Firm innovation and access to finance: firm-level evidence from India

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Parneet Kaur ◽  
Navneet Kaur ◽  
Paras Kanojia

Purpose Based on 9,281 firm-level survey data on micro, small and medium enterprises (MSMEs) in India, this study aims to investigate how access to different finance sources and collateral requirement facilitates the firm’s innovation activity across industries. Design/methodology/approach This paper used ordered logit regression models using Stata software for explanatory variables to measure the impact of explanatory variables on firm innovation performance. Firms’ innovation performance is measured through the aggregate innovation index obtained by adding up the no. of “new-to-firm” activities. Findings The empirical results reveal that external sources of funding impact innovation activity than other financing sources. Also, the requirement of collateral for financing impacts innovation performance significantly. This paper finds that firms funded by state-owned banks or government agency are more actively engaged in innovation activities. The firm’s size, ownership structure and location of the firm also show the varying innovation performance. This paper found variation in innovation performance across industries as well. Practical implications First, the present study underlines the significance of funding sources. Second, minimizing the need for collateral to obtain external finance boosts small firms’ innovation activity and will also trigger overall economic growth. Finally, while making policies for ownership transformation of state-owned institutions, policymakers should discuss these policies’ impact on innovative firms. Originality/value What facilitates innovation performance in an emerging market is missing in the literature for MSMEs, largely due to lack of data. It is reasonable not to generalize innovation knowledge in large firms to small firms because of the constraints, particularly MSMEs face.

2020 ◽  
Vol 20 (3) ◽  
pp. 503-525
Author(s):  
Nischay Arora ◽  
Balwinder Singh

Purpose The purpose of the paper is to examine the impact of corporate governance mechanisms, i.e. board structure and ownership structure on the underpricing of small and medium enterprises (SME) IPOs in India. Design/methodology/approach Most of the extant empirical research studies have either pivoted on mainstream IPOs or SMEs IPOs in developed economies, but the present study examines 200 SME IPOs issued during Feb 2012 to April 2017. Multiple regressions have been used to examine the impact of the corporate governance mechanisms on raw return (RR). Furthermore, robustness of the results has been verified through the employment of market-adjusted excess return (MAER) as an additional proxy of underpricing. Findings The results highlight that board size, inverse of board committees, board independence, board age, board directorships positively, and top ten shareholding negatively influence RR. Further, direction of promoter ownership variable indicates curvilinear relationship with underpricing. Other explanatory variables used in model lack statistical validity. Similar results have been obtained when variables were regressed against MAER with related board members being additionally significant in model. Practical implications The findings suggest that Indian investors do take cues from board structure and ownership patterns for making investment decisions in small- and medium-sized firms. Further, the results are also helpful to top management in structuring their boards. Originality/value The present research enriches SME IPOs underpricing literature because the impact of corporate governance mechanisms on unadjusted returns is relatively under explored particularly within the context of small- and medium-sized firms.


2018 ◽  
Vol 21 (4) ◽  
pp. 672-694 ◽  
Author(s):  
Irem Demirkan

PurposeThe purpose of this paper is to propose that the resources that a firm owns and has full control (firm-level resources) and resources that a firm access through direct connection with other firms (network-level resources) will impact firm innovation when effectively deployed by the firm. While previous research examined these factors separately, the author takes a holistic view and looks into their effects on innovation simultaneously. The author also introduces the moderating effects, i.e. the variables that can enhance firm innovation through their interaction with internal and external resources.Design/methodology/approachThe author tested the role of financial resources and slack resources in the form of cash slack and human slack at the firm level, and network size, network tie strength, and network diversity at the network level on the firm innovation. Using generalized negative binomial model with Huber-White procedure, the author analyzed 306 firms from the biotechnology industry over a span of 17 years.FindingsThe analysis suggests that cash slack impact innovation negatively. However, this link is moderated by firm size such that for large firms cash slack affects innovation positively. Network-level resources all positively impact innovation and have more economic impact on firm innovation than firm-level resources. Furthermore, although human slack negatively affects innovation, its interaction with network size enhances innovation.Originality/valueThe research makes important contributions to both strategic management and innovation literatures especially when, the author considers the role of firm-level slack in driving firm innovation. Previous research reported conflicting findings about the availability of slack resources and firm performance. The results showed that the relationship between slack resources and firm innovation is negative and significant, both for available slack and human slack. This finding parallels with previous research which reported that constraints such as lack of slack resources can actually facilitate innovation. The author also contributes to the literature by introducing boundary conditions which can enhance firm innovation through their interaction with firm-level internal and network-level external resources. In this respect, to the author’s knowledge, this is among the first studies to combine the slack literature focusing on firm-level resources with the literature on network-level resources.


