Firm Performance In Terms Research Articles

Rare and Valuable: Female Board Directorship in the Middle East and North Africa

Amassing unique hand-collected data for 1197 publicly-listed MENA firms from 2016, we explore the predictors of female board assignments at the firm, industry, and country level and also examine the impact of female directors on firm performance. We rely on the institutional logic and legitimacy concerns to explain the predictors of female board directorship and find that foreign ownership, firms in industries with larger female employment bases, and gender parity promote female board directorship. We find, though, partial empirical support that smaller firms as well as family- and state-owned firms assign more board seats to female directors. Supporting the upper echelons view of board gender diversity, we find that female directors have a positive impact on firm accounting performance. However, reflecting a market bias against female representation in corporate hierarchy, we find a negative impact on firm performance in terms of market measures.

Board diversity and performance in a masculine, aged and glocal supply chain: new empirical evidence

Purpose This study aims to contribute to the debate on the relationship between board diversity and performance, a hot topic for scholars and shareholders. A number of studies have found contrasting impacts of board diversity on firm performance and this paper adds new and original evidence in the context of the automotive supply chain focusing on gender, age and nationality diversity. Design/methodology/approach The authors propose a triple stage empirical analysis. First, the authors use linear models according to different performance indexes for investigating diversity (gender, age and nationality) within the board of directors and executives. Second, the authors investigate the issue of diversity in different contexts such as position in the supply chain, nationality of the owner and family/corporate ownership. Finally, the authors use non-linear models to find a better combination of diversity in terms of gender and nationality for retrieving some managerial implications. Findings First, the authors demonstrate a robust positive effect of women in board representation on firm performance in terms of profitability and firm risk. In the case of, age and nationality the results are more equivocal in particular for the former. Second, the authors depict board diversity in different contexts as follows: positioning in the supply chain, type and nationality of the final owner. Again, gender heterogeneity is more adequate in the complex firm as Tier 1 suppliers, corporate and foreign company. Originality/value The authors focused the analysis on a specific industry, shedding light on the main specificities linked to operating in certain phases of the supply chain, a substantial novelty in this field. The empirical evidence is based on a very large data set containing quantitative and qualitative information on a representative sample of 1,538 firms operating in the Italian automotive supply chain, one of the most relevant in Europe.

Firm Restructuring System in Korea: A Comparison of Firm Performance Between Policy Finance Institutes and Private Banks

The performance of firm restructuring led by policy finance institutes in Korea was analysed using quantitative methods. Firm performance in terms of the probability of graduating from the restructuring process, profitability and financial soundness for restructuring firms managed by policy finance institutes was compared against those managed by private banks. Data analysis using the propensity score matching (PSM) and Heckman models found the following characteristics in the firm restructuring led by policy finance institutes in Korea. First, the probability of graduating from restructuring was statistically significantly lower in the firms managed by policy finance institutes. Second, the strength of restructuring in terms of material and human resources since the start of restructuring was statistically significantly stronger in firms managed by policy finance institutes. However, whether the policy finance institutes were the main creditors since the start of the restructuring process significantly reduced the firms’ sales. Nevertheless, it did not affect their profitability in a statistically significant manner. Considering that relatively more financial resources are injected into the restructuring firms managed by policy finance institutes, it can be concluded that the firm restructuring led by policy finance institutes is less efficient.

Did China’s bank ownership reform improve credit allocation?

This paper studies the impact of ownership reform on the credit allocation of China’s three largest state-owned banks (SOBs) in 2004. Using firm data for 2000–2007, we show that listed companies with higher amounts of debt experience a larger decline in credit access in cities that are more exposed to these SOBs after bank reform, indicating that a bank ownership change pushes loan officers to give much more importance to credit risks in the lending process. We extend our study to the universe of unlisted manufacturing companies and find that bank ownership reform also reduces bank lending to state-owned enterprises (SOEs) and low productivity firms in addition to more indebted firms. The negative effect of the reduced SOB lending on firm performance in terms of profitability and investment is only prominent in SOEs and firms with low productivity.

