Search results for: firm dynamics

Authors: Kawinphat Lertpongmanee

Abstract:

The purpose of this research is to examine the relationships among business collaboration effectiveness, modern management excellence, proactive operational management, and firm performance to bring competitive advantage to the firm. Furthermore, the population and sample selected are exporters on textile businesses in Thailand in total of 566 companies. The data were collected by questionnaire survey and sent direct to the directors or managerial managers of each company which is appropriate as the key informant of this research. Moreover, the statistic to test hypothesis uses the hierarchical multiple regression analysis and provides those five hypotheses to testing. The results show direct effect that the business collaboration effectiveness has a significantly positive influence on firm performance, meaning that, the collaboration is an important factor in global business both internal and external of firms that reflect the linkage of business to create competitive advantage and gain benefits simultaneously of the firms efficiently also.

Keywords: business collaboration effectiveness, firm performance, modern management excellence, strategic management

Procedia PDF Downloads 245

Authors: Gayathri P. Nair

Abstract:

The focus of this study is to identify whether the board structure has any significant impact on the firm performance and finding out any evidence of being listed in the Fortune 500 list compiled and published by the American business magazine, Fortune and published globally by Time Inc., as the world’s wealthiest companies. The list has been released based on the ranking obtained for the total revenues for the respective fiscal year which has ended on or before March 31st. The study has been conducted on the Indian companies that were listed in the Fortune 500 list for the past 10 years. This study employs a logical regression between the variables, firm performance and board composition as mentioned in the clause 49 of companies act 1956 and 2013. For getting the firm performance, ROA has selected as the key performance metric, as it focuses the management attention on the assets required to run the business. The highlight of the study is that the tools had been applied between public and private sector firms so that, it reveals whether the board composition is helping out to maintain the position in the list. In addition, the findings reveal that apart from independent directors, all other variables have significant impact on firm performance.

Keywords: board structure, Fortune 500 company, firm performance, India

Procedia PDF Downloads 205

Authors: Nadia Fatima Zahra Malki

Abstract:

The aim of the study is to show the role of total Quality Management on firm performance, research relied on the views of a sample managers working in the Marinel pharmaceutical company. The research aims to achieve many objectives, including increasing awareness of the concepts of Total Quality Management on Firm Performance, especially in the manufacturing firm, providing a future vision of the possibility of success, and the actual application of the Principles of Total Quality Management in the manufacturing company. The research adopted a default model was built after a review and analysis of the literature review in the context of one hypothesis's main points at the origin of a group of sub-hypotheses. The research presented a set of conclusions, and the most important of these conclusions was that there is a relationship between the Principles of TQM and Firm Performance.

Keywords: total quality management, competitive advantage, companies, objectives

Procedia PDF Downloads 12

Authors: Monika Kulikowska-Pawlak, Katarzyna Bratnicka-Myśliwiec, Tomasz Ingram

Abstract:

This study seeks to contribute to the literature on firm competitiveness by advancing the perspective of organizational politics that views this process as a driver which creates identifiable differences in firm performance. The hypothesized relationships were tested on the basis of data from 355 Polish medium and large-sized enterprises. Data were analyzed using correlation analysis, EFA and robustness tests. The main result of the conducted analyses proved the coexistence, previously examined in the literature, of corporate entrepreneurship and firm performance. The obtained research findings made it possible to add organizational politics to a wide range of elements determining corporate entrepreneurship, followed by competitive advantage, in addition to antecedents such as strategic leadership, corporate culture, opportunity-oriented resource-based management, etc. Also, the empirical results suggest that four dimensions of organizational politics (dominant coalition, influence exertion, making organizational changes, and information openness) are positively related to firm competitiveness. In addition, these findings seem to underline a supposition that corporate entrepreneurship is an important mediator which strengthens the competitive effects of organizational politics.

Keywords: corporate entrepreneurship, firm competitiveness, organizational politics, sensemaking

Procedia PDF Downloads 331

Authors: Emel Gelmez, Derya Özilhan

Abstract:

In this study, the relationship between market orientation, innovation orientation and firm performance in the hotel enterprises in Konya was examined. Research data was obtained by survey method and the research was conducted on the enterprises operating in tourism business in Konya. Hypothesis were tested in terms of the main aim of the present study. According to the findings it was determined that there is a positive and significant relationship between each parameters.

