Firms’ reaction to threats from informal firms: exploring the roles of institutional quality and technical gap

2020 ◽  
Vol 35 (11) ◽  
pp. 1887-1899
Author(s):  
Guoyou Qi ◽  
Hailiang Zou ◽  
Xie X.M. ◽  
Saixing Zeng
Keyword(s):  
Organizational Innovation ◽  
Institutional Quality ◽  
Firm Level ◽  
Content Type ◽  
Innovative Strategies ◽  
Innovation Activities ◽  
Top Managers ◽  
Level Data ◽  
Technical Capability ◽  
The Impact

Purpose Threats from the informal sector have become an important concern among formal firms. As a response to these threats, formal firms can adopt product innovation (PI) and marketing innovation (MI) strategies to differentiate themselves. The purpose of this paper is to examine how firm-level technical capability and external institutional quality affect firms’ reactions to the threats from informal firms by adopting innovative activities. Design/methodology/approach Based on attention-based view (ABV), an empirical study is conducted by using firm-level data from the World Bank Enterprise Survey in 2013. Findings The findings indicate that when faced with competition from informal firms, formal firms will intensify their innovation activities in both MI and PI, and their technical capability mitigates the competitive threats from informal sectors and thus weakens the impact of informal competitors on the level of product and marketing innovations. Moreover, it is found that the improvement of institutional quality reduces formal firms’ urgency to introduce new products when facing informal competitors. However, this improvement strengthens the impact of informal rivalry on formal firms’ innovation in marketing methods. Originality/value Previous studies that investigate the influence of informal threats are focused on technological innovation (e.g., PI and process innovation) strategies, but little knowledge is provided on non-technological innovative strategies, such as marketing strategies (e.g., MI and organizational innovation). This study contributes to the innovation literature by delving into the circumstances under which PI and/or MI is adopted to counter informal rivals. The findings enrich ABV by investigating how inter-firm resource similarity and marketing commonality strengthen top managers' attention to competition from informal firms.

scholarly journals The Effect of Government Subsidy on Non-Technological Innovation and Firm Performance in the Service Sector: Evidence from Germany

2018 ◽  
Vol 9 (1) ◽  
pp. 118-137 ◽  
Author(s):  
Shoaib Abdul Basit ◽  
Thomas Kuhn ◽  
Mumtaz Ahmed
Keyword(s):  
Firm Performance ◽  
Service Sector ◽  
Organizational Innovation ◽  
Government Subsidy ◽  
Community Innovation Survey ◽  
Firm Level ◽  
Government Subsidies ◽  
Innovation Activities ◽  
Public Subsidy ◽  
The Impact

Abstract Background: To enhance the innovation activities at the firm level, government subsidies plays an important role. Objectives: The objective of the study is to explore whether firms in service sector that receive government subsidies engage more in marketing and organizational innovation activities than their counterparts. Second, focusing on the subsidized firms in the service sector, the impact of innovations (marketing as well as organizational) on firm performance—measured as the probability of submitted copyright applications by firms, has been analyzed. Methods/Approach: The propensity score matching approach and probit model have been used to analyze the innovation activities of subsidized and non-subsidized firms. The empirical analysis is based on the micro level data from Mannheim Innovation Panel, covering the Community Innovation Survey of 2011. Results: Empirical results show that public subsidy has a significant positive effect on marketing and organizational innovation. In addition, within the firms that have received government subsidy, the impact of only marketing innovation is found to be significant on firm performance. Conclusions: These findings employ that subsidized firms are more likely to perform better than their counterparts. Furthermore, public subsidy programs increase the probability of applying for a copyright in small and medium firms.

Standards and innovation in manufacturing and services: the case of ISO 9000

2014 ◽  
Vol 31 (4) ◽  
pp. 435-454 ◽  
Author(s):  
Giovanni Mangiarotti ◽  
Cesare A.F. Riillo
Keyword(s):  
Small Firms ◽  
Relative Effectiveness ◽  
Case Study Research ◽  
Iso 9000 ◽  
Community Innovation Survey ◽  
Firm Level ◽  
Content Type ◽  
Innovation Potential ◽  
Innovation Activities ◽  
The Impact

