FDI and incumbent R&D behavior: evidence from Indian manufacturing sector

2017 ◽  
Vol 44 (3) ◽  
pp. 380-399 ◽  
Author(s):  
Qayoom Khachoo ◽  
Ruchi Sharma
Keyword(s):  
Manufacturing Sector ◽  
Empirical Studies ◽  
Foreign Firms ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
Domestic Firms ◽  
Indian Manufacturing Sector ◽  
The Impact ◽  
Two Step Estimation

Purpose The study is an attempt to analyze the impact of foreign direct investment (FDI) on research and development (R&D) behavior of incumbent firms’, both domestic and foreign, operating in Indian manufacturing sector. FDI inflows into the host country escalates the level of competition compelling domestic as well as existing foreign firms to adjust their spending on R&D. The purpose of this paper is to propose that response of domestic and existing foreign firms to the FDI entry vary, with domestic firms increasing their spending on R&D whereas foreign firms reducing it. Design/methodology/approach Using a rich firm level data set from Indian manufacturing for the period 2000-2012, the study utilizes Heckman’s two- step estimation strategy to estimate the impact of FDI entry on R&D behavior of incumbents. Findings FDI entry significantly increases the tendency of domestic and foreign firms to invest in R&D; however, the impact on R&D intensity for both domestic and foreign firms appears to be minimal. Originality/value The study contributes to the existing literature on two fronts. One, unlike other studies, it examines the impact of FDI entry not only on R&D behavior of domestic firms but also on the R&D behavior of existing foreign firms. Second, it addresses the problem of selection bias that has been largely ignored by majority of empirical studies on R&D.

Does FDI crowd out domestic firms? Micro-level evidence from the Republic of Korea

2018 ◽  
Vol 22 (4) ◽  
pp. 405-416
Author(s):  
Hyelin Choi
Keyword(s):  
Foreign Investment ◽  
Small Firms ◽  
Advanced Technology ◽  
Foreign Firms ◽  
Crowding Out ◽  
Firm Level ◽  
Content Type ◽  
Domestic Firms ◽  
Crowd Out ◽  
The Impact

PurposeThe purpose of this paper is to investigate the impact of the foreign investment on the exit and sales of the domestic firms. Furthermore, it studies whether domestic firms undergo different influences by foreign firms according to the size of domestic firms.Design/methodology/approachKorean firm-level data for the period of 2006 through 2013 provided by Statistics Korea are used to study the impact of the foreign investment on the exit and sales of the domestic firms.FindingsThe result shows that foreign firms crowd out small firms from the market and take their shares in the domestic market. On the other hand, larger firms rather enjoy positive spillover effect from foreign firms, reducing its exit probability and increasing sales. It may be that large firms have enough competitiveness and ability to learn and apply the advanced technology of the foreign firms.Practical implicationsDespite the strong belief on the positive impacts of the foreign firms such as knowledge spillovers or job creation, there might be crowding-out or market-stealing effect from the presence of foreign firms. If the latter effect is larger than positive effect, the incentives provided by host country government to the multinational firms cannot be justified. In this regard, the question addressed in this paper is very important.Originality/valueWhile most of previous papers have focused on the impacts of the foreign firms on productivity of the domestic firms, this paper deals with their impacts on the exit and sales of the domestic firms in order to examine more direct crowding-out and market-stealing effect of foreign firms.

Revisiting the impact of organized labor on corporate bottom lines

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Dmytro Osiichuk ◽  
Paweł Mielcarz ◽  
Julia Kavalenka
Keyword(s):  
Financial Performance ◽  
Organized Labor ◽  
Corporate Financial Performance ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
International Panel ◽  
Transmission Mechanisms ◽  
Credible Threat ◽  
The Impact

Purpose Relying on an international panel data set, the purpose of this paper is to quantify the economic impact of labor unionization on corporate financial performance. Design/methodology/approach Static panel regression analysis is performed for a firm-level multinational data set to elucidate the postulated empirical relationships between employee unionization and corporate performance. The transmission mechanisms intermediating the studied effects are discussed and operationalized. Findings The empirical evidence demonstrates that firms with a higher level of employee unionization spend more on wages and labor-related expenses. The concomitant downside of higher resource extraction by unions is a lower rate of net employment creation and a higher possibility of redundancy layoffs. Originality/value Overall, the authors demonstrate that by creating a credible threat of employee disobedience manifested through strikes and internal wage disputes, labor unions remain an effective mechanism of increasing employees’ bargaining power. Despite the discovered weak negative associative link between the degree of unionization and corporate financial performance, the authors perceive the overall evidence to be inconclusive on this matter.

