Innovation capabilities, market characteristics and export performance of EMNEs from India

2020 ◽  
Vol 32 (5) ◽  
pp. 801-822
Author(s):  
Sneha Bhat ◽  
Kirankumar S. Momaya
Keyword(s):  
Emerging Market ◽  
Export Performance ◽  
Developed Countries ◽  
Least Square ◽  
Least Square Estimator ◽  
Data Set ◽  
Content Type ◽  
Emerging Market Multinationals ◽  
Pharmaceutical Firms ◽  
The Relationship

Purpose This study aims to investigate the moderating effect of market characteristics on the relationship between innovation capabilities and export performance of Indian pharmaceutical firms. Design/methodology/approach The authors test the hypotheses using generalized least square estimator with random effects, on a panel data set, for the period 2010–2016. Findings Analyses of the data show that innovation capabilities lead to superior export performance. R&D investment positively affects export performance of both developing and developed countries, whereas patent quality negatively affects the export performance of developed countries and has no significance in developing countries. Size of the firm has significant positive effect on its export performance. Originality/value This study explores the role of market characteristics in determining the relationship between innovation and export performance, which has mostly been ignored in extant literature, especially in the context of emerging market multinationals.

Does investment in innovation impact firm performance in emerging economies? An empirical investigation of the Indian food and agricultural manufacturing industry

2021 ◽  
Vol 13 (2) ◽  
pp. 233-248
Author(s):  
Manogna R.L. ◽  
Aswini Kumar Mishra
Keyword(s):  
Firm Performance ◽  
Manufacturing Industry ◽  
Emerging Market ◽  
Developed Countries ◽  
Emerging Economy ◽  
Content Type ◽  
Agricultural Industry ◽  
Indian Food ◽  
The Impact ◽  
The Relationship

Purpose The study aims to analyze the impact of Research & Development (R&D) intensity on the firm’s performance, measured by growth of sales in the emerging market like India. Innovation strategy and its outcomes for firms may be different in developing countries as compared to developed countries. Thus, a study that focuses on the emerging economy like India, with a majority of the population dependent on agriculture, is of prime importance to the firm performance in the food and agricultural manufacturing industry. For this study, the broader focus will be on one widely recognised factor which may influence the growth rate of firms, i.e. investment in innovations which is in terms of R&D expenditure. Design/methodology/approach The paper investigates the relationship between the R&D efforts and growth of firms in the Indian food and agricultural manufacturing industry during 2001–2019. To empirically test the relationship between firm’s growth (FG) and R&D investments, system generalised method of moments technique has been used, hence enabling to avoid problems related to endogeneity and simultaneity. Findings The findings reveal that investments in innovations have a positive effect on the growth of firms in the Indian food and agricultural manufacturing industry. Investment in R&D also enables the firms to reap benefits from externalities present in the industry. Further analysis reveals that younger firms grow faster when they invest in R&D. More specifically, this paper finds evidence in the case of the food and agricultural industry that import of raw materials negatively affects the FG and export intensity positively affects the growth in the case of R&D firms. Research limitations/implications This study suggests that the government should encourage the industries to invest optimally in R&D projects by providing favourable fiscal treatments and R&D subsidies which are observed to have positive effects in various developed countries. Originality/value To the best of the author’s knowledge, the current paper is the first to analyse the impact of innovation in food and agricultural industry on firm’s performance in an emerging economy context with the latest data. This paper agrees that a government initiative to increase private R&D expenditure would have favourable effects on FG as growing investments in R&D lead to further growth of the firms.

