Does organizational learning lead to higher firm performance?

2015 ◽  
Vol 22 (5) ◽  
pp. 271-288 ◽  
Author(s):  
Wencang Zhou ◽  
Huajing Hu ◽  
Xuli Shi
Keyword(s):  
Organizational Learning ◽  
Firm Performance ◽  
Financial Performance ◽  
Secondary Data ◽  
Positive Association ◽  
Firm Innovation ◽  
Content Type ◽  
Firm Financial Performance ◽  
Positive Correlations ◽  
And Performance

Purpose – The purpose of this paper is to develop a framework for studying organizational learning, firm innovation and firm financial performance. Design/methodology/approach – This paper examines the effects of organizational learning on innovation and performance among 287 listed Chinese companies. Findings – The results indicate a positive association between organizational learning dimensions and firm performance (both objective financial performance and perceptual innovation measure). Research limitations/implications – The sample includes only firms for which secondary data are available. Different results might have been obtained if we include smaller, private firms into the sample. This paper only includes a limited number of measures of financial performance to assess the relationship between organization learning dimensions and firm performance. Therefore, researchers are encouraged to test the proposed propositions further with different performance measures. Practical implications – The results showed that it is the combination of several learning characteristics and not a single dimension that influenced the variance of firm performance. The findings reinforce the notion that systemic interventions that address a variety and different combinations of learning organization characteristics will be more likely to be successful than interventions that solely focus on singular or a limited number of dimensions. Originality/value – The integration of objective measures of firms’ financial performance with perceptual survey data represents a unique methodology that has not been widely used in the organizational learning literature. The positive correlations between the eight learning dimensions and the measures of firms’ performance lend credence to the efficacy of the organizational learning concepts.

Intellectual capital in Ugandan service firms as mediator of board governance and firm performance

2014 ◽  
Vol 5 (3) ◽  
pp. 300-340 ◽  
Author(s):  
Stephen Korutaro Nkundabanyanga ◽  
Joseph M. Ntayi ◽  
Augustine Ahiauzu ◽  
Samuel K. Sejjaaka
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Intellectual Capital ◽  
Predictor Variable ◽  
Mediating Effect ◽  
Board Governance ◽  
Content Type ◽  
Firm Financial Performance ◽  
Starting Point ◽  
The Relationship

Purpose – The purpose of this paper is to examine the mediating effect of intellectual capital on the relationship between board governance and perceived firm financial performance. Design/methodology/approach – This study was cross-sectional. Analyses were by SPSS and Analysis of Moment Structure on a sample of 128 firms. Findings – The mediated model provides support for the hypothesis that intellectual capital mediates the relationship between board governance and perceived firm performance. while the direct relationship between board governance and firm financial performance without the mediation effect of intellectual capital was found to be significant, this relationship becomes insignificant when mediation of intellectual capital is allowed. Thus, the entire effect does not only go through the main hypothesised predictor variable (board governance) but majorly also, through intellectual capital. Accordingly, the connection between board governance and firm financial performance is very much weakened by the presence of intellectual capital in the model – confirming that the presence of intellectual capital significantly acts as a conduit in the association between board governance and firm financial performance. Overall, 36 per cent of the variance in perceived firm performance is explained. the error variance being 64 per cent of perceived firm performance itself. Research limitations/implications – The authors surveyed directors or managers of firms and although the influence of common methods variance was minimal, the non-existence of common methods bias could not be guaranteed. Although the constructs have been defined as precisely as possible by drawing upon relevant literature and theory, the measurements used may not perfectly represent all the dimensions. For example board governance concept (used here as a behavioural concept) is very much in its infancy just as intellectual capital is. Similarly the authors have employed perceived firm financial performance as proxy for firm financial performance. The implication is that the constructs used/developed can realistically only be proxies for an underlying latent phenomenon that itself is not fully measureable. Practical implications – In considering the behavioural constructs of the board, a new integrative framework for board effectiveness is much needed as a starting point, followed by examining intellectual capital in firms whose mediating effect should formally be accounted for in the board governance – financial performance equation. Originality/value – Results add to the conceptual improvement in board governance studies and lend considerable support for the behavioural perspective in the study of boards and their firm performance improvement potential. Using qualitative factors for intellectual capital to predict the perceived firm financial performance, this study offers a unique dimension in understanding the causes of poor financial performance. It is always a sign of a maturing discipline (like corporate governance) to examine the role of a third variable in the relationship so as to make meaningful conclusions.