Linking responsible leadership with financial and environmental performance: determining mediation and moderation

PurposeDrawing upon the institutional theory, this study examines the influence of responsible leadership on firm performance. Furthermore, this research investigates environmental management practices (EnvMP) as an underlying mechanism and institutional pressures as boundary condition between responsible leadership and firm performance.Design/methodology/approachTime-lagged data were collected using survey-questionnaire from 385 mid-level employees of construction industry in Pakistan. Partial least square-structural equation modeling (PLS-SEM) was used to analyze the data.FindingsResults demonstrate that responsible leadership impacts firm performance (financial and nonfinancial) directly and through EnvMP. Furthermore, institutional pressure moderates the link between responsible leadership and EnvMP. However, moderated mediation effect of intuitional pressures was found insignificant.Practical implicationsThis study suggest that EnvMP is a key process through which responsible leadership influences firms' financial and nonfinancial performance and shed lights as to when responsible leaders matter most in terms of firm performance through low or high institutional pressures.Originality/valueThis paper is an early attempt which contributes to the body of literature on responsible leadership by investigating mechanisms (how) and boundary condition (when) through which responsible leadership influences firms' financial and environmental performance.

Brand Alliances and Stock Reactions

Purpose: This paper examines the performance and risk of brand alliances by investigating the market value of brand alliances through the analysis of investors’ response, and look into the differen...

The Impact of Trade Liberalization on Firm Profitability in Ghana: Panel Evidence from Private Firms in the Manufacturing Sector

Since 1983, Ghana has witnessed trade liberalization policies that were introduced as part of structural adjustment and economic recovery programmes and meant to open up the once closed economy. As part of such reforms, tariffs were reduced, and non-tariff trade barriers lessened. The adjustment programme also sought to make the once neglected private sector a key player in Ghana’s economic development since the sector is recognized as an engine of growth, hence, needed to accelerate the rapid industrialization of the country. In view of this, a key question begging for answers has been: how has the reductions in import restrictions in Ghana impacted on the performance of firms in terms of profitability in the private sector? This paper attempts to answer this question by investigating the effects of tariffs on the profitability of private firms in the manufacturing sector using firm-level data. Profitability is measured as the net profit margin of a firm. For our regression analysis, we employ robust pooled OLS and the fixed effects estimators. The findings reveal that tariff reductions are associated with increased profitability in such firms. Also, firm productivity and profitability were found to be positively related.

What a firm produces matters: Processes of diversification, coherence and performances of Indian manufacturing firms

Economic growth and development of a country involves the accumulation of knowledge and dynamic capabilities. Past research has begun to investigate capability accumulation and macro-economic development of countries and sectors, and the role of new products in these processes. In this work, we focus on the firm-level process of capability accumulation and diversification in a developing country, namely, India. First, we explore the drivers of firm diversification strategies, and the effects of diversification upon firm performance in terms of profitability and sales growth. Second, we look at the idiosyncratic characteristics of different products, trying to identify the synergies of a product line with respect to the overall product basket of the firm – i.e. the “coherence” of its diversification patterns. We observe that the future performance of firms crucially depends on the interactions between the products they produce.

Performance Differential between Private and State-owned Enterprises: An Analysis of Profitability and Solvency

ABSTRACT Motivated by the rise of state capitalism, the paper investigates the relationship between ownership identity and the performance of firms in terms of profitability and solvency. Using cross-sectional data covering over 25,000 firms worldwide and by employing various empirical methods, we find robust evidence that state-owned enterprises (SOEs) tend to be less profitable than private-owned enterprises. However, they appear to use debt for their financial need and are, thus, better leveraged. SOEs are also more labor-intensive and have higher labor costs. In addition, an improvement in institutional quality could benefit both SOEs and POEs. Thus, evidence from this study could be interpreted to mean that privatization could improve the performance of public firms; however, this process should come with several prior-privatization approaches. A study over a more extended period is needed before these results can be considered conclusive.

