Firm and country characteristics related to cumulative contribution to society

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Carlos Serrano-Cinca ◽  
Beatriz Cuéllar-Fernández ◽  
Yolanda Fuertes-Callén
Keyword(s):  
Empirical Study ◽  
Financial Performance ◽  
Business Models ◽  
Positive Contribution ◽  
Financial Indicators ◽  
Socially Responsible ◽  
Accounting Systems ◽  
Content Type ◽  
Country Characteristics ◽  
A Company

Purpose Many indicators attempt to measure the social performance of a company from different perspectives. Grounded in stakeholder theory, this paper aims to propose capitalising the economic value distributed annually to society over a period of time, hereafter called a firm’s cumulative contribution to society (CCS). This can be done by including everything that stakeholders value; for example, payments of taxes, remuneration of employees, payments to suppliers and creditors, donations, dividends, research and development expenses and efforts to improve the environment. Design/methodology/approach First, this paper makes a methodological proposal about how to calculate the CCS and discusses potentials and shortcomings. Then, a set of hypotheses are formulated about the firm characteristics and country attributes that make the most positive contribution to society such as business models, financial performance, a country’s human development, income equality and the extent of its shadow economy. The authors also argue that a company that originally contributes to society will continue to do so because of the structural inertia faced by organisations. The hypotheses were validated with an empirical study conducted with a sample of 9,276 new-born European companies. Findings The most significant contributors to society are large, profitable companies, which are leveraged but solvent, with high asset turnover and high-profit margins and which are productive and pay high wages. Unfortunately, this win-win situation describes a small percentage of the explained variance, which can explain why social and financial performance sometimes do not go hand-in-hand. The paper identifies features of other types of companies that contribute to society, suggesting criteria for socially responsible investors. Country development favours the cumulative contribution that firms make to society. Research limitations/implications Most accounting systems do not collect all the information necessary to calculate a refined version of the indicator such as percentage of purchases from local suppliers, percentage of salaries for executives and disabled employees and percentage of financing from socially responsible financial entities. The authors encourage modification of the accounting systems to include those aspects. Practical implications This paper identifies several types of companies that contribute the most to society from a modest set of financial indicators. Socially responsible investors can estimate their contribution to society, devising new investment criteria. Social implications The paper identifies several types of companies that contribute the most to society from a modest set of financial indicators. Socially responsible investors can estimate their contribution to society, devising new investment criteria. Originality/value The paper makes two contributions, one methodological and the other empirical. By applying a financial methodology, the authors propose to capitalise the contributions of a company over a period of time. The empirical study identifies both firm and country characteristics that explain CCS.

Intertwining CSR with strategy – the way ahead

2014 ◽  
Vol 14 (2) ◽  
pp. 211-219 ◽  
Author(s):  
Shital Jhunjhunwala
Keyword(s):  
Business Strategy ◽  
Design Methodology ◽  
Business Models ◽  
Corporate Strategy ◽  
Sustainable Business ◽  
Socially Responsible ◽  
Content Type ◽  
Sustainable Business Models ◽  
Corporate Social

Purpose – The purpose of this paper is to emphasize the importance and means of making corporate social responsibility (CSR) an integral part of corporate strategy with the help of case studies. Design/methodology/approach – The article explores the transformation of business from being egocentric to socially responsible. With the use of examples it demonstrates how integrating CSR into strategy can create sustainable business models. Findings – Firms need to develop a framework for integrating CSR into their business strategy for long term successful survival. Social implications – Corporates and society are intertwined and mutually dependent. Business cannot survive without society's acquiescence nor succeed without its active support. Originality/value – The article explains the benefits of CSR and how to make it an integral part of business strategy to gain a competitive advantage.

scholarly journals Do Brands Matter in Unlisted Firms? An Empirical Study of the Association between Brand Equity and Financial Performance

