Management Financial Incentives and Firm Performance in a Sustainable Development Framework: Empirical Evidence from European Companies

Management financial incentives are an effective way to attract, retain and stimulate managers with beneficial spillover effects on firm performance. This paper explores the relationship between board and executive management compensation and remunerations and the financial performance of European companies from various industries in a sustainable development framework. The sample covers 1594 firms with data extracted from Thomson Reuters Eikon (Refinitiv, New York, NY, USA) databases from 2019 and a selection of specific indicators. The complex methodological endeavor encompassed by our research embeds several robust and two-stage least squares (2SLS/IV) regression models, structural equation modelling, including latent class analysis and network analysis through Gaussian Graphical Models. Main results bring to the fore that management financial incentives/packages reverberate positively and significantly on the performance of European firms, leading to important upwards in enterprise value and company earnings. Moreover, the sustainability indicators (committee, policy, energy use, renewable energies) also have positive effects on the financial performance of analyzed companies, being discussed extensively within the paper.

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The Interplay between Board Characteristics, Financial Performance, and Risk Management Disclosure in the Financial Services Sector: New Empirical Evidence from Europe

Journal of Risk and Financial Management ◽

10.3390/jrfm14020079 ◽

2021 ◽

Vol 14 (2) ◽

pp. 79

Author(s):

Gratiela Georgiana Noja ◽

Eleftherios Thalassinos ◽

Mirela Cristea ◽

Irina Maria Grecu

Keyword(s):

Risk Management ◽

Financial Performance ◽

Financial Services ◽

Structural Equation ◽

Supervisory Board ◽

Fiscal Year ◽

Services Sector ◽

Board Characteristics ◽

Financial Services Sector ◽

Thomson Reuters

This paper empirically evidences the role played by board characteristics (skills, diversity, structure, independence) in supporting risk management disclosure and shaping the financial performance of European companies operating in the financial services sector. We exploit data selected from Thomson Reuters Eikon database in 2020 for the last fiscal year 2019 (FY0) on a longitudinal sample of 144 companies with the head offices in Europe (25 countries). Following an original empirical approach based on two modern financial econometric techniques, namely structural equation modelling (SEM) and network analysis through Gaussian graphical models (GGMs), the research endeavor outlines the decisive importance of an optimal board size, enhanced management skills, upward gender diversity (encompassed by women participation on board management), and structure (mainly a two-tier type, one management board, and a distinctive supervisory board) as fundamentals of risk management strategies, leading to improved financial achievements and a higher profitability for the analyzed companies.

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Trade Agreements and Global Value Chains: New Evidence from China’s Belt and Road Initiative

Sustainability ◽

10.3390/su12041353 ◽

2020 ◽

Vol 12 (4) ◽

pp. 1353 ◽

Cited By ~ 2

Author(s):

Fei Peng ◽

Lili Kang ◽

Taoxiong Liu ◽

Jia Cheng ◽

Luxiao Ren

Keyword(s):

Foreign Direct Investment ◽

Direct Investment ◽

Structural Equation ◽

Spillover Effects ◽

Trade Agreements ◽

Global Value Chains ◽

Equation Model ◽

Value Chains ◽

Positive Effects ◽

Belt And Road

This paper investigates the relationship between China’s trade agreements (TAs) and partner countries’ upgrade in global value chains (GVCs). We focus on the experience of China and relate China’s TAs with one belt and one road (OBOR) initiative. A structural equation model (SEM) is applied on a dataset including 216 countries and regions to identify the direct and indirect effects of China’s TAs and OBOR initiative on its export, outwards foreign direct investment (OFDI) and partner economy’ GVCs upgrade over the period 2010–2015. We find that China’s TA partner countries are more likely to be included in the OBOR initiative than those non-TA partner countries. The positive effects of China’s TAs and OBOR initiative on China’s export, outwards foreign direct investment (OFDI) and partner countries’ upgrade in GVCs differ across country groups at the different locations of GVCs. Both vertical and horizontal spillover effects exist in China’s TAs. Therefore, the partner countries at low end and middle of GVCs might benefit more from TAs with China than those richer countries at the high end of GVCs.