Keywords: firm performance, innovation, innovation orientation, market orientation

Procedia PDF Downloads 320

Authors: Prateep Wajeetongratana

Abstract:

The objective of this research is to examine the effects of internal audit innovation on firm performance effectiveness influences of financial report reliability, organizational process improvement, and risk management effectiveness. This paper drew upon the survey data collected from 400 employees survey conducted at Nonthaburi province, Thailand. The statistics utilized in this paper included percentage, mean, standard deviation, and regression analysis. The findings revealed that the majority of samples were between 31-40 years old, married, held an undergraduate degree, and had an average income between 10,000-15,000 baht. And also the results show that auditing integration has only influence on financial report reliability. Moreover, corporate risk evaluation has effect on firm performance by risk management effectiveness and control self-assessment has effect influence on firm performance by organizational process improvement and risk management effectiveness as well.

Keywords: corporate risk evaluation, firm performance effectiveness, internal audit innovation, marketing management

Procedia PDF Downloads 349

Authors: Ayu Diar Sari, Sidharta Utama

Abstract:

The main objective of this study is to examine the empirical association among strategic corporate social responsibility (Strategic CSR), corporate governance (CG), and firm performance by investigating their causal effects. In order to get the comprehensive result, this study uses CSR variables which consist of Strategic CSR, Non-Strategic CSR and CSR as a whole. Exerting the two stage least square (2SLS) method, the result showed that CG mechanism positively influences CSR, Non-Strategic CSR, and firm performance (both ROA and PBV). CSR and Non-Strategic CSR positively influence ROA. Meanwhile CSR, Strategic and Non-Strategic CSR positively influence PBV. Firm’s Strategic CSR engagement plays a significantly positive role in enhancing PBV. The results supported the social impact hypothesis, agency theory, and conflict resolution theory.

Keywords: corporate financial performance, corporate governance, corporate social responsibility, strategic corporate social responsibility

Procedia PDF Downloads 273

Authors: Bita Mashayekhi, Zeynab Lotfi Aghel

Abstract:

The determinants of Earnings Response Coefficient (ERC), including firm size, earnings growth, and earnings persistence are studied in this research. These determinants are supposed to be moderator variables that affect ERC and Return Response Coefficient. The research sample contains 82 Iranian listed companies in Tehran Stock Exchange (TSE) from 2001 to 2012. Gathered data have been processed by EVIEWS Software. Results show a significant positive relation between firm size and ERC, and also between earnings growth and ERC; however, there is no significant relation between earnings persistence and ERC. Also, the results show that ERC will be increased by firm size and earnings growth, but there is no relation between earnings persistence and ERC.

Keywords: earnings response coefficient (ERC), return response coefficient (RRC), firm size, earnings growth, earnings persistence

Procedia PDF Downloads 292

Authors: Shuai Yang, Bin Li, Sixing Chen

Abstract:

Engaging and co-creating value with buyers (i.e., the buying organizations) have rapidly become a rising trend for sellers (i.e., the selling organizations) within Business-to-Business (B2B) environments, through which buyers can interact more with sellers and be better informed about products. One important way to achieve this is through engaging with buyers on social media, termed as brand engagement on social media, which provides a platform for sellers to interact with customers. This study addresses the research gap by answering the following questions: (1) Are B2B firms’ brand engagement on social media related to their firm value? (2) To what extent do analyst stock recommendations channel B2B firms’ brand engagement on social media’s possible impact on firm value? To answer the research questions, this study collected data merged from multiple sources. The results show that there is a positive association between seller-initiated engagement and B2B sellers’ firm value. Besides, analyst stock recommendations mediate the positive relationships between seller-initiated engagement and firm value. However, this study reveals buyer-initiated engagement has a counterintuitive and negative relationship with firm value, which shows a dark side of buyer-initiated engagement on social media for B2B sellers.

