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R&D innovation indicator and its effects on the market. An empirical assessment from a financial perspective
Abstract
We propose an alternative firm-level measure for innovation activities—R&D elasticity—and we analyse its effects on the Tobin's Q of listed companies on the Euronext 100 Index. We find that R&D elasticity is positively related to market appreciation by stakeholder investors. Moreover, we analyse the role of default risk in the relationship between innovation activities and market value, and find that firms' default probabilities are negatively related to Tobin's Q. These findings are supported by OLS regressions, wherein Tobin's Q is regressed on R&D elasticity, five-year default probability, and controls such as ESG voluntary disclosure. These results further the research aimed at developing a conceptual framework for integrating at a policy level the R&D elasticity indicator as a type of innovation disclosure among the non-financial disclosures released by companies.
... Chief executive officers' personality not only affects their behavior but also influences the behavior of firms that they lead (e.g., Hambrick and Mason, 1984;Hiller and Hambrick, 2005). A large body of literature in strategic management focuses on the role of top executives and their personality impacts on firm's strategic choices, such as different aspects of entrepreneurial orientation (Runst & Thomä, 2021;Kiss et al, 2022;Verdú-Jover et al., 2023 andLeonelli et al., 2022) diversification and M&A (Malhotra et al., 2018, Brown & Sarma, 2007, R&D intensity (Coluccia et al., 2020) and internationalization decisions (Forlani et al., 2008) that are associated to risk taking, proactiveness and innovative decision making. The present study investigates how extraverted CEO's personality, attributed by positive affect, self-confidence, pivotal thinking, and social engagement, affects the entrepreneurial orientation of a firm and how contingent factors, such as CEO's bridging social capital and TMT support moderate these relationships. ...
... Agnihotri and Bhattacharya (2022) found empirical support for the impacts of a CEO's competitive aggressiveness on a firm's relative R&D investment decisions. Many scholars stated that R&D intensity is one of the important drivers of firms' performance (Coluccia et al., 2020). ...
CEO personality and its impact on entrepreneurial orientation (EO) is a sparking topic for scholars and practitioners. The influence of CEO extraverted personality on EO extensively studied but the mechanisms by which extraverted CEO influence the entrepreneurial orientation of firms are not adequately studied. Integrating Upper Echelon and Social Capital theories, this study has established a theoretical link between CEO extraversion and firm’s EO and underlying mechanisms with two contingent factors. The study proposes that the CEO’ s bridging social capital and top management team (TMT) support strengthen this relationship. Through rigorous literature review, the present study provides an important resolution for mixed findings in prior studies and important managerial insights for understanding the role of CEO extraversion on EO and the contingent effects of TMT support and CEO’s bridging social capital. Finally, the study offers future research options.
... It is positively correlated with the success of new products and services, suggesting that firms with higher market shares can more effectively convert KC into profits (Bhattacharya et al. 2022;Hula 1989;Willekens et al. 2023). Tobin's Q, an indicator of a firm's growth opportunities, suggests that firms with higher values are recognized for generating more value than the investments made, including those in KC (Coluccia et al. 2020;Parcharidis and Varsakelis 2010). We also consider the role of cash holdings, which can reduce financial constraints, supporting sustained investment in KC and ongoing R&D efforts (Chang and Yang 2022;He and Wintoki 2016). ...
... Conversely, those with a market share below this median are considered low-market share firms. Tobin's Q is a measure of firm valuation calculated by dividing the sum of the market value of equity and total debt by total assets (Coluccia et al. 2020;Wright 2004). To categorize firms based on Tobin's Q, we use their SIC two-digit classification to assign them into either high or low groups, depending on whether Tobin's Q is above or below the median value within their industry. ...
This study analyzes the impact of knowledge capital (KC), a key element of firms’ innovation and competitiveness, on stock returns during economic crises when sustainable competitiveness becomes particularly important. We analyze the impact of the Global Financial Crisis and COVID-19 as economic crises, focusing on manufacturing industries with a high proportion of investment shifts from physical capital to KC. Our findings indicate that KC is positively associated with stock returns during the Global Financial Crisis and COVID-19. This positive relationship is strengthened by the firm’s ability to leverage KC, as measured by greater product market share, higher Tobin’s Q, and larger cash holdings. This study emphasizes the protective role of KC during the economic crisis when the market pays more attention to corporate sustainability and provides implications to corporate managers and investors.