2020 ◽  
Vol 14 (4) ◽  
pp. 421-440
Author(s):  
Roberto Martin N. Galang ◽  
Rouselle F. Lavado ◽  
George O. White III ◽  
Jamil Paolo S. Francisco

Purpose The purpose of this study is to answer the research question: How do cooperative organizations perform when created by government fiat in an emerging market? Through the use of institutional and agency theory, this paper presents a comparative analysis of the efficiency of the cooperative form of organization and investor-owned firms-investigating how the social–political structures in a community affect the efficiency of cooperatives vis-à-vis investor-owned firms. This paper also attempts to offer a better understanding of how government quality and organizational size influence performance outcomes between different organizational forms specifically in the Philippines. Design Methodology Approach The empirical analysis of this study was conducted among electric distribution utilities in the Philippines. Firm-level data was generated for 133 distributors, consisting of 119 electric cooperatives and 14 investor-owned companies. Panel data regressions were ran to test all hypotheses. Findings Cooperative organizations operate at a less efficient rate than investor-owned firms in the Philippines, even when controlling for firm-specific factors such as size, customer density and profitability. In addition, the efficiency of these cooperative organizations is more strongly influenced by the quality of the local government than investor-owned firms. Originality Value Positive externalities generated by the propagation of cooperatives on local communities may be based primarily on our understanding of how cooperatives have functioned largely in western contexts. Within the context of Southeast Asia, where national socio-political structures may be more dysfunctional, this paper observes that there is an equivalent negative externality caused by the tendency of cooperatives to replicate the political mismanagement of the community around it.


2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Alireza Vafaei ◽  
Darren Henry ◽  
Kamran Ahmed

Purpose This study aims to examine the impact of board female participation on Australian firms’ innovation. Design/methodology/approach Data are from the 500 largest Australian Securities Exchange (ASX)-listed companies for 2004–2015. Measures of innovation concern input (research and development expenditure and intangible assets) and output (patents registered) indicators. Findings A positive and significant association exists between female director participation and firm innovation activity. This association exists across industry classifications independent of technological importance and is particularly driven by materials and health-care sectors. Findings support calls for more board diversity in line with board female membership positively influencing innovative investment and development activities. Practical implications The economic efficacy of the latest revisions to the ASX Corporate Governance Council principles and recommendations (“ASX CGC revisions”) is supported. Diverse boards are a strong source of innovation. Regulators and corporations can use the findings to establish principles and practices that promote female board diversity. Originality/value This study is the first to examine the link between board diversity and corporate innovation in Australia where there is under-representation of women on corporate boards and in key management positions. Also lacking are formal legislative or governance policy mandates on board gender diversity. Beyond confirming a positive association between board diversity and levels of corporate innovation, this paper provides new findings that this relationship is driven by women who are non-executive (independent) directors, independent of the underlying technology intensity of firms and moderated by the nature of firm-level profitability and growth opportunities.


2017 ◽  
Vol 14 (06) ◽  
pp. 1750038 ◽  
Author(s):  
Derya Findik ◽  
Berna Beyhan

This paper aims to introduce a qualitative indicator to measure innovation performance of Turkish firms by using firm-level data collected by Turkish Statistical Institute (TURKSTAT) in 2008 and 2009. We propose a new indicator to measure the innovation performance which is simply based on the perception of firms regarding to the impacts of innovation. In order to create performance indicators, we conduct a factor analysis to group the firms’ perceptions on the impacts of innovation. Factor analysis gives us product and process-oriented impacts of innovation. There are significant differences among product innovators, process innovators and firms engaged in both product and process innovations with respect to their perceptions on product and process-oriented impacts of innovation. Among these three groups, product- and process-oriented impacts provide a highest value for the firms that perform both product and process innovations. As far as the link between firm characteristics and the impact of innovation is considered, there is a significant difference between small and large firms with respect to their perceptions on product-oriented impact of innovation. While product-oriented impact is larger for small firms, large firms focus more on process-oriented impact. Anova results also indicate that perceptions on process-oriented impact significantly differ among exporter firms, domestic market-oriented firms and firms being active in internal and external markets. Process-oriented impact generates results in favor of exporting firms.


2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Carlos M.P. Sousa ◽  
Ji Yan ◽  
Emanuel Gomes ◽  
Jorge Lengler

PurposeThe paper examines the impact of export activity on productivity and how this effect is moderated by R&D investment and foreign ownership.Design/methodology/approachA time-lag effect is taken into account when examining the proposed model. Data are collected from the Annual Industrial Survey of the National Bureau of Statistics of China. A dataset containing 117,340 firms across the sample period (2001–2007) are used to test the hypotheses.FindingsThe results indicate that while R&D investment plays a significant role in strengthening the positive effect of export activity on a firm's productivity, foreign ownership surprisingly has a negative moderating role.Originality/valueScholarly interest in the links between export activity and productivity is on the rise. However, the bulk of research has been focused on understanding the effects of export activity on productivity at the country or industry level. Little has been done at the firm level. Another gap in the literature is that the mechanism through which the impact of export activity can be leveraged to enhance the firm's productivity has been largely ignored. To address these issues, the study adopts the learning-by-exporting theory to examine the relationship between export and productivity at the firm-level and how R&D investment and foreign ownership may explain how learning can be leveraged to enhance the firm's productivity. Finally, these relationships are examined in the context of firms from an emerging market, China, which is especially relevant for the learning-by-exporting argument used in this study.


