Swiss Firms Research Articles

Learning from the best: how regional knowledge stimulates circular economy transition at company level

Abstract This paper investigates whether, and what kind of, regional knowledge has a stimulating effect on circular economy (CE) innovation by companies. We thus add to the literature on regional knowledge spillovers, which has rarely focussed explicitly on the CE. For the empirical study, we create econometric regressions based on a representative dataset with extensive information on the CE activities of about 1400 Swiss firms. The results confirm that regional knowledge is important for the implementation of CE innovations. However, geographical distance and the quality of the knowledge must be taken into account, that is, companies primarily learn from the best.

Money matters: The role of money as a regional and corporate financial resource for circular economy transition at firm-level

This study addresses the role of different financial resources in driving circular economy activities at the firm level, which are a particular form of innovation. While the impact of financial resources on innovation activities has been widely researched, their relationship with the circular economy has not been adequately studied. Previous studies have focused primarily on corporate financial resources and investments by banks and investors. By using unique survey data from Swiss firms, we break new ground by examining the importance of regional financial resources, including regional household income and public procurement volumes. In doing so, we make a valuable contribution to the fields of (eco-)innovation and economic geography. We also examine the timing of financial resource deployment, looking at both early adopters and pioneers of the circular economy. Our results, derived from a comprehensive multivariate regression analysis that includes a representative sample of over 1000 observations, confirm that regional household income and public procurement volumes play a central role in the successful implementation of the circular economy – that is, money matters. Additionally, our research reveals distinct and independent impacts of corporate and regional financial resources, advocating for their combined influence. Importantly, we find that financial resources are crucial for both beginners and leaders in the circular economy, emphasizing the profound policy implications and central role in driving and supporting the circular economy.

In search of markets and technology: the role of cross-border knowledge for domestic productivity

Abstract Internationalization of research and development (R&D) is a double-edged sword: on the one hand, it is understood as a driving force of global innovation performance; on the other hand, from a national perspective it is often perceived as a threat to domestic efforts. Against this background, we compare the contribution of domestic and international knowledge sourcing to the productivity of Swiss firms. We find a positive productivity effect of knowledge-sourcing activities in geographically close countries (in the European Union [EU]). Domestic knowledge alone or from other world regions does not yield positive productivity effects. We provide evidence that companies that source international knowledge to generate innovative products benefit disproportionately from knowledge sourcing in the EU and that both knowledge- and market-seeking motives may be relevant to this result.

Open innovation during the 2008 financial crisis

ABSTRACT We examine how firms adjusted their open innovation strategy in response to the 2008 global financial crisis. While previous research has analysed the advantages, drawbacks, and methods of open innovation, less is known about how firms adjust their open innovation strategy in response to major economic shocks. Guided by theories of organisational learning and behavioural theory of the firm, we examine the impact of demand shock on firm openness to external knowledge. To test our hypotheses, we analyse a unique dataset on innovation in Swiss firms during the financial crisis. Our findings show that firms persisted with open innovation during the crisis, but the nature of the shock had a differential effect on how firms searched for external knowledge. This research contributes to a better understanding of the role of open innovation in times of crisis and provides insights into how firms adjust their innovation strategies in response to economic shocks.

Climate change awareness and mitigation practices in small and medium‐sized enterprises: Evidence from Swiss firms

AbstractThe objective of this paper is to investigate climate change awareness and mitigation effort and their associated motivating and limiting factors to pro‐environmental behavior and firm demographics in small and medium‐sized enterprises (SMEs) in Switzerland. For this purpose, a questionnaire was developed, conducted, and analyzed on motivating and limiting factors along with firm demographics, using descriptive statistics and ordinary least squares (OLS) and ordered probit regression models. The results show that Swiss SMEs are in general aware of climate change and their resulting consequences. SMEs have taken steps to help mitigate greenhouse gas emissions through recycling, reduction of energy and water consumption, and use of recycled packaging. SMEs could however improve their environmental impact through low‐carbon means of transport and use of public transport, sustainable raw material inputs, sustainable energy sources, and setting environmental goals and audits. There was a positive association between climate change awareness and mitigation. Motivating factors to pro‐environmental behavior included financial advantage and responsibility towards the environment, while firm size and human resources were limiting factors. Lastly, different mitigation measures might be influenced by different motivating and limiting factors including financial advantage and pressure from interest groups, as well as firm size.