... 14 For instance, L. Cohen et al. (2020) showed that firms with low ESG scores are the pillar driving incremental green innovation development. Coluccia et al. (2020) found a substitution effect between innovation inputs and ESG scores from the perspective of financial crowding out, which accorded with Luo and Bhattacharya's (2006) conclusion. According to loosecoupling theory (Newton et al., 2014;Orton & Weick, 1990), to enhance their social legitimacy, firms may position green innovation within the framework of ESG rules, even if lowquality green innovation outputs are undesirable, to buffer the risks associated with deviations from widely accepted ESG norms. ...
The inability to reliably quantify firms’ climate change exposure has become a primary obstacle preventing academics from thoroughly investigating climate impacts on micro‐organizations. In this study, we construct firm‐level climate risk indicators using hand‐collected data on meteorological factors and investigate whether and how climate risk affected the paradoxical relation between corporate green innovation and its’ environmental, social, and governance (ESG) scores on the basis of the Chinese context. We document that the climate risk is significantly positively (or negatively) related to the negative (or positive) green innovation‐ESG disconnect, implying that climate risk enhances the loose‐coupling motives between green innovation and ESG for addressing internal efficiency and external legitimacy conflict. The above disconnect effect of climate risk, namely green innovation as compliance means and ESG as ends fail to complement each other as comparative advantages, is less pronounced for private‐owned enterprises, firms with high corporate governance quality, and those with powerful CEOs. Furthermore, the disconnect effect of climate risk results in severe corporate performance volatility and diminishes future growth potential. Overall, this study contributes to the literature on climate risk at the micro level and offers initial evidence that climate risk causes means and ends cannot be mutually justified by demonstrating the green innovation‐ESG disconnect, which has conducted few empirical research so far.
... This longitudinal dataset allows for a robust analysis of the determinants and outcomes of innovation activities in Vietnam. Previous studies, including Coluccia et al. (2020), often use R&D expenditures as a proxy for innovation, but this study considers a firm's patenting activities to provide a more comprehensive measure of innovation. Because R&D expenditures only represent one type of observable input to innovation, while there are many other unobservable inputs, such as organizational culture, employee skills, and knowledge management processes. ...
This study examines the relationship between female board representation and firm innovation within Vietnam's private sector. It applies panel data from the World Bank Enterprise Survey for the years 2009, 2015, and 2023 to examine how having women on company boards influences innovation at the firm level. It employs a bivariate probit model and considers distinct characteristics of firms and industries. The findings reveal a significant positive association between female board representation and innovation, particularly in the initial stages of female board membership. However, the impact of female ownership on innovation is more complex, with higher levels of female ownership potentially leading to increased risk aversion. Additionally, firm size, growth, industry affiliation, and export orientation are identified as key determinants of innovation. This study contributes to the growing literature on gender diversity and innovation by providing empirical evidence from the Vietnamese context. It offers actionable insights for Vietnamese policymakers aiming to enhance private sector innovation and competitiveness by promoting gender diversity in corporate governance.
... Innovation intensity has a positive relationship with the company's market capitalization, return on assets, and return on equity. The positive relationship between innovation intensity was also shown by [12] on data from Chinese companies and by [13] on data from European companies. The concentration of ownership in the hands of certain types of shareholders affects firms' innovation activity in different ways. ...
The lack of understanding management of corporate and financial innovation management in South Asia raises the fear of the declining effects of new technologies. Therefore, it is of practical interest to compare the estimates of the impact of ownership concentration in different innovation-intensive industries to minimize the agency problem among managers and shareholders. The paper provides an econometric analysis using panel regression of model testing on companies from technologically sophisticated industries, such as the Heavy and Light Industry, Information Technology (IT), and Consumer Staples from South Asia in different life cycles stages from 2015 to 2020. The South Asian market is volatile and receptive to innovations, but R&D capacity in some countries remains low. The paper provides a better understanding of the relationship between the concentration of different forms of ownership and the intensity of innovation, using industryspecifics and life cycle stages. It’s known that institutional investors are still interested in developing new digital marketing channels by competing with industry “disruptors” due to the lack of necessary strength in the IT industry along with barriers to cross-border investment. The paper confirms a linear and inverted U-shaped relationship between different forms of ownership structure and innovation activity. The results allow focusing on industrial and cultural differences to avoid agency and resource conflicts for majority shareholders of the company to build effective corporate governance, achieving strategic goals and minimizing the risks of improper management decisions in R&D.