Have restaurant firms been using right recession turnaround strategies?: Evaluating with propensity score measure

Abstract Among the diverse strategies that restaurants use in recessions, some studies have shown that strategies that increase advertising, profit margins, or asset turnover have yielded promising results in terms of firm performance. However, the success of these turnaround strategies might be due to the health or size of a firm rather than the implementation of these strategies. Therefore, this study empirically tested this question utilizing the propensity score measure (PSM) due to concerns with selection bias across restaurant segments. The results showed significant improvements in revenue for limited-service and franchise restaurants when aggressive advertising was used but no improvements in profitability. The profit margin strategy had no impact on revenue but affected profitability and stock returns positively for all segments. Finally, the asset turnover strategy had adverse effects on revenue the year after a recession for all segments. These mixed results suggest that managers need to be cautious when implementing recession turnaround strategies.

Development of an integrated framework of LGSS strategies for Indian manufacturing firms to improve business performance: an empirical study

PurposeThis article aims to explore synergies between Lean, Green and Six Sigma practices in order to propose an integrated LGSS framework for continuous and incremental improvement in the Indian manufacturing industries. The three-dimensional LGSS framework seeks to provide various combinations and support operational, financial, environmental and social needs.Design/methodology/approachIn the research method, first, the current problems faced by Indian manufacturing industries are considered and proposition of a conceptual framework that qualitatively integrates synergistic aspects of Lean, Green and Six Sigma practices, and second, the framework is checked by a survey taken from 203 Indian firms by using SPSS-AMOS.FindingsThe hypothesized result suggests that the positive impact of integrated practices on firm performance in terms of operational, financial, social and environmental outcomes. It also provides a systemic and holistic approach to problem-solving through constant and incremental enhancement in the manufacturing sector.Research limitations/implicationsIn this research, only Indian manufacturing industries have been studied but can be extending into different geographical areas and sectors. Future research is also possible for different behavior and characteristics of companies that can lead to recommending strategies on how companies can improve performance. Most importantly, future research can try to understand which specific practice can contribute to competitive advantage and business success.Practical implicationsManufacturing firms that want to improve environmental sustainability should implement integrated LGSS practices into their supply chain. The set of combined practices improves operational, social, economical and environmental benefits.Social implicationsThe research presents an integrated approach of LSS for the manufacturing industry which leads their business processes to achieve economic sustainability through continuous growth and improved operational efficiency. Manufacturing industries result in outcomes like reduced cost, lead time, improved quality, sustainable market position, profitability, customer satisfaction, etc.Originality/valueThis research is different from previous studies because it integrates Lean, Green and Six Sigma practices into a unique framework that fulfills a specific need of the Indian manufacturing sector that guides operational, social, environmental and financial issues in Indian industries.

Do green business initiatives enhance firm performance? Evidence from an emerging market

This paper examines the adoption of green business initiatives in Vietnamese firms’ activities and their impacts on firm performance. We applied both qualitative and quantitative methods in this study. Our research results show that green initiatives have positive impacts on firm performance in terms of operating performance, financial performance, marketing performance and environmental performance. Green initiatives such as green supply chain management, reverse logistics, green logistics, green marketing, green advertising, eco-labeling, and green product innovation help firms grow and improve their revenues, profits, market shares and customers’ satisfaction towards their products and services. In addition, green business initiatives contribute to firms’ reduction in costs and negative impacts on the natural environment.