Purpose – The research empirically investigates the firm-level impact of ISO 9000 certification on innovation propensity. The study aims to distinguish between manufacturing and service sectors and adopts different innovation definitions aimed at capturing the peculiarities of innovation in services and small firms. Design/methodology/approach – Relying chiefly on Community Innovation Survey data for Luxembourg, the impact of certification on innovation probability is assessed using a logit model that controls for relevant firms characteristics and market features. Findings – The innovation potential of services and small firms is understated when adopting innovation definitions restricted to technological aspects and more formalised innovation activities. ISO 9000 certification may promote innovation when adopting definitions that captures sectoral innovation specificities. In particular, certification increases innovation propensity in manufacturing when the focus is on technological innovation and formalised innovation expenditures. On the contrary, when non-technological aspects are included and allowance is made for wider innovation activities, the impact of certification on services tends to emerge. However, sharper statistical evidence for manufacturing indicates a more important role of certification for innovation success in this sector. Research limitations/implications – Case-study research could supplement the findings concerning the relative effectiveness of certification in services and manufacturing. The investigation would also benefit from extensions in the econometric analysis to address comparisons across samples and potential causality issues. Practical implications – Findings are interesting to practitioners and registrars in order to identify the specific characteristics of firms for which certification provides higher innovative potential. Originality/value – The study highlights the relevance of sectoral specificities and innovation definitions for the debate about the effect of ISO 9000 certification on innovation.

scholarly journals The Dynamics of Offshoring and Institutions

2015 ◽  
Vol 15 (4) ◽  
pp. 1975-2016 ◽  
Author(s):  
Fredrik Heyman ◽  
Patrik Gustavsson Tingvall
Keyword(s):  
Institutional Quality ◽  
Learning Effects ◽  
Firm Level ◽  
Weak Institutions ◽  
Level Data ◽  
Market Experience ◽  
Internationalization Strategies ◽  
Source Countries ◽  
The Impact ◽  
The Relationship

Abstract Previous research has found that weak institutions can hamper investment and alter patterns of trade. However, little is known about the impact of institutional quality on offshoring. This lack of knowledge is surprising, given that offshoring has become an important part of many firms’ internationalization strategies. This study uses detailed firm-level data for the 1997–2005 period to examine the relationship between institutional quality in 113 source countries and offshoring by Swedish firms. The results suggest that weak institutions are negatively related to offshoring in general and to the offshoring of R&D- and relationship specificity-intensive inputs in particular. An analysis of learning effects suggests that the impact of weak institutions on the offshoring of relationship specificity-intensive inputs vanishes when firms return to countries from which they have previous market experience. Our results are robust to the use of various measures of institutional quality.

The relationship between organizational slack and innovation: revisited

2014 ◽  
Vol 29 (1) ◽  
pp. 26-42 ◽  
Author(s):  
Fariss Terry Mousa ◽  
Jaideep Chowdhury
Keyword(s):  
Fixed Effect ◽  
Publicly Traded ◽  
Firm Level ◽  
Firm Innovation ◽  
Content Type ◽  
Financial Slack ◽  
Level Data ◽  
Economic Downturns ◽  
The Impact ◽  
The Relationship

Purpose – The slack-innovation relationship has interested scholars for years. The authors aim to delve into the impact of financial slack on firm innovation by replicating a classic study arguing that this relationship has an inverse U-shape. Design/methodology/approach – The sample consists of all US firms that were publicly traded between 1993 and 2011. The authors employ the standard econometrics methodology of panel regression with firm-fixed effect and time-fixed effect to estimate the regression equation of firm innovation on financial slack. Findings – The authors find that the relationship between financial slack and R&D investments is similar to that suggested by earlier authors, thus enhancing the generalizability of this important finding in management research. The authors also find that this relationship holds even during economic downturns. Originality/value – The authors replicate Nohria and Gulati's classic study by considering the impact of slack on innovation. The authors also move away from survey data, as used by Nohria and Gulati. The authors utilize actual firm-level data for a large sample of US publicly traded firms from 1993 to 2011, thus enhancing the generalizability of these findings.