... As a result, the DEA is considered a useful tool for assessing the relative effectiveness of NIS. [30] This allows NIS to provide added value and sustainability to different countries by improving resource management capacities, which increases innovation efficiencies [31]. ...
As supported by numerous studies and publications, the scientific literature places great emphasis on the collaboration between the market and the academic actors, when evaluating the effectiveness of RDI projects. The main objective of this research is to investigate the effectiveness of projects managed in cooperation between market and academia in the Hungarian innovation ecosystem. To this end, the paper provides a literature review of the aspects and applicability of the triple helix model along with its extensions and developments. The model will be examined in economic, cultural and political contexts. Relying on the triple-helix model, the author examines the impact of joint ventures of market and academic actors on the effectiveness of RDI projects. The primary research is conducted among active actors in the Hungarian innovation space, seeking to answer whether the results are consistent with international research and literature.
... Green tech R&D initiatives contribute to the growth and improved efficiency of enterprises by embracing the concept of technological innovation. Additionally, it generates supplementary income 25 . In simple terms, business organizations use their investment in research and development (R&D) for green technology to create and introduce new goods and equipment. ...
... Good ESG performance can improve innovation performance through resource effect [27,28], and formulate ecological innovation strategies for enterprises [29], thus promoting sustainable development. On the other hand, scholars emphasize that the R&D innovation index is an important factor in exploring enterprise ESG disclosure [30,31]. Other studies have linked R&D innovation with enterprise brand value. ...
As an important asset of an enterprise, brand value reflects its competitive position in the market. With the proposed goal of “carbon peak” and “carbon neutrality”, the development of enterprises is paying more and more attention to ESG performance (that is, the performance of enterprises in environmental, social and governance aspects), and the attention of brand management is slowly shifting away from traditional products and markets into being green and sustainable. In order to verify the relationship between ESG performance and brand value, this study takes Chinese A-share listed enterprises from 2012 to 2021 as research samples to reveal the mechanism of ESG performance’s impact on brand value. The results show that ESG performance can significantly improve brand value, indicating that the investment in ESG will ultimately affect brand value. The mediation mechanism analysis shows that R&D innovation plays a mediating role in the relationship between the two. A heterogeneity analysis shows that the ESG performance of state-owned enterprises and large enterprises has a stronger promoting effect on brand value, while small enterprises do not show heterogeneity. The research results provide new evidence to reveal the impact of ESG performance on brand management, and have reference significance for ESG construction, brand marketing innovation, and corporate green innovation.
... Thus, we ask the following question: How can we fully understand the impact of eco-innovations on the energy transition without directly exploring the link between PETs and RECs? Furthermore, we note that most studies (Coluccia et al., 2020;B. Wang et al., 2024) use R&D expenditures as a proxy for innovation. ...
Environmental degradation and energy security are two of policymakers' most crucial concerns, with an increasing emphasis on renewable energy development. Studies regarding the role and influence of environmental technology patents in this context become necessary and can provide the empirical evidence needed for public policy decisions in terms of the benefits they bring compared to other innovation measures. Thus, our aim was to capture the effects of environmental technology patents on renewable energy consumption in OECD Member States over the period 2000–2021. We applied the general dynamic panel model with heterogeneous slopes and interactive fixed effects, controlling for cross – sectional dependence and long-run error – correction models based on (Pesaran, 2015) and implemented by Ditzen (2018), and Blackburne Ⅲ & Frank (2007), respectively. The empirical results demonstrated that environmental technology patents can be interpreted as effective mediating mechanisms for increasing renewable energy consumption, thus contributing to a reorientation of activities and consumption toward sustainable development. In other words, environmental patents appear in the transformation equation as the main trigger for innovation, generating a growing influence as the demand for the use of renewable energy sources increases, thus facilitating the transition process towards a (cleaner) and affordable energy market. Based on these results, we believe that policymakers and regulators should pay more attention to the research financing related to the investment and patenting of new environmental technologies, promoting a policy of encouraging and enforcing green technologies, regardless of their scope of application.
... Therefore, it can be inferred that due to the inefficiency in quantitatively distinguishing the two variables, scholars have not yet analyzed the two in a unified manner. Subsequently, we innovatively used the frequency of text words related to the two, extracted from financial reports as an indicator to measure the difference in the company's focus on AI development and innovation activities, which is also combined with traditional measurements (Coluccia et al., 2020), thereby confirming the effect and difference in the role of the two as mediating variables. ...