How women broke into the old boys’ corporate network in Switzerland

This article aims to contribute to women’s business history by linking research on corporate networks with research on female directors. To do so, we investigate the effect of the Swiss corporate network on the entry of women into boardrooms, and the effect of board feminisation on the Swiss corporate network and elites. We draw on a large database of Swiss elites, which includes board members and chief executive officers (CEOs) of the 110 largest Swiss firms from the beginning of the twentieth century to the present. The results show that during the twentieth century, a dense corporate network and a strong class cohesion within the male economic elites made it very difficult for women to gain access to these boards. A few female directors were first found in family firms, then in cooperatives within the wholesale and retail trade sector. They did not accumulate positions of power like men and remained ‘second-class’ elites. At the end of the twentieth century, equality was perceived as potentially profitable for firms. This led to an increase in the presence of female directors in all firms, the diversification of their profiles, and the emergence of a female ‘inner circle’. The assertion of board diversity must, however, be tempered by recognising the enduring geographical and social backgrounds of a large proportion of the directors.

Culture, norms, and the provision of training by employers: Evidence from the Swiss language border

Apprenticeships are the core track of the Swiss educational system at the upper-secondary level, made possible by the fact that many Swiss firms voluntarily provide appropriate training positions. However, firms’ training provision differs substantively between the language-cultural regions within Switzerland. This feature of the Swiss apprenticeship system is hard to explain using conventional explanations of firm-provided training. In this paper, we argue that there are cultural differences in the norms favoring private over state provision of goods, which influence firms’ provision of training positions. Exploiting national referenda, we first show that, within a narrow band around the language border, voters in German speaking municipalities value private over public provision of certain goods more than their French speaking counterparts. We then document a higher share of training firms on the German speaking side of the language border of 4.4 percentage points, or roughly 13%. This estimate is robust across different sets of controls, alternative specifications, and various subsamples. Our results suggest an interplay between regional norms and local firms’ training behavior.

The Foreign Exchange Risk Premium in the Cross-Section of Stock Returns: International Evidence

Using the framework of the International Capital Asset Pricing Model, we estimate unconditional FX risk premiums for a large cross-section of firms from local currency perspectives. Further, we study the impact of potential FX risk diversifiability on FX risk premiums. Using equity data from nine major financial markets, we find support for FX risk being a contributing factor to stock return volatility in eight and a priced factor in four of the sample markets. Empirical estimates of FX risk premiums are economically meaningful, negative for U.S. and Swiss firms, and positive for Australian and Canadian firms.

The costs of standardized apprenticeship curricula for training firms

Standardized curricula define the set of skills that must be trained within a training occupation and thus are a key regulatory element of apprenticeship systems. Although clear economic rationales support the usage of such curricula, they necessarily impose costs, especially on firms that train apprentices, but do not use the full set of skills in their productive process and/or train other skills that are not covered by the curriculum. In this paper, we identify the trade-offs involved in setting up training curricula and use data from the most recent survey on the costs and benefits of apprenticeship training among Swiss firms to quantify the associated costs to training firms. On average, training firms state that they do not use 17% of the training content prescribed by the relevant curriculum, and 11% of the companies train additional skills not covered by the curriculum. We show that both kinds of misfit are associated with higher training costs and lower productive output from apprentices. This shows that the regulator imposes costs on firms in order to guarantee broad skills development for apprentices. It also cautions against overly broad curricula that may impose disproportionate costs on firms.

ダイバーシティ経営に適合する人事管理と職場マネジメント―ドイツ・スイス企業インタビュー調査からの示唆―

ダイバーシティ経営に適合する人事管理と職場マネジメント―ドイツ・スイス企業インタビュー調査からの示唆―

Firms\u2019 participation in the Swiss COVID-19 loan programme

This paper analyses the determinants of firm participation in the Swiss COVID-19 loan programme, which aims to bridge firms’ liquidity shortfalls that have resulted from the pandemic. State-guaranteed COVID-19 loans are widely used by Swiss firms, with 20% of all firms participating, resulting in a sizeable programme of 2.4% of GDP. We use a comprehensive dataset to study the determinants of firm participation. Our results can be summarised as follows. First, participation was largely driven by the exposure of a firm to lockdown restrictions and to the intensity of the virus in the specific region. Second, we show that firms associated with lower liquidity ratios had a significantly higher probability of participating in the programme. Third, we find no clear evidence that firm indebtedness affected participation in the programme and no evidence that pre-existing potential “zombie firms” participated more strongly in the loan programme. Fourth, we show that the programme reached younger and smaller firms, which could be financially more vulnerable as they are less likely to obtain outside finance during a crisis. Overall, we conclude that given its objective, the programme appears to be successful.

