Board demographic diversity, firm performance and strategic change

2014 ◽  
Vol 37 (12) ◽  
pp. 1110-1136 ◽  
Author(s):  
Daniel Kipkirong Tarus ◽  
Federico Aime
Keyword(s):  
Firm Performance ◽  
Fixed Effects ◽  
Strategic Change ◽  
Secondary Data ◽  
Developed Countries ◽  
Outcome Variable ◽  
Demographic Diversity ◽  
Content Type ◽  
Fixed Effects Regression ◽  
High Level

Purpose – The purpose of this study is to examine the effect of boards’ demographic diversity on firms’ strategic change and the interaction effect of firm performance. Design/methodology/approach – This paper used secondary data derived from publicly listed firms in Kenya during 2002-2010 and analyzed the data using fixed effects regression model to test the effect of board demographic and strategic change, while moderated regression analysis was used to test the moderating effect of firm performance. Findings – The results partially supported board demographic diversity–strategic change hypothesis. In particular, results indicate that age diversity produces less strategic change, while functional diversity is associated with greater levels of strategic change. The moderated regression results do not support our general logic that high firm performance enhances board demographic diversity–strategic change relationship. In effect, the results reveal that at high level of firm performance, board demographic diversity produces less strategic change. Originality/value – Despite few studies that have examined board demographic diversity and firm performance, this paper introduces strategic change as an outcome variable. This paper also explores the moderating role of firm performance in board demographic diversity–strategic change relationship, and finally, the study uses Kenyan dataset which in itself is unique because most governance and strategy research uses data from developed countries.

Is the MD&A of US REITs informative? A textual sentiment study

2020 ◽  
Vol 38 (3) ◽  
pp. 181-201
Author(s):  
Marina Koelbl
Keyword(s):  
Firm Performance ◽  
Real Estate ◽  
Fixed Effects ◽  
Textual Analysis ◽  
Real Estate Industry ◽  
Content Type ◽  
The Real Estate ◽  
Domain Specific ◽  
Panel Fixed Effects ◽  
Fixed Effects Regression

PurposeThis study examines whether language disclosed in the Management Discussion and Analysis (MD&A) of US Real Estate Investment Trusts (REITs) provides signals regarding future firm performance and thus generates a market response.Design/methodology/approachThis research conducts textual analysis on a sample of approximately 6,500 MD&As of US REITs filed by the SEC between 2003 and 2018. Specifically, the Loughran and Mcdonald (2011) financial dictionary, and a custom dictionary for the real estate industry created by Ruscheinsky et al. (2018), are employed to determine the inherent sentiment, that is, the level of pessimistic or optimistic language for each filing. Thereafter, a panel fixed-effects regression enables investigating the relationship between sentiment and future firm performance, as well as the markets’ reaction.FindingsThe empirical results suggest that higher levels of pessimistic (optimistic) language in the MD&A predict lower (higher) future firm performance. Hereby, the use of a domain-specific real estate dictionary, namely that developed by Ruscheinsky et al. (2018) leads to superior results. Corresponding to the notion that the human psyche is affected more strongly by negative than positive news (Rozin and Royzman, 2001), the market responds solely to pessimistic language in the MD&A.Practical implicationsThe results suggest that the market can benefit from textual analysis, as investigating the language in the MD&A reduces information asymmetries between US REIT managers and investors.Originality/valueThis is the first study to analyze exclusively US REITs, whether language in the MD&A is predictive of future firm performance and whether the market responds to textual sentiment.

Does R&D create additional business value through IT?

2017 ◽  
Vol 11 (2) ◽  
pp. 194-208 ◽  
Author(s):  
Yu Wang ◽  
Tie-nan Wang ◽  
Xin Li
Keyword(s):  
Firm Performance ◽  
Fixed Effects ◽  
Business Value ◽  
It Investment ◽  
Content Type ◽  
Chinese Business ◽  
Fixed Effects Regression ◽  
The Impact ◽  
D Investment ◽  
It Payoff