... Therefore, it can be inferred that due to the inefficiency in quantitatively distinguishing the two variables, scholars have not yet analyzed the two in a unified manner. Subsequently, we innovatively used the frequency of text words related to the two, extracted from financial reports as an indicator to measure the difference in the company's focus on AI development and innovation activities, which is also combined with traditional measurements (Coluccia et al., 2020), thereby confirming the effect and difference in the role of the two as mediating variables. ...
Although research in the field of corporate governance has been exhaustive recently many scholars have focused on the relationship between corporate governance attributes and artificial intelligence (AI), corporate governance attributes, and corporate innovation, few studies combine corporate governance, AI, and corporate innovation. The main reason is due to the quantitative difficulties in measuring and distinguishing AI activities and corporate innovation activities in enterprises. This study examines the relationships among corporate governance attributes, AI, and corporate innovation in the context of the United States and Canada. Adopting a new perspective, we have tried to help resolve the issue using a content analysis that integrates data from over 100 companies that trade on National Association of Securities Dealers Automated Quotations (NASDAQ) and TSX to analyze the relationship between board attributes, practice of AI and firm innovation for the time 2018–2022. The results suggest that particular aspects of boards, such as board size, board diversity, and ownership concentration show significant correlations with firm AI development and innovation for overall industries, but the levels of associations also vary depending on different innovation measurements and samples considered in specific industries. Moreover, the mediating effects of AI and innovation are examined, respectively. Lastly, we also discovered changes in the industry’s attention to AI development before and after COVID-19 (2020). This research offers implications to corporate decision-makers as to how to proceed if the intent is to offer commercialized AI advancements and successful breakthrough innovations.
... The determination of wages in the labor market is a crucial topic for policymakers, business leaders, and employees (Smith, 1979;Topel, 1999;Moretti, 2010;Kabeer, 2021). Research and development (R&D) and training and development (T&D) investments at the company level serve as indicators of a company's commitment to innovation and employee growth, resulting in enhanced productivity, competitiveness, and ultimately, higher wages (Chatzimouratidis et al., 2012;Zavyalova et al., 2018;Coluccia et al., 2020;Xiang et al., 2022;Kuknor and Kumar, 2024). Theoretically, these investments are expected to yield higher productivity, potentially leading to higher wages for employees (Teodorovicz et al., 2024). ...
The study investigates the correlation between research and development (R&D) and training and development (T&D) investments in creative companies in Bangladesh. It aims to understand the economic benefits of fostering a creative corporate environment, as well as its impact on employee wages. We collected data from a sample of companies in Bangladesh, which included expenditures and employee wages. We used multiple regression models to control for potential confounding factors. The findings reveal a positive correlation between R&D investments and employee wages. Companies that allocate more resources to R&D tend to pay higher wages due to the development of new products and processes, enhanced employees' skills, and the attraction of talented and skilled employees. T&D investments also lead to increased productivity and efficiency, which in turn boosts the company's financial performance. Additionally, T&D can improve employee morale and job satisfaction, leading to lower turnover rates and a more stable workforce..
... Such solutions can assist lenders in safeguarding from default risk and frauds, decrease the credit assessment cost, improve product production, monitoring, and distribution and improve customer-user engagement (Guo, 2020). The role of default risk in correlating market value and innovation activities also gets established (Coluccia et al., 2020). ...
... Therefore, it can be inferred that due to the inefficiency in quantitatively distinguishing the two variables, scholars have not yet analyzed the two in a unified manner. Subsequently, we innovatively used the frequency of text words related to the two, extracted from financial reports as an indicator to measure the difference in the company's focus on AI development and innovation activities, which is also combined with traditional measurements (Coluccia et al., 2020), thereby confirming the effect and difference in the role of the two as mediating variables. ...
The conference proceedings book "Corporate governance: Research and advanced practices" proposes research abstracts that explore ideas on current issues and advanced practices of modern corporate governance. The conference studies analyze such crucial and relevant issues as board of directors’ practices, accounting, auditing, firm performance, ESG issues, sustainability, risk management, earnings management, ownership structure, banking, digitalization, artificial intelligence, etc. These discussions contribute to advancing the literature on the topic and serve as key elements for entrepreneurs who strive to keep their companies competitive and innovative in the current global market. The proceedings contain not only materials of the conference presenters but also a full list of comments generated by the conference participants during the forum discussion. More than 50 scholars from 18 countries of the world presented their conference papers. More than 40 scholars took an active part in the conference forum discussion and provided about 260 comments with a deep analysis of the materials presented at the conference. At the end of the book, a set of infographics provides very useful statistics about the conference forum.