Controller involvement in a project management setting: effects on project functions and performance

PurposeThe authors examine the extent to which a controller's involvement in project functions (namely definition and scope, organization, constraints management and risk management) cascades down to project performance.Design/methodology/approachThe authors test the study’s framework using survey data from a sample of project leaders in German and Swiss firms. Responses were analyzed using the partial least squares (PLS) technique.FindingsThe authors find that controllers contribute to project success via the previously described project functions. Further, the study reveals the crucial role of controllers in managing uncertainty and project risks.Research limitations/implicationsAlthough the arguments used in this research were not country specific and suggest that the findings of this study also apply to the controller professional in general, this study clearly acknowledges that further research is needed to address the effects of this role in different jurisdictions given the specific characteristics of controllers acting in German-speaking countries.Practical implicationsThe authors provide insights on the role of controllers at an operational level, like project management, highlighting the need for controllers to support an effective project governance.Originality/valueThe authors add to the literature by examining the role of controllers in highly knowledge-intensive, highly pressured, task-driven, interdependent and dynamic operational settings, thus contributing to a better understanding of how controllers function at an operational level. The authors also strengthen a broader role of controllers in project management that goes beyond their historical controlling activities to include more modern functions, extending previous studies analyzing their professional identity.

COVID-19: guaranteed Loans and Zombie Firms.

Based on a survey (7–13 April 2020) we evaluate the reaction of Swiss firms towards the COVID-19 crisis. Firms show little pro-active reactions towards the crisis, but decrease their business activities. The firms in the survey report that the decline in foreign demand is the single most important reason for their deteriorating business situation. Firms that faced a more difficult business situation before the crisis are affected more severely during the crisis. Moreover, we investigate the impact of the Swiss federal loan program (Bundeshilfe) on the business activities. To this end, we develop a stylized theoretical model of financially constrained heterogeneous firms. We find that policy makers face a trade-off between immediate higher unemployment rates and long-term higher public spending. The former arises from a combination of a too strong economic impact of the COVID-19 lockdown (demand drop) and too low levels of loans provided. Nevertheless, providing (too) high levels of loans to firms creates zombie firms that are going to default in the future leading to an increase in public spending. (JEL codes: D22, D25, D84, and G33)

Knowledge Spillovers, Competition and Innovation Success

AbstractWe study the relationship between a patent‐based measure of knowledge spillovers that calculates technological proximity based on technologically relevant firms and innovation success. We find – for a representative sample of Swiss firms – that knowledge spillovers have a positive and significant association with the commercial success of innovative products. The paper shows the importance of market conditions for the relationship of spillovers with innovation performance: It is only positive and significant in markets with a medium number of competitors in the main product market, but not in monopolistic or polypolistic market structures.

COVID-19: Guaranteed Loans and Zombie Firms

Based on the ZHAW Managers Survey (7-13 April 2020) we evaluate firm reactions towards the COVID-19 crisis. We find that the Swiss economic lockdown measures successfully froze the economy, i.e., firms show very little pro-active reactions towards the crisis, but drastically decrease their business activities. The firms in the survey report that the decline in foreign demand is the single most important reasons for their deteriorating business situation. The only significant pro-active reactions to mitigate the crisis are increased digitalization efforts. These efforts are expected to have a long-lasting impact on firms' performance due to a selection effect, i.e., firms with more positive experience of digitialization will maintain their higher levels of digitalization even after the crisis. In general we find that firms that faced a more difficult business situation before the crisis are affected more severely during the crisis. Moreover, we investigate the impact of the Swiss federal loan program (Bundeshilfe) on the business activities of Swiss firms. Specifically, we focus on the take up of firms and its interaction with the perceived business situation before and during the COVID-19 crisis. To this end, we develop a stylized theoretical model of financially constrained heterogeneous firms. We find that policy makers face a trade-off between immediate higher unemployment rates and long-term higher public spending. The former arises from a combination of a too strong economic impact of the COVID-19 lockdown and too low levels of loans provided by the government to financially distressed firms. Nevertheless, providing (too) high levels of loans to firms might create zombie firms that are going to default on their debt in the future leading to an increase in public spending.

