Swedish Firms Research Articles

Does Going Public Affect the CEO-Employee Pay Disparity? The Role of Board Characteristics

We examine how going public via an IPO impacts the compensations of the CEO and average employees and the resulting pay disparity, and what board characteristics matter for this relation. Using a sample of Swedish firms from 2005 to 2017 and the difference-in-difference method, we find that pay levels of employees and the CEO is higher after IPO compared to the pre-IPO in IPO firms than in matched private firms, but the increase in the compensation of the CEO is substantially higher than that of average employees, leading to an increase in the CEO-employee pay dispersion. Examining the board characteristics, we find that venture capital board membership and board IPO experience can mitigate the increase in CEO-worker pay dispersion after the IPO. The results suggest the board characteristics that allow for more effective monitoring of the firm compensation system during and after IPO and have important theoretical implications for the literatures on IPO and pay disparity.

Job Turnover in Times of Crisis: Family Firms and Rural Context

Financial crises inevitable leads to downturns in the labor market and increased unemployment. Family firms are known for their long-term orientation which help them to survive hardships. In times where short-term profit maximization is compromised, there are reasons to believe that family control can be a source to sustainable business behaviour. In the present study, building on the the nonfinancial logic and local embeddedness literatures, we theorize that that family involvement mitigates involuntary job turnover following an exogenous economic shock (in our case, the 2007–2009 global financial crisis), and especially in rural areas where local ties are likely to be strong. Relying on a panel dataset of Swedish firms, our study contributes to a better understanding of how companies react to employee layoff in times of crisis while shedding some further light on the link between regional economics and family involvement.

Effect of Employee Commitment on Organizational Performance; Case of Textile Firms in Sweden

Employee commitment helps organizations perform better and achieve their goals because employees feel connected to the organization and are more productive and dedicated to their work. Thus, the study sought to examine the effect of employee commitment on organizational performance in the case of textile firms in Sweden. The study adopted the descriptive research design. The collection of the data was done using the questionnaires. The data was collected from two textile companies in Sweden, namely Meandi Holding AB and Woodline Swedish Outdoor Co. The study conducted a pilot study to examine the validity and reliability of the research instruments. The analysis of the data was done using descriptive and inferential statistics. SPSS was used to generate the output. The study findings indicated that employee commitment is positively and significantly related to organizational performance (β=.1579, p=0.013). Employee commitment is necessary for every organization to have amazing performance on a long-term basis. Committed employees bring added value to the organization, including determination, proactive support, relatively high productivity and an awareness of quality. The study recommended that textile companies should continue ensuring there is employee commitment. Organizations need to increase employee commitment by including them in decision-making, which will ultimately increase their commitment to the organization. Moreover, it is recommended that organizations should encourage transparency. When an organization keeps employees informed, they feel valued and trustworthy. Further, it is recommended that organizations should encourage open and free communication. Open and accessible communication in an organization facilitates an environment of trust. There should be letting the employees be innovative in providing ideas, strategies and ways of communication. The employees should be valued by the organizations and encouraged to develop better ideas and rewards for their achievements and innovation. Keywords: Employee commitment, organizational performance, textile firms, Sweden

Solar business models from a firm perspective – an empirical study of the Swedish market

A worldwide transition towards sustainable energy systems requires the diffusion of renewable electricity technologies. To achieve this, recent research has put emphasis on the role of business models as catalysts for sustainability transitions, particularly in the case of solar photovoltaics. Authors have identified a variety of solar business models that can be characterized based on roles, activities, and applications. In contrast, on the market, solar firms use business models to communicate their offer to clients, focusing on customers’ needs, how they organize their resources and activities to meet these needs and, in return, create value for themselves. The aim of this paper is to bridge the gap between the way energy policy literature describes solar business models, and the way solar firms use them to communicate with their clients. The business models of 241 solar firms in Sweden were mapped and analyzed using a framework developed by Richardson (2008) as well as the roles, activities, and applications as highlighted in solar business model literature. This led us to identify six types of solar business models. We found that there are some gaps and overlaps between theoretical and empirical solar business models which, in turn, have implications for theory and policy.