... While some studies have suggested a positive relationship, indicating that higher R&D expenditures lead to increased market valuation due to the expectation of future growth and innovation [1][2][3], others have found no significant association or even negative effects [4]. Furthermore, other research distinguishes between capitalizing and expensing R&D, yielding varied results regarding their impact on share prices [5,6]. ...
Previous research provides conflicting results regarding how R&D expenditures impact market value. Given that financial analysts are the primary intermediaries between companies and investors, our study focused on the impact of R&D-related uncertainty, growth, and information asymmetry associated on analysts’ earnings forecasts. Based on 19,834 firm-year observations in the European market between 2005 and 2020, our results show that R&D activities lead to higher absolute forecast error and negative forecast error, indicating higher forecast inaccuracy with an optimistic bias. Additionally, these investments contribute to higher forecast dispersion, indicating disagreement among financial analysts. The comparison between 17 industries revealed that these effects are more pronounced in R&D-intensive industries than in non-R&D industries, uncovering the varied relationship between R&D investments and analyst forecasts across sectors.
... Previous studies have primarily examined the intricacies associated with specific intangible investments like R&D (Lev 2001;Gu and Wang 2005;Elkemali and Rejeb 2015;Zhang 2015;Chen et al. 2017). They conclude that the inherent uncertainty and risk linked to both expensed and capitalized R&D affect market valuation (Lev and Sougiannis 1996;Oswald and Zarowin 2007;Li 2011;Coluccia et al. 2020;Kim et al. 2021) and subsequent earnings uncertainty (Kothari et al. 2002;Amir et al. 2007;Jeny et al. 2019). ...
This study delves into the impact of intangible and tangible investments on future earnings volatility within the European financial market context. Drawing from International Accounting Standards (IAS) 16 and 38, we examine the intricate relationship between fixed assets, expenses, and the uncertainty surrounding forthcoming earnings. Our analysis reveals that intangible assets, often associated with heightened uncertainty and risk, contribute to increased earnings volatility compared to capital expenditures. Furthermore, we find that capitalizing intangible assets serves to alleviate uncertainty, resulting in lower earnings volatility compared to expensing them. Our exploration of industries’ effects further reinforce these findings, with the effect of intangible and tangible investments on earnings volatility being more pronounced in high-tech industries than in low-tech industries. Additionally, our robustness test, utilizing goodwill as a proxy for intangible assets and property, plant, and equipment as a proxy for tangible assets, yields consistent results, further bolstering our findings.
... Knowledge growth, innovation, relationship building, and brand building are all projects that can benefit from these resources. New studies Coluccia, Dabić et al., (2020) have highlighted the significance of complementary, intangible resources. Because most studies only look at how resources directly affect firm performance as measured by things like profitability, market share, and return on investments the idea that vital resources like marketing should be seen as investments for companies becomes questionable. ...
This research aims to use performance indicators to find out how marketing and R&D budgets work together to influence brand competitiveness. While many studies have examined the effects of marketing and R&D investment alone, very few have examined how these factors affect a company's performance, brand value, and competitive advantage. Seven years of longitudinal data, totaling 1020 observations, were collected from 145 organizations. Based on the systematic removal approach, these companies were selected from 640 listed on the Pakistan stock exchange market. We used the generalized method of moments (GMM), to examine the data. While research and development did have a small but noticeable effect, marketing had a much more significant and lasting effect on brand competitiveness (as measured by market share) when considered alone. Brand competitiveness was also found to be moderately affected by the impact of interaction between marketing expenditure and R&D investment in this study. Based on these results, companies need to invest in marketing campaigns that make use of R&D benefits if they want to enhance their brand's competitiveness. Most firms often have financial constraints, so it's wise to keep investing in marketing and R&D to be competitive in the long run.
... Therefore, it can be inferred that due to the inefficiency in quantitatively distinguishing the two variables, scholars have not yet analyzed the two in a unified manner. Subsequently, we innovatively used the frequency of text words related to the two, extracted from financial reports as an indicator to measure the difference in the company's focus on AI development and innovation activities, which is also combined with traditional measurements (Coluccia et al., 2020), thereby confirming the effect and difference in the role of the two as mediating variables. To summarize, the main objective of this research is to unveil the inter-relationship among corporate governance, AI, and innovation, aiming to find the crucial impacts of characteristics of corporate governance on AI and innovation. ...
