Investigating firm heterogeneity in country-of-origin cluster location choice decisions

2019 ◽  
Vol 28 (2) ◽  
pp. 221-244 ◽  
Author(s):  
Francisco Puig ◽  
Anoop Madhok ◽  
Zhi Shen
Keyword(s):  
Firm Heterogeneity ◽  
Local Economic Development ◽  
Location Choice ◽  
Emerging Market ◽  
Multinomial Logit Model ◽  
Firm Level ◽  
Content Type ◽  
Mainland Chinese ◽  
Advantages And Disadvantages ◽  
The Impact

Purpose This paper aims to analyse which firm-level characteristics drive their location decisions when investing in a foreign country. Focusing on origin clusters, the authors will study the potential influence of the home country context and, in particular, the impact of firm-level factors, both investor- and investment-related, underlying heterogeneity in their location choice decisions. Design/methodology/approach The empirical analysis draws on data gathered from mainland Chinese MNEs that have invested in Germany between 2005 and 2013 (269 firms). The authors chose a single host (Germany) and a single home (China) country for their representativeness and for methodological reasons to control for country effects. The authors used a multinomial logit model to assess the effects of the independent variables on the probability that each of the three location possibilities would be selected. Findings The results suggest that investors preferring co-location in origin clusters have distinct structural and strategic characteristics. From a more structural point of view, Chinese foreign direct investment (FDI) undertaken by smaller firms and those without prior experience in the EU prefer an area where there are other Chinese investors. From a more strategic perspective, these FDI flows are more likely to tap into industry agglomerations when the investors’ objective is strategic asset seeking, and they have less knowledge-intensive investments. Practical implications The findings may be of great practical value to practitioners and policymakers. Knowledge of the advantages and disadvantages of the types of agglomeration networks can help managers to balance the rewards and risks in their decision-making and to select a suitable development path for their FDIs. For policymakers, an understanding of the structure and formation of different groups of firms in one location and the characteristics of investors who may enter the location can help them to improve their regulatory work and to develop policies to attract investments, thereby enhancing local economic development and community stability. Originality/value The research shifts the emphasis of the location choice decision beyond just where to locate toward with whom to collocate. It also contributes to the growing research on emerging market multinationals by providing further insight into understanding of FDI location behavior by firms from emerging economies.

Imposing cooperation: the impact of institutions on the efficiency of cooperatives in the Philippines

2020 ◽  
Vol 14 (4) ◽  
pp. 421-440
Author(s):  
Roberto Martin N. Galang ◽  
Rouselle F. Lavado ◽  
George O. White III ◽  
Jamil Paolo S. Francisco
Keyword(s):  
Emerging Market ◽  
Research Question ◽  
The Philippines ◽  
Performance Outcomes ◽  
Organizational Size ◽  
Firm Level ◽  
Content Type ◽  
Positive Externalities ◽  
Political Structures ◽  
The Impact

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.

scholarly journals Export activity, R&D investment, and foreign ownership: does it matter for productivity?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Carlos M.P. Sousa ◽  
Ji Yan ◽  
Emanuel Gomes ◽  
Jorge Lengler
Keyword(s):  
Emerging Market ◽  
Time Lag ◽  
Foreign Ownership ◽  
National Bureau ◽  
Firm Level ◽  
Content Type ◽  
Export Activity ◽  
Learning By Exporting ◽  
The Impact ◽  
D Investment

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.

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
Keyword(s):  
Small Firms ◽  
Small And Medium Enterprises ◽  
Emerging Market ◽  
Innovation Performance ◽  
Innovation Activity ◽  
Firm Level ◽  
Firm Innovation ◽  
Content Type ◽  
Explanatory Variables ◽  
The Impact

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.

Does ownership concentration affect cost of debt? Evidence from an emerging market

2019 ◽  
Vol 12 (3) ◽  
pp. 282-296 ◽  
Author(s):  
Imad Jabbouri ◽  
Maryem Naili
Keyword(s):  
Stock Exchange ◽  
Emerging Market ◽  
Panel Data Analysis ◽  
Ownership Concentration ◽  
Cost Of Debt ◽  
Governance Mechanisms ◽  
Firm Level ◽  
Content Type ◽  
Controlling Shareholders ◽  
The Impact

Purpose The purpose of this paper is to explore how ownership concentration affects cost of debt (CoD) in one of the most important emerging markets in the Middle East and North Africa, Morocco. Design/methodology/approach The study employs panel data analysis using non-financial firms listed on Casablanca Stock Exchange (CSE) between 2004 and 2016. To unveil the hidden facets of the relationship between ownership concentration and CoD, and examine if this relationship changes with market conditions, we conduct a pre–post-crisis analysis. Findings The results demonstrate that controlling shareholders promote decent governance as long as they are able to generate appropriate returns. However, this behavior seems to change during the post-crisis period. In their attempts to increase their returns adversely affected by the financial crisis, controlling shareholders switch from guardians of decent governance and firm’s resources to a menace to creditors’ interests. Practical implications Our results expose the severity of agency problems in CSE. It is the duty of all market participants including regulators, board of directors, financial analysts, shareholders and creditors to scrutiny and reinforce governance mechanisms to alleviate expropriation by controlling shareholders. Improving country and firm-level governance mechanisms would enhance investors’ protection, attract international investors and boost the economic activity. Originality/value Prior research is inconclusive about the impact of ownership concentration on CoD. Hence, it is worthwhile to seek new evidence in a new market on the nature of this relationship.