2018 ◽  
Vol 8 (4) ◽  
pp. 65
Author(s):  
Anne Schmitz ◽  
Nieves Villaseñor-Román
Keyword(s):  
Strategic Planning ◽  
Empirical Study ◽  
Financial Performance ◽  
Brand Equity ◽  
Brand Management ◽  
Earnings Persistence ◽  
Financial Indicators ◽  
Future Earnings ◽  
Measures Of Performance ◽  
Unlisted Firms

In spite of the importance of the brand management in marketing studies and practice, there is a scarcity of prior research on the links between brand equity and financial performance, particularly in unlisted (unquoted) firms. The study contributes to prior research along a number of dimensions. It provides evidence on the relevance of brands for unlisted firms of several industries, by showing that brand equity is associated with financial performance even in non-quoted firms without world-recognized brands. Second, the study analyzes the association between brands and accounting-based measures of performance, across different windows and financial indicators. Finally, the evidence on earnings persistence is particularly relevant, as it potentially sheds light on the existing debate on the association between brand equity and stock markets. To the extent that firms with greater brand equity have more persistent earnings, current earnings contain greater information about future earnings, which show the relevance of brand management in the strategic planning of unlisted firms.

IBM's global CEO report 2006: business model innovation matters

2006 ◽  
Vol 34 (5) ◽  
pp. 34-40 ◽  
Author(s):  
George Pohle ◽  
Marc Chapman
Keyword(s):  
Financial Performance ◽  
Business Model ◽  
Business Models ◽  
Business Model Innovation ◽  
Content Type ◽  
Revenue Growth ◽  
Business Executives ◽  
Operating Margin ◽  
Operational Innovation ◽  
Study Participants

PurposeTo ascertain whether the choices CEOs were making about particular types of innovation and key enablers had any correlation with financial performance, IBM looked at a subset of our sample where publicly reported financial information was available.Design/methodology/approachThe findings in this report are based on in‐depth, consultative interviews on the topic of innovation with 765 CEOs, business executives and public sector leaders from around the world.FindingsFor a subset, the authors compared their financial performance to that of an industry‐accepted list of their nearest competitors (up to ten companies with similar revenue and publicly available information). Some of their competitors were CEO study participants, but most were not. By taking a five‐year view, the researchers were able to identify which companies outperformed and under‐performed the average revenue growth, operating margin growth and historical operating margins of their closest competitors.Research limitations/implicationsThroughout the analysis, IBM used these top‐half and bottom‐half groupings to look for notable financial correlations. In this report, the term outperformers refers to the study participants that are in the top 50 percent based on this competitive comparison, and under‐performers are those that fall in the bottom 50 percent.Practical implicationsThe authors report on how business leaders are seeking and finding new ways to adapt their business models to remain competitive in their current industry – or to seek growth by entering new industries.Originality/valueCompanies focusing on business model innovation have enjoyed significant operating margin growth, while those using products/services/markets and operational innovation have sustained their margins over time.

Socioemotional wealth and human resource policies: effects on family firm performance

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Juan David Peláez-León ◽  
Gregorio Sánchez-Marín
Keyword(s):  
High Risk ◽  
Financial Performance ◽  
Human Resource ◽  
Family Firms ◽  
Equation Modeling ◽  
Positive Contribution ◽  
Socioemotional Wealth ◽  
Content Type ◽  
Firm Financial Performance ◽  
The Relationship

PurposeThis study analyses whether human resource management (HRM), through the use of four sets of high-performance work policies (HPWPs) (i.e. selection, training, motivation and opportunity policies), mediates the relationship between socioemotional wealth (SEW)—defined as a unique set of nonfinancial family goals—and firm financial performance when family firms face a high-risk context.Design/methodology/approachHypotheses were statistically tested using a structural equation modeling (SEM) methodology with a cross-sectional sample of 196 medium-sized and private family firms in a high-risk context in Spain.FindingsThe results indicate that the relationship between SEW and financial performance in family firms is fully mediated by the use of HPWPs, especially by training and motivation HR policies. The importance given to preserving SEW influences the use of four sets of HPWPs when family firms show clear evidence of being confronted by a financial decline (i.e. a high-risk context). However, to improve their financial results to avoid the firm's failure and thus the loss of their SEW, only those HR policies that focus on training and motivation made a significant and positive contribution to the firm financial performance.Originality/valueThis study contributes to the literature on family firms and HRM by adopting an alternative theoretical framework to understand how the importance of nonfinancial family goals may affect employee structures and management policies, thereby improving financial performance in family firms.