The impact of training on productivity: evidence from a panel of Italian firms

2014 ◽  
Vol 35 (8) ◽  
pp. 1140-1158 ◽  
Author(s):  
Emilio Colombo ◽  
Luca Stanca
Keyword(s):  
Unobserved Heterogeneity ◽  
Occupational Groups ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
Training Activity ◽  
Blue Collar Workers ◽  
Level Data ◽  
Effective Training ◽  
The Impact

Purpose – The purpose of this paper is to investigate the effects of training activity on labor productivity in a panel of Italian firms. Design/methodology/approach – The use of a large panel data of individual firms allows the author to properly account for the possible endogeneity of training activity and avoid aggregation biases typical in industry-level data. Findings – The paper finds that training has a positive and significant impact on productivity. While unobserved heterogeneity leads to overestimate the impact of training, failing to account for the endogeneity of training leads to underestimate its effects on productivity. Within occupational groups, training has large and significant effects for blue-collar workers, while the effects for executives and clerks are relatively small. Finally, using a measure of effective training intensity the paper finds that failing to account for training duration may lead to underestimate the effect of training on productivity. Originality/value – Our data set is unique in terms of size and coverage and overcomes several limitations of previous research using firm-level data. Moreover, besides estimating the overall effect of training on productivity, the paper allows to address some more specific questions. Does the effect of training depend on the type of worker being trained? What is the relevance of effective participation to training activity?

scholarly journals The effects of internal and external innovation strategies on process innovation in Vietnamese firms

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Thuy Minh Thu Phung ◽  
Dat Tho Tran ◽  
Patrick Alexander Maria Vermeulen ◽  
Joris Knoben
Keyword(s):  
Process Innovation ◽  
Innovation Strategy ◽  
Firm Level ◽  
Content Type ◽  
Logistic Regression Models ◽  
Institutional Settings ◽  
Level Data ◽  
Institutional Contexts ◽  
Innovation Strategies ◽  
The Impact

Purpose This paper aims to investigate the antecedents of process innovation to provide more alternates for Vietnamese firms as they are still struggling to find an appropriate innovation strategy. Design/methodology/approach The research analyzes the separate impacts of each innovation strategy on process innovation using logistic regression models. Data were collected using a stratified random sampling method. Findings The results show that having an innovation strategy is good for innovation, regardless of whether the strategy is internal or external. Internal and external strategies are proved not complements but substitutes. However, the internal strategy seems to be most beneficial. Weak institutional settings further strengthen the importance of internal strategies, whereas strong institutional settings favor external strategies. Originality/value This paper analyzes the impact of different innovation strategies on process innovation in Vietnamese firms using firm-level data. The findings strongly recommend that in weak institutional settings such as Vietnam, firms should focus on an internal strategy because the emphasis on external innovation strategies might be a western bias stemming from research in mostly strong institutional contexts.

How do Islamic equities respond to monetary actions?

2019 ◽  
Vol 14 (4) ◽  
pp. 503-522 ◽  
Author(s):  
Zaheer Anwer ◽  
Wajahat Azmi ◽  
Shamsher Mohamad Ramadili Mohd
Keyword(s):  
Monetary Policy ◽  
Stock Returns ◽  
Strong Impact ◽  
Market Conditions ◽  
Firm Level ◽  
Content Type ◽  
Stock Indices ◽  
Level Data ◽  
Negative Effect ◽  
The Impact

Purpose The purpose of this paper is to appraise the effectiveness of monetary policy actions in variant market conditions for Islamic stocks. These stocks offer ground for a natural experiment as they have restrictions on the line of business and their distinguished capital structure does not allow them to combat the liquidity crisis through the use of leverage. Design/methodology/approach The paper uses the quantile regression approach for a multi-country sample of Islamic stock indices to assess the impact of domestic as well as US expansionary monetary policy on stock returns of Islamic indices at various locations of distribution of returns. Findings It is found that, at lower return levels, an expansionary monetary policy has a negative effect on the returns. In other cases, there is no significant impact of policy rate change on index returns. Research limitations/implications It is more appropriate to use firm level data of Islamic stocks instead of stock indices. However, the information regarding index constituents is not publicly available. Practical implications The paper offers useful information to investors and policy makers. It shows that central banks should improve their credibility for monetary policy to be effective and their policies must be designed keeping in view the strong impact of US rate on global monetary environment. Originality/value This paper provides first empirical evidence of the impact of discount rates on the returns of Islamic stocks in different market conditions.

scholarly journals Bank concentration and SME financing availability: the impact of promotion of financial inclusion in China