Firm-level agreements, employment strategies and temporary workers

2020 ◽  
Vol 42 (1) ◽  
pp. 194-212
Author(s):  
Saverio Minardi
Keyword(s):  
Fixed Effects ◽  
Selection Process ◽  
Temporary Employment ◽  
Least Square ◽  
Temporary Workers ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
Collective Agreements ◽  
The Impact

Purpose The purpose of this paper is to investigate the impact of two-tier firm-level collective agreements on firms’ propensity to use temporary employment, accounting for the process of self-selection of firms into different bargaining levels in the Italian context. It further examines which firm-level characteristics drive this process of selection. Design/methodology/approach The empirical analysis uses a panel data set of Italian firms for the years 2005, 2007, 2010 and 2015. Estimations are produced and compared through ordinary least square regression, random-effects and fixed-effects models. Findings Results show that enterprises adopting two-tier firm-level agreements (TTFA) are associated with lower levels of temporary workers. However, a longitudinal analysis suggests that introducing a TTFA does not impact firms’ propensity to employ temporary workers. This novel finding highlights the presence of a selection process based on firm-level time-constant characteristics. The paper argues that these characteristics refer to management orientation toward high-road rather than low-road employment strategies. Further evidence is brought in support of this claim, showing that firms’ propensity toward the provision of training for their labor force partially explain the process of selection. Originality/value The study is the first to analyze the impact of secondary-level collective agreements on firms’ reliance on temporary employment, offering new evidence on the causes of the expansion of temporary employment. It further highlights the relevance of employers’ strategies in shaping the impact of the bargaining structure.

Corporate tax planning and corporate tax disclosure

2019 ◽  
Vol 28 (2) ◽  
pp. 327-364
Author(s):  
Mahfoudh Hussein Mgammal
Keyword(s):  
Positive Impact ◽  
Positive Influence ◽  
Tax Planning ◽  
Corporate Tax ◽  
Effective Tax Rate ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
The Impact ◽  
Practical Implications

Purpose This paper aims to examine the impact of corporate tax planning (TP) on tax disclosure (TD). Using tax expenses data set, with the detailed effective tax rate (ETR) by reconciling individual items of income and expenses. Design/methodology/approach A firm-level panel data set is used to analyse 286 non-financial listed companies on Bursa Malaysia that spans the period 2010-2012. Multivariate statistical analyses were run on the sample data. The empirical understanding of TD depends on public sources of data in the financial statement, characterized in the aggregated note of tax expenses. Fitting with Malaysian environment, the authors measured TD using modified ETR reconciling items. Findings Results show that TP, exhibit a robust positive influence on TD. This suggests that TP is related to lower corporate TD. In addition, companies with high TP attempt to mitigate the disclosure problem by increasing various TD. The authors further find significant positive impact between each of firm size and industry dummy, on TD. This means that company-specific characteristics are significant factors affecting corporate TD. Research limitations/implications This study contributes to the literature on the effect of TP on TD. It depends on both the signalling theory and the Scholes–Wolfson framework, which are the main theories concerned with TP and TD. Therefore, from a theoretical side, the authors add to the current theories by verifying that users are the party influenced whether positively or negatively, by the extent of TD or the extent of TP activities through Malaysian organizations. Practical implications The evidence found in this paper has important policy and practical implications for the authorities, researchers, decision makers and company managers. The findings can provide them some relevant insights on the importance of TP actions from companies’ perspective and contribute to the discussion of who verifies and deduces from TD directed by companies. Originality/value This paper originality is regarded as the first attempt to examine the impact of TP on TD in a developing country such as Malaysia. Malaysian setting is an interesting one to examine because Malaysia could be similar to other countries in Southeast Asia. Results contribute significant insights to the discussion about TD regarding, which parties are responsible for the verification of TD by firms, and which parties benefit from this disclosure. Findings suggest that companies face a trade-off between tax benefits and TD when selecting the type of their TP.

