding termination for new ventures despite product development failure. Through a longitudinal study of 254 venture capital-funded biotechnology ventures, we show that internal quality signals decrease in their effectiveness while industry endorsement signals increase in their effectiveness as quality signals over time. Our findings contribute to the literatures on entrepreneurial failure, entrepreneurial resource acquisition and signaling.

Linking labor with capital: How employee friendly treatment impact trade credit availability

This study explores the value of employee friendly treatment from a signaling theory perspective by relating it to corporate trade credit. Theoretically, employee friendly treatment signals firms' high possibility of “will and able” to perform obligations, which strengthens firms' bargaining power in striving for trade credit. The empirical tests show a positive relationship between employee friendly treatment and trade credit availability. The positive effect of employee friendly treatment on trade credit is more prominent in firms with lower market power and firms located in areas with weaker legal enforcement, lower level industrialization and poorer high education popularity. Overall, the study establishes a link between labor and capital market, implying that firms' treatment to employees who are internal stakeholders can be a cue for outsider stakeholders such as suppliers to alter the provision of trade credit.

Fostering firm value: Unpacking the effect of circular economy disclosure via social media

AbstractGrowing environmental concerns and the need to address global challenges such as climate change and resource exploitation have highlighted the relevance of the circular economy (CE) and the importance for companies to communicate circular practices externally. While academic literature has examined the dissemination of CE information, the effects of CE disclosure (CED) remain underexplored. This study aims to fill this gap by exploring, through signaling theory, the influence of CED via social media on firm value. The econometric analysis, based on 366 observations (an unbalanced panel of 133 internationally listed companies for the period 2019–2021), demonstrates that CED via Twitter serves as a powerful market signal, positively influencing investor perception and increasing firm value. This study enlarges the literature relating to the association between non‐financial disclosure and firm value, and the effects of CED. Furthermore, it extends the debate on the use of social media as disclosure tools and broadens the scope of signaling theory.

Evaluating the influence of digital strategy on the interplay between quality certification and sales performance using data science and machine learning algorithms

In the context of international trade with information asymmetries, business certifications can serve as signals of product quality and reliability for customers and stakeholders. Recognizing this, the current study unbraces “signalling theory” to explore the impact of digital transformation strategy (DTS) on firm’s international quality certification status and sales performance in the global economy. To this end, treating quality certification endogenously, the study relies on bivariate copula regression modeling of 121429 firms’ responses data extracted from the World Bank’s Enterprise Surveys. Consistent with the hypothesized theoretical predictions, the findings revealed that DTS, in the form of website ownership, has a significantly positive impact on sales performance due to increasing firm’s reach, visibility, engagement, conversion, and retention of customers across different channels and touchpoints. As theoretically conjectured, quality certification is also found to positively impact sales performance by enhancing the firm’s reputation, trustworthiness, and attractiveness in the global marketplace. Most importantly, the study found empirical evidence that DTS significantly moderates the relationship between quality certification and sales performance, such that quality certification has a stronger effect on sales performance for firms with a well-defined DTS (web=1) than those without (web=0); leading therefore to the conclusion that DTS can amplify the signal of quality certification by making it more visible, transparent, and consistent across different digital channels and touchpoints. Hence, the study provides valuable empirical and theoretical insights that inform current business practices, future research, and potential policy measures to support business growth, and enhanced competitiveness in the global market place.

From liability to asset: A receiver’s perspective on eponymy signals and market value

ABSTRACT Drawing on signaling theory and literatures from eponymy and branding, we take a receiver’s perspective to explicate how signaling eponymy impacts venture market value at harvest. To untangle the mixed findings on the effects of eponymy, we take a contingency approach and theorize that firm age plays a key role in how the eponymy signal will be perceived by valuators. Employing a novel dataset of 471 acquired private firms, our analysis reveals that while the market value of eponymous firms declines early in the life cycle, past a threshold their value begins to increase. This suggests that at that point, eponymy becomes an asset and adds value to the firm. We establish this nadir at a firm age of 44.