scholarly journals Government institutional support, entrepreneurial orientation, strategic renewal, and firm performance in transitional China

2019 ◽  
Vol 25 (3) ◽  
pp. 433-456 ◽  
Author(s):  
Chengli Shu ◽  
Dirk De Clercq ◽  
Yunyue Zhou ◽  
Cuijuan Liu
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Entrepreneurial Orientation ◽  
Transition Economy ◽  
Institutional Support ◽  
Equation Modeling ◽  
Content Type ◽  
Strategic Renewal ◽  
Firm Financial Performance ◽  
The Relationship

PurposeThe purpose of this paper is to examine how entrepreneurial orientation (EO) and strategic renewal (as a critical dimension of corporate entrepreneurship) might transmit government institutional support and thereby enhance firm performance in a transition economy.Design/methodology/approachMulti-respondent data were collected from 230 Chinese-based firms. The hypotheses were tested with structural equation modeling, in combination with a bias-corrected bootstrap method, to assess the significance of the theorized direct and indirect relationships.FindingsGovernment institutional support enhances EO and strategic renewal individually, yet EO also fully mediates the relationship between government institutional support and strategic renewal. Moreover, strategic renewal fully mediates the relationship between EO and firm financial performance, and it partially mediates the relationship between EO and firm reputation.Originality/valueThis study contributes to entrepreneurship literature by testing an organization-level model of entrepreneurial phenomena in established firms that identifies EO and strategic renewal as two distinct mechanisms through which government institutional support in a transition economy can enhance organizational effectiveness, which entails the firm’s financial performance and reputation. In doing so, this study provides an extended understanding of how EO and strategic renewal might influence a firm’s financial and nonfinancial outcomes in different ways.

The effects of corporate governance on financial performance and financial distress: evidence from Egypt

2015 ◽  
Vol 15 (5) ◽  
pp. 641-662 ◽  
Author(s):  
Tamer Mohamed Shahwan
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Financial Performance ◽  
Financial Distress ◽  
Emerging Market ◽  
Negative Relationship ◽  
Positive Association ◽  
Time Frame ◽  
Content Type

Purpose – This paper aims to empirically examine the quality of corporate governance (CG) practices in Egyptian-listed companies and their impact on firm performance and financial distress in the context of an emerging market such as that of Egypt. Design/methodology/approach – To assess the level of CG practices at a given firm, the current study constructs a corporate governance index (CGI) which consists of four dimensions: disclosure and transparency, composition of the board of directors, shareholders’ rights and investor relations and ownership and control structure. Based on a sample of 86 non-financial firms listed on the Egyptian Exchange, the effects of CG on performance and financial distress are assessed. Tobin’s Q is used to assess corporate performance. At the same time, the Altman Z-score is used as a financial distress indicator, as it measures financial distress inversely. The bigger the Z-score, the smaller the risk of financial distress. Findings – The overall score of the CGI, on average, suggests that the quality of CG practices within Egyptian-listed firms is relatively low. The results do not support the positive association between CG practices and financial performance. In addition, there is an insignificant negative relationship between CG practices and the likelihood of financial distress. The current study also provides evidence that firm-specific characteristics could be useful as a first-pass screen in determining firm performance and the likelihood of financial distress. Research limitations/implications – The sample size and time frame of our analysis are relatively small; some caution would be needed before generalizing the results to the entire population. Practical implications – The findings may be of interest to those academic researchers, practitioners and regulators who are interested in discovering the quality of CG practices in a developing market such as that of Egypt and its impact on financial performance and financial distress. Originality/value – This paper extends the existing literature, in the Egyptian context in particular, by examining firm performance and the risk of financial distress in relation to the level of CG mechanisms adopted.

scholarly journals Strategic Management and Firm Performance

2019 ◽  
Vol 7 (03) ◽  
Author(s):  
Dr. Sadudin Ibraimi
Keyword(s):  
Firm Performance ◽  
Strategic Management ◽  
Financial Performance ◽  
Empirical Studies ◽  
Business Strategies ◽  
Firm Financial Performance ◽  
And Performance ◽  
In The Beginning ◽  
The Relationship

This paper discusses the relationship between business strategies of firms and their performances. In the beginning the strategic aspects of the concept are presented, then competition and performance and their linkage to strategy is discussed. This is followed by the discussion of several empirical studies on the determinants of firm financial performance. Researches confirm that firms within the same industry differ from one another, and that there seems to be an inertia associated with these differences.