Keywords: brand engagement, B2B firms, firm value, social media, stock recommendations

Procedia PDF Downloads 284

Authors: Fereshteh Darash

Abstract:

Reflective tax management corresponds to the Agency Theory since it determines the motivation of managers for tax management actions and short-term and long-term consequences. Therefore, selection of tax strategy contributes to the tax and financial position of the firm in the future. The aim of the present research is to evaluate the effect of tax management components on risk-taking of firms listed in Tehran stock exchange by using regression analysis method. Results show that tax effective rate, tax risk and tax planning have no significant effect on the firm's future risk. Results suggest that stakeholders assess the effective tax rate and delay in tax payment in line with their benefits. They tend to accept the higher risk cost for reduction of tax payments and benefits of higher liquidity in current period. Hence, effective tax rate and tax risk have no significant effect on future risk of the firm. Moreover, tax planning yields no information regarding the predictability of the future profits and as a result, it has no significant effect on the future risk of the firm since specific goals of financial reporting are in priority for the stakeholders and regardless of the firm’s data analysis, they take investment decisions and they less intend to purchase the stocks in a rational manner.

Keywords: tax management, tax effective rate, tax risk, tax planning, firm risk

Procedia PDF Downloads 98

Authors: Umang Varshney, Amit Karamchandani, Rohit Kapoor

Abstract:

Practitioners and researchers have realized that Blockchain is not limited to currency. Blockchain as a distributed ledger can ensure a transparent and traceable supply chain. Due to Blockchain-enabled IoTs, a firm’s information management system can now take inputs from other supply chain partners in real-time. This study aims to provide empirical evidence of dimensions responsible for blockchain implemented firm’s growth and highlight how sector (manufacturing or service), state's regulatory environment, and choice of blockchain network affect the blockchain's usefulness. This post-adoption study seeks to validate the findings of pre-adoption studies done on the blockchain. Data will be collected through a survey of managers working in blockchain implemented firms and analyzed through PLS-SEM.

Keywords: blockchain, information management system, PLS-SEM, firm's growth

Procedia PDF Downloads 91

Authors: Tijjani Bashir Musa

Abstract:

The recent global crisis which suddenly results to Nigerian stock market crash revealed some peculiarities of Nigerian firms. Some firms in Nigeria are performing but their stock prices are not increasing while some firms are at the brink of collapse but their stock prices are increasing. Thus, this study examines the relationship between firm performance and stock price in Nigeria. The study covered the period of 2005 to 2009. This period is the period of stock boom and also marked the period of stock market crash as a result of global financial meltdown. The study is a panel study. A total of 140 firms were sampled from 216 firms listed on the Nigerian Stock Exchange (NSE). Data were collected from secondary source. These data were divided into four strata comprising the most performing stock, the least performing stock, most performing firms and the least performing firms. Each stratum contains 35 firms with characteristic of most performing stock, most performing firms, least performing stock and least performing firms. Multiple linear regression models were used to analyse the data while statistical/econometrics package of Stata 11.0 version was used to run the data. The study found that, relationship exists between selected firm performance parameters (operating efficiency, firm profit, earning per share and working capital) and stock price. As such firm performance gave sufficient information or has predictive power on stock prices movements in Nigeria for all the years under study.. The study recommends among others that Managers of firms in Nigeria should formulate policies and exert effort geared towards improving firm performance that will enhance stock prices movements.

Keywords: firm, Nigeria, performance, stock price

Procedia PDF Downloads 444

Authors: Ali Hojati Najafabadi, Mohamad Hosein Rahmati, Seyed Ali Madanizadeh

Abstract:

Governments execute energy subsidy reforms by either increasing energy prices or reducing energy price dispersion. These policies make less use of energy per plant (intensive margin), vary the total number of firms (extensive margin), promote technological progress (technology channel), and make additional resources to redistribute (resource channel). We estimate a structural dynamic firm model with endogenous technology adaptation using data from the manufacturing firms in Iran and a country ranked the second-largest energy subsidy plan by the IMF. The findings show significant dynamics and distributional effects due to an energy reform plan. The price elasticity of energy consumption in the industrial sector is about -2.34, while it is -3.98 for large firms. The dispersion elasticity, defined as the amounts of changes in energy consumption by a one-percent reduction in the standard error of energy price distribution, is about 1.43, suggesting significant room for a distributional policy. We show that the intensive margin is the main driver of energy price elasticity, whereas the other channels mostly offset it. In contrast, the labor response is mainly through the extensive margin. Total factor productivity slightly improves in light of the reduction in energy consumption if, at the same time, the redistribution policy boosts the aggregate demands.

