Swedish Manufacturing Firms Research Articles

Import, Productivity, and Export Performances

Abstract The aim of this article is twofold. First, we analyze whether the decision of where to import from is affected by firms’ ex-ante characteristics. Second, we analyze how the origin of imports affects firms’ productivity, export sales, and the number of export markets. Using extensive data on Swedish manufacturing firms from 2007 to 2020, we uncover several significant insights. Nearly 80% of the firms engage in international trade. The smallest firms operate exclusively as exporters, medium-sized firms as importers, and the largest firms engage in two-way trading. While most imports originate from high-wage countries, there has been a gradual shift to low-wage countries over time. Self-selection is evident, with highly productive firms importing from all sources, followed by firms that exclusively import from either low-wage or high-wage countries, and the lowest-productive firms not importing. By controlling for self-selection using the Event Study approach and difference-in-differences matching estimator, we find that large importing firms exhibit no significant differences in productivity and export sales in comparison to their non-importing counterparts. However, small importing firms show increased productivity growth, driven by high-wage imports. Both small and large firms importing from high- and low-wage countries tend to access more high-wage export markets than non-importers.

The Effect of Carbon Pricing on Firm Emissions: Evidence from the Swedish CO2 Tax

Abstract Sweden was one of the first countries to introduce a carbon tax back in 1991. We assemble a unique data set tracking CO2 emissions from Swedish manufacturing firms over 26 years to estimate the impact of carbon pricing on firm-level emission intensities. We estimate an emission-to-pricing elasticity of around two, with substantial heterogeneity across subsectors and firms, where higher abatement costs and tighter financial constraints are associated with lower elasticities. A simple calibration suggests that 2015 CO2 emissions from Swedish manufacturing would have been roughly 30% higher without carbon pricing.

Effects of customization and product modularization on financial performance

The need amongst customers for customized products is constantly increasing, and companies can gain competitive advantage by being able to offer a broad product assortment. This study’s purpose is to investigate the financial effects of using product modularization as a strategy to manage the need for product customization The paper is based on analysis of data collected through an online survey of Swedish manufacturing firms. The results show that product modularization is a mediator between the need for customization and financial performance, suggesting that product modularization is an efficient strategy to facilitate companies’ needs for developing customized products.

Can green producers achieve strong profitability without engaging in high-risk activities?

PurposeAs environmental awareness becomes more widespread, the issue of making manufacturing more sustainable has gained increasing attention. The natural-resource-based view (NRBV) sets out to explain how firms can reduce their environmental footprint while simultaneously improving their financial performance. Drawing on the NRBV and entrepreneurial orientation (EO) literature, this study examines the relationship between pollution prevention, risk-taking and financial performance.Design/methodology/approachData from 303 Swedish manufacturing firms were collected through a survey.FindingsThe findings reveals a positive relationship between pollution prevention and financial performance, and this relationship is found to be negatively moderated by risk-taking; that is, pollution prevention reduces the requisite for risk-taking in the achievement of financial performance.Originality/valueThis is the first study to explore how risk-taking moderates the relationship between a pollution prevention strategy and financial performance.

The impact of offshoring on technical change: Evidence from Swedish manufacturing firms

AbstractThis paper examines the link between offshoring and technical change measured by patent and total factor productivity in order to sort out the causality. It applies instrumental variable and matching approaches on a panel of more than 7000 Swedish manufacturing firms over the period 2001–2014, and identify offshoring‐related intermediate imports by the United Nations Broad Economic Categories system. Accounting for self‐selection and reverse causality, no impact of offshoring on TFP is found and only weak effect on patenting.

Financial performance and supply chain dynamic capabilities: the Moderating Role of Industry 4.0 technologies

Industry 4.0 digital technologies are becoming indispensable for firms striving to enhance their supply chain capabilities and financial performance, but how these relationships play out in practice remains unclear. To address this issue, this study assesses the relationship between supply chain integration, supply chain agility, and financial performance from a dynamic capability perspective. Further analyses are conducted to establish whether Industry 4.0 digital technologies moderate the association between (a) supply chain integration and supply chain agility and (b) supply chain agility and financial performance. Findings based on the data pertaining to a sample of 274 Swedish manufacturing firms indicate that supply chain agility fully mediates the link between supply chain integration and financial performance. However, while Industry 4.0 digital technologies strengthen the effect of supply chain agility on financial performance, they do not moderate the relationship between supply chain integration and supply chain agility. These findings contribute to the ongoing debate regarding how digital technologies play a role in achieving competitive advantage in interplay with dynamic capabilities related to the supply chain. These findings are relevant for decision-makers, as they address the need for organisational adjustments beyond the mere introduction of Industry 4.0 technologies to fully reap their benefits.