Purpose R&D indicates absorptive capacity, which may affect IT payoff. The purpose of this paper is to examine how R&D investment affects the relation between IT investment and firm performance and under what circumstances R&D intensity is more beneficial to IT returns. Such study has been lacking in R&D research and IT payoff literature. Design/methodology/approach A conceptual model for linking IT investment, R&D investment, environmental dynamism and firm performance was developed and tested by data collected from Chinese listed firms from 2007 to 2013, using fixed effects regression model. Findings The results show positive moderating effects of firm R&D investment and government R&D subsidies on the relation between IT investment and firm performance. Furthermore, the impact of firm R&D investment on IT payoff is stronger for firms in more dynamic environments. The findings suggest that R&D investment creates additional business value through interactions with IT, and complementarities between R&D and IT, as manifested in their interaction effect on firm performance vary across industry sectors. Research limitations/implications This paper indicates the importance of complementarities between R&D and IT, which should prove helpful to researchers and practitioners engaged in Chinese business. Originality/value This paper presents one of the first attempts at examining the moderating effect of R&D investment on the relation between IT investment and firm performance. Especially this study helps to understand under what circumstances R&D investment is more or less likely to be beneficial to IT returns.

Mediating effect of organizational learning and moderating role of environmental dynamism on the relationship between strategic change and firm performance

2019 ◽  
Vol 12 (2) ◽  
pp. 275-297 ◽  
Author(s):  
Haruna Isa Mohammad
Keyword(s):  
Organizational Learning ◽  
Firm Performance ◽  
Strategic Change ◽  
Developed Countries ◽  
Mediating Effect ◽  
Environmental Dynamism ◽  
Content Type ◽  
The Relationship ◽  
Moderating Role

Purpose With the materialization of literature on strategic change, it is clear that organizational learning and organizational dynamism have been among the most notable areas of study. The purpose of this paper is to extend the literature on strategic management by examining the mediating effects of organizational learning and the moderating role of environmental dynamism on the relationship between strategic change and firm performance. Design/methodology/approach A survey questionnaire was administered to 650 respondents who were both corporate and business-level managers of 22 main deposit money banks (commercial banks) and their branches across the country. In total, 630 questionnaires were returned and 587 were used after following all the processes of data preparation. Path analysis was employed to test the hypotheses in this study using Smart PLS 3. Findings The study found a significant mediating effect of organizational learning on the relationship between strategic change and firm performance. Although no significant moderating role of environmental dynamism was found, the directions of the path coefficients are consistent with the hypothesis. All the relationships between the constructs are significant. Research limitations/implications It is paramount for managers to understand the type of environment and learning that fits diverse kinds of strategic changes in order to improve firm performance. It is evident that changes that are not proactive and generative organizational learning may seem dangerous for a firm. However, organizations should learn to incorporate the change to be able to compete in a dynamic competitive environment. Originality/value Prior studies on strategic change, environmental dynamism and organizational learning have mainly focused on manufacturing and construction industries in the developed countries, but less has been done in the service sector, particularly the banking organizations in developing countries. Nigeria is one of those countries. Therefore, this study focuses on the links between strategic change and firm performance, moderating role of environmental dynamism and the mediating effect of organizational learning within the context of the Nigerian deposit money banks.

New product launch actions and firm performance

2018 ◽  
Vol 12 (1) ◽  
pp. 79-105 ◽  
Author(s):  
Yang Liu ◽  
Peng Cheng ◽  
Dingtao Zhao
Keyword(s):  
Firm Performance ◽  
Fixed Effects ◽  
New Product ◽  
Superior Performance ◽  
Product Launch ◽  
Firm Reputation ◽  
Content Type ◽  
New Product Launch ◽  
Two Factors ◽  
Fixed Effects Regression

Purpose This paper aims to examine the effect of new product launch actions and firm reputation on firm performance in the Chinese auto industry. Design/methodology/approach This analysis adopts empirical data from 66 auto firms in China’s auto market from 2007 to 2012 to explore how new product launch actions undertaken by a firm can contribute to achieving superior performance and to investigate the relationships between new product launch actions and firm performance. Moreover, how firm reputation interacts with new product launch actions to affect firm performance is also investigated. Fixed effects regression model following the Hausman specification test was used to quantitatively examine the relationship. Findings It was concluded that the focal firm’s new product launch actions, including new product launch breadth, complexity and heterogeneity of its new repertoire of product launch actions, and firm reputation can impact its performance. Firm reputation can impact the signaling process and the capability of firms to enhance their performance via new product launch movements. Originality/value This research contributes to new product launch research by providing a more comprehensive view of competitive dynamic actions by which a firm’s performance is strengthened by examining the effects of two factors that affect performance. These factors are as follows: the characteristics in terms of breadth, complexity, and heterogeneity of new product launch actions undertaken by a firm and the characteristic of firm reputation.