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The performance of export manufacturing firms: roles of international entrepreneurial capability and international opportunity recognition

International Journal of Emerging Markets ◽

10.1108/ijoem-09-2019-0732 ◽

2020 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Md Imtiaz Mostafiz ◽

Murali Sambasivan ◽

See Kwong Goh

Keyword(s):

Firm Performance ◽

Financial Performance ◽

Structural Equation ◽

Manufacturing Firms ◽

Opportunity Recognition ◽

Entrepreneurial Firms ◽

Marketing Capability ◽

Content Type ◽

Export Manufacturing

PurposeThe international entrepreneurial capability has achieved its legitimacy in international business literature. Leveraging capabilities to recognise opportunities is considered a pivotal strategy to achieve success. Drawing on the entrepreneurship literature and opportunity perspective, this study aims to investigate the role of international entrepreneurial capability in enhancing the international opportunity recognition (IOR) process and the performance of export manufacturing firms.Design/methodology/approachStructural equation modelling has been used to test the hypothesised relationship on 388 export manufacturing entrepreneurial firms operating in the apparel industry of Bangladesh.FindingsThe results signify that three international entrepreneurial capabilities, namely, international networking, learning and marketing capability, positively enhance the IOR process of export manufacturing firms. The IOR process positively mediates the relationships between these international entrepreneurial capabilities and firm performance.Originality/valueMerely having the international entrepreneurial capability is not sufficient to escalate the firm performance. It must be amplified by various strategic actions such as the IOR process. Entrepreneurs need to capitalise on the international entrepreneurial capability to leverage the IOR process and generate non-financial performance success. Entrepreneurial firms that focus more on stimulating non-financial performance can secure better financial performance.

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Partnership-Based Supply Chain Collaboration: Impact on Commitment, Innovation, and Firm Performance

Sustainability ◽

10.3390/su11020449 ◽

2019 ◽

Vol 11 (2) ◽

pp. 449 ◽

Cited By ~ 12

Author(s):

Nina Shin ◽

Sun Park ◽

Sangwook Park

Keyword(s):

Firm Performance ◽

Financial Performance ◽

Structural Equation ◽

Resource Dependence ◽

Resource Dependence Theory ◽

Equation Modeling ◽

Supply Network ◽

Supply Chain Collaboration ◽

The Impact ◽

The Relationship

With increasing numbers of nodes and links in supply network relationships, understanding partnership management and the required level of collaboration is important for sustainable supply network alignment. This study explores the impact of partnership orientation on partnership commitment and firm performance using a model based on social capital theory and resource dependence theory. It aims to understand the appropriate partnership orientation for the desired level of commitment and firm performance, including innovation, operational, and financial performance. Using a survey of 423 respondents representing three different partnership structure types (supplier, buyer, and parallel-aligned firms’ perspectives), the relationship between partnership orientation and commitment in enhancing firm performance is investigated using structural equation modeling. Additional analysis identifies the moderating role of commitment and investment exchange on performance. The findings show that positive relationships between both investment and contractual-based partnership orientation positively contribute to partnership commitment, but the direct association between partnership commitment and firm performance type varies by partnership structure. Furthermore, (i) investment exchange level moderates the relationship between commitment and innovation and operational performance regardless of partnership structure type, (ii) negative investment exchange signals higher firm performance from the buyer firm’s perspective, and (iii) positive investment exchange is absolutely necessary for financial performance from the supplier firm’s perspective.

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ANALYSIS OF INFLUENCE OF STRATEGIC ACTION, KNOWLEDGE MANAGEMENT ORIENTATION AND INNOVATION IN LOGISTICS TO FIRM PERFORMANCE (Study at Sea Transportation Service Company Operating In Port of Tanjung Emas Semarang)

JURNAL BISNIS STRATEGI ◽

10.14710/jbs.26.2.138-145 ◽

2018 ◽

Vol 26 (2) ◽

pp. 138

Author(s):

Fajar Ismail ◽

Amie Kusumawardhani ◽

Sugiono Sugiono

Keyword(s):

Knowledge Management ◽

Firm Performance ◽

Financial Performance ◽

Structural Equation ◽

Operational Performance ◽

Equation Modeling ◽

Strategic Action ◽

Transportation Service ◽

Sea Transportation ◽

Management Orientation

This research is motivated by the number of Sea Transportation Service (JPT) companies operating in the port of Tanjung Emas which lost their revenue for 6 months in a row, resulting in the revocation of their permits. The inability to compete in the form of low operational performance leads to a decrease in financial performance. Some researchers believe that innovation in logistics is the most effective way of increasing competitive advantage and firm performance in the logistics industry.Therefore, this study aims to analyze the relationship between innovation in logistics, operation performance, and financial performance and the factors that influence innovation is strategic action and knowledge management orientation. The data were obtained from a questionnaire filled by 178 Sea Management Services (JPT) companies operating in the Port of Tanjung Emas Semarang. Data were analyzed with Structural Equation Modeling (SEM) using AMOS software.The result of the statistical analysis shows that directly strategic action and innovation in logistics have a positive and significant effect on operational performance. Indirectly knowledge management orientation has a positive and significant effect on operational performance through innovation in logistic.