2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Amira Khattak ◽  
Mosab I. Tabash ◽  
Zahid Yousaf ◽  
Magdalena Radulescu ◽  
Abdelmohsen A. Nassani ◽  
...  

Purpose This study aims to investigate the impact of digital platforms, frugal innovation and innovation culture (IC) on innovation performance (IP). The mediation role of IC between digital platforms and IP, as well as moderating role of frugal innovation between IC and IP is also tested. Design/methodology/approach Data is collected from 387 top management officials from the small and medium enterprises (SMEs) working in emerging economies, in the current study Pakistan. Quantitative research design was applied for the collection of data and analysis. Various statistical techniques, i.e. correlation and regression, were used. Findings The findings revealed that digital platforms positively affect IC and IP. The results proved that IC mediates the association between digital platforms and IP link. Originality/value The SMEs of emerging economies are working in a dynamic scenario, and their performance in term of innovation is critically needed. Only those businesses that update their products and services according to customers’ demand can achieve success. Hence, SMEs of emerging economies need IP to flourish their businesses. This study highlights an overlooked link of digital platforms with IP and also shows the mediating role of IC.


2014 ◽  
Vol 31 (4) ◽  
pp. 435-454 ◽  
Author(s):  
Giovanni Mangiarotti ◽  
Cesare A.F. Riillo

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.


2018 ◽  
Vol 22 (4) ◽  
pp. 405-416
Author(s):  
Hyelin Choi

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.


2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Giulio Ferrigno ◽  
Giovanni Battista Dagnino ◽  
Nadia Di Paola

Purpose Drawing upon the importance of research and development (R&D) alliances in driving firm innovation performance, extant research has analyzed individually the impact of R&D alliance partner attributes on firm innovation performance. Despite such analyzes, research has generally underestimated the configurations of partner attributes leading to firm innovation performance. This research gap is interesting to explore, as firms involved in R&D alliances usually face a combination of partner attributes. Moreover, gaining a better understanding of how R&D partner attributes tie into configurations is an issue that is attracting particular interest in coopetition research and alliance literature. This paper aims to obtain a better knowledge of this underrated, but important, aspect of alliances by exploring what configurations of R&D alliance partner attributes lead firms involved in R&D alliances to achieve high innovation performance. To tackle this question, first, this study reviews the extant literature on R&D alliances by relying on the knowledge-based view of alliances to identify the most impactful partner attributes on firms’ innovation performance. This paper then applies a fuzzy set qualitative comparative analysis (fsQCA) to explore the configurations of R&D alliance partner attributes that lead firms involved in R&D alliances to achieve high innovation performance. Design/methodology/approach This study selects 27 R&D alliances formed worldwide in the telecom industry. This paper explores the multiple configurations of partner attributes of these alliances by conducting a fsQCA. Findings The findings of the fsQCA show that the two alternate configurations of partner attributes guided the firms involved in these alliances to achieve high innovation performance: a configuration with extensive partner technological relatedness and coopetition, but no experience; and a configuration with extensive partner experience and competition, but no technological relatedness. Research limitations/implications The research highlights the importance of how partner attributes (i.e. partner technological relatedness, partner competitive overlap, partner experience and partner relative size) tie, with regard to the firms’ access to external knowledge and consequently to their willingness to achieve high innovation performance. Moreover, this paper reveals the beneficial effect of competition on the innovation performance of the firms involved in R&D alliances when some of the other knowledge-based partner attributes are considered. Despite these insights for alliance and coopetition literature, some limitations are to be noted. First, some of the partners’ attributes considered could be further disentangled into sub-partner attributes. Second, other indicators might be used to measure firms’ innovation performance. Third, as anticipated this study applies fsQCA to explore the combinatory effects of partner attributes in the specific context of R&D alliances in the telecom industry worldwide and in a specific time window. This condition may question the extensibility of the results to other industries and times. Practical implications This study also bears two interesting implications for alliance managers. First, the paper suggests that R&D alliance managers need to be aware that potential alliance partners have multiple attributes leading to firm innovation performance. In this regard, partner competitive overlap is particularly important for gaining a better understanding of firm innovation performance. When looking for strategic partners, managers should try to ally with highly competitive enterprises so as to access their more innovative knowledge. Second, the results also highlight that this beneficial effect of coopetition in R&D alliances can be amplified in two ways. On the one hand, when the partners involved in the alliance have not yet developed experience in forming alliances. Partners without previous experience supply ideal stimuli to unlock more knowledge in the alliance because new approaches to access and develop knowledge in the alliance could be explored. On the other hand, this paper detects the situation when the allied partners are developing technologies and products in different areas. When partnering with firms coming from different technological areas, the knowledge diversity that can be leveraged in the alliances could drive alliance managers to generate synergies and economies of scope within the coopetitive alliance. Originality/value Extant research has analyzed individually the impact of R&D alliance partner attributes on firm innovation performance but has concurrently underestimated the configurations of partner attributes leading to firm innovation performance. Therefore, this paper differs from previous studies, as it provides an understanding of the specific configurations of R&D alliance partner attributes leading firms involved in R&D alliances to achieve high innovation performance.


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