Keywords: energy reform, firm dynamics, structural estimation, subsidy policy

Procedia PDF Downloads 68

Authors: Amir Mohagheghzadeh, Solaleh Salimi, Ramin Tafazzoli

Abstract:

Ecosystem and networks plays significant roles in product innovation. External innovation within developing firms can bring a wide range of advantages for a firm in a competitive market. Using external innovation can be mentioned as one of the most significant concepts regarding the firm’s transition phase into openness. Derivative concepts such as open or shared platform and app stores are the main result of this thinking within the firms. However, adopting this concept and leverage the defined advantages of external innovation should be aligned with other strategies and policies of a firm. Consequently, one of the key aspects that have been raised while using external innovation is how to govern external innovation within a developing firm. This paper describes the frameworks that two pioneer companies in mobile operating system development have used in order to control and govern external innovation through platform.

Keywords: external innovation, open innovation, governance, governance mechanisms, innovation, Apple, iOS, Google, Android

Procedia PDF Downloads 477

Authors: Intan Waheedah Othman, Maslinawati Mohamad, Azizah Abdullah

Abstract:

Few discussions were made on cooperative governance reforms despite the fact that cooperative movements operate and compete in an identical business environment as the private as well as the public corporations. Due to the scarcity of research examining the issue of governance among cooperatives, this paper is motivated to examine the extent of governance compliance and disclosure among cooperatives, hence the relationship between cooperative governance and its firm performance. Results from the study provide empirical evidence that disclosure on ownership structure and exercise of control rights was found to have significant negative relationship with cooperative firm performance.

Keywords: cooperative, governance, firm performance, Malaysia

Procedia PDF Downloads 507

Authors: K. Shim, J. N. Kim

Abstract:

This study investigates how consumers’ evaluations of a multinational corporation’s corporate social responsibility program connected to the perceived corporate authenticity and consumers’ pro-firm behavioral intention. With special attention to the two different types of CSR motives, business-oriented CSR motive and society-oriented motive, the current study empirically tests a theoretical model of a mediating role of corporate authenticity between perception of CSR motives and the consumers’ subsequent pro-firm behaviours. Results indicate significant mediation effects of corporate authenticity between perception of altruistic and societal CSR motives and consumers’ pro-firm behaviours. Unlike previous notions of the negative influence of self-interested motives on corporate authenticity, perceived strategic and business-oriented motives in CSR does not negatively affect the evalution of corporate authenticity when stakeholders have utilitarian ethical perspectives. Unlike the Korean participants, US participants are not willing to conduct pro-firm behaviors when they perceive strategic and business-oriented CSR motives. Theoretical and practical implications are discussed.

Keywords: corporate authenticity, corporate social responsibility, CSR motives, strategic CSR, utilitarian ethics, kantian ethics

Procedia PDF Downloads 448

Authors: B. Urban

Abstract:

International entrepreneurship represents the process of discovering and creatively exploiting opportunities that exist outside a firm’s national borders in order to obtain a competitive advantage. Firms in emerging economies are increasingly looking towards internationalisation since they are faced with rising competition in their domestic markets and attracted to opportunities in foreign markets. This article investigates international entrepreneurship by examining how the influence of entrepreneurial intensity and capabilities at the firm level influence performance, while at the same time considering environmental influences on this relationship. Based on past theoretical and empirical findings, hypotheses are formulated and then tested using correlational and regression analysis. Generally, the results support the hypotheses where both entrepreneurial intensity and capabilities are positively related to internationalisation and firm performance, while weak evidence is found for environmental hostility as a moderating influence. Several recommendations are made in light of the findings, where it is suggested that firms foster higher levels of innovativeness, risk-taking and proactiveness while developing human, social and technology related capabilities in order to enhance their performance and increase their levels of internationalisation.