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Technology transfer and its impact on innovation and firm performance: empirical evidence from Turkish export companies

Kybernetes ◽

10.1108/k-12-2019-0828 ◽

2020 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Omer Cinar ◽

Serkan Altuntas ◽

Mehmet Asif Alan

Keyword(s):

Technology Transfer ◽

Firm Performance ◽

Structural Equation ◽

National Level ◽

Theoretical Framework ◽

Decision Makers ◽

Equation Modeling ◽

Content Type ◽

Positive Effects ◽

The Relationship

Purpose The purpose of this study is to determine the relationships between technology transfer, innovation and firm performance. Design/methodology/approach The relationship between technology transfer, innovation and firm performance is examined by using data obtained from 252 Turkish export firms, which are among the top 1,000 firms in terms of export volume in Turkey. To examine these relationships, a theoretical framework is empirically tested using structural equation modeling and tested via an empirical study of Turkish export companies. Findings The results of this study can benefit policymakers in government at the national level and company decision-makers at the firm level. Furthermore, an understanding of the relationship between technology transfer, innovation and firm performance may help firms to make correct technology transfer decisions and focus on the correct type of innovation to increase firm performance in practice. The findings indicate the positive effects of technology transfer on innovation and firm performance. In addition, innovation mediates the relationship between technology transfer and firm performance in Turkish export companies. This study suggests that decision-makers should transfer the right technology because well-realized technology transfers lead to the improvement of corporate innovation capacities and improvement of firm performances for export companies. Originality/value There is no study that fully examined the relationship between technology transfer, innovation and firm performance. The proposed literature-based theoretical framework in this study is novel for Turkish export companies.

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Materiality Conditions in the Interplay between Environment and Financial Performance: A Graphical Modeling Approach for EEA Oil and Gas Companies

Complexity ◽

10.1155/2021/7380759 ◽

2021 ◽

Vol 2021 ◽

pp. 1-16

Author(s):

Mirela Sichigea ◽

Marian Siminica ◽

Mirela Cristea ◽

Gratiela Georgiana Noja ◽

Daniel Circiumaru

Keyword(s):

Financial Performance ◽

Graphical Models ◽

Structural Equation ◽

Oil And Gas ◽

Strong Dependence ◽

Sustainable Growth ◽

Equation Modeling ◽

Main Concept ◽

Thomson Reuters ◽

Oil And Gas Companies

The recovery after the unprecedented pandemic crisis that Europe has currently been facing is strengthening the strong dependence between social, economic, and environmental fields, maintaining green investments and innovation at the core of the European strategies. Shifting to clean industries is a challenging mission that a complex network of stakeholders and their different interests must take into account. Within this network, the interplay between environmental and financial performance of a company represents a common point with a growing emphasis on the transparency and the materiality capacity of the disclosed information. This paper uses the Structural Equation Modeling and the Gaussian Graphical Models as graphical analysis approaches and offers a first insight about the interaction between environmental materiality measures and financial performance. A preliminary step of the scientific research consisted of a hand-mapping investigation about materiality conditions. Starting from the Materiality Map developed by the Sustainability Accounting Standards Board (SASB), this paper extends the main concept about materiality and investigates it on three different content ranges, which focus on the general environmental policy of the company, the targets set, and its concrete footprint. The methodology approaches were grounded on a newly compiled dataset provided by the Thomson Reuters database for 194 Economic European Area (EEA) oil and gas companies. The results provide significant evidences for the manifestation of materiality and emphasize the informational content of the individual environmental measures as an important condition for its financial impact. Adding to the environmental-financial performance relationship, our findings have both practical and academic relevance for the economic field and sustainable growth goals.