Impact of exchange rates on exports from India’s sub-national economies

2019 ◽  
Vol 8 (2) ◽  
pp. 166-184
Author(s):  
Khee Giap Tan ◽  
Sasidaran Gopalan ◽  
Jigyasa Sharma
Keyword(s):  
Exchange Rates ◽  
Export Performance ◽  
National Level ◽  
Skewed Distribution ◽  
Significant Finding ◽  
Data Set ◽  
Content Type ◽  
National Economies ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to examine the impact of real effective exchange rates (REER), both in terms of levels and volatility, on the export performance of India’s sub-national economies, given the recent slowdown in India’s exports. Design/methodology/approach India’s export distribution is highly asymmetric, with 90 percent of India’s exports concentrated in 11 sub-national economies. Exploiting this concentration, this paper constructs a panel data set using available data between 2002 and 2014 to understand the relationship between REER and exports from the top exporting cluster. Moreover, the paper constructs a sub-national competitiveness index to capture the supply capacity of the states. Findings The empirical findings of this paper reveal that a higher REER volatility deters exports and movements in REER do not matter as much as volatility. The most significant finding of the paper is that state competitiveness is the most crucial factor affecting trade. Therefore, policy makers at the state level must lay more emphasis on the supply side such as addressing logistical bottlenecks to help revive exports growth. Originality/value This study makes a departure from the plethora of extant aggregate-level studies by examining the relationship between REER and exports at the sub-national level for India. Considering the highly skewed distribution of India’s exports, the study provides important insights into the exporting patterns and determinants that are at play at the sub-national level.

Price premium of private placement: evidence from India

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Supriya Katti ◽  
Naval Verma ◽  
B.V. Phani ◽  
Chinmoy Ghosh
Keyword(s):  
Emerging Market ◽  
Least Square ◽  
Price Premium ◽  
Group Affiliation ◽  
Data Set ◽  
Content Type ◽  
Equity Issues ◽  
Private Placement ◽  
Ordinary Least Square Regression ◽  
Binary Probit

PurposeThis study identifies the factors responsible for obtaining price premium on privately placed equity in a developing market.Design/methodology/approachWe examine a unique data set of a special case of private placement of equity, Qualified Institutional Placement (QIP) in India purchased at a premium. The study analyzed 188 equity issues offered between September 2006 and December 2014. On average, we find that QIP issues received a price premium of 4.38%. The study employed binary probit and ordinary least square regression models to analyze the probability and magnitude of the premium.FindingsThe study attributes the price premium of QIP to certification effect through group affiliation, signaling through promoters' ownership and monitoring effect through existing institutional investors. These factors influence the probability of premium for QIP issues. However, group affiliation and institutional ownership do not significantly influence the magnitude of the premium.Originality/valueThe private placement of equity is usually offered at a discount. Our findings contribute to the existing literature by evaluating the premium obtained on private placement as a unique scenario in emerging market supported through certification hypothesis, monitoring hypothesis and signaling.

Chinese multinationals’ FDI motivations: suggestion for a new theory

2019 ◽  
Vol 14 (1) ◽  
pp. 70-90 ◽  
Author(s):  
Byung Il Park ◽  
Taewoo Roh
Keyword(s):  
Mergers And Acquisitions ◽  
Multinational Corporations ◽  
Emerging Market ◽  
Developed Countries ◽  
Future Research ◽  
Foreign Direct Investments ◽  
Data Set ◽  
Content Type ◽  
Developed Economies ◽  
Chinese Mncs