Layered localization of international human rights law: Signaling and contestation in the context of Thailand

To make international human rights enforceable on the ground, they must be localized. In the process, domestic stakeholders may attempt to contest or reshape the rights. Although norm localization has received much scholarly attention, prior publications have failed to explain which elements of a human rights treaty might be contested and why. Based on signaling theory, this article starts from the assumption that governments’ commitments to human rights treaties raise corresponding expectations on the part of other states. Consequently, contestation is relatively more likely when a government considers the audience costs for backtracking on its commitments to be lower. The article goes on to suggest that expected audience costs vary for different treaty elements—primary, secondary, and tertiary—which in turn affects the relative likelihood of contestation. The article develops a novel approach to norm localization and applies it to the making of a treaty-transposing law against torture and enforced disappearance in Thailand. The case study largely confirms the model but also demonstrates the significance of local specifics, such as a history of impunity. The findings allow theoretical and practical conclusions for the legislative localization of international human rights law.

PENGARUH INVESTASI TEKNOLOGI INFORMASI DAN STRATEGI DIVERSIFIKASI TERHADAP NILAI PERUSAHAAN DENGAN PERTUMBUHAN PENJUALAN SEBAGAI VARIABEL MODERASI

The impact of the Covid-19 pandemic has had an impact on the main sectors of the Indonesian economy, especially on company value. A company can have high share movements on the stock exchange because of the company's value. Company value is a reflection of company performance, this can influence investor assessment. The focus of this research is on company financial reports published in 2018-2020, where there are 168 manufacturing companies registered on the IDX in 2018-2020 which were obtained by downloading the website. Using signal theory (signaling theory) with multiple linear regression analysis methods. From the research results, it was found that information technology investment has a positive influence on the value of a company, the higher the value of a company's technology investment, the higher the company value. The diversification strategy does not affect the company's value. Sales growth has a positive influence on company value. Sales growth moderates the influence of information technology investment on company value. Then sales growth does not moderate the effect of diversification strategy on company value.

Better Is Better? Signaling Paradoxes in Performance-Based Advertising

Under performance-based advertising, firms pay only for measurable consumer actions, such as clicks or sales. However, these actions may result from factors other than effective advertising. For example, a high-reputation seller is more likely to generate more actions than a low-reputation seller. If such consumer actions are counted toward advertising performance, a high-quality firm is penalized because it has to pay more than necessary to signal its quality. Without addressing these paradoxes, it becomes increasingly challenging for a high-quality firm to signal its quality under the performance-based advertising scheme. Our research extends advertising signaling theory, which primarily focuses on new products without an established reputation and assumes that the advertising reaches the entire market (e.g., Milgrom and Roberts 1986 , Feng and Xie 2012 ). Instead, we consider products that may have an established reputation (e.g., newer versions of the iPhone) and allow for the scenario that not every market segment can be reached by the advertising. We identify two paradoxes that arise from performance-based advertising and discuss methods to mitigate these paradoxes by proposing different ways of measuring advertising performance.

The Influence Of Environmental, Social, Governance (ESG) Pillars And State Ownership On The Company's Debt Costs

Topics related to environmental, social, and governance are currently interesting to research because the importance of sustainability principles in the business world is increasingly recognized. This research investigates the influence of the ESG pillar and state ownership on the cost of debt in non-financial companies. The analysis was carried out on public companies in emerging Asian countries during the period 2016 to 2023 using panel data regression. Using various theories such as agency theory, stakeholder theory, and signaling theory, this research proves that state-owned companies with better ESG scores have lower debt costs. An unexpected finding is that the social pillar has a positive effect on the cost of debt. For the environmental pillar, although it is negatively related to the cost of debt, the effect is not significant. Meanwhile, the governance pillar has a significant negative influence on the cost of debt in accordance with agency theory. It is hoped that the results of this research will contribute to providing insight to stakeholders, especially managers and company owners, regarding the role of ESG and state ownership in the magnitude of corporate debt costs