Keywords: international entrepreneurship, entrepreneurial intensity, capabilities, firm performance, exporting, South Africa

Procedia PDF Downloads 375

Authors: Maria A. Murtiati, Ancella A. Hermawan

Abstract:

The objective of this study is to examine whether the firm’s eligibility to get a bank loan is influenced by earnings management. The earnings management is distinguished between accruals and real earnings management. Hypothesis testing is carried out with logistic regression model using sample of 285 companies listed at Indonesian Stock Exchange in 2010. The result provides evidence that a greater magnitude in accruals earnings management increases the firm’s probability to be eligible to get bank loan. In contrast, real earnings management through abnormal cash flow and abnormal discretionary expenses decrease firm’s probability to be eligible to get bank loan, while real management through abnormal production cost increases such probability. The result of this study suggests that if the earnings management is assumed to be opportunistic purpose, the accruals based earnings management can distort the banks credit analysis using financial statements. Real earnings management has more impact on the cash flows, and banks are very concerned on the firm’s cash flow ability. Therefore, this study indicates that banks are more able to detect real earnings management, except abnormal production cost in real earning management.

Keywords: discretionary accruals, real earning management, bank loan, credit worthiness

Procedia PDF Downloads 322

Authors: Mohammad-Ali Latifi, Harry Bouwman

Abstract:

Changes in the business environment accelerated dramatically over the last decades as a result of changes in technology, regulation, market, and competitors’ behavior. Firms need to change the way they do business in order to survive or maintain their growth. Innovating business model (BM) can create competitive advantages and enhance firm performance. However, many companies fail to achieve expected outcomes in practice, mostly due to irreversible fundamental changes in key components of the company’s BM. This leads to more ambiguity, uncertainty, and risks associated with business performance. However, the relationship among BM Innovation, moderating factors, and the firm’s overall performance is by and large ignored in the current literature. In this study, we identified twenty moderating factors from our comprehensive literature review. We categorized these factors based on two criteria regarding the extent to which: the moderating factors can be controlled and managed by firms, and they are generic or specific changes to the firms. This leads to four moderation groups. The first group is BM implementation, which includes management support, employees’ commitment, employees’ skills, communication, detailed plan. The second group is called BM practices, which consists of BM tooling, BM experimentation, the scope of change, speed of change, degree of novelty. The third group is Firm characteristics, including firm size, age, and ownership. The last group is called Industry characteristics, which considers the industry sector, competitive intensity, industry life cycle, environmental dynamism, high-tech vs. low-tech industry. Through collecting data from 508 European small and medium-sized enterprises (SMEs) and using the structural equation modeling technique, the developed moderation model was examined. Results revealed that all factors highlighted through these four groups moderate the relation between BMI and firm performance significantly. Particularly, factors related to BM-Implementation and BM-Practices are more manageable and would potentially improve firm overall performance. We believe that this result is more important for researchers and practitioners since the possibility of working on factors in Firm characteristics and Industry characteristics groups are limited, and the firm can hardly control and manage them to improve the performance of BMI efforts.

Keywords: business model innovation, firm performance, implementation, moderation

Procedia PDF Downloads 92

Authors: Ugbor Raphael Oluchukwu

Abstract:

Focusing on liquidity comes more naturally to a Chief Executive Officer than an Accountant who is trained to practice accrual accounting. When business is just commencing, it is essentially run on a cheque book (cash accounting) and for as long as there is cash in the accounts, the business is solvent. When complexity sets in and the business adopts financial accounting, the effect of liquidity and cash management becomes more pronounced. The management of cash no doubts impacts positively on the survival and growth of firms. What is in doubt is the amount of cash to be held by a firm as enough cash to enable the firm stay “afloat”. The focus of this paper is to determine liquidity and cash management in business, the Nigerian case. The specific objectives of the study are to do a theoretical review of the amount of cash to be held by a firm as enough cash to enable it stay afloat and to do a theoretical analysis to show the effect of cash flow on the survival and growth of firms in Nigeria.