scholarly journals Driving internationalization through business model innovation

2019 ◽  
Vol 28 (2) ◽  
pp. 201-220 ◽  
Author(s):  
Angelo Cavallo ◽  
Antonio Ghezzi ◽  
Bertha Viviana Ruales Guzmán
Keyword(s):  
Business Model ◽  
Design Methodology ◽  
Business Models ◽  
International Entrepreneurship ◽  
Single Case ◽  
Business Model Innovation ◽  
Content Type ◽  
A Company ◽  
North Western

Purpose This paper aims to investigate how a firm may innovate its business model to internationalize. Design/methodology/approach Owing to its novelty and to the depth of the investigation required to grasp the mechanisms and logics of business model innovation aiming at internationalization, a single case study has been performed related to a company located in North-Western Colombia. Findings The study provides detailed empirical evidences over the mutual connection and complementarities among value mechanisms of business models. Moreover, this study suggests that BMI fosters internationalization to scale, which, in turn, will require additional changes to match new customer needs as they emerge. Also, the study shows an extension of the action–space of lean startup approaches, intended as scientific approaches to international entrepreneurship. Originality/value This study connects business model innovation and internationalization as few studies have done before.

scholarly journals Is CSR performance related to disclosure tone in earnings announcements?

2019 ◽  
Vol 32 (2) ◽  
pp. 129-147
Author(s):  
Yu Lu ◽  
Steven Cahan ◽  
Diandian Ma
Keyword(s):  
Earnings Management ◽  
Financial Performance ◽  
Manufacturing Industry ◽  
Earnings Announcements ◽  
Positive Association ◽  
Socially Responsible ◽  
Content Type ◽  
Sensitivity Tests ◽  
Disclosure Tone ◽  
Corporate Social

Purpose This study aims to examine whether the disclosure tone in earnings announcements is related to a firm’s corporate social responsibility (CSR) performance. Design/methodology/approach Considering the lower likelihood of earnings management conducted by CSR-conscious firms, and the significant market impact of the tone of disclosure in the earnings announcements, the study investigates whether firms with good CSR performance attempt to influence investors’ judgements through “soft information” and, thus, produce earnings announcements with more positive tone. Specifically, it examines whether CSR performance is positively related to the optimistic disclosure tone in earnings announcements. Findings The study finds that more socially responsible firms exhibit a more optimistic tone in earnings announcements. The findings are robust to a variety of sensitivity tests and data from different years. Furthermore, the study finds that the positive association between CSR performance and disclosure tone in the earnings announcement is particularly apparent in the manufacturing industry. Research limitations/implications This study contributes to the literature in multiple ways. Practical implications These findings should assist regulators in better understanding the verbal components in earnings announcements. Social implications It is possible that firms might opportunistically engage in CSR activities to enhance their social image to exaggerate financial performance and influence investors’ 2019 decisions. Originality/value These results show that CSR performance is positively associated with the optimistic tone in earnings announcements. The findings are consistent with two alternative interpretations. First, even though CSR-conscious firms are unlikely to engage in earnings management, they may engage a more subtle form of impressions/tone management. Second, firms with better CSR performance may have better financial performance, and thus are more confident and optimistic, resulting in a more positive tone in their earnings announcements. As the study controls for financial performance and find a positive relation between CSR concerns and optimism in earnings announcements, it favors the previous explanation.