The impact of gender diversity in foreign subsidiaries’ innovation outputs

2015 ◽  
Vol 7 (2) ◽  
pp. 148-167 ◽  
Author(s):  
Juan Fernández
Keyword(s):  
Gender Diversity ◽  
Process Innovation ◽  
Foreign Firms ◽  
Foreign Subsidiaries ◽  
Content Type ◽  
Domestic Firms ◽  
Gender Policies ◽  
The Impact ◽  
The Relationship ◽  
Innovation Outcomes

Purpose – This paper aims to examine the effect of R&D teams’ gender diversity on different innovation outputs. The paper argues that some innovations are best positioned to capitalize on the benefits of gender diversity because of the greater relevance of market insight and personal interactions. Moreover, it argues that gender diversity is not a source of innovation for foreign firms because of the subsidiaries’ role in the multinational group, the tacit nature of gender policies and the institutional distance between multinationals’ home and host countries. Design/methodology/approach – Drawing from data of the Spanish Survey of Technological Innovation Panel de Innovación Tecnológica (PITEC), this study uses multivariable probit models that allow for systematic correlations among the different innovation outcomes to determine the impact of R&D workforce gender diversity on the likelihood of introducing different innovation outputs. Findings – Allowing for systematic correlations among different innovation outcomes, results indicate that the relationship between gender diversity and product and process innovation has the shape of an inverted-U, while there is a positive linear association with service innovation. Moreover, gender diversity produces a greater impact on product innovation than on process innovation. Results also indicate that while gender diversity fosters every innovation outcome of domestic firms, it only contributes to foreign firms’ services innovation in a positive non-linear way. Research limitations/implications – Because of the availability of data, this paper has focused on how firms’ multinationality and group affiliation influence the relationship between gender diversity and innovation; however, other firms’ differences might also play a role on the effectiveness of the R&D workforce’s gender diversity. Firms differ on strategies, structures and capabilities (Nelson, 1991), and these differences may condition the potential of gender diversity. Therefore, this paper opens future research lines. Practical implications – Innovative firms should be concerned with human resource management practices for gender diversity regardless of their innovation output strategy. However, managers should not consider forming teams with equal proportions of men and women. Those firms aiming at introducing innovations that involve interactions among internal and external agents and those that require a better interface with the marketplace will benefit more from gender diversity than those firms pursuing innovations related to the solution of technical problems. Finally, the paper shows that foreign subsidiaries have problems with the implementation of gender policies, especially when it comes to service and process innovation activities. Originality/value – This paper contributes by examining the influence of two contextual factors that may affect the relationship between gender diversity and innovation. First, it examines how gender diversity affects the likelihood of introducing different innovation outputs (product, service and process) as the different tasks required by each innovation represent different contexts that may affect the effectiveness of gender diversity. Second, the paper analyzes whether the influence of R&D workforce’s gender diversity on innovation outputs is different for domestic and foreign firms as foreign firms’ national culture, organizational culture, strategy and HR practices differ from those of domestic firms.

Relational embeddedness in home-based network and dynamic capabilities: evidence from Chinese MNCs

2021 ◽  
Vol 15 (1) ◽  
pp. 222-242
Author(s):  
Jian Du ◽  
Keying Lu ◽  
Chao Zhou
Keyword(s):  
Emerging Economies ◽  
Dynamic Capabilities ◽  
Home Country ◽  
Foreign Firms ◽  
Content Type ◽  
Domestic Firms ◽  
Close Relationship ◽  
Relational Embeddedness ◽  
Chinese Mncs ◽  
The Impact