Purpose The purpose of this paper is to complement the conventional international business (IB) theory, the OLI perspective, which is good at explaining the foreign direct investments (FDIs) undertaken by developed market multinational corporations (DMNCs). This study also suggests a new theoretical framework, namely, the OILL paradigm, that is able to encompass FDIs from emerging market multinational corporations (EMNCs) toward developed economies. Design/methodology/approach The data comprising 206 Chinese MNCs, which completed international mergers and acquisitions (IMAs), were obtained from Zephyr. By using these data, logical regressions are conducted to statistically confirm that we should not omit the learning motivation if we want to adequately understand the FDI phenomenon by encompassing investment flow from developing (or emerging) to developed countries. Findings The results based on this data set indicate that EMNCs often try to enter developed economies with the motivation to seek sophisticated foreign host knowledge that is not available internally. In particular, they tend to use IMA strategies when they want to learn from heterogeneity (i.e. inter-industry mergers and acquisitions) and absorb advanced technologies from DMNCs. Research limitations/implications By shedding light on the recent new trend in FDI (i.e. FDI from emerging countries to developed economies), the study provides useful theoretical implications, as well as suggesting scholarly contributions. However, we should acknowledge that there are some limitations to this study. First, the study explores only Chinese MNCs. Second, learning motivations need to be minutely and precisely measured by other studies. Third, this study argues that FDI from EMNCs to DMNCs is triggered by the former’s motivation concerning knowledge acquisition. However, the type of knowledge should be considered, and this is perhaps another avenue for future research. Practical implications Conventional IB theories, such as the OLI paradigm and internalization theory, have long sought to answer the question of why DMNCs go for foreign markets, in spite of the presence of the liabilities of foreignness, and focused on their main investment motivations (i.e. market-seeking, efficiency-seeking and resource-seeking motivations). For this reason, these theories do not adequately capture the primary FDI motivations of EMNCs, and consequently, they are unable to see the big picture when it comes to the FDI phenomenon. Based on this idea, the authors complement the well-known triad motivations (i.e. market-seeking, efficiency-seeking and resource-seeking motivations) by adding the knowledge-seeking motive and contribute to the evolution of IB theories by suggesting a new theory, which is the OILL paradigm. Originality/value The study contributes to the extant literature in the field of IB in two key ways. First, it examines EMNCs’ central motivations in conducting FDI where empirical research is sparse. By doing this, this paper attempts to solve the query indicated above (i.e. why MNCs choose FDI in spite of the presence of the liabilities of foreignness), and it offers a new theory (i.e. the OILL paradigm).

The relationship between cross-border acquisitions and R&D investments by Indian firms – substituting or complementing

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ajay Kumar Singal ◽  
Faisal Mohammad Ahsan
Keyword(s):  
Resource Constraints ◽  
Emerging Market ◽  
Main Idea ◽  
Generalized Least Squares ◽  
Emerging Economy ◽  
Least Squares Regression ◽  
Data Set ◽  
Content Type ◽  
Cross Border ◽  
The Relationship

PurposeEmerging economy firms seek strategic assets through cross-border acquisitions (CBAs) to upgrade their capabilities. The paper explores the relation between emerging economy firms' investments in CBAs and subsequent investments in domestic R&D. It investigates the underlying mechanism that links a firm's decision to pursue CBAs and the outcomes from the CBAs. The main idea behind the study is that firms have higher possibility of creating value from cross-border acquisitions when they simultaneously invest in domestic R&D though both investments are constrained by financial and managerial resources.Design/methodology/approachThe hypotheses are tested on a panel data set of 296 Indian firms over a period of 13 years (2003–2015). The authors use a two-stage Heckman procedure for testing their hypotheses. In the first stage, a probit model predicts the probability of a firm being a cross-border acquirer. The second stage model is estimated by a pooled-data GLS (generalized least squares) regression technique.FindingsThe authors find a nonlinear (inverted U-shaped) relationship between firm's investments in CBAs and domestic R&D. This suggests a complementary relation between investments in CBAs and a firm's domestic R&D at lower levels of investments in CBAs. At higher levels of investments in CBAs, CBA investments begin to substitute for firm's domestic R&D investments. For firms with higher international product-market experience and those operating in the hi-tech industry, the relationship between investments in CBAs and domestic R&D is complementary even at higher levels of CBA investments.Originality/valueThe study highlights the role of an emerging market firm's investment in domestic R&D as a link between the decision to invest in CBAs and related outcomes thereof. Emerging market firms face resource constraints while pursuing simultaneous investments in CBAs and R&D, but investment in R&D is essential for realizing the acquisition objectives. The authors also establish the significance of industry context and experiential learning in deciding the allocation of resources between CBAs and internal R&D.

scholarly journals Greenfield investments or acquisitions? The influence of distance on emerging-market multinationals