Industry innovation spending and openness to collaboration as levers for firm performance

2019 ◽  
Vol 22 (4) ◽  
pp. 617-638 ◽  
Author(s):  
Luiz Fernando de Paris Caldas ◽  
Fabio de Oliveira Paula ◽  
T. Diana L. van Aduard de Macedo-Soares
Keyword(s):  
Firm Performance ◽  
Knowledge Spillovers ◽  
Moderating Effect ◽  
Firm Innovation ◽  
Content Type ◽  
Innovation Activities ◽  
Industry Collaboration ◽  
And Performance ◽  
Italian Manufacturing Firms ◽  
The Relationship

Purpose The purpose of this paper is to analyze to what extent spending on innovation activities and collaboration at the industry level affects the relationship between firm innovation and performance. Design/methodology/approach A conceptual model was proposed and empirically tested using multiple linear regression. The data were obtained from the Community Innovation Survey 2012, composing a sample of 890 Italian manufacturing firms. Findings The results provided full support for the positive moderating effect of intra-industry innovation spending and partial support for the positive moderating effect of intra-industry collaboration, both regarding the relationship between firm innovation spending and performance. Knowledge spillovers derived from intra-industry innovation spending and intra-industry collaboration affect firm performance. While this finding corroborates other studies that have found that the intra-industry R&D spending influences firms’ innovation and performance, it also contributes to improve the understanding about the complementarity of internal innovation activities and knowledge spillovers. Originality/value This study contributes to theory by filling a gap concerning the complementarity of internal innovation activities and the effect of knowledge spillovers to improve firm performance. Our findings suggested that intra-industry openness to collaboration and innovation spending, as proxies of knowledge spillovers, plays an important role in complementing firm level innovative efforts, even in the case of firms that spend less on innovation and have a lower degree of collaboration. This is especially relevant for small and medium enterprises, which can take advantage of access to the necessary information to overcome their internal resource constraints for R&D and innovation. The originality of these findings adds value in terms of furthering the understanding of this phenomenon.

Board gender diversity, board compensation and firm performance. Evidence from Jordan

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Taha Almarayeh
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Least Squares ◽  
Gender Diversity ◽  
Ordinary Least Squares ◽  
Content Type ◽  
Firm Financial Performance ◽  
Board Compensation ◽  
Board Gender Diversity ◽  
The Impact

Purpose This study aims to analyze the relationship between board gender diversity, board compensation and firm financial performance in the developing country, Jordan, whose cultural, economic and institutional context is very different from most previously analyzed countries’ context. Design/methodology/approach Ordinary least squares regression was used to examine the association between board gender diversity, board compensation and firm financial performance in a sample of 510 firm-year observations during the years 2009–2018. Generalized least squares estimation method was used to confirm that the results are robust. Findings The author provides new evidence that board gender diversity does not contribute to firm financial performance. The author also detects that there is a positive relationship between board compensation on firm financial performance. Originality/value This paper examines the under-researched relationship between board gender diversity, board compensation and firm financial performance. In so doing, the author tries to provide new insights into this relationship within the developing context, the case of Jordan that has a different environment from that of advanced markets. To the best of the researcher’s knowledge, this is almost certainly the first research to investigate the impact of board gender diversity and board compensation on firm financial performance in the Jordanian market. This manuscript is expected to be used as a reference by the regulators and policymakers – both in Jordan and other countries with a similar institutional, cultural setting – to provide a deep understanding of the impact of board gender diversity and board compensation on the firm performance.