Innovation in agriculture: An analysis of Swedish agricultural and non-agricultural firms

This paper contributes to the literature on innovation in agri-food sectors. It presents a quantitative analysis of how innovation and innovation capacities differ between agricultural firms and firms in other sectors. With unique survey data on Swedish firms, we show that one-third of the firms in the agriculture sector are innovation creators. Moreover, incremental innovations in the form of firm-level technology adoption are not more prevalent in agriculture than in other sectors. These results indicate that agriculture does not appear as a special case concerning innovation output, besides their higher incidence of process innovations. The peculiarity of the sector rather seems to be related to firm-level innovation capacities. Our results suggest that agriculture is different in how they source relevant knowledge, which is a finding that could question the design of innovation support policies that emphasize collaborative research. Our findings rather point to a need of strengthening in-house knowledge capacities in agricultural firms. That would improve their capacity to participate in and benefit from collaborations with partners operating at higher levels in the knowledge system.

Sourcing from China: Approaches and Outcomes for Swedish Firms

Purpose The large and persistent trend of firms sourcing from China is in itself well-established with many success stories. However, managing the sourcing is a complex issue confounded both by c ...

Do Firm Support Increase Investments? Evidence from the Aquaculture and Fish Processing Sectors in Sweden

AbstractThe European Union provides firm support to the maritime sector to reach the policy objectives in the Common Fisheries Policy. This paper analyzes to what extent the investment support to aquaculture and fish processing firms in Sweden increases firm investment activity. By doing so, the paper also quantifies the amount of investments that would have been undertaken also without support (deadweight losses, DWL). The results show that the support increases investment in aquaculture with a factor of 0.65, thus with a DWL of 35%. The corresponding number for fish processing is a DWL of 77%.

Last mile practices in e-commerce: framework development and empirical analysis of Swedish firms

PurposeIn light of the recent dynamics, this paper aims to explore the last mile (LM) of e-commerce retailers. Two research questions are developed (1) What firm characteristics are critical in LM practices? and (2) How do LM practices differ based on the identified critical firm characteristics?Design/methodology/approachData were collected via 10 interviews with e-commerce executives, as well as a survey on 200 e-commerce firms in different retail sectors in Sweden.Findings“Firm Size” and “Sales Channel-Mix” appear to be the top critical firm characteristics in LM practices. While last mile delivery (LMDe) was found to vary more based on sales channel mix than firm size, the opposite occurs for last mile back-end fulfilment (LMBF). Moreover, last mile consumer steering (LMCS) was found to vary only with sales channel-mix. Unexpectedly, primarily store-based retailers capitalize on their stores while offering competitive remote services; they hence compete indirectly with their existing store network.Originality/valueWhile most prior work has focused on LMBF and LMDe for strategizing, the consumer-steering aspect seems to have been a missing link. This study develops an integrated framework for LM strategy planning, incorporating LMCS, LMBF and LMDe. New aspects such as the environment, specialization and inventory management are included. The findings provide insights for executives when strategizing, undertaking competition analysis and positioning the firm.

BestAmong the Worst or Worst Among the Best? Socioemotional Wealth and Risk-Performance Returns for Family and Non-family Firms Under Financial Distress

A firm’s proactive engagement in risk, which has been deeply intertwined with the entrepreneurship literature, is essential to sustaining a firm’s long-term competitive advantage. Drawing on BAM’s mixed gamble logic in a family firm context, the present study offers a theoretical framework examining how firm risk returns differ in the contexts of distressed (the worst) and nondistressed (the best) family and nonfamily firms. We predict that family control moderates the risk taking-performance relationship. That is, compared with nonfamily firms, a mixed gamble featuring the prospect of socioemotional and financial losses leads family firms to extract higher financial returns from risk taking when in financial distress, but lower financial returns when they are not in financial distress. Our theoretical expectations are supported using a matched sample of Swedish firms.

