How increased foreign competition motivates domestic firms to do good: an examination of foreign entry mode and domestic CSR response

PurposeWe examine whether domestic firms react differently to foreign direct investment (FDI) entry modes –mergers and acquisitions (M&A) versus greenfield. Specifically, we ascertain whether the entry mode of foreign competition motivates different corporate social responsibility (CSR) responses from domestic firms and when such relationships hold.Design/methodology/approachWe employ fixed-effects models using 1,331 US firm-year observations for 2015–2018. Furthermore, we examine the interactive effects of industry concentration to examine a key boundary condition.FindingsForeign entry via greenfield mode has no effect on domestic firm CSR. Entry through M&A has a significantly positive effect. We attribute these findings to the increased threat to domestic firms from foreign M&A whereas foreign entry through greenfield mode is less threatening as entrants face significantly more challenges in host countries. We identify industry concentration as a boundary condition of our findings. The effect of foreign M&A entries on domestic firms' CSR becomes weaker as industries are more concentrated.Originality/valueThis study offers novel insights on FDI by parsing out different reactions to entry mode by domestic firms. We add to our understanding of CSR as a mechanism to stave off foreign competition, offer insights into a key boundary condition of such actions and demonstrate the robustness of our findings.

Exploring the antecedents of industry globalization: a longitudinal investigation

PurposeThere is considerable variation in the extent of globalization across industries. The authors attempt to identify the structural conditions of the industry that lead to these variations.Design/methodology/approachBased on a sample of 33 manufacturing industries over the nine-year period from 2007 to 2016, the authors test for antecedents of industry globalization.FindingsThe authors find that industry globalization is positively affected by medium levels of barriers to entry, industry competition, industry assistance, low and mediums levels of capital intensity, industry concentration and industry regulation and negatively affected by low levels of technological change and industry assistance. In addition, the life cycle stage of the industry has an impact on the level of globalization with the growth stage having the highest level of globalization.Research limitations/implicationsFirst, the major limitation of the paper is that the authors rely entirely on trade data to measure the level of industry globalization. The authors did not have a choice because foreign direct investment (FDI) data are available only at the country level. Second, given that globalization can occur at the country, industry and firm levels, the focus on industry-level structural characteristics alone may be seen as a limitation.Practical implicationsThe results of the study can provide guidance to practicing managers to apply industry analysis for predicting the potential for and direction of globalization of their industries. This will enable them to formulate appropriate strategies to cope with global competition.Social implicationsThe study has important public policy implications. National governments have many levers at their command that can be used to influence the structural characteristics of industries, such as industry regulation, industry assistance and industry concentration. They can selectively use these levers to either facilitate or impede globalization.Originality/valueMuch of the empirical focus of prior research on globalization has been on countries, rather than industries, as the unit of analysis. There is clearly variation in the extent of globalization across industries with some industries highly integrated while others remain primarily local or regional. Based on a novel approach to measure the extent of globalization at the industry level, the authors identify its antecedents. The value of the paper lies in the fact that the analysis of 33 manufacturing industries over a ten-year period shows that the structural characteristics of the industries drive their extent of globalization.

Contemporary Processes of Concentration and Specialization of Industrial Activity in Post-Socialist States as Illustrated by the Case of Wrocław and Its Suburbs (Poland)

This paper explores the issues of contemporary spatial differentiation in the process of industry concentration and the accompanying specialization according to the intensity of research and development in urban agglomerations, as exemplified by Wrocław and its suburbs. The aim of the study was to assess the degree and directions of advancement of these processes and to identify spatial patterns in the location and relocation of industry operators in the analyzed area. The industrial location was analyzed on the basis of industry operators registered in section C (industrial processing) according to the Polish Classification of Activities (PKA) in city districts in 2008 and 2016. The industry’s spatial structures were presented using the classification of industrial processing according to R&D intensity broken down into high-, medium-high-, medium-low-, and low-tech industry sectors. Quantitative methods were used to analyze and identify the degree of spatial concentration and specialization of the industry. The underlying analytical statistics included relative indicators, such as the location quotient (LQ), Florence’s location quotient, or the Krugman Specialization Index, as well as analyses of market structures (Herfindahl–Hirschman index or discrete index). The findings of this research revealed quite significant changes taking place in the internal spatial structure of Wrocław and its immediate vicinity in terms of the industry concentration and specialization. This phenomenon was much more dynamic and turbulent in the post-socialist countries than in the cities of Western Europe. Likewise, Wrocław and its suburban zone are characterized by a significant diversification and intensity of the processes subject to this analysis. These processes proved to be complex and selective.

Industry Concentration and Profitability in Europe: The Case of Norway

Several recent studies show that market concentration in the US has increased over time, with firm profits increasing in the same period. The consistency of findings from the US is contrasted by more varying results from studies of the development of market concentration in Europe. In this study, we utilise the completeness of Norwegian microdata to investigate how methodological choices and data limitations impact results with respect to the market concentration and its relationship with profitability. First, we find that concentration in Norway has decreased slightly over the last two decades. Over the same period, profitability has increased slightly for two profitability measures and been stable for the other two. Despite a difference in overall trends, at the industry level, we find a positive and statistically significant relationship between concentration and profitability for three out of four profitability measures, in line with the market power hypothesis. Investigating the effect of methodological choices and data limitations, we find that concentration trends are quite robust to exclusion of smaller companies, the incorporation of ownership structures in concentration measures and the choice of industry classification. However, the positive relationship between concentration and profitability is almost non-existent when using readily available industry classification instead of more product market-oriented industry classifications and disappears completely when we do not exclude export-oriented industries. Our study is relevant for future research, as well as for policymakers, as our results indicate that one should be careful when interpreting results from studies of market concentration that fail to handle these methodological challenges.