DOES FIRM VALUE MATTER? EMPIRICAL EVIDANCE FROM INDONESIA

The COVID-19 pandemic has hurt the entire government and corporate financial system, making it difficult for businesses to distribute dividends. During the COVID-19 epidemic, this study examines the possible impact of financial statements on firm value by considering dividend policy as a moderating factor. This research employs a quantitative methodology, utilizing purposive sampling techniques and secondary data. The sample data includes all public companies listed on the Indonesia Stock Exchange between 2020 and 2022. There are 127 sample data. We conducted the test using SmartPLS software. Researchers looked at three financial parameters: profitability, leverage, and liquidity. The research results show that leverage and profitability, not liquidity, can influence firm value. The impact of dividend policy on the relationship between profitability and company value is evident, while it does not affect leverage or liquidity. To identify this problem accurately, the researchers used signal theory to get accurate results in identifying this problem. We hope the research results will alert investors to exercise caution when purchasing shares, particularly in manufacturing companies.

Will Diversity, Equity, and Inclusion Commitment Improve Manufacturing Firms’ Market Performance? A Signaling Theory Perspective on DEI Announcements

Will Diversity, Equity, and Inclusion Commitment Improve Manufacturing Firms’ Market Performance? A Signaling Theory Perspective on DEI Announcements

The mediating effect of financial reporting quality on the relationship between corporate social responsibility and corporate green innovation

Purpose This study aimed to examine the mediating role of corporate financial reporting quality in the impact of corporate social responsibility (CSR) on corporate green innovation, based on the integration of stakeholder theory, opportunity cost theory, innovation diffusion theory and signaling theory. Design/methodology/approach A deductive quantitative approach was used as the research methodology. Following a survey design, questionnaire responses were collected from a purposively chosen sample of 308 employees in China. The data was analyzed using partial least squares structural equation modeling, performed with SmartPLS4.0 software. Findings The findings show that CSR promotes green innovation, and that financial reporting quality mediates this relationship. It was further revealed that compared to employees’ CSR perception, consumers’ perception of firms’ CSR performance has a stronger positive effect on firms’ corporate financial reporting quality and green innovation. These findings provide insights into the impact of both internal and external CSR performance on corporate green innovation. Research limitations/implications This study only sampled Chinese employees, meaning that the findings may not be representative of other regions. Also, as this study employed only the questionnaire instrument, future research may collect data through multiple sources, including financial reports, surveys and interviews, to better understand and estimate variations in the positive impact of CSR on green innovation. Originality/value This study establishes the mediating role of corporate financial reporting quality in linking CSR to corporate green innovation. It further examines green innovation in multiple dimensions (i.e. product, process, organizational), while also measuring CSR in dual perspectives, namely internal (employee awareness) and external (consumer awareness). The results of this study offer guidance to firms in improving their green innovation in various aspects, thus promoting sustainability and environmental friendliness in corporate development.

Environmental disclosures and financial performance amid banking crisis and COVID-19: evidence from Ghana

Purpose The purpose of this study is to examine the impact of environmental disclosures (END) on the corporate financial performance (CFP) of listed companies in Ghana before and during the Banking crisis (BKC) and the COVID-19 pandemic (COV). Design/methodology/approach This study used data from 16 companies listed on the Ghana Stock Exchange between 2012 and 2021. The END Index was used, which uses percentile ranking and is guided by Global Reporting Initiative guidelines. A diverse set of empirical tests were used to examine whether ENDs affect CFP during crises. Findings The study offered support for the stakeholder and signaling theories generally applied to the study of END. The results confirmed that ENDs have a significant positive effect on CFP measures, return on equity and earnings per share, before and during the crises. The BKC and COV had no impact on the CFP. Practical implications As Ghana is still recovering from the 2017 to 2020 BKC and COV, the findings of this study highlight the need for managers to embrace END reporting and engagement strategies to improve CFP and firm reputation. Originality/value To the best of the authors’ knowledge, this study is the first to examine the effect of END on CFP in the context of before and considering the Ghanaian BKC and COV. In addition, it is one of the few studies that investigates how ENDs affect the CFP of Ghanaian-listed firms.