Entrepreneurs’ legal infractions and hidden information: Evidence from small business bankruptcies

We study how entrepreneurs’ attitudes toward risk, as measured by their personal legal infractions, are related to information asymmetry and agency problems prior to bankruptcy, using a sample of 260 small Swedish firms. We find that auditor resignations are more likely in firms where entrepreneurs have legal infractions. Furthermore, we find that legal infractions are negatively related to the likelihood of a firm disclosing its annual report and the quality of the bookkeeping, suggesting that information asymmetry problems are more severe when the entrepreneurs have legal infractions. We also find that creditors’ recovery rates in bankruptcy are lower if the entrepreneurs have legal infractions related to serious traffic offences, such as driving under the influence of alcohol or without a license.

Do going concern disclosures in the management report and audit report signal bankruptcy risk? Evidence from privately held firms

This article provides evidence of the relations between disclosures in the management report of conditions that could challenge the continuance of operations, auditors' going concern reporting and the likelihood of bankruptcy for privately held firms in an environment characterized by low litigation risk. We conduct a matched case–control study using data for 125 firms filing for liquidation bankruptcy and 125 non‐bankrupt firms. The results show that disclosures in the management report and auditors' going concern modifications are positively associated with the likelihood of bankruptcy and that their predictive ability is incremental to the control factors. Despite the lower litigation pressure facing private Swedish firms, the informational value of going concern disclosures is comparable with those in litigious environments.

Firms’ Employment Dynamics and the State of the Labor Market

According to search and matching theory, a greater availability of unemployed workers should make it easier for a firm to fill a vacancy, but more vacancies at other firms should make recruitment more difficult. Simulating a theoretical model of a firm facing perfect competition in the product market and no convex adjustment costs (standard assumptions in the search and matching literature), I find that shocks to vacancies and unemployment lead to economically significant employment responses. Simulating a more realistic model with imperfect competition in the product market and convex adjustment costs, I find small employment effects of shocks to vacancies and unemployment. In particular, shocks to the number of unemployed seem to be unimportant. Estimating an employment equation on a panel of Swedish firms, I find that neither the number of unemployed workers nor the number of vacancies in the local labor market is important for firms’ employment decisions.

Recruiting strategic human capital from MNCs—Does hiring MNC managers enable exporting in domestic firms?

Exporting is a central growth strategy for most firms and managers with international experience are instrumental for export decisions. We suggest that such managers can be hired from Multinational Corporations (MNCs). We integrate theory from strategic human capital research into models explaining export decisions. We theorize that hiring managers from MNCs increases the odds of domestic firms to start exporting and this effect depends on the similarities between hiring firms and MNCs. We hypothesize that young firms will benefit comparatively less from hiring MNC managers. In contrast, firms with internationally diverse workforces and with high degrees of hierarchical specialization will benefit the most from hiring MNC managers. We test and support these hypotheses for 474,926 domestic firms in Sweden, which we observe between 2007 and 2015.

Land Acquisition Regulation through the lens of expert stakeholders’ mental models - what are the implications for business development among Swedish farmers?

Agricultural and forestry land markets are regulated in several European countries. However, assessing the economic consequences of land market regulation for agricultural and forestry firms is methodologically challenging for various reasons. The aim of this study is to highlight the usefulness of exploring expert stakeholders’ mental models in order to gain insights into the economic impacts of agricultural and forestry land market regulation. We use thematic analysis based on in-depth interview data to explore Swedish expert stakeholders’ mental models concerning the regulation of the Swedish agricultural and forestry land market. This research strategy facilitated a rich understanding of the effects of land regulation on economic consequences. Findings indicate that current regulation does not have any major impact on the economic situation of agricultural and forestry firms in Sweden. This is interesting from the perspective of agricultural and forestry land market policy.

Microfoundations of Firm Resource Reconfiguration: The Role of Hiring Former Consultants as Managers

The scarcity of skilled managers for finding superior resource configurations is a central constraint to theory and practice of resourced-based strategies of firms. We theorize that firms can overcome this shortage by hiring managers from management consultancies, since this particular work experience allows individuals to train and reveal resource orchestration skills while working with various clients. Theoretically, we integrate mechanisms from the transferability of scarce, valuable human capital across organizational contexts into microfoundational models of resource-based advantages. We analyze 102,639 Swedish firms from 2010 until 2015 and find that firms hiring former consultants as managers initiate more resource reconfigurations and experience higher performance effects from them. Then again, effects depreciate quickly as the context of the hiring firm homogenizes the particular skills of former consultants.

