A Research on the Crisis Spillover Effect of Food Safety Incidents on Competitive Firms: The Influence of Political Connections and Charitable Donations

Taking the perspective of corporate social responsibility and institutional theory, this research establishes an innovative relationship between variables such as charitable donation, political connection and crisis spillover effect of firms through quantitative analysis using the event study method, regression analysis and the Heckman two-stage model. Taking 8 food safety incidents from 2011 to 2016 as research samples, this paper studies the impact of food safety incidents on the market value of both firms under crisis and their competitive firms, as well as the influence of political connection and charitable donation. Based on the current situation that the product crisis or reputation crisis of a firm will, inevitably, affect the market performance and value of its competitive firms in the same industry, this paper attempts to answer questions such as “what kind of firms are capable of minimizing this negative influence?” “will the political connection of competitive firms exert a positive or negative impact?” and “can actions taken before the crisis, such as charitable donation of competitive firms, help these firms in reducing the harm?” The conclusions are as follows: first, the occurrence of food safety incidents not only has a negative impact on the market value of the crisis firm, but also has a negative spillover effect on the competitive firm; second, charitable donations made by the competitive firm before the crisis demonstrates a positive competitive effect on the competitive firm, and the intensity of such charitable donations is positively correlated with this positive competitive effect; third, the political connection of the competitive firm has no significant impact on the crisis spillover effect. These findings provide enlightenment for the operation and management of firms in the food industry.

The nexus between dynamic capabilities and competitive firm performance: the mediating role of open innovation

PurposePrior research has reported the indirect implications of firm's dynamic capabilities on their competitive firm performance. Our attention now turns to open innovation since it has been confirmed to be an influential factor contributing to the superior performance of technological firms. So far there has been little research on assessing the relationship between a firm's dynamic capabilities as an antecedent of the competitive performance of the firm or investigations into the mediating role of open innovation in this relationship.Design/methodology/approachDrawing on the theory of dynamic capabilities, we developed a framework as a way to better understand the role of open innovation, which could then help to better explain the relationship between firms' dynamics capabilities and their competitive firm performance. Based on the empirical data of 465 firms operating in innovative and non-innovative industries, we employed structural equation modelling (SEM) to examine the research hypotheses and the path relationships in the proposed model.FindingsThe SEM analysis revealed that a firm's dynamic capabilities significantly impact its open innovation performance and that open innovation, consequently, impacts the competitive performance of the firm. Moreover, the results show that the path between dynamic capabilities and competitive firm performance is partially mediated through open innovation.Practical implicationsThe findings provide practical implications and draw managerial attention to the importance of: (1) investing in innovation, (2) engaging customers in the innovation process and (3) maintaining innovation management excellence as significant antecedent factors in increasing competitive firm performance.Originality/valueConsidering the lack of empirical research in the literature on the links between dynamic capabilities and open innovation, this paper contributes to the dynamic capabilities and open innovation literature by confirming that open innovation not only mediates the relationship between these two aspects but also strengthens the effect the dynamic capabilities have on competitive firm performance. Besides, due to the significant impact of dynamic capabilities on open innovation, dynamic capabilities might be regarded as an antecedent of open innovation.

The competitive firm and perfect competition

This chapter addresses market equilibria for competitive firms, firms that act as price takers. It develops a theory which is based on the hypothesis that firms and consumers act as if they have no effect on prices; consumers choose what to consume and firms choose their production plans in the belief that the prices they see are unaffected by their decisions. There are two ways to proceed in the theory. One could continue analysis of general equilibrium in the style of Chapter 6, but with firms added to the story. Or one can undertake partial equilibrium analysis. The chapter begins with the classic partial equilibrium analysis of perfect competition. It then develops an example that shows how a partial equilibrium perspective can be misleading, before discussing general equilibrium with firms.

Information and Communication Technology for SMEs' Competitiveness

Competitiveness of a firm is its capacity to achieve its targets. These targets are likely to be expressed in a variety of terms depending on the context (Barney 2002). Within a macroeconomic perspective, a competitive firm develops and sustains a level of performance that contributes to the Gross Domestic Product (GDP), employment opportunities, and the wealth of the people. From an entrepreneurial perspective, a competitive firm needs to survive in the market and to achieve market share and profitability. This paper deliberates regarding the theory of competitive advantage and discusses the role of Information and Communications Technology (ICT) for augmenting SMEs' competitiveness.

Dynamic Currency Futures and Options Hedging Model

In this paper, we consider a risk averse competitive firm that adopts currency futures and options for hedging purpose. Based on the assumption of unbiased markets of currency futures and options, we propose the optimal hedging model in dynamic setting. By using two-stage optimization method, we prove that it is desirable for the prudent enterprise to buy exchange rate options to hedge currency risk. Furthermore, we derive the closed-form solutions of the multiperiod hedging problem with the quadratic utility function. We investigate an empirical study incorporated into GARCH-t prediction on the efficiency of hedging with currency futures and options. The empirical results demonstrate that hedging with currency futures and options can reduce the silver export firm’s risk exposure. Profits and the effective boundaries are compared in three cases: hedging with futures and options synchronously, only with futures and without any hedge. The results of multiple comparisons among different hedging strategies show that hedging with linear and nonlinear derivatives is advisable for the export firm.

Market Competition, Managerial Incentives and Agency Cost

This study investigates the determinants of board of director compensation from the view of strategic management. Specifically, this study examines the association between product market competition and directors’ compensation for a sample of 524 listed firms in Malaysia from 2010 to 2014. We find that there is a positive relationship between a competitive firm and its compensation to its directors. Our research indicates that managerial incentives reflect more of talent appreciation, rather than purely for acknowledging better performance or a bigger size firm. This research contests the use of agency theory and managerialism in explaining directors’ compensation, especially for the developing country context of Malaysia. Our findings also imply that firms may pay higher compensation in a competitive market.

Strategic Alignment Between IT Flexibility and Dynamic Capabilities

Dynamic capabilities theory (DCT) emerged as a leading framework in the process of value creation for firms. Its core notion complements the premise of the resource-based view of the firm and is considered an important theoretical and management framework in modern information systems research. However, despite DCT's significant contributions, its strength and core focus are essentially in its use for historical firm performance explanation. Furthermore, valuable contributions have been made by several researchers to extend the DCT to fit the constantly changing IT environments and other imperative drivers for competitive performance. However, no DCT extension has been developed which allows firms to integrally assess their current state of maturity to derive imperative steps for further performance enhancements. In light of empirical advancement, this article aims to develop a strategic alignment model for IT flexibility and dynamic capabilities and empirically validates proposed hypotheses using correlation and regression analyses on a large data sample of 322 international firms. The authors conjecture that the combined synergetic effect of the underlying dimensions of a firm's IT flexibility architecture and dynamic capabilities enables organizations to cope with changing environmental conditions and drive competitive firm performance. Findings of this study suggest that there is a significant positive relationship between firms' degree of strategic alignment—defined as the degree of balance between all dimensions—and competitive firm performance. Strategic alignment can, therefore, be seen as an important condition that significantly influences a firm's competitive advantage in constantly changing environments. The proposed framework helps firms assess and improve their maturity and alignment of IT flexibility and dynamic capabilities. This article concludes with a discussion, suggestions for future research and managerial implications are also discussed.