Corporate social responsibility on worker turnover rate and worker turnover cost: the role of symbolic image dimensions and the unemployment rate

Purpose This study aims to examine the relationship between corporate social responsibility (CSR) and worker turnover rate (WTR) and worker turnover cost (WTC) in Vietnamese garment companies, using the mediating role of symbolic image dimensions (SID) of employer image and the moderating role of unemployment rate. Design/methodology/approach This study uses Signaling Theory and Job Embeddedness Theory as theoretical frameworks to examine the mediating role of SID and the moderating role of the unemployment rate on the link between CSR and WTR, as well as the associated cost. Data from 119 Vietnamese garment companies are analyzed using structural equation modeling – AMOS software. Findings The findings suggest that CSR has a direct adverse effect on the WTR and an indirect effect on WTC through WTR. The results also indicate a direct relationship between the level of CSR adopted by companies and workers’ perception of the symbolic attributes of their company’s employer image as sincere, innovative, competent and prestigious. This, in turn, leads to a reduced rate of worker turnover. In addition, this study discovers the moderating influence of the region’s unemployment rate on the correlation between companies’ CSR and WTR. Practical implications The results indicate that companies should view CSR as a strategic tool to obtain better performance by achieving a win-win state of affairs with their workers. It also implies the influence of external economic factors on the relationship between CSR and worker turnover. Originality/value This study contributes to the literature by highlighting the economic benefits of CSR and the SID.

Building consumer trust in secondhand fashion: A signaling theory perspective on how consumer orientation and environmental awareness shape engagement

The secondhand fashion market suffers from information asymmetry, creating consumer distrust and limited engagement in secondhand fashion (ESHF). The existing research on how sellers and product signals can mitigate this distrust is limited and produces conflicting results. This is particularly true in terms of understanding how signaling interacts with consumer-specific factors such as orientation and environmental awareness. Thus, this study contributes to understanding the factors driving consumer trust (CT) and ESHF through signaling theory and the nuanced role of consumer orientation and environmental awareness. Structural equation modeling, including multigroup analysis, is employed to test the proposed hypotheses with a sample of 203 Indonesian consumers from a secondhand market platform. The findings indicate that signals such as seller reputation, product history, and refurbishment details significantly enhance CT, with seller reputation being the most influential of the factors. The effectiveness of these signals varies by consumer orientation: functionality-oriented consumers respond more to remarketing information, whereas newness-conscious consumers are influenced more by refurbishment details. Additionally, consumer environmental awareness significantly strengthens the positive relationship between CT and ESHF, highlighting the importance of aligning environmental values with trust-building measures to enhance consumer ESHF. These insights enrich the theoretical understanding of signaling in secondhand markets and offer practical guidance for addressing the challenges associated with CT and ESHF.

How Does Internationalization Help Reputation? The Role of the Learning Gap

This study delves into the intangible effects of internationalization on reputation, and proposes a mechanism by which internationalization can lead to improved reputation. Grounded in institutional and signaling theories, we begin by proposing that internationalization signals learning advantages deriving from experience in host environments and responses to foreign institutional pressures. Then, we derive the learning gap construct from two principal dimensions of the diversity of location portfolio, namely home—host cognitive distance and power asymmetry; and posit that this learning gap explains the link between internationalization and reputation. Analyses based on the legal service industry demonstrate that while international diversification is important in predicting reputational benefits at home, its effect is mediated through the learning gap deriving from each firm's internationalization, underscoring potential advantages of home—host differences.

Exploring the efficacy of ecolabels as a marketing strategy: Insights from the emerging bioplastic packaging market

AbstractThe packaging industry's significant role in plastic production and environmental pollution underscores the need for more sustainable alternatives. Bioplastics emerge as a promising solution, yet consumer understanding of this innovative material often lags, particularly in emerging markets. This study thus aims to explore effective marketing strategies for communicating bioplastic packaging to shape consumer adoption and disposal practices in such markets. Through a case study approach, we examine the role of ecolabels as a marketing tool across key sectors of the bioplastic packaging supply chain. Drawing upon the signalling theory, we identify key characteristics of effective signals, including costly signalling, visibility, clarity, fitness, consistency and credibility, which should be integrated into a broader context of ecolabels design in order to encourage consumer adoption and responsible disposal. Our study also identifies instances where noises from the environment may have little impact and where communication gaps hinder feedback loops between consumers and producers.