Purpose Prior studies have argued that multinational firms with dynamic capabilities can reconfigure and upgrade their internal and external resources and adapt to an ever-changing competitive global environment. The impact of home country networks exerting on multinational corporations’ (MNCs) dynamic capabilities has been rarely discussed in extant research. This paper aims to explore how two types of home country networks’ relational embeddedness (from domestic firms and foreign firms) affect Chinese MNCs’ dynamic capabilities. Design/methodology/approach Several hypotheses were tested by analyzing the survey data from 204 multinational companies in china. Findings The results reveal the impact mechanism of the home country network on dynamic capabilities. Embeddedness in domestic networks positively affects embeddedness in the foreign network; embeddedness in foreign firms exerts positive effects on the three dimensions of MNC’s dynamic capabilities. Additionally, the effect of domestic firms’ relational embeddedness on resource reconfiguring capability is mediated by foreign firms’ embeddedness. Consequently, this study provides a theoretical introduction for MNCs from emerging economies. Practical implications This study has several managerial implications for emerging MNCs’ international operations. For MNCs from emerging economies, close cooperation with domestic firms helps firms to develop a close relationship with foreign firms; meanwhile, developing a close relationship with foreign firms can obtain spillover about technology and management experience better, improving dynamic capability. Specifically, domestic embeddedness, through foreign embeddedness, can extend the impact to focal firms in developing resource reconfiguring capability. Originality/value This study provides an alternate view of how home country networks influence the dynamic capabilities of Chinese MNCs and outlines its impact mechanism. Therefore, the study contributes both to the international business literature and social network literature.

scholarly journals The impact of corruption on analyst coverage

2019 ◽  
Vol 34 (3) ◽  
pp. 305-323
Author(s):  
Omaima Hassan ◽  
Gianluigi Giorgioni
Keyword(s):  
Negative Binomial ◽  
Firm Level ◽  
Data Set ◽  
Endogeneity Bias ◽  
Analyst Coverage ◽  
Content Type ◽  
Country Level ◽  
Data Limitations ◽  
Potential Benefits ◽  
The Impact

PurposeThis study aims to investigate the impact of country-level corruption and firms’ anti-bribery policies on analyst coverage. Analyst coverage has been identified as a powerful tool to detect fraud and should equally act as a possible tool to reduce corruption.Design/methodology/approachThis study used a negative binomial count regression method on a longitudinal data set of a sample of S&P Global 1200 companies for the years 2010-2015. To control for potential endogeneity bias and improve the reliability of the estimation, both country-level corruption and firms’ anti-bribery policies variables were instrumented.FindingsAfter controlling potential endogeneity bias, the results show that the adoption of anti-bribery policies at firm level attracts more analysts to follow a firm. The results for corruption at country level show that analyst coverage increases in less corrupted countries indicating that the costs of corruption exceed its potential benefits. When the variables corruption at country level and anti-bribery policies are interacted, the relationship is positive and highly significant.Practical implicationsGiven the potential important role played by anti-corruption measures, firms are encouraged to adopt them to reduce the incidence of corruption and to increase analyst coverage, which will reinforce the benign effect of monitoring.Originality/valueAlthough the literature on corruption at the country level is rich, it is geared towards the determinants of corruption in contrast to its consequences, and fewer studies have focused on the impact of corruption at firm level because of data limitations. This paper addresses this gap and contributes to the literature on the consequences of corruption at firm level.

Corporate governance and the impact to the R&D lab

2019 ◽  
Vol 13 (1) ◽  
pp. 91-110
Author(s):  
Arjan Markus ◽  
Tim Swift
Keyword(s):  
Corporate Governance ◽  
Competitive Advantage ◽  
Generalized Least Squares ◽  
Innovation Theory ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
Generalized Least Squares Estimation ◽  
The Impact ◽  
Exploratory Innovation

Purpose The purpose of this paper is to determine whether the strength of corporate governance influences the firm’s ability to retain their key knowledge workers or inventors. Design/methodology/approach This paper links agency and innovation theory to develop the hypotheses. Agency theory predicts that the interests of employees are counter to those of firm owners. The authors predict that as shareholder power grows as corporate governance strengthens, inventors who are highly productive, and those who pursue risky but valuable exploratory innovation will leave the firm. Given prior scholarship in innovation theory establishing the critical contributions that new knowledge creation and exploratory innovation make to firms’ competitive advantage, the authors consider whether stronger firm-level corporate governance leads to the erosion of the firm’s competitive advantage. The hypotheses are empirically tested using generalized least squares estimation on a data set that combines data on firms, their patents and the governance provisions these firms adopt. Findings Using a 10-year sample of publicly traded US firms, the authors find that stronger corporate governance erodes the very foundation of a firm’s innovation capabilities. Stronger corporate governance reduces management job security, which makes managers more risk-averse. This heightened “managerial myopia” results in increased departures of highly valuable inventors employed by the firm. The authors show that these departing inventors are more productive inventors than those who remain and engage in more exploratory R&D than the remaining inventors at the firm. Originality/value The findings raise questions on the appropriateness of the adoption of governance provisions strengthening shareholder rights in firms pursuing innovation.