Keywords: cash, firm survival, growth, liquidity management

Procedia PDF Downloads 548

Authors: Kyujin Shim, Soojin Kim

Abstract:

This study identifies and examines the impact of factors on two types of CSR outcomes, consumers’ perceptions of corporate authenticity and their pro-firm behavior intentions. Specifically we investigated the roles of two factors - the consumers’ perceptions of CSR motives of a company (i.e. business-oriented vs. society-oriented) and their ethical orientations (i.e. deontology vs. consequentialism). A web-based survey was conducted in South Korea and the United States respectively to compare the differences of consumer reactions between the two countries. The results show that consumers in two countries behave differently to a firm’s CSR motives. In the United States, when consumers perceive a company’s CSR motive as society-oriented, they are more likely to perceive the company authentic and as a result more likely to engage in pro-firm behavior. However, when consumers’ ethical orientation is considered, only consumers’ consequential orientation led to their pro-firm behavioral intention. In South Korea, interpretation of two different CSR motives affects the valence in consumers’ perceptions of corporate authenticity (i.e. society-oriented CSR motive and positive perception of corporate authenticity vs. business-oriented CSR motive and negative perception of corporate authenticity). Korean consumers also showed same pattern in terms of relationship among society-oriented CSR motive, perception of corporate authenticity, and pro-firm behavior intention. Interestingly, Korean consumers’ consequential orientation affects both their perception of corporate authenticity and their pro-firm behavior intention positively. In addition, there was an interaction effect of business-oriented CSR motive and deontological orientation on perception of corporate authenticity. Theoretical and practical implications will be discussed.

Keywords: corporate authenticity, corporate social responsibility, consequentialist ethics, CSR motives, deontological ethics

Procedia PDF Downloads 249

Authors: Uyen Tran Tu

Abstract:

The decision on capital structure is one of the most important and sophisticated decisions in financial management in order to improve firm performance. This article would study the two-way impact between capital structure and firm performance. The study use EVIEWS 6.0 software to determine a two-way relationship between the capital structure and firm performance based on two-stage regression (2SLS - Two-Stage Least Squares). The findings are: capital structure has the opposite effect on the business efficiency and vice versa, factors that effect on business efficiency include Size and Opportunities. Factors effects on the capital structure are size; liquidity. These factors also affect the ratio of capital structure (total debt/ total asset) of companies. In particular, liquidity has the opposite effect; and the size of the business has the same impact. The results of the study are in line with the theory and empirical studies presented, and the results of the study are unchanged for all three years 2015-2017.

Keywords: capital structure, firm performance, factors, two-way relationship

Procedia PDF Downloads 119

Authors: Saad Bin Nasir

Abstract:

The research will examine the role of corporate governance (CG) practices on firm’s financial performance. Population of this research will be manufacture sector of Pakistan. For the purposes of measurement of impact of corporate governance practices such as board size, board independence, ceo/chairman duality, will take as independent variables and for the measurement of firm’s performance return on assets and return on equity will take as dependent variables. Panel data regression model will be used to estimate the impact of CG on firm performance.

Keywords: corporate governance, board size, board independence, leadership

Procedia PDF Downloads 489

Authors: Mingook Lee, Sungjoo Lee

Abstract:

As technology-based service industries grow drastically worldwide; companies are recognizing the importance of market preoccupancy and have made an effort to capture a large market to gain the upper hand. To this end, a focus on patents can be used to determine the properties of a technology, as well as to capture advantages in technical skills, in comparison with the firm’s competitors. However, technology-based services largely depend not only on their technological value but also their economic value, due to the recognized worth that is passed to a plurality of users. Thus, it is important to determine whether there are any competitors in the target areas and what services they provide in any field. Despite this importance, little effort has been made to systematically benchmark competitors in order to identify business opportunities. Thus, this study aims to not only identify each position of technology-centered service companies in complex market dynamics, but also to discover new business opportunities. For this, we try to consider both technology and market environments simultaneously by utilizing patent data as a representative proxy for technology and trademark dates as an index for a firm’s target goods and services. Theoretically, this is one of the earliest attempts to combine patent data and trademark data to analyze corporate strategies. In practice, the research results are expected to be used as a decision criterion to diagnose the economic value that companies can obtain by entering the market, as well as the technological value to be passed onto their customers. Thus, the proposed approach can be useful to support effective technology and business strategies in a firm.