Socio-economic preconditions of resort agglomerations development in the south of Russia

2018 ◽  
Vol 10 (4) ◽  
pp. 467-477 ◽  
Author(s):  
Matvey S. Oborin ◽  
Irina Kozhushkina ◽  
Tatyana Gvarliani ◽  
Nikolay Ivanov
Keyword(s):  
Natural Resource ◽  
Federal District ◽  
Tourism Industry ◽  
Infrastructure Development ◽  
The South ◽  
Health Tourism ◽  
Resource Potential ◽  
Content Type ◽  
Advantages And Disadvantages ◽  
The Impact

Purpose This paper aims to analyze the modern problems and the main trends of development of the health-improving tourism sector in the southern part of Russia and to identify significant factors in overcoming the complex challenges related to specific socio-economic conditions in the study area. Design/methodology/approach The material that served as the basis of the study comprises statistical data from the Southern Federal District and its subjects, as well as data about the development of tourism infrastructure on the official websites of governments, Ministry of Tourism and the population of the Southern Federal District. This information was systematized from a number of perspectives, including identification of the chronology of health-improving tourism infrastructure development in the chosen territory, as well as the advantages and disadvantages in this area. Based on the results of the study, the authors also developed some recommendations to overcome existing inactive trends in the field of health tourism. Findings This paper sheds light on the understanding of the challenges and changes that took place in the resort agglomerations of the south of Russia in terms of current issues and those that must be addressed in the coming years. It was concluded that health tourism in the south of Russia has old traditions based on the natural resource potential of territories that are included in the composition of the Southern Federal District. At the same time, the authors came to the conclusion that, unfortunately, not resort agglomerations are fully utilized. Furthermore, some historic resorts were not well maintained by local authorities and have suffered more recently because of lack of investment. At present, the financial results of health resorts and others related to health-improving tourism are precarious as most operations are unprofitable, and so complex decisions are needed to address the underlying problem of resource optimization because of the important social and economic role of the cities in this region. They have special natural and resource potential and preserve traditions related to health-improving tourism. Research limitations/implications The paper provides a conceptual analysis based on limited empirical data combined with some directions for further research. Originality/value The paper attempts to reveal the impact of social, economic and geopolitical factors, both negative and positive, on the development of the health-improving tourism segment, restructuring of the Russian tourism market and the emergence of promising opportunities and new directions for development. The findings also provide insights for practitioners and researchers, and the tourism industry can draw on this analysis to guide the development of strategy, increase investment attractiveness, make more effective use of the natural resource potential and maintain pressure on government partners to provide support to tourism.

scholarly journals The drivers of economic growth in China and India: globalization or financial development?

2017 ◽  
Vol 16 (1) ◽  
pp. 54-84 ◽  
Author(s):  
Magda Kandil ◽  
Muhammad Shahbaz ◽  
Mantu Kumar Mahalik ◽  
Duc Khuong Nguyen
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Emerging Market ◽  
Annual Data ◽  
Test Results ◽  
Causality Test ◽  
Content Type ◽  
China And India ◽  
Integration Test ◽  
The Impact

Purpose Using annual data from 1970 to 2013 for China and India, this paper aims to examine the impact of globalization and financial development on economic growth by endogenizing capital and inflation and drawing comparisons between the two fastest growing emerging market economies. Design/methodology/approach In the long run, co-integration test results indicate that financial development increases economic growth in China and India. Findings The results also reveal that globalization accelerates economic growth in India but, surprisingly, impairs economic growth in China, as it increases competition for exports. The results furthermore disclose that acceleration in capitalization and inflation, as a proxy for aggregate demand, are positively linked to economic growth in China and India. Originality/value Causality test results indicate that both financial development and economic growth are interdependent. In contrast, causality runs from higher economic growth to increased globalization in India, while the results do not support long-term causality between globalization and economic growth in China.