Challenges to competitive manufacturing in high-cost environments: checklist and insights from Swedish manufacturing firms

Research on competitive manufacturing (CM) in high-cost environments has earlier indicated that firms struggle to remain competitive and that manufacturing operations often have been offshored to low-cost environments. The purpose of this research is to explore and create a compounded view of challenges related to both internal and external environments of firms when operating in high-cost environments. This issue has been investigated through a qualitative case study involving five manufacturing firms in Sweden. This research has empirically derived the challenges associated with sustaining CM in high-cost environments and developed a prescriptive checklist. Seven main categories of challenges have been identified, ranging from a micro level related to product characteristics and employee involvement, to a macro level related to supply chain collaborations and industry systems. This research contributes to the existing literature on CM in high-cost locations by explaining and detailing what constitutes challenges in this kind of environment.

TFP change and its components for Swedish manufacturing firms during the 2008\u20132009 financial crisis

A driving force of economic development is growth in total factor productivity (TFP). Manufactured goods are, to a large extent, exports, and represent an important part of the economy for many developed countries. Additionally, a slowdown in labour productivity has been observed in many OECD countries since the financial crisis of 2008–2009. This study investigates TFP change and its components for the Swedish manufacturing industry, compared with the private service sector, during the years 1997–2013, centering on the financial crisis. Stochastic frontier analysis (SFA) is used to disentangle persistent and transient efficiency from firm heterogeneity and random noise, respectively. In addition, technical change (TC), returns to scale (RTS) and a scale change (SC) component are also identified. Along with the empirical analysis, an elaborative discussion regarding TC in SFA is provided. The persistent part for manufacturing (service) is 0.796 (0.754) and the transient part is 0.787 (0.762), indicating improvement potentials. Furthermore, TFP change is substantially lower between the years 2007–2013, compared to 1997–2007. This occurs due to a lower technological progress. Policy should, therefore, target interventions that enhance technology. However, care needs to be taken so that policies do not sustain low-productive firms that otherwise would exit the market.

Resource orchestration of firm-specific human capital and firm performance—the role of collaborative human resource management and entrepreneurial orientation

Firm-specific human capital (HC) is widely recognised as the most important resource for superior firm performance. Contemporary literature on the resource-based view (RBV) and resource orchestration has stressed the importance of organising resources, such as firm-specific HC, in order to fully exploit them. However, companies with idiosyncratic resources cannot rely on established resource exploitation practices, making the exploitation of firm-specific HC a complex issue. Nevertheless, few studies have empirically examined how to orchestrate firm-specific HC. Therefore, the aim of this study is to examine how resource orchestration—operationalised as collaborative human resource management (CHRM) and entrepreneurial orientation (EO) both individually and combined—moderates the relationship between firm-specific HC and firm performance. Based on a sample of 151 Swedish manufacturing firms, the findings demonstrate that CHRM and EO do not independently influence the relationship between firm-specific HC and performance. However, firms with firm-specific HC benefit from either being highly entrepreneurial and relying on CHRM or being non-entrepreneurial and not focusing on CHRM; they perform worst if they are entrepreneurial without using CHRM. Whereas previous RBV-studies on resource exploitation have mainly stressed that HC has to be exploited, this study contributes to the RBV by examining how firm-specific HC should be exploited.

Critical operations capabilities in a high cost environment: a multiple case study

Operations capabilities have been a popular research area for many years and several frameworks have been proposed in the literature. The current frameworks do not take specific contexts into consideration, for instance a high cost environment. This research gap is of particular interest since a manufacturing relocation process has been ongoing the last decades, leading to a huge amount of manufacturing being moved from high to low cost environments. The purpose of this study is to identify critical operations capabilities in a high cost environment. The two research questions were: What are the critical operations capabilities dimensions in a high cost environment? What are the critical operations capabilities in a high cost environment? A multiple case study was conducted and three Swedish manufacturing firms were selected. The study was based on the investigation of an existing framework of operations capabilities. The main dimensions of operations capabilities included in the framework were: cost, quality, delivery, flexibility, service, innovation and environment. Each of the dimensions included two or more operations capabilities. The findings confirmed the validity of the framework and its usefulness in a high cost environment and a new operations capability was revealed (employee flexibility).