The effect of business cycle, market return and momentum on financial performance of socially responsible investing mutual funds

2017 ◽  
Vol 13 (3) ◽  
pp. 513-528 ◽  
Author(s):  
Karen Paul
Keyword(s):  
Business Cycle ◽  
Financial Performance ◽  
Mutual Funds ◽  
Factor Model ◽  
Social Performance ◽  
Socially Responsible ◽  
Content Type ◽  
Responsible Investing ◽  
Market Return ◽  
Three Factor

Purpose This study examines the effect of business cycle, market return and momentum on the financial performance of socially responsible investing (SRI) mutual funds using data from two complete business cycles as defined by the National Bureau of Economic Research (NBER). Design/methodology/approach A “fund of funds” approach is used to identify the extent to which SRI financial performance is affected by the macroeconomic climate. The Fama-French Three-Factor model and the Carhart four-factor model are used to bring the results into alignment with commonly used finance methodologies. Findings The results indicate that SRI tends to preserve value during economic contraction more than it adds value during economic expansion. Market return is important during both expansion and contraction, while momentum is important only during expansion. Research limitations/implications These findings suggest that double screening, for both financial and social performance, enables portfolio managers of SRI funds to have insight into those companies that are particularly vulnerable during times of economic contraction. Practical implications These results bring added clarity to the mixed findings found by previous researchers examining the relationship between corporate social performance (CSP) and financial performance. Social implications This study reinforces the idea that the financial performance of companies with high ethical standards is comparable to the financial performance of the market as a whole during times of economic expansion and superior to the market as a whole during times of economic contraction. Originality/value Business cycle analysis, along with the Fama-French Three-Factor model and the Carhart four-factor model, brings SRI research more into the realm of conventional financial analysis than previous studies.

Measuring value creation: VAIC and EVA

2014 ◽  
Vol 18 (1) ◽  
pp. 8-21 ◽  
Author(s):  
Gianpaolo Iazzolino ◽  
Domenico Laise ◽  
Giuseppe Migliano
Keyword(s):  
Balanced Scorecard ◽  
Economic Value ◽  
Value Added ◽  
Financial Indicators ◽  
Economic Sectors ◽  
Accounting Systems ◽  
Content Type ◽  
Evaluation Systems ◽  
Multi Criteria Evaluation ◽  
Capital Efficiency

Purpose – This study proposes a comparison between Value Added Intellectual Coefficient (VAIC) and one of the most important performance evaluation methods, the Economic Value Added (EVA), starting from a re-interpretation of the VAIC. Design/methodology/approach – The empirical data were gathered from AMADEUS Bureau van Dijk and consist of 2,596 companies operating in Northern Italy, from six different economic sectors, observed for the year 2011. A correlation analysis was carried out in order to highlight whether there is a relationship between the two concepts of VAIC and EVA. Findings – Results show that EVA and VAIC have no significant relationships; as a matter of fact, EVA is based on financial theory, whereas VAIC is focalised on the assessment of Intellectual Capital Efficiency (ICE). Practical implications – Managers could be misled due to the fact that they often make decisions by taking into account only financial indicators such as EBIT, EVA, etc. Although methods like EVA have improved modern accounting systems, they do not take into account information linked to ICE. Therefore, these two perspectives can be useful in a context in which firms' performances are measured through multi-criteria methodologies (i.e. Balanced scorecard). Originality/value – The proposal describes the differences between VAIC and EVA considering these two concepts as not contrasting. In fact, in order to better measure firms' performances, it could be useful to consider VAIC and EVA as an integrated vision in order to develop multi-criteria evaluation systems, rather than consider them separately.