Corporate social responsibility and firm financial performance

2017 ◽  
Vol 32 (3-4) ◽  
pp. 106-133 ◽  
Author(s):  
Mingming Feng ◽  
Xiaodan Wang ◽  
Jerry Glenn Kreuze
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Industrial Sector ◽  
Content Type ◽  
Firm Financial Performance ◽  
Stakeholder Groups ◽  
Heterogeneous Nature ◽  
Corporate Social ◽  
Industry Sectors ◽  
Practical Implications

Purpose Despite the intensive research on corporate social responsibility (CSR) and firm financial performance, little is known about how the linkage between CSR and firm financial performance is heterogeneous across industries and how the performance implications are differentiated among specific categories of CSR activities. The purpose of this paper is to explore how the association between a firm’s engagement in CSR and firm financial performance is heterogeneous across industries and CSR categories. Design/methodology/approach Using a sample of 17,083 firm-year observations representing 1,877 firms from the largest 3,000 US companies during years 1991 and 2011, the authors compare the association between CSR and firm financial performance across ten industry sectors defined by Global Industry Classification Standard and across the four CSR categories classified by Mandl and Dorr (2007). Findings The authors find that the association between the overall CSR activities and firm performance is heterogeneous across industries. CSR has significant positive implications for firms from most, but not all, industries. Comparing the performance implication of CSR practices targeting different stakeholder groups, the empirical results indicate that different types of CSR have different influences on financial performance of firms from different industry sectors. Research limitations/implications This study provides new angles for managers in maximizing firm performance through CSR activities and suggests an important and interesting direction for researchers who engage in CSR research. Due to its heterogeneous nature, the CSR-performance relationship needs to be examined more specifically – across industries and different CSR categories. Findings from studies incorporating both company industrial sector and CSR categories would provide more meaningful and practical implications for managers. Practical implications This study provides important managerial implications. First, to maximize firm performance through CSR activities, managers must interpret the linkage between CSR and firm financial performance from the perspective of a specific industrial sector and acknowledge the importance of CSR practices across different CSR categories. Second, the findings suggest that CSR practices aiming at different stakeholder groups generate different financial returns in different industries. Firms engage in CSR to satisfy different stakeholder groups. When budgets are tight, managers may give higher priority to the CSR practices that have stronger effects on firm financial performance. Originality/value This study advances our understanding of the CSR-financial performance relationship by exploring its heterogeneous nature across industry sectors and across specific categories. To obtain the biggest gain from CSR spending, managers must have a good understanding how a specific CSR category can contribute to the financial performance of their particular company in their particular industry.

Fostering performance through leaders’ behavioral competencies

2017 ◽  
Vol 25 (2) ◽  
pp. 295-311 ◽  
Author(s):  
Alessandra Tognazzo ◽  
Paolo Gubitta ◽  
Fabrizio Gerli
Keyword(s):  
Firm Performance ◽  
Empirical Study ◽  
Human Resources ◽  
Financial Performance ◽  
External Environment ◽  
Individual Characteristics ◽  
Content Type ◽  
Firm Financial Performance ◽  
Performance Determinants ◽  
The Individual

Purpose This paper aims to identify which top leaders’ behavioral emotional intelligence (EI)-competencies affect firm performance when considering the overall organization orientation toward efficiency, human resources and adaptability to the external environment as an interface (i.e. a filter) between the individual leader and firm outcomes. Design/methodology/approach The research was conducted on a sample of Italian top leaders. The authors used a cross-level analysis that distinguishes individual characteristics, mid-level performance determinants and organizational results. The authors used a variety of methods of assessment: behavioral event interviews for top leaders’ EI-competencies; subject matter experts’ evaluations for organizational orientation; a non-parametric statistical analysis for distinctive competencies; objective financial data for firm financial performance. To identify which competencies impact on financial performance, factor and regression analysis was used. Findings In firms oriented toward efficiency, human resources and adaptability to the external environment, top leaders’ people management EI-competencies are the most frequent distinctive abilities. These distinctive competencies can be further distinguished into task, relationship and change-oriented behaviors, although only the first two appear to be related to firm performance. Practical implications To foster firm performance, top leaders should leverage certain EI-related competencies, especially those that are task and relationship oriented. Leaders should not only see the organization as an extension of themselves but also be aware that the organization might obstacle their individual impact. Originality/value This original empirical study uses different data sources and methodologies, it assesses a multi-level model and is conducted in Italy. No previous empirical study has considered the organization as a filter – and not an enhancer – between the top leader and firm performance.