Do Swedish multinationals pay less in taxes than domestic firms?

AbstractIn recent years, there has been growing concern that multinational enterprises (MNEs) engage in strategic tax planning in order to shift profits to low‐tax jurisdictions. This common perception is generally confirmed by empirical evidence, which is foremost provided for countries with high corporate taxes and relatively complex tax systems. We investigate whether multinational firms in a country with a comparatively more competitive tax system undertake profit shifting. We do this using detailed census data from corporate income statements and balance sheets filed by Swedish manufacturing firms between 1997 and 2007. We detect profit shifting by comparing MNEs with (purely) domestic firms. In particular, we identify systematic differences in tax payments, earnings (before interest and taxes) and equity ratios between multinational and comparable domestic firms based on propensity score matching. In addition, we examine the tax behavioural impact of acquiring multinational status using difference‐in‐differences estimations and/or propensity score matching. Our results reveal that the extent to which multinational firms have lower tax payments than their domestic counterparts depends on their production characteristics and foreign market outreach. In particular, we find evidence indicating that firms operating in few foreign markets and firms that become multinational engage in profit shifting from Sweden.

When does Exit from Exports Benefit the Performance of SMEs?

The purpose of this paper is to answer the question ‘when does exit from export markets influence post-exit SME performance?’. Based on the internationalization-performance literature and a contingency view, it is argued that exit can have a positive effect on firm performance if the firm has high levels of organizational slack and experiences a highly dynamic environment. Using longitudinal data from Swedish manufacturing firms, it is found that high levels of potential slack have a positive moderating effect on firm performance but that available and recoverable slack have no significant effect. Support is found for the importance of environmental dynamism as a moderator between exit and SME performance. These findings add to the current literature in internationalization and SME performance by focusing on exit from exports as an alternative to continuous international growth and by emphasizing that exit is not always equal to failure. Moreover, with the changing international environment it makes pract...

Bending the rules, breaking the rules: How corruption and lobbying affect the investment market selection of Swedish firms

AbstractThere is stark evidence that many policies which influence firm gains from engaging in FDI (such as tax and trade policies) are targeted by lobbying groups and that corruption can be an important determinant of market attractiveness. The scarce research that exists on firm behaviour, corruption and lobbying shows that these activities can be regarded as alternative, and interdependent, influence forms. This paper provides the novel contribution of investigating how the market infiltration of corruption and lobbying affects the firm's investment decision. We identify the interdependent effects using census data for Swedish manufacturing firms that allows a complete identification of the firm's market selection. Our results reveal that these private–public sector links influence the firm's investment decision differently, as market selection is deterred by corruption and stimulated by lobbying, and that they function as substitutes. We show that the stimulating lobbying effect largely can be attributed to its interdependency with corruption, which suggests that firms are more shielded from corruption in lobbying environments. Further investigation reveals that the corruption and lobbying effects are not always representative of larger firms: The largest firms are undeterred by corruption in markets where lobbying forms an integral part of the business environment and larger firms are not stimulated by lobbying in markets largely void of corruption.

Adoption of management accounting innovations: Organizational culture compatibility and perceived outcomes

Although the introduction of a number of successful management accounting innovations over the past few decades has generated a vast amount of research, we have limited knowledge about how the diffusion of innovations is affected by the interplay between characteristics of adopters and characteristics of innovations. The study presented in this paper contributes to the literature that examines the adoption of innovations at the firm level of analysis. We develop and test an adoption model which draws on two recently introduced ideas about innovation adoption—the notion of compatibility between organizational culture and the values and beliefs embedded in innovations, and the perspective that early and late adopters might both be motivated to adopt based on expected economic and social gains and losses. In synthesising these models, we assume that a diffusing innovation that is compatible with a firm’s values and beliefs is adopted early if it is perceived as delivering adequate gains while the innovation is rejected if it is not perceived as doing so, and that a diffusing innovation that is incompatible with a firm’s values and beliefs is adopted late if it is perceived as reducing the likelihood of incurring losses while the innovation is rejected if it is perceived as not doing so. Hypotheses are generated and tested using data provided by a web-based survey of Swedish manufacturing firms on the diffusion of the balanced scorecard across those firms. In most respects, the pattern of results this study finds supports our model and assumptions.