Relationships among triple bottom line elements

2015 ◽  
Vol 6 (2) ◽  
pp. 195-214 ◽  
Author(s):  
Sitalakshmi Venkatraman ◽  
Raveendranath Ravi Nayak
Keyword(s):  
Empirical Study ◽  
Financial Performance ◽  
Corporate Sustainability ◽  
Triple Bottom Line ◽  
Performance Outcomes ◽  
Business Practices ◽  
Sustainable Business ◽  
Bottom Line ◽  
Content Type ◽  
Performance Outcome

Purpose – The purpose of this paper is to gain more insight of the nature and strength of relationships among the three triple bottom line (TBL) outcomes, namely corporate environmental performance outcome (CEPO), corporate social performance outcome (CSPO) and corporate financial performance outcome (CFPO) and to evolve a roadmap for integrating sustainable business practices that facilitates in managing and improving their sustainable performance. Literature reports that currently businesses try to achieve economic, social and ecological goals independently resulting in silos. The interrelationships of TBL elements have not been explored and integrated. The literature has already pointed out that to achieve corporate sustainability, managers need to integrate TBL goals in all their business decisions. However, the question remains – how to integrate these three competing goals and this paper attempts to answer this question. Design/methodology/approach – In the research design, the authors use a quantitative research methodology with data collected by means of a survey questionnaire that included both descriptive and exploratory flavour. The empirical study examines the relationships of TBL elements as perceived by 85 different Australian-based large, medium, as well as small business organisations. The data collected were analysed by performing factor analysis on 21 items resulting in three latent factors that were aligned to TBL outcomes and the correlations among them were analysed to assess their interrelationships. Findings – The results of the study report weak, positive relationships existing between the TBL. This result has useful implications well-supported by the qualitative feedback. The paper argues that Australian managers do not see any strategic advantage in pursuing “beyond compliance” sustainable business practices, as they perceive no added value to their organisations’ financial performance outcomes. Integrating economic, social and ecological performances is seen as an additional management burden. Originality/value – While most of the TBL studies conducted worldwide focus on predominantly assessing large organisations toward responsible and sustainable business practices, this paper considers large, medium as well as small businesses. Also, economic, social and environmental issues are explored by organisations individually, while this study investigates their inter-connections. Through the empirical study, this paper provides recommendations and proposes a four-step roadmap with the participation of quality circles that would facilitate the integration of the social responsibility and environment protection practices into the core business operations paving way towards achieving corporate sustainability.

scholarly journals Analysis of Sustainable Business Models: Exploratory Study in Two Brazilian Logistics Companies

2022 ◽  
Vol 14 (2) ◽  
pp. 694
Author(s):  
Jaqueline Geisa Cunha Gomes ◽  
Marcelo Tsuguio Okano ◽  
Rodrigo Salgado Guerra ◽  
Denilson de Sousa Cordeiro ◽  
Henry Castro Lobo dos Santos ◽  
...  
Keyword(s):  
Exploratory Study ◽  
Business Models ◽  
Business Processes ◽  
Digital Technologies ◽  
Positive Contribution ◽  
Environmental Aspects ◽  
Sustainable Business ◽  
Material Resources ◽  
Sustainable Business Models ◽  
A Company

Over the years, researchers have presented different concepts regarding business models. There is no unanimity, but there is a general agreement that a business model is the representation of how a company conducts its business. Subsequently, interest in the topic has increased and has come to be considered by companies that, driven to incorporate a positive contribution to sustainability into their values, began to face economic development that considers social and environmental aspects instead of worrying only about profit for the shareholders. The general objective of this research is to identify how the merger of two Brazilian logistics companies with different customer segments can positively contribute to the defense of sustainability, considering social and environmental aspects. As a methodology, a literature review on business models, conceptual business models, and sustainable business models was used to legitimize issues relevant to the themes. The case studies allowed for a measurement of the productivity of the areas of the chosen companies, and a survey of used business processes and technological systems, in addition to diagnosing the level of maturity of these areas. An analysis of the strengths and weaknesses in these areas, within the studied companies, resulted in a solution that allowed for the optimization of processes and savings in human and material resources, and the identification of qualitative benefits arising from mergers, improvements in productivity and services, the standardization of processes, and the implementation of innovative digital technologies.

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