2019 ◽  
Vol 57 (5) ◽  
pp. 1223-1236 ◽  
Author(s):  
Laura Rienda ◽  
Enrique Claver-Cortes ◽  
Diego Quer ◽  
Rosario Andreu
Keyword(s):  
Emerging Market ◽  
Mode Choice ◽  
Behavioral Pattern ◽  
Foreign Direct Investments ◽  
Developed Country ◽  
Content Type ◽  
Emerging Market Multinationals ◽  
Greenfield Investments ◽  
The Relationship ◽  
Establishment Mode

Purpose In recent years, emerging-market multinationals (EMMs) are receiving significant attention in the international business literature. They represent a challenge for the conventional wisdom, mainly derived from the behavior of developed-country multinationals (MNEs). The purpose of this paper is to analyze how different cross-national distances, namely cultural, administrative, geographic and economic, may affect establishment mode choice by Indian MNEs. Design/methodology/approach Data are collected from 328 outward foreign direct investments carried out by Indian MNEs in 73 countries from 1991 to 2014. A binomial logistic regression analysis is used to test the hypotheses. Findings The results show that cultural and administrative distances negatively affect the choice of an acquisition. Moreover, firm size, acquisition experience, host country experience, industry, belonging to the G20 alliance and being a state-owned enterprise also influence establishment mode choice. Originality/value This is one of the first studies that investigate the relationship between distances and establishment mode choice by Indian MNEs. The findings suggest that they follow a different behavioral pattern among EMMs, since their internationalization decisions are closer to those of developed-country MNEs.

Effects of ownership structure on the relationship between multinationality and downside risk

2019 ◽  
Vol 26 (3) ◽  
pp. 401-421
Author(s):  
Chao Zhou
Keyword(s):  
Emerging Markets ◽  
Real Options ◽  
Ownership Structure ◽  
Emerging Market ◽  
Downside Risk ◽  
Publicly Traded ◽  
Data Set ◽  
Content Type ◽  
Real Options Theory ◽  
The Relationship

Purpose The purpose of this paper is to explore how multinationality affects multinational companies’ (MNCs) downside risk and the moderate effects of ownership structure in the setting of emerging markets based on Chinese publicly traded manufacturing MNCs. Design/methodology/approach The author derives hypotheses based on real options theory and agency theory, and tests hypotheses by using Tobit model and a unique data set of Chinese A-shared publicly traded manufacturing MNCs in the period of 2010–2016. Findings The empirical results suggest that multinationality is positively related to downside risk and this effect is subjected to ownership structure for firms in emerging markets. In particular, multinationality of MNCs with a high level of ownership concentration, managerial ownership and institutional ownership is more likely to reduce downside risk. Practical implications The main conclusion of this paper highlights the importance of ownership structure of MNCs in explaining the real options value of multinationality, and conveys to owners of MNCs in China and other emerging markets the need to strengthen firms’ governance if they want to maximize the benefits of multinational operations. Originality/value This study extends existing studies by taking ownership structure into consideration and highlighting the importance of agency problem in the examination of multinationality and downside risk, which provides a potential explanation for previous mixed evidence. This study also provides new evidence for the relationship between multinationality and downside risk by using a unique sample from China, an emerging market country.

Brand teams and distribution of wealth in Brazilian State Championships

2018 ◽  
Vol 8 (1) ◽  
pp. 2-14 ◽  
Author(s):  
Thadeu Gasparetto ◽  
Angel Barajas ◽  
Carlos María Fernandez-Jardon
Keyword(s):  
Least Square ◽  
Least Square Estimator ◽  
Data Set ◽  
Content Type ◽  
Explanatory Variables ◽  
Distribution Of Wealth ◽  
Brazilian State ◽  
The Impact ◽  
Practical Implications ◽  
Redistribution Effect