The impact of intellectual capital on firm performance: a study of Indian firms listed in COSPI

2018 ◽  
Vol 19 (5) ◽  
pp. 935-964 ◽  
Author(s):  
Neha Smriti ◽  
Niladri Das
Keyword(s):  
Firm Performance ◽  
Intellectual Capital ◽  
Value Creation ◽  
Generalized Method Of Moments ◽  
Value Added ◽  
Secondary Data ◽  
Share Price ◽  
Content Type ◽  
Listed Firms ◽  
The Impact

Purpose The purpose of this paper is to examine the effect of intellectual capital (IC) on financial performance (FP) for Indian companies listed on the Centre for Monitoring Indian Economy Overall Share Price Index (COSPI). Design/methodology/approach Hypotheses were developed according to theories and literature review. Secondary data were collected from Indian companies listed on the COSPI between 2001 and 2016, and the value-added intellectual coefficient (VAIC) of Pulic (2000) was used to measure IC and its components. A dynamic system generalized method of moments (SGMM) estimator was employed to identify the variables that significantly contribute to firm performance. Findings Indian listed firms appear to be performing well and efficiently utilizing their IC. Overall, human capital had a major impact on firm productivity during the study period. Furthermore, the empirical analysis showed that structural capital efficiency and capital employed efficiency were equally important contributors to firm’s sales growth and market value. The growing importance of the contribution of IC to value creation was consistently reflected in the FP of these Indian companies. Practical implications This study has robust theoretical grounds and employs a validated methodology. The present study extends knowledge of IC among academicians and managers and highlights its contribution to value creation. The findings may help stakeholders and policymakers in developing countries properly reallocate intellectual resources. Originality/value This study is the first study to evaluate IC and its relationship with traditional measures of firm performance among Indian listed firms using dynamic SGMM and VAIC models.

Internationalization of emerging multinationals: the Latin American case

2014 ◽  
Vol 26 (6) ◽  
pp. 588-602 ◽  
Author(s):  
Mauricio Losada-Otálora ◽  
Lourdes Casanova
Keyword(s):  
Latin American ◽  
Global Economy ◽  
Secondary Data ◽  
Developed Countries ◽  
Analytical Framework ◽  
Content Type ◽  
Emerging Multinationals ◽  
Internationalization Strategies ◽  
American Case ◽  
Key Resources

Purpose – The purpose of this paper is to develop an analytical framework that challenges the condescending view of multinationals of emerging countries. In this paper, it is showed that emerging multinational companies (EMNCs) developed valuable resources that leveraged their internationalization strategies. Design/methodology/approach – An exploratory approach was used to investigate the internationalization strategies of EMNCs. A qualitative study was built on secondary data sources, particularly analysis of cases of the internationalization of Latin American companies. Findings – The internationalization strategies deployed by EMNCs are similar to the strategies of traditional multinationals (firms of developed countries). Similarly, EMNCs exploit, acquire or defend their resources in foreign markets. Additionally, the selection of each strategy depends on the availability, transferability and substitutability of the resources involved in the internationalization. Research limitations/implications – The traditional approaches that study the role of resources in the internationalization of the EMNCs have some shortcomings. It is worth conducting additional research including the approach developed here to advance in the comprehension of the behavior of EMNCs. Practical implications – Managers must identify and develop key resources to invest abroad. Additionally, managers need to take into account the characteristics of the resources of their firms to select an adequate strategy abroad. Originality/value – This paper shows that EMNCs are not resource laggards. Consequently, theoretical and empirical evidence is provided to advance the development of comprehensive theories of the internationalization of EMNCs. This paper offers academics and practitioners with a new focus to analyze the internationalization of EMNCs which are recognized as a driving force of the global economy.

Controlling shareholders' stock pledges and strategic change: the moderating effects of corporate governance

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Xi Zhong ◽  
He Wan ◽  
Qiuping Peng
Keyword(s):  
Fixed Effects ◽  
Family Firms ◽  
Strategic Change ◽  
Balance Of Power ◽  
Controlling Shareholder ◽  
Analyst Coverage ◽  
Content Type ◽  
Controlling Shareholders ◽  
Change Behavior ◽  
Negative Effect

PurposeThe authors analyze the effects of controlling shareholders' stock pledging on firms' strategic change behavior, and investigate how the balance of power between shareholders and analyst coverage moderates those effects.Design/methodology/approachEmploying fixed effects models, the authors test hypotheses based on Chinese listed company data from 2011 to 2017.FindingsControlling shareholders' stock pledges has a negative effect on strategic change. As the balance of power among shareholders and/or analyst coverage increases, it mitigates the effect of controlling shareholder stock pledges on strategic change. In particular, the balance of power between shareholders and analyst coverage weakened the relationship between controlling shareholder stock pledges and strategic change. Lastly, after distinguishing family from nonfamily firms, the authors discovered that these findings only held for family firms.Originality/valueThis study makes important contributions to strategic change, stock pledge and family firm literature, and also provides guidance on firms' strategic change practices.