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A contextual analysis of the impact of strategic sourcing and E-procurement on performance

Journal of Business and Industrial Marketing ◽

10.1108/jbim-01-2012-0010 ◽

2015 ◽

Vol 30 (1) ◽

pp. 1-16 ◽

Cited By ~ 11

Author(s):

Minkyun Kim ◽

Nallan C Suresh ◽

Canan Kocabasoglu-Hillmer

Keyword(s):

Firm Performance ◽

Product Life Cycle ◽

Structural Equation ◽

Positive Impact ◽

Equation Modeling ◽

Content Type ◽

Strategic Sourcing ◽

Research Results ◽

Positive Effects ◽

The Impact

Purpose – The aim of this study is to investigate the relationships among strategic sourcing, e-procurement and firm performance, along with the moderating effects of business characteristics and environmental factors on these relationships. Design/methodology/approach – This empirical investigation relies on structured survey responses from 137 managers of US manufacturing firms. The partial least squares-based structural equation modeling approach is used for data analysis. Findings – The research results confirm that both strategic sourcing and e-procurement have a positive effect on firm performance. In addition, e-procurement is also found to have a positive impact on strategic sourcing. In addition, the research results suggest that business characteristics and the environment, especially the degree of competition, market turbulence, firm size and stage in product life cycle moderate these relationships significantly. The positive effects of strategic sourcing and e-procurement on firm performance are particularly enhanced under the right conditions. Originality/value – This research is the first, to the best of our knowledge, to provide insights into the joint effects of strategic sourcing and e-procurement, and how business characteristics and the environment affect their roles on firm performance. In addition, firm performance is evaluated as a multi-dimensional construct involving financial, operational and supply chain aspects, with the measurements consisting of several second-order constructs. The study makes both theoretical and practical contributions.

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Performance Indicators for Quality, Innovation, and Competitiveness： A Survey on the Saudi Manufacturing Sector

International Business Research ◽

10.5539/ibr.v9n2p99 ◽

2016 ◽

Vol 9 (2) ◽

pp. 99

Author(s):

Khalid Al-Shuaibi ◽

Mohamed Zain ◽

Norizan Kassim

Keyword(s):

Financial Performance ◽

Structural Equation ◽

Manufacturing Sector ◽

Positive Influence ◽

Equation Modeling ◽

Mediating Role ◽

Positive Effects ◽

Managerial Implications ◽

Innovation Indicators ◽

Significant Positive Influence

<p>This study examines the relationships between quality, innovation, competitiveness, and financial performance of firms. Data were obtained from a questionnaire survey involving 223 Saudi companies and were analyzed using Structural Equation Modeling (SEM). The results indicate that innovation positively influences quality and the latter has a significant positive influence on the competitiveness of the firms. As expected, both quality and innovation indicators have an indirect influence on the financial performance of the firms through competitiveness. Therefore, this study discovers the important mediating role played by competitiveness in the positive effects of quality and innovation on financial performance of the firms. Finally, we found significant positive effects of competitiveness on financial performance of the firms. Managerial implications are also discussed.</p>

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Operational Perspective of SMEs Performance and Competitive Priorities Practices: Path Analytic Approach

Studies in Business and Economics ◽

10.2478/sbe-2020-0006 ◽

2020 ◽

Vol 15 (1) ◽

pp. 55-67

Author(s):

Haleem Fazal ◽

Jehangir Muhammad ◽

Ul Haq Zahoor

Keyword(s):

Firm Performance ◽

Financial Performance ◽

Organizational Performance ◽

Developing Country ◽

Structural Equation ◽

Equation Modeling ◽

Operations Strategy ◽

Close Link ◽

Competitive Priorities ◽

Access To Data

AbstractLiterature review suggests a close link between operations strategies and organizational performance. Nevertheless, there is dearth of research investigating the association between operations strategies and SMEs performance in a developing country, Pakistan, context. Thus, the paper attempts to fill this gap by finding out the influence of operations strategy on firms’ financial and non-financial performance. In addition, it digs out what predicts the financial and non-financial performance of the firms. Sample data is drawn from 244 manufacturing SMEs and is analyzed by Path Analytical Model of Structural Equation Modeling (SEM). The results reveal an overall positive and significant influence of competitive priorities on firm performance. However, there is no direct effect of Delivery priority on Financial, and Cost and Flexibility priority on Non-Financial Performance of the firms respectively. Moreover, the financial performance is predicted by focus on Cost, Flexibility, and Quality priorities respectively. By the same token, the predictors of Non-Financial performance are Delivery and Quality strategies in order of importance. The paper is not without limitations and acknowledges the constraints of access to data, time, finance, non-inclusion of important mediating/moderating variables. Practically, it offers implications to managers and policy makers to employ a set of competitive priorities that drives enhanced firm performance in this business setting, and to devise policies in accordance with market demands that lead to improved overall productivity respectively. Theoretically, the paper contributes to a richer and finer understanding on the connection between operations strategy and SMEs performance in a developing country context.

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