Value reporting and firm performance

Proponents of the concept of “value reporting” emphasize the idea that it may be in firms’ interest to provide investors and other stakeholders with a holistic picture of their value generation activities. The basic idea is that by explaining more clearly how and why value is created in the company, especially by considering the interplay of financial and non-financial value drivers, management will enhance its own understanding of the value generation process. This, in turn, enables management to make better operating decisions in the future. Using a 10-year panel of Swiss firms, we document that firms with better value reporting quality deliver better future operating performance and obtain greater economic value added. They also exhibit higher valuation ratios. These results hold when controlling for industry-year fixed effects as well as with two instrumental variables approaches. These findings also shed light on the potential value generation benefits of “integrated reporting”.

Competition and invention quality: Evidence from Swiss firms

Existing literature investigates the effect of access to international markets on the technological activities of companies neglecting the issue of competition. It is not only the access to such markets, but in particular the competition in these markets that drives technological activities. This partly explains the divergent findings in the literature. We try to fill this research gap by investigating the relationship between competition in international technological markets, invention quality, and firm performance. We compile a unique time-series cross-section dataset combining patent and survey data covering the period 1990–2013. The survey data are based on stratified random sample of about 6000 companies drawn from the census data provided by the Swiss Federal Statistical Office. This data allows us to develop composite indicators for competition and invention quality, giving credit to their versatile features. We apply econometric procedures using international trade shocks as an instrument to identify invention quality and address selection issues with a Bayesian imputation approach. We find evidence that the positive effect of invention quality on domestic sales of innovative products is positively mediated by intensive competition in international markets. This has important implications for trade policy and underscores the meaningfulness of open markets for invention quality.

Old before their time: the role of employers in retirement decisions

Do elderly workers retire early voluntarily, or are they induced to retire by their employers? We consider an exogenous shock due to a trade agreement between Switzerland and the EU—the mutual recognition agreement (MRA), which improved access to the EU market for Swiss firms. A vast literature suggests that these trade liberalization episodes lead firms to relocate and to innovate in order to increase productivity. This may lead to lower demand of skill obsolescent elderly workers and to higher demand of skilled workers. We use a difference in differences approach on Swiss Labor Force Survey data to compare early retirement behavior in treated MRA and control (non-MRA) industries in three periods (pre-liberalization, announcement, and implementation). We find an increase in early retirement in the MRA sector during the announcement period, which is stronger for larger firms, for exporting firms and for firms with a large age wage gap. We also find an increase in the share of graduates in all age groups. Wages are largely unaffected.

Controller Involvement in a Project Management Setting: Effects on Project Functions and Performance

Purpose. We examine the extent to which a controller’s involvement in project functions (viz. definition and scope, organization, constraints management, and risk management) cascades down to project performance. Design/methodology/approach. We test our framework using survey data from a sample of project leaders in German and Swiss firms. Responses were analyzed using the partial least squares (PLS) technique. Findings. We find that controllers contribute to project success via the previously described project functions. Further, the study reveals the crucial role of controllers in managing uncertainty and project risks. Originality. We add to the literature by examining the role of controllers in highly knowledge-intensive, highly pressured, task-driven, interdependent, and dynamic operational settings, thus contributing to a better understanding of how controllers function at an operational level. We also strengthen a broader role of controllers in project management that goes beyond their historical controlling activities to include more modern functions, extending previous studies analyzing their professional identity. Research limitations. Although the arguments used in this research were not country-specific and suggest that the findings of this study also apply to the controller professional in general, this study clearly acknowledges that further research is needed to address the effects of this role in different jurisdictions given the specific characteristics of controllers acting in German-speaking countries. Practical implications. We provide insights on the role of controllers at an operational level, like project management, highlighting the need for controllers to support an effective project governance.

What Goliaths and Davids among Swiss firms tell us about expected returns on Swiss asset markets

Motivated by recent US evidence, we evaluate the predictive power of changes in the weight of large firms in the aggregate stock market (“Goliath vs David” (GVD)) for Swiss stock market returns and bond market returns. Previous research suggests that the asset return dynamics in the US and Switzerland differ markedly. Forecasting Swiss asset returns hence constitutes a challenging “out-of-sample” test for GVD. Over the sample period from January 1999 to December 2017, we find that the Swiss version of GVD exhibits predictive power for Swiss stock and bond market returns even in the presence of global predictors. However, Swiss bond market returns are best predicted by the US term spread.