The impact of CEO educational background on corporate cash holdings and value of excess cash

This study examines the effect of CEOs' educational background on the cash holdings policy and value of excess cash in Korean firms considering the education system in Korea, where academic tracks are determined earlier in life than in other countries. We show that although firms with CEOs who majored in business or in science or engineering have less cash holdings, the value of excess cash holdings varies by major. We find that firms with CEOs who majored in business (science or engineering) show a higher (lower) value of excess cash than other CEOs. Moreover, firms whose CEOs have a master's degree show a higher value of excess cash. In sum, this study suggests that corporate financial policy depends on CEOs' educational background, which determines their personal traits and professional career experience and thus lead to different firm performance in terms of cash holdings policy and the value of excess cash.

Implementation of digital manufacturing technologies: Antecedents and consequences

The use of digital manufacturing technologies (DMTs) is changing the face of the manufacturing landscape and enhancing the competitiveness of firms. However, its implementation is still a relatively unexplored phenomenon and demands attention. The purpose of this study is to determine the role played by technological context, organizational context, and environmental context of firms in the implementation of the DMTs. A hypothesized model is proposed and tested using survey-based data from the International Manufacturing Strategy Survey VI comprising 931 firms across developed and developing countries. The proposed research model gains support from the technology–organization–environment framework and the combinatorial technology evolution theory, which together provide a holistic understanding of the technology implementation process in terms of its enablers and performance outcomes. We find that although the organizational context and environmental context impact DMTs' implementation, these impacts are mediated through the technological context of the firm. Moreover, the implementation of these technologies has a significant impact on firm performance in terms of flexibility, design, delivery, and quality performance. Contributing to the empirical research gap in the domain of DMTs’ implementation, this study also generates insights for practitioners about the complementarity of the technological, organizational, and environmental factors that together enable the implementation of DMTs and enhance firm performance.

Concordance and complementarity in IP instruments

ABSTRACT This work investigates the relationship between proxies of innovation activities, such as patents and trademarks, and firm performance in terms of revenues, growth, and profitability. By resorting to the virtual universe of Italian manufacturing and service firms, this work provides a rather complete picture of the Intellectual Property (IP) strategies pursued by Italian firms, in terms of patents and trademarks, and studies whether the two instruments for protecting IP exhibit complementarity or substitutability. In addition, and to our knowledge novel, we propose a measure of concordance (or proximity) between the patents and trademarks owned by the same firm and we then investigate whether such concordance exerts any effect on performance. The results suggest that while patents and trademarks independently exert a relevant impact on firm performance, there is no convincing evidence in favour of a complementary role of IP.

The interplay between socioemotional wealth and family firm psychological capital in influencing firm performance in hospitality and tourism

The purpose of this study is to examine the impact of family firm specific non-financial dynamics [socioemotional wealth (SEW) and family firm psychological capital (FFPsyCap)] on firm performance. We develop a model of how family firms' SEW preservation goal negatively affects firm performance in terms of sales and the mitigating influence of FFPsyCap on this association. We test the model on a sample of 192 family firms in the Hospitality and Tourism (H&T) industry. Using a cross-sectional research design, surveys were solicited from small-and-medium size hotels in Turkey. Ordinary Least Squares technique is used to test our hypotheses. The results reveal that family firms' SEW preservation goal negatively affects firm performance in terms of sales, and the FFPsyCap mitigates this influence. Accordingly, if small-and-medium size firms in H&T can capitalize on non-financial strengths and minimize the impact of family-centric goals on firm outcomes, they can attain transgenerational sustainability and success.

The impact of financial fragility on firm performance: an analysis of BIST companies

This study analyzes the impact of financial fragility on firm performance through panel data regression models. In this context, financial fragility is represented by a selected set of nine different macroeconomic indicators as independent variables which are the real exchange rate of Turkish Lira, BIST 100 index, the ratios of short-term foreign debt to long-term foreign debt, exports to imports, short-term foreign debt to international reserves as well as the ratios of current account deficit, budget deficit, net public debt and private sector foreign debt to gross domestic product, respectively. In addition, firm performance is represented by the Altman Z-Score, EBT and share price of BIST companies as dependent variables. Integrating data from 4,193 observations of 492 diverse listed companies on Borsa Istanbul with coverage from 2005 to 2017, separate regression models were constituted for each firm performance construct with selected nine indicators of the given years. Empirical findings primarily suggested that a significant relationship existed between financial fragility and firm performance based on selected representative parameters. The main findings suggest that the change in the BIST 100 index can be concluded as the most influential indicator for firm performance in terms of profitability, bankruptcy risk and share price development. Moreover, fluctuations in the real exchange rate in one period may signal for changes in share prices in the coming period.