Purpose The purpose of this paper is to analyse the demand for tickets in the Brazilian State Championships focussing in the impact generated by the brand teams as well as the play-off matches in the demand for tickets and, consequently, in the match day revenues. Design/methodology/approach An equations system by three-stage least square estimator is employed. The data set comprises 1,114 matches from Mineiro, Carioca and Paulista Championships over the seasons 2013-2015. Findings All explanatory variables increase both attendance and match day revenues. However, the most important goal is the distribution of wealth found. The presence of brand teams in those championships provides a financial aid for smaller teams. Practical implications The proposals from the mass media to exclude the brand teams and design those championships exclusively in play-off stages should not be implemented by the policymakers. On the contrary, rearranging the design of the competition with more matches between small teams and brand teams may help to all of them. Originality/value The paper contributes to introduce the Brazilian State Championships in the sport economics literature as well as evidences the redistribution effect of wealth among clubs.

The link between export relationship quality, performance and expectation of continuing the relationship

2015 ◽  
Vol 10 (1) ◽  
pp. 16-31 ◽  
Author(s):  
A.F.M. Jalal Ahamed ◽  
Kåre Skallerud
Keyword(s):  
Relationship Quality ◽  
Social Exchange ◽  
Significant Relationship ◽  
Social Exchange Theory ◽  
Emerging Market ◽  
Export Performance ◽  
Convenience Sample ◽  
Content Type ◽  
The Relationship ◽  
Practical Implications

Purpose – The purpose of this study is threefold: to investigate how relationship quality affects export performance; to see if and to what extent export performance affects exporter satisfaction; and to determine whether exporter satisfaction ultimately affects the expectation of continuing the export-import relationship in an emerging market. Design/methodology/approach – The paper reports the findings of a survey of 185 respondents from the ready-made garments industry in Bangladesh chosen from a convenience sample. The responding exporters were located in Dhaka city or nearby areas. The data were analyzed using the partial least squares technique. Findings – The results support four out of five hypotheses, indicating that there is a significant relationship between exporter relationship quality and financial and strategic export performance. Additionally, a positive relationship between financial export performance and exporter satisfaction and between exporter satisfaction and the expectation of continuing the relationship are shown. No significant relationship between strategic export performance and exporter satisfaction is found. Practical implications – The findings have practical implications for managers and policy-makers interested in developing effective strategies for building and maintaining high quality export-import relationships, especially in the context of an emerging market. Originality/value – In order to accomplish the research goal, the main constructs from two influential streams of literature – social exchange theory and the disconfirmation of expectation theory – are utilized. This is new in the context of an emerging economy perspective.

Working capital and firm value in an emerging market

2015 ◽  
Vol 11 (1) ◽  
pp. 60-79 ◽  
Author(s):  
Shaista Wasiuzzaman
Keyword(s):  
Firm Value ◽  
Capital Investment ◽  
Emerging Market ◽  
Developed Countries ◽  
Ordinary Least Squares ◽  
Financing Constraints ◽  
Working Capital ◽  
Content Type ◽  
Capital Efficiency ◽  
The Relationship

Purpose – The purpose of this paper is to examine the relationship between working capital efficiency and firm value and the influence of financing constraints on this relationship. Design/methodology/approach – Data from 192 firms spanning a period of ten years (1999-2008) are used for this purpose and analyzed using the ordinary least squares regression technique. Findings – The study finds that improvements in working capital efficiency through reduction in working capital investment results in higher firm value. However, this relationship is influenced by the financing constraints faced by a firm. For financially constrained firms, working capital efficiency significantly increases firm value but it is found to be insignificant for unconstrained firms. Originality/value – To the author’s knowledge, this is the first study on the value of working capital in Malaysia or in any emerging market. Most studies on working capital valuation concentrate on developed countries and that too are only a handful. Hence this study contributes to the scarce literature on the valuation of working capital. This study also uses the model by Fama and French (1998) to evaluate the relationship between working capital and firm value, which has hardly been used in studies on working capital valuation.

Sign in / Sign up

Export Citation Format

Share Document