Keywords: business opportunity, patent, Portfolio analysis, trademark

Procedia PDF Downloads 264

Authors: Somdech Rungsrisawas

Abstract:

The objectives of this study are to examine the relationship between the competitive advantage of small and medium enterprises (SMEs) and their overall performance. A mixed method has been applied to identify the effect of determinants toward competitive advantage. The sample is composed of SMEs in product and service businesses. The study has been tested at an organizational level with samples of SME entrepreneurs, business successors, and board of directors or management team. Quantitative analysis has been conducted through multiple regression analysis with 400 samples. The findings illustrate that each aspect of competitive advantage needs a different set of driving factors to explain either the direct or the indirect effect on firm performance. Interestingly, technological capability is a perfect mediator and interorganizational cooperation toward competitive advantage. In addition, differentiation is difficult to be perceived by customers, as well as difficult to manage; however, it is considered important to develop an SMEs product or service for firm sustainably.

Keywords: competitive advantage, firm performance, technological capability, Small and Medium Enterprise (SMEs)

Procedia PDF Downloads 269

Authors: Gebrehiwot H., Giorgis Bahita

Abstract:

Firms in Africa experience less financial market in comparison to other emerging and developed countries, thus lagging behind the rest of the world in terms of innovation and growth. Though there are different factors to be considered, underdeveloped financial systems take the lion's share in hindering firm innovation and growth in Africa. Insufficient capacity to innovate is one of the problems facing African businesses. Moreover, a critical challenge faced by firms in Africa is access to finance and the inability of financially constrained firms to grow. Only little is known about how different sources of finance affect firm innovation and growth in Africa, specifically the formal and informal finance effect on firm innovation and growth. This study's aim is to address this gap by using formal and informal finance for working capital and fixed capital and its role in firm innovation and firm growth using firm-level data from the World Bank enterprise survey 2006-2019 with a total of 5661 sample firms from 14 countries based on available data on the selected variables. Additionally, this study examines factors for accessing credit from a formal financial institution. The logit model is used to examine the effect of finance on a firm’s innovation and factors to access formal finance, while the Ordinary List Square (OLS) regression mode is used to investigate the effect of finance on firm growth. 2SLS instrumental variables are used to address the possible endogeneity problem in firm growth and finance-innovation relationships. A result from the logistic regression indicates that both formal and informal finance used for working capital and investment in fixed capital was found to have a significant positive association with product and process innovation. In the case of finance and growth, finding show that positive association of both formal and informal financing to working capital and new investment in fixed capital though the informal has positive relations to firm growth as measured by sale growth but no significant association as measured by employment growth. Formal finance shows more magnitude of effect on innovation and growth when firms use formal finance to finance investment in fixed capital, while informal finance show less compared to formal finance and this confirms previous studies as informal is mainly used for working capital in underdeveloped economies like Africa. The factors that determine credit access: Age, firm size, managerial experience, exporting, gender, and foreign ownership are found to have significant determinant factors in accessing credit from formal and informal sources among the selected sample countries.

Keywords: formal finance, informal finance, innovation, growth

Procedia PDF Downloads 50

Authors: Farheen Akram

Abstract:

Research and Development (R&D) is the most crucial element of the firm’s survival in a competitive business environment. R&D is a long-term investment; therefore, executives having the power to make the investment decisions may be pessimistic when their compensation is closely linked with short-term firm performance. Thus, the current study investigates the impact of board composition and executives’ compensation (cash or short-term benefits and LTIs) on R&D spending using a sample of 85 S&P/100 firms listed on the Australian Stock Exchange (ASX) in 2017. SmartPLS (v.3.2.7) was used to evaluate the proposed model of current research. The empirical findings of this study indicate that board composition has a significant and positive effect on R&D spending. While, as expected, executive cash compensation has negative and Long-Term-Incentives (LTIs) has a positive impact on R&D spending. Based on current findings, the study suggested that myopic behavior of CEOs and top management towards long-term value creation investment like R&D can be controlled by using long-term compensation rewards.