Television Democratization and the Political Awareness of Voters in Indonesia

This study explores how the democratization of media in Indonesia enhanced the role of television stations in raising voters’ political awareness about the 2014 legislative election. For this qualitative study, we interviewed two media experts and the chief editors of six television stations. We find that there are three general factors negatively affect TV’s role as a free public sphere, namely, production constraints, owners` political interests, and commercial aspects of the television industry. Concentration of ownership and commercialization have increased television’s orientation toward profit, minimizing its educative role, and minimizing its neutrality. However, television still increased voters’ awareness regarding the election technicalities but failed to reflect the visions of the competing candidates. The establishment of innovative community television could be an alternative for commercial TV in Indonesia. However, the performance of community TVs in Indonesia is hindered by the restricted access to frequency spectrum and low financial capabilities.

Digitalization, Industry Concentration, and Productivity in Germany

This paper investigates the links of digitalization and industry concentration with labor productivity at the sectoral level in Germany. Combining data for digitalization and labor productivity from the EU KLEMS database with firm-level data from the CompNet and Orbis Bureau Van Dijk databases to construct industry concentration measures between 2000 and 2015, we show that (1) the German economy appears to have digitized since 2000, and (2) there is no clear-cut relationship between digitalization and market concentration at the industry level. Using a time and sector fixed effects model and controlling for capital intensity, however, we find evidence for (3) a positive effect of both lagged industry concentration and lagged digitalization on productivity at the sectoral level in Germany. This finding is robust to alternative measures of digitalization and industry concentration as well as to their interaction but sensitive to the sector sample and to scale effects from the capital intensity. We, therefore, cautiously conclude that recent technological change appears to have been labor-saving and that productivity-enhancing aspect of a partial “superstar firm” effect may be identified in the German economy, in particular in its manufacturing sector.

What Drives Bank Profitability? A Panel Data Analysis of Commercial Banks in Bangladesh

Bank profitability plays a significant role in the growth and development of an emerging economy. The purpose of the study was to examine the impact of bank characteristics, industry concentration and macroeconomics variables on commercial bank profitability in Bangladesh from 2007-2017. Bank profitability is proxied by return on assets (ROA), return on equity (ROE) and net interest margin (NIM). The study is based on secondary data and Hausman test has been performed using STATA software in favor of fixed effect modeling. Panel regressions shows that cost efficiency has significant negative impact on ROA and NIM. The positive impact of loan to deposit ratio with ROA suggests that efficient fund management including investment and assessed expenditure should be emphasized. Bank size has significant negative impact on all the measures of profitability, which indicates that monopolistic competition will reduce banking profit. Credit risk has significant positive impacts on ROE. Industry concentration measured by CR3 is positively related with ROE and has significant negative relation with bank profitability (ROA). Among macroeconomic variables inflation has significant positive and bank spread has significant negative impact on ROE. The coefficients of all the macroeconomic variables have been found to be significantly related to bank profitability while measured by NIM. Our study recommends further research with other explanatory variables such as, corporate governance, corporate social responsibility (CSR) and deposit insurance to accelerate the model and construct the econometric model by using structural equation modeling, mediation effect modeling etc.

Institutional Provision of Destination Management in the Most Important and in the Crisis Period the Most Vulnerable Regions of Tourism in Slovakia

The aim of the presented paper is to examine the specific situation in the institutional provision of tourism in Slovakia with special regard to the most important and in the crisis period the most vulnerable tourism regions, their identification is a partial goal of the paper. With regard to the current crisis period, the survey is supplemented by identifying factors of employment change, focusing mainly on the region’s competitiveness in tourism. The importance of regions is assessed in the article on the basis of potential for tourism development, further in terms of their importance for tourism in Slovakia based on tourism performance expressed by the number of overnight stays and on the basis of industry concentration of tourism measured by employment in tourism. We consider the most vulnerable regions to be those that reach the level of specialization in tourism (based on the localization coefficient) and it has a growing tendency. The research results show that the importance of regional competitiveness in tourism for employment change (which is a regional component) is very different despite the established destination management, it is even negative, and in the case of positive figures, it is without an obvious advantage over other factors analyzed in the shift-share analysis. Also, it is possible that the current crisis period caused by measures in connection with the COVID-19 pandemic will help to find endogenous solutions to fragmented destination management in the most important and vulnerable tourism regions, or legislative solutions related to the amendment to the Tourism Promotion Act.

The Economic Imperative: Cities Need Migrants

The policy responses to Covid-19 have triggered large-scale reverse migration from cities to rural areas in developing countries, exposing the vulnerability of migrants living precarious lives in cities, giving rise to debates asserting to migration as undesirable and favouring policy options to discourage the process. However, the very basis of spatial concentration and formation of cities is presence of agglomeration economies, benefits accruing to economic agents operating in cities. Presence of these agglomeration benefits in local labour markets manifests themselves in the form of an upward sloping wage curve in urban areas. We estimate the upward sloping wage curve for various size classes of cities in Indian economy and establish the presence of positive returns to occupation and industry concentration at urban locations. Controlling for worker-specific characteristics influencing wages, we establish that higher the share of an industry or an occupation in local employment as compared to national economy, the desirability of firms to pay higher wages increases. For casual labourers, occupational concentration results in higher wages. However, impact of industry concentration varies across sectors. Results supporting presence of upward sloping urban wage curve, therefore, endorse policies to correct the market failure in cities and promote migration as a desirable process. JEL Classification Codes: J2, R2