Growth and job creation at the firm level: Swedish SME data

2018 ◽  
Vol 41 (3) ◽  
pp. 345-358 ◽  
Author(s):  
Darush Yazdanfar ◽  
Peter Öhman
Keyword(s):  
Job Creation ◽  
Sales Growth ◽  
Firm Level ◽  
Employment Level ◽  
Data Set ◽  
Resource Based View ◽  
Content Type ◽  
Large Panel ◽  
Industry Sectors ◽  
The Impact

Purpose The purpose of this study is to investigate the association between firm sales growth and employment level as a proxy for job creation among small and medium-sized enterprises (SMEs). Design/methodology/approach The hypotheses were empirically examined by performing several univariate and multivariate regressions to investigate a large panel data set of 13,548 Swedish SMEs in four industry sectors in the four-year period from 2009 to 2012. Findings The results indicate that growth, in terms of sales, as a competitive advantage is positively related to the number of employees hired by the sampled firms. In addition, the size and age variables are also positively associated with the number of employees hired. The results support the suitability of implementing the resource-based view to explain job creation by SMEs. Originality/value While previous studies have mostly ignored the impact of these firm-level variables on job creation, the current study highlights the effect of firm-specific characteristics such as sales growth, size, age and industry. The authors use a combination of models to analyse a large cross-sectoral data set regarding the association, in SMEs, between the firms’ sales growth and job creation.

scholarly journals The impact of government financial assistance on the performance and financing of Australian SMEs

2017 ◽  
Vol 30 (4) ◽  
pp. 447-464 ◽  
Author(s):  
Dong Xiang ◽  
Andrew C. Worthington
Keyword(s):  
Financial Assistance ◽  
Federal State ◽  
Firm Level ◽  
Data Set ◽  
Content Type ◽  
Goods And Services ◽  
Control Factors ◽  
The Future ◽  
Direct Government ◽  
The Impact

Purpose This paper aims to examine the impact of government financial assistance provided to Australian small and medium-sized enterprises (SMEs). Design/methodology/approach This study uses firm-level panel data on more than 2,000 SMEs over a five-year period from the Business Longitudinal Database compiled by the Australian Bureau of Statistics. The authors measure the impact of government financial assistance in terms of subsequent SME performance (income from sales of goods and services and profitability) and changes in the availability of alternative nongovernment finance. Findings The authors find government financial assistance helps SMEs improve performance over and above the effects of conventional financing. They also find than the implicit guarantee effect signalled by a firm receiving government financial assistance suggests firms are more likely to obtain nongovernment finance in the future. Control factors that significantly affect SME performance and finance availability include business size, the level of innovation, business objectives and industry. Research limitations/implications Nearly all of the responses in the original survey data are qualitative, so we are unable to assess how the strength of these relationships varies by the levels of assistance, income and profitability. The measure of government financial assistance of the authors is also general in that it includes grants, subsidies and rebates from any Australian Government organisation, so we are unable to comment on the impact of individual federal, state or local government programmes. Practical implications Government financial assistance helps SMEs improve both immediate and future performance as measured by income and profitability. This could be because government financial assistance quickly overcomes the financial constraints endemic in SMEs. Government financial assistance also helps SMEs obtain nongovernment finance in the future. The authors conjecture that this is because it overcomes some of the information opaqueness of SMEs. Originality/value Few studies focus on the impact of direct government financial assistance compared with indirect assistance as typical in credit guarantee schemes. The authors use a very large and detailed data set on Australian SMEs to undertake the analysis.

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