The Effect of Incremental Innovation and Switching-Over to Architectural Innovation on the Sustainable Performance of Firms: The Case of the NAND Flash Memory Industry

This paper presents an empirical study that shows the relationship between innovation activities and the sustainable performance of firms in terms of market share and profit. While previous studies of innovation effects have focused on one type of innovation in the industry, such as incremental or radical innovations, the study of both incremental and architectural innovations in the same industry would enrich our understanding of innovation. This study discusses and emphasizes the importance of continuous incremental innovation and how switching-over to architectural innovation affects the sustainable performance of firms in the NAND flash memory industry. A systematic content analysis, comparing the changes in market and profit leadership in terms of continuous incremental innovation and an introduction of architectural innovation, was performed, and it was concluded that both continuous incremental innovation and switching-over to architectural innovation positively affects the sustainable market and profit leadership of firms. Additionally, architectural innovation reframes the technological lifecycle in the industry and gives a firm a chance to retain and continue its technological leadership by establishing new dominant designs. This study suggests that continuous incremental innovation is very important for high-tech firms, and firms should consider the option of switching-over to architectural innovation instead of the incremental development of current dominant design when the complexity of technology and market is increased in order to have a sustainable advantage.

Coherent diversification in corporate technological portfolios.

We study the relationship between the performance of firms and their technological portfolios using tools borrowed from complexity science. In particular, we ask whether the accumulation of knowledge and capabilities associated with a coherent set of technologies leads firms to experience advantages in terms of productive efficiency. To this end, we analyze both the balance sheets and the patenting activity of about 70 thousand firms that have filed at least one patent over the period 2004-2013. We define a measure of corporate coherent diversification, based on the bipartite network linking companies with the technological fields in which they patent, and relate it to firm performance in terms of labor productivity. Our measure favors technological portfolios that can be decomposed into large blocks of closely related fields over portfolios with the same breadth of scope, but a more scattered diversification structure. We find that the coherent diversification of firms is quantitatively related with their economic performance and captures relevant information about their productive structure. In particular, we prove on a statistical basis that a naive definition of technological diversification can explain labor productivity only as a proxy of size and coherent diversification. This approach can be used to investigate possible synergies within firms and to recommend viable partners for mergers and acquisitions.

The HR decision-maker’s emotional intelligence and SME performance

PurposeThis paper aims to examine the influence of the emotional intelligence (EI) of the human resources (HR) decision-maker on firm performance in small and medium-sized enterprises (SMEs), as well as the possible mediating role of the use of a system of HR practices in that relationship.Design/methodology/approachThe research involves a sample of 157 managers responsible for HR in SMEs. SMEs are examined because in these firms, decisions are not usually adopted on a collegiate basis. It makes these firms an ideal context for studying the relationship between HR decision-maker’s EI and firm performance.FindingsResults show that the HR decision-maker’s EI determines firm performance in terms of generation of valuable HR and financial outcomes. They also confirm the mediating role of the system of HR practices in that relationship.Research limitations/implicationsThis research suggests that an adequate understanding of the importance of EI can guide efforts to boost SMEs competitiveness. Thus, as SMEs are an important part of the business fabric in the majority of developed economies, the implications of this study are significant.Originality/valueFindings in this research suggest that the workplace is not managed exclusively on a cognitive basis since emotional competences may play an important role in the HR management and SMEs’ performance.