A new approach to estimation of the R&D–innovation–productivity relationship

ABSTRACTWe apply a generalized structural equation model approach to the estimation of the relationship between R&D, innovation and productivity that focuses on the potentially crucial heterogeneity across sectors. The model accounts for selectivity and handles the endogeneity of this relationship in a recursive framework which allows for feedback effects from productivity to future R&D investment. Our approach enables the estimation of the different equations as one system, allowing the coefficients to differ across sectors, and also permits us to take cross-equation correlation of the errors into account. Employing a panel of Swedish manufacturing and service firms observed in three consecutive Community Innovation Surveys in the period 2008–2012, our full-information maximum likelihood estimates show that many key channels of influence among the model's components vary meaningfully in their statistical significance and magnitude across six different sectors based on the OECD classification on technological and knowledge intensity. These results cast doubt on earlier research which does not allow for sectoral heterogeneity.

Capability configurations for advanced service offerings in manufacturing firms: Using fuzzy set qualitative comparative analysis

The present study contributes to the servitization literature demonstrating capability configurations that lead to successful advanced service offerings. Drawing on a data set of 131 Swedish manufacturing firms, the present study utilizes a configurational comparative method, namely fuzzy-set qualitative comparative analysis (fsQCA), to identify influential capability configurations. This study identifies four capability configurations that enable advanced service offerings in manufacturing companies. The results highlight the importance of a configurational approach towards understanding service capabilities and suggest two key paths based upon service development capabilities and mass service customization capabilities that firms may follow in achieving advanced service offerings.

Environmental investment and firm performance: A network approach

This study examines the role of investment in environmental production practices for both environmental performance and energy efficiency over time. We employ a network DEA approach that links successive production technologies through intertemporal investment decisions with a period by period estimation. This allows us to estimate energy efficiency and environmental performance separately, as well as productivity change and its associated decompositions into efficiency change and technology change. Incorporating a network model also allows us to account for both short-term environmental management practices and long-term environmental investments in each of our productivity measures. We apply this framework to a panel of detailed plant-level production data for Swedish manufacturing firms covering the years 2002–2008.

Labour Demand, Offshoring and Inshoring: Evidence from Swedish Firm‐level Data

AbstractThe objective of this paper was to analyse effects on firm–level relative demand for skilled labour due to imports of intermediates (offshoring) and exports of intermediates (inshoring). The study is based on a data set of Swedish manufacturing firms, 1997–2002, using trade flows in intermediate goods and services, respectively. Descriptive data show that goods inshoring is much larger than goods offshoring, while the reverse is true for services. There is, however, a strong increase in services inshoring over the study period. Controlling for potential endogeneity in offshoring and inshoring, our results indicate that there is a positive effect of services offshoring on the skill composition of workers in Swedish firms, while no such causality can be established from inshoring.

Importers, Exporters and Multinationals: Exploring the Hierarchy of International Linkages

The purpose of this paper is to empirically explore two dimensions of the firm hierarchy of international market-specific linkages, using data on Swedish manufacturing firms from 1997 to 2007. First, we investigate the productivity ordering with respect to three international linkages; importing, exporting and investing abroad. Second, we explore whether differences in the productivity ordering across industries correlates with industry and country characteristics. Our findings support a general productivity hierarchy from importing to exporting and from exporting to investing abroad, as well as from a low to a high number of linkages (measuring the complexity of firms’ international linkages). However, an industry-by-industry examination shows that the hierarchical structure is only generally upheld when it comes to the number of international linkages, while the ordering of import, export and investment linkages does not exhibit the same regularity across industries. Extending the analysis, we find that the lack of a hierarchical structure is more likely in industries focusing on larger and less distant markets.

The impact of ISO 14001 on corporate environmental performance: a study of Swedish manufacturing firms

The debate concerning the environmental effectiveness of environmental management systems (EMS) based on ISO 14001 is still open and scholars have called for further studies that can explain the contrasting evidence in previous research. As a response, this study aims to contribute knowledge about the effects of ISO 14001-based EMS by presenting fact-based environmental data. The study focuses on changes in performance over a period of 12 years and includes both firms with an EMS (66 firms) and firms without one (50 firms). Consideration is given to the improvement efforts in the firms before EMS adoption making it possible to neutralize any selection effects where better environmental performance precedes ISO 14001 adoption. Analysis has been carried out using statistical methods for six different environmental areas. No statistically significant differences between certified and non-certified firms concerning the change in the rate of improvement could be found in any of the six areas. However, it can be suspected that EMS adoption has positive effects on energy use and waste production whereas the non-adopting firms seem to perform better concerning air emissions. These mixed results mirrors previous research, which is rather worrying considering the worldwide popularity of EMS based on ISO 14001 in industry.