2020 ◽  
Vol 38 (6) ◽  
pp. 1329-1349
Author(s):  
Zhiqiang Lu ◽  
Junjie Wu ◽  
Jia Liu
Keyword(s):  
Positive Impact ◽  
Substitution Effect ◽  
Financial Inclusion ◽  
Firm Level ◽  
Content Type ◽  
Level Data ◽  
The Impact ◽  
The Relationship ◽  
Bank Concentration ◽  
Sme Financing

PurposeThe promotion of financial inclusion can disturb the composition of traditional bank concentration and change the relationship between bank concentration and the availability of small and medium-sized enterprise (SME) financing. This paper concentrates on a less frequently explored area of research by examining the relationships between bank concentration, financial inclusion and SME financing availability respectively, and the interaction between bank concentration and financial inclusion after the implementation of a financial inclusion strategy in China.Design/methodology/approachUsing firm-level data from 1,509 listed SMEs in China from 2007 to 2017 and applying rigorous analyses, we identify how bank concentration affects SME financing availability under the promotion of financial inclusion and also the mechanisms involved.FindingsWe find that bank concentration and financial inclusion respectively have positive impacts on the credit available to listed SMEs, indicating that the promotion of financial inclusion in China has reached a new high watermark. The positive impact of bank concentration is reduced when the level of financial inclusion is high. Conversely, a higher level of financial inclusion favours SME credit availability at only a low degree of bank concentration. Our findings suggest that financial inclusion has a substitution effect on bank concentration and has enabled us to add new interpretations to relevant theories; namely, the Market Power and Information Theories respectively.Originality/valueThis study provides new insights into the relationship between bank concentration and SME finance availability under the promotion of financial inclusion.

Wage differentials between foreign invested and domestic enterprises in the manufacturing

2015 ◽  
Vol 42 (6) ◽  
pp. 1056-1077 ◽  
Author(s):  
Kien Trung Nguyen
Keyword(s):  
Wage Differentials ◽  
Wage Differential ◽  
Capital Intensity ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
Level Data ◽  
Size Firm ◽  
Unskilled Workers ◽  
The Impact

Purpose – The purpose of this paper is to examine the impact of trade and investment liberalization on the wage skill premium between skilled and unskilled workers in Vietnam. Design/methodology/approach – An analysis is undertaken by means of descriptive statistics and econometric investigation using a firm-level data set from the Enterprise Survey of Vietnam. Findings – It is shown that there has been a positive wage differential between foreign-invested enterprises (FIEs) and domestic enterprises over the period 2000-2009. More importantly, the FIE-domestic wage differentials are found to be significantly positive after accounting for differences in capital intensity, size, firm location, and industry features. Furthermore, statistical evidence shows that these wage differentials narrowed over the period 2006-2009. Originality/value – One of the first study examines the FIE-domestic wage differentials given the outward-oriented economic reforms since 2000 in Vietnam.

Free lunch or vital support? Export promotion in The Netherlands

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Marcel van den Berg
Keyword(s):  
Small Businesses ◽  
Export Performance ◽  
Export Promotion ◽  
Firm Level ◽  
Content Type ◽  
Level Data ◽  
Advanced Economies ◽  
Export Shares ◽  
The Impact ◽  
Matching Techniques

Purpose The purpose of this paper is to add to the debate concerning the merits of export promotion efforts by governments by investigating the effect of export promotion program (EPP) participation on the export performance of Dutch small and medium-sized enterprises (SMEs). Design/methodology/approach The authors confront participation data of an EPP targeting SMEs with rich firm-level data and use propensity score matching techniques combined with regression analysis. Findings The authors show that exports generated by participants do generally rise in the years after program entry, however, export growth does not outpace that of comparable, but unsupported firms. Nonetheless, there is some evidence suggesting that export shares in sales rise faster among program entrants, particularly in the first and second years after participation. Furthermore, the authors present evidence suggesting that the probability of becoming a permanent exporter is higher for participants relative to beginning exporters that did not receive support from the program. Originality/value The analysis contributes to the still relatively small literature dealing with the impact of government export promotion instruments on export performance using firm-level micro-data. The subject of analysis are Dutch small businesses. SMEs, particularly operating in advanced economies, are a group that is not frequently considered separately in this respect.

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