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.

Role of ambidexterity and learning capability in firm performance

2018 ◽  
Vol 48 (4) ◽  
pp. 517-536 ◽  
Author(s):  
Sanjay Dhir ◽  
Swati Dhir
Keyword(s):  
Firm Performance ◽  
Developed Countries ◽  
Two Dimensions ◽  
Survey Method ◽  
Learning Capability ◽  
Content Type ◽  
Multiple Resources ◽  
Managerial Implications ◽  
Managerial Positions ◽  
Exploration Exploitation

Purpose This study aims to comprehend the ambidexterity and organizational learning capability construct in the Indian E-commerce industry context. Design/methodology/approach The survey method was adopted for this study. A survey was circulated among the personnel working in E-commerce companies in India. The focus was on people working in managerial positions and had at least three years of experience in the same industry. Findings This paper investigates the link between two dimensions of ambidexterity, i.e., exploration, exploitation and learning capability in firm performance. The paper also establishes the moderating effect of the learning capability on the two dimensions of ambidexterity and firm’s performance. Research/limitations/implications Our focus was to cover most of the E-commerce companies, yet to generalize the research the analysis needs to be conducted with even more E-commerce companies. Although we took extraordinary care to gather data from multiple resources and discarded the data that was incomplete or was from lower level employees yet, we need a larger sample to establish the causal claim of our model. Practical/implications We reason that learning capability of a firm impacts the two dimensions and firms should focus both on external and internal knowledge to benefit from the ambidexterity efforts. Social/implications Learning capability influences a firm’s performance and has managerial implications. The analysis’ results on the India based ecommerce companies differs from prior research done in more developed countries and other industries. Originality/value No prior research has been done from this perspective in the Indian context, and thus our work opens up new avenues for researchers to look at.Keywords Ambidexterity, Firm performance, Learning capability

A jack-of-all-trades or a master of none: the performance effects of balancing exploration and exploitation within vs across alliance portfolio domains

2018 ◽  
Vol 24 (3) ◽  
pp. 569-587 ◽  
Author(s):  
Christopher R. Penney ◽  
James G. Combs ◽  
Nolan Gaffney ◽  
Jennifer C. Sexton
Keyword(s):  
Firm Performance ◽  
Value Chain ◽  
Fixed Effects ◽  
Empirical Work ◽  
Generalized Least Squares ◽  
Exploration And Exploitation ◽  
Specific Domain ◽  
Alliance Portfolio ◽  
Content Type ◽  
Alliance Portfolios

Purpose Theory predicts that balancing exploratory and exploitative learning (i.e., ambidexterity) across alliance portfolio domains (e.g. value chain function, governance modes) increases firm performance, whereas balance within domains decreases performance. Prior empirical work, however, only assessed balance/imbalance within and across two domains. The purpose of this study is to determine if theory generalizes beyond specific domain combinations. The authors investigated across multiple domains to determine whether alliance portfolios should be imbalanced toward exploration or exploitation within domains or balanced across domains. The authors also extended prior research by exploring whether the direction of imbalance matters. Current theory only advises managers to accept imbalance without helping with the choice between exploration and exploitation. Design/methodology/approach Hypotheses are tested using fixed-effects generalized least squares (GLS) regression analysis of a large 13-year panel sample of Fortune 500 firms from 1996 to 2008. Findings With respect to the balance between exploration and exploitation within each of the five domains investigated, imbalanced alliance portfolios had higher firm performance. No evidence was found that balance across domains relates to performance. Instead, for four of the five domains, imbalance toward exploration related positively to firm performance. Originality/value An alliance portfolio that allows for exploration in some domains and exploitation in other domains appears more difficult to implement than prior theory suggests. Firms benefit mostly from using the alliance portfolio for exploratory learning.

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