Overcoming economic liminality: internationalization of B2B SME’s from a small emerging economy

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Barney G. Pacheco ◽  
Syed Akhter
Keyword(s):  
Emerging Market ◽  
Foreign Market ◽  
Emerging Economy ◽  
Foreign Market Entry ◽  
Valuable Insight ◽  
Content Type ◽  
Qualitative Research Design ◽  
Theoretical Perspectives ◽  
Internationalization Strategies ◽  
The Impact

Purpose Current research on small to medium enterprise (SME) internationalization has generated valuable insight but continues to overlook the activities of business-to-business (B2B) SMEs located in small emerging economies. This study aims to fill this gap by testing the applicability of the ownership, location and internalization (OLI) framework to understand the internationalization strategies of small B2B firms in Trinidad and Tobago, a small emerging Caribbean economy. Design/methodology/approach The study used a qualitative research design, which involved in-depth interviews with senior executives of three firms in the B2B sector who were knowledgeable about their firm’s internationalization process. Thematic analysis was then used to understand the motivations and strategies underpinning the internationalization approach adopted by each firm. Findings Contrary to the stereotype of SMEs in emerging markets as fragile enterprises, there is evidence that firms exploited the development of innovative products and processes to facilitate foreign market entry and expansion. Additionally, firms overcame resource limitations by relying on governmental ties and leveraging networking opportunities. The findings also call attention to the impact of organizational learning and the role of knowledge as a dynamic capability. Originality/value Both the context of the study and the application of the OLI framework contributes to the extant literature by yielding substantive insights into the internationalization strategies of B2B firms in a small emerging economy. The findings further highlight how the OLI framework can be supplemented by other theoretical perspectives to better understand internationalization by emerging market SMEs.

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.

Earnings management and audit quality at Damascus securities exchange: Does managerial ownership matter?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Zukaa Mardnly ◽  
Zinab Badran ◽  
Sulaiman Mouselli
Keyword(s):  
Earnings Management ◽  
Ownership Structure ◽  
Management Practices ◽  
Audit Quality ◽  
Emerging Market ◽  
Ordinary Least Squares ◽  
Managerial Ownership ◽  
External Audit ◽  
Content Type ◽  
The Impact

Purpose The purpose of this study is to examine the individual and combined effect of managerial ownership and external audit quality, as two control mechanisms, on earnings management. Design/methodology/approach This study applies ordinary least squares estimates on fixed-time effects panel regression model to test the impact of the investigated variables on earnings management for the whole population of banks and insurance companies listed at Damascus Securities Exchange (DSE) during the period from 2011 to 2018. Findings The empirical evidence suggests a negative non-linear relationship between managerial ownership (as proxied by board of directors’ ownership) on earnings management. However, neither audit quality nor the simultaneous effect of the managerial ownership and audit quality (Big 4) affects earnings management. Research limitations/implications DSE is dominated by the financial sector and the number of observations is constrained by the recent establishment of DSE and the small number of firms listed at DSE. In addition, the non-availability of data on executive directors’ and foreign ownerships restrict our ability to uncover the impact of different dimensions of ownership structure on earnings management. Practical implications First, it stimulates investors to purchase stocks in financial firms that enjoy both high managerial ownership, as they seem enjoying higher earnings quality. Second, the findings encourage external auditors to consider the ownership structure when choosing their clients as the financial statements’ quality is affected by this structure. Third, researchers may need to consider the role of managerial ownership when analyzing the determinants of earnings management. Originality/value It fills the gap in the literature, as it investigates the impact of both managerial ownership and audit quality on earnings management in a special conflict context and in an unexplored emerging market of DSE. It suggests that managerial ownership exerts a significant role in controlling earnings management practices when loose regulatory environment combines conflict conditions. However, external audit quality fails to counter earnings management practices when conditions are fierce.

To be more philanthropic when joining the government-controlled business association? Evidence from Chinese private firms

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Youliang Yan ◽  
Xixiong Xu
Keyword(s):  
Communist Party ◽  
Corporate Philanthropy ◽  
Emerging Market ◽  
Private Firms ◽  
Theoretical Understanding ◽  
Business World ◽  
Content Type ◽  
Business Association ◽  
The Government ◽  
The Impact

Purpose The purpose of this paper is to investigate whether and how affiliation with the government-controlled business association, namely, China Federation of Industry and Commerce (CFIC), affects corporate philanthropy in an emerging market. Design/methodology/approach Through an analysis of survey data gathered from Chinese private firms, this paper conducts multiple regressions to examine the impact of the CFIC membership on corporate philanthropy. Findings Empirical results show that the CFIC membership of private entrepreneurs is significantly positively associated with corporate philanthropy. Moreover, this study finds that the provincial marketization level and the firm Communist Party branch attenuate the positive association between CFIC membership and corporate philanthropy, indicating that the effect of CFIC on corporate philanthropy is more pronounced in regions with lower marketization level and firms without Communist Party branch. The findings are robust to various alternate measures of corporate philanthropy and remain valid after controlling for potential endogeneity. Practical implications Firms will be more active in corporate philanthropy to respond to the government’s governance appeal when they join the CFIC. This highlights the implications of political connections and in particular on the value of government-controlled business associations in the Chinese business world. Originality/value This study extends the literature on the determinants of corporate philanthropy and deepens the theoretical understanding of the governance role of business association with Chinese characteristics.

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