Keywords: cash compensation, LTIs, board composition, R&D spending

Procedia PDF Downloads 149

Authors: A. Briseno, A, Zorrilla

Abstract:

Firms are increasingly responding to social and environmental claims from society. Practices oriented to attend issues such as poverty, work equality, or renewable energy, are being implemented more frequently by firms to address impacts on sustainability. However, questions remain on how the responses of firms vary across industries and regions between the social and the economic objectives. Using concepts from organizational theory and social network theory, this paper aims to create a theoretical framework that explains the internal and external influences that make a firm establish its objective. The framework explains why firms might have a different objective orientation in terms of its economic and social prioritization.

Keywords: organizational identity, social network theory, firm objective, value maximization, social responsibility

Procedia PDF Downloads 279

Authors: Petar Dobrev

Abstract:

There is no agreed-upon definition of firm quality. While profitability and stock performance often qualify as popular proxies of quality, in this project, we aim to identify quality without relying on a firm’s financial statements or stock returns as selection criteria. Instead, we use firm-level data on management practices across small to medium-sized U.S. manufacturing firms from the World Management Survey (WMS) to measure firm quality. Each firm in the WMS dataset is assigned a mean management score from 0 to 5, with higher scores identifying better-managed firms. This management score serves as our proxy for firm quality and is the sole criteria we use to separate firms into portfolios comprised of high-quality and low-quality firms. We define high-quality (low-quality) firms as those firms with a management score of one standard deviation above (below) the mean. To study whether this proxy for firm quality can identify better-performing firms, we link this data to Compustat and The Center for Research in Security Prices (CRSP) to obtain firm-level data on financial performance and monthly stock returns, respectively. We find that from 1999 to 2019 (our sample data period), firms in the high-quality portfolio are consistently more profitable — higher operating profitability and return on equity compared to low-quality firms. In addition, high-quality firms also exhibit a lower risk of bankruptcy — a higher Altman Z-score. Next, we test whether the stocks of the firms in the high-quality portfolio earn superior risk-adjusted excess returns. We regress the monthly excess returns on each portfolio on the Fama-French 3-factor, 4-factor, and 5-factor models, the betting-against-beta factor, and the quality-minus-junk factor. We find no statistically significant differences in excess returns between both portfolios, suggesting that stocks of high-quality (well managed) firms do not earn superior risk-adjusted returns compared to low-quality (poorly managed) firms. In short, our proxy for firm quality, the WMS management score, can identify firms with superior financial performance (higher profitability and reduced risk of bankruptcy). However, our management proxy cannot identify stocks that earn superior risk-adjusted returns, suggesting no statistically significant relationship between managerial quality and stock performance.

Keywords: excess stock returns, management, profitability, quality

Procedia PDF Downloads 69

Authors: Seyed Mohammadbagher Jafari, Elahe Mahdizadeh, Masomeh Ghahremani

Abstract:

Nowadays almost all organizations depend on information systems to run their businesses. Investment on information systems and their maintenance to keep them always in best situation to support firm business is one of the main issues for every organization. The new concept of cloud computing was developed as a technical and economic model to address this issue. In cloud computing the computing resources, including networks, applications, hardwares and services are configured as needed and are available at the moment of request. However, migration to cloud is not an easy task and there are many issues that should be taken into account. This study tries to provide a comprehensive model to assess a firm readiness to implement cloud computing. By conducting a systematic literature review, four dimensions of readiness were extracted which include technological, human, organizational and environmental dimensions. Every dimension has various criteria that have been discussed in details. This model provides a framework for cloud computing readiness assessment. Organizations that intend to migrate to cloud can use this model as a tool to assess their firm readiness before making any decision on cloud implementation.

Keywords: cloud computing, human readiness, organizational readiness, readiness assessment model

Procedia PDF Downloads 365