The King is Dead! Owner-Managers' Sudden Death, Financial Distress, and the Role of the Successor

When the owner-manager of a privately-held firm suddenly dies, which is a tragic event that happens more often than one would expect, a crucial yet unanswered question is who should ideally take over to reduce the likelihood of firm failure. Integrating the resource-based view and research on grief recovery, we theorize that the owner-manager’s sudden death leads to a firm’s financial distress and that there is an inverse U-shaped relationship between the time passed after sudden death and the firm’s financial distress. We also propose that the successor’s resource endowment originating from her/his embeddedness in the firm, local community, and family, moderates this non-linear relationship. Using a longitudinal, matched sample of privately-held Swedish firms, we offer important theoretical and practical contributions.

The role of entrepreneurial orientation in crisis management: evidence from family firms in enterprising communities

PurposeThe purpose of this paper is to explore and understand how family firms manage a crisis by applying a processual and longitudinal perspective. The objective is to find out how crisis management is approached by family firms in Sweden, Scotland and Germany, using entrepreneurial orientation (EO) as an analytical lens. Further, this paper investigates the role of the owning family in creating and solving a crisis in family firms.Design/methodology/approachThis study follows a processual and longitudinal case study approach. Cases are drawn from Germany, Scotland and Sweden. Data collection is based on a combination of interviews with archival data such as annual reports and press clippings.FindingsThe results show that all studied firms had high levels of autonomy combined with high risk-taking. It is noteworthy, that these dimensions also help to overcome the crisis. Risk-taking and proactiveness can be useful for addressing the crisis. Under certain circumstances, even innovativeness can help to develop new offers. Autonomy is considered central in family firms and only extraordinary circumstances can be owning families make willing to compromise on it. The EO-dimensions are not all relevant at all times. Rather, family firms will emphasize the dimensions during the consecutive stages differently.Originality/valueThis study compares case companies from Germany, Scotland and Sweden and how EO contributes to their crisis management by taking a longitudinal and processual perspective. Its originality lies in the in-depth studies of companies from three countries.

Dividend taxes, employment, and firm productivity

The paper examines the effect of dividend taxation on employment and productivity. I exploit a dividend tax cut of 10 percentage points for closely held private corporations in Sweden. Using data on all closely held Swedish firms with exact information on employees and their wages, I find that firms with limited internal funds increase productivity and wages relative to firms with sufficient internal funds whose investment decisions are less affected by dividend taxes. My findings indicate that dividend taxes constrain firms in investing efficiently. Lower taxes can result in higher capital and labor input and, thus, in higher productivity.

Does the CEO effect on performance differ in private versus public firms?

Scholars have long debated the effect CEOs have on firm performance, including a focus on how their effect shifts across industries, national settings, and time. Unexplored, however, is the possibility that the CEO effect might differ in publicly traded versus privately held firms. Drawing on a unique longitudinal sample of both publicly traded and large, privately held Swedish firms from 1997 to 2013, we replicate and build upon prior CEO effects studies and find that private-firm CEOs have a greater effect on firm performance, for good or for ill, than do their public firm counterparts. Our results are strengthened after controlling for industry, firm profitability, and size in a matched-pair sample. We discuss the implications and potential future research stemming from these findings.

Aligning Corporate Social Responsibility with the United Nations’ Sustainability Goals: Trickier than it Seems?

Abstract This article explores the profound mismatch between the United Nations 2030 Agenda for Sustainable Development and fundamentals for Corporate Social Responsibility (CSR). The common survival of human life, society, and the global order as we know it, and the need for companies to make profit is not easy. The intractability of the problem is often underestimated in public as well as scientific debate. This article discusses the problem and possible ways to cope with it through ‘social entrepreneurship’ illustrated here by a study of nine firms in Sweden. The study draws on an amalgamation of Schumpeterian theory about “creative destruction” and the concept of “Emerging Davids vs. Greening Goliaths.”