Differentiating the impact of CSR strengths and concerns on firm performance

2017 ◽  
Vol 36 (3) ◽  
pp. 401-409 ◽  
Author(s):  
Albi Alikaj ◽  
Cau Ngoc Nguyen ◽  
Efrain Medina
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Latent Variables ◽  
Multinational Enterprises ◽  
Content Type ◽  
Future Studies ◽  
Domestic Firms ◽  
Firm Financial Performance ◽  
Individual Effects ◽  
The Impact

Purpose The purpose of this paper is to assess the Kinder, Lydenberg, Domini & Co. (KLD) dimensions by distinguishing between corporate social responsibility (CSR) strengths and concerns and examine their individual effects on firm financial performance. Additionally, the study distinguishes between US domestic firms and multinational enterprises (MNEs) to provide additional insights and explore if any differences exist. Design/methodology/approach Data from the KLD and Compustat databases are analyzed for a sample of 562 US firms, of which 359 are multinational corporations, and 203 operate solely in the USA. A path analysis was used to examine the effect of CSR strengths and concerns on firm financial performance. Findings The findings show that increases in CSR strengths as well reductions in CSR concerns are positively linked to firm financial performance. The results also suggest that addressing concerns would be more beneficial to MNEs as opposed to US domestic firms. Research limitations/implications First, it should be noted that this study is cross-sectional, thus limiting confirmation of causality. Future studies can confirm causality by conducting longitudinal analysis. Also, some country-specific regulations require firms to make certain CSR-related information publicly available. Future studies can focus on countries that have such regulations and make comparisons with countries that allow firms to decide for themselves whether or not to make CSR-related activities publicly available. Originality/value When measuring CSR, previous studies have combined the CSR strengths and concerns latent variables of the KLD database. This can potentially be a problem because CSR strengths and concerns are not meant to measure the same issues. By separating them into two distinct latent variables, the authors can better understand their individual effects on firm performance.

Corporate social responsibility and financial performance nexus

2018 ◽  
Vol 9 (3) ◽  
pp. 301-328 ◽  
Author(s):  
Joseph Dery Nyeadi ◽  
Muazu Ibrahim ◽  
Yakubu Awudu Sare
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Positive Impact ◽  
Public Investment ◽  
Data Set ◽  
Content Type ◽  
The Public ◽  
Firm Financial Performance ◽  
Corporate Social ◽  
The Impact

Purpose The paper aims to investigate empirically the impact of corporate social responsibility (CSR) on financial performance in South African listed firms. Design/methodology/approach The paper uses panel corrected standard errors to estimate the effect of CSR on firm financial performance and thus addresses contemporaneous cross-correlations across the panel cross sections. The study uses a broad base measure of CSR created by the Public Investment Corporation data set and the combination of accounting and economic means of measuring firm financial performance. Findings CSR is found to have a strong positive impact on firm financial performance in South Africa. When CSR is decomposed further into its major components, governance performance positively impacts a firm’s financial performance with no evidence of any relationship between social components and firm performance and between environmental components and firm performance. The positive impact of CSR on firm performance is greater in big firms. At the industry level, CSR is noticed to impact positively on financial performance in the extractive industry via good governance and responsible environmental behaviors. It however has no impact on firm performance in the financial sector. Research limitations/implications The results should be interpreted with caution and some limitations. Due to the limiting nature of the Public Investment Corporation data set (the survey was carried out on selected firms on the Johannesburg Stock Exchange for three years spanning from 2011 to 2013). This resulted in a sample of 56 firms. It is therefore very problematic to generalize the findings to a larger population over a long period of time. This is more limiting especially on individual sector studies where the sample has further shrunk to a smaller sample. As a result of the smaller sample size, the authors were unable to explore some other sectors which could have given more revealing findings. The authors recommend that future research should explore other data sets or use primary data approach that can allow for more sample size and elongated time period for a more holistic view and for easy generalization of the findings. The authors also identify an important lacuna necessitating further research effort. It would be interesting to empirically examine the threshold point of firms’ size beyond which CSR damages firms’ performance. Knowledge of this will guide managers of firms in their strategic CSR decision. Practical implications This study does not only serve as a reference work for subsequent investigations into the impact of CSR on firm performance in sub-Saharan Africa but also serves as a guide to policymakers on the financial impact of CSR adoption. Originality/value This study is one of the pioneering works that comprehensively examines the effect of CSR on financial performance amongst South African firms via size and sector and also controls for contemporaneous cross-correlation effects from the firms in the panel set.

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