Research in the field of corporate governance has been exhaustive, and recently many scholars have focused on the relationship between corporate governance attributes and artificial intelligence (AI), corporate governance attributes, and corporate innovation (Asensio-López et al., 2019), however, there are few studies that combine corporate governance, AI, and corporate innovation. This article examines the relationships among corporate governance attributes, AI, and corporate innovation. Adopting a new perspective, we have tried to help resolve this issue using a content-analysis that integrates data from over 50 companies that trade on National Association of Securities Dealers Automated Quotations (NASDAQ) to analyze the relationship between board attributes, the practice of AI and firm innovation for the time 2018–2022. The results suggest that particular aspects of boards, such as board size, board diversity, and ownership concentration show significant correlations with firm AI development and innovation for overall industries, but the levels of associations also vary depending on different innovation measurements and samples considered in specific industries. Corporate governance has more significant variables in the manufacturing and information technology service industries. Moreover, the mediating effects of AI and innovation are examined, respectively. This research offers implications to corporate decision-makers as to how to proceed if the intent is to offer commercialized AI advancements and successful breakthrough innovations.
... In the above models, the subscript i refers to the enterprise, and t refers to the year. The OLS regression method is used for the three regression models (Coluccia et al., 2020), and the firm fixed effect (Firm) is added to control the impact of enterprise characteristics that do not change over time and are difficult to be observed on CP and ROE. The model also adds an annual fixed effect (Year) to control the impact of time changes on CP and ROE. ...
Digitization has become an engine to promote industrial transformation and social change, providing great potential for carbon emission reduction in the world. At present, there is still a lack of sufficient discussion on whether digital transformation can further improve micro-enterprises’ performance in carbon performance and financial performance improvement. Therefore, this paper constructs the index of enterprise digital transformation with the help of Word2Vec technology and theoretically analyzes and empirically tests the relationship among enterprise digital transformation, carbon performance and financial performance. The study found that digital transformation can remarkably improve corporate carbon performance, and the relationship between corporate carbon performance and financial performance is positive. Furthermore, this paper further discusses the role of digital transformation in the relationship between corporate carbon performance and financial performance. The results show that digital transformation can promote the enhancement effect of carbon performance on financial performance. The conclusions of this paper provide a clear inspiration for enterprises and governments to promote digital transformation and realize the “win–win” goal of carbon emission reduction and profit maximization.
... It is thus an analytical issue what effect leverage has on the COD. In addition, there is a correlation between the age of a company and its default rate, with younger companies being riskier (Coluccia et al., 2020). As a result, the cost of doing business is greater for newer companies. ...
Impact statement
A firm’s loan guarantee is oftenrecognizedasauseful instrument for mitigating the risks involved with borrowing to firms that lack a solid credit history and auditing procedures. However, loan guarantees are frequently associated with riskier or lower-quality borrowing enterprises, which leads to serious information asymmetry problems. This, in turn, has a negative effect on the company’s reputation and exposes it to threats of bank and guarantor non-payment. Our empirical study looks at how loan guarantees might reduce debt costs by neglecting information asymmetry in the bank lending process. Furthermore, our findings provide empirical evidence of the substitution effect of management earnings forecasts over loan guarantees in lowering the firm’s cost of debt. The findings imply that both loan guarantee and management earnings forecasts have a negative impact on firms’ cost of debt in China. First, on the one hand, the loan guarantee lowers the cost of debt by ignoring information asymmetry, which results in adverse selection and ethical uncertainty concerns, both of which raise the default and litigation risks faced by financial institutions and clients. Second, management earnings forecasts have a substitution effect on funding injection into China’s bank loans. It may help firms improve their reputations, reducing informational asymmetries concerns such asunfavorableshortlisting and ethical inconsistency, and lowering their cost of debt in banks’ credit lendingprograms. The present study contributes to the most contemporary understanding of the impacts of loan guarantees on debt cost reductions and the critical role of management earnings forecasts in company expansion.
... The specifics of the variables and their source (Access: 30.10.2022) of origin are presented in Table 2. The variables were selected based on an expert analysis of publicly available statistics related to innovation and R&D, as well as an analysis of the literature in this area [46,47]. ...
Research and development carried out by companies are pivotal for innovative economies of countries, especially in the unpredictable and changing social, economic and political environment. In this context, it is very important to answer, which factors identify the effectiveness of measures in relation to R&D activity and innovativeness in EU countries and how should the degree of development of a country be assessed in terms of R&D activity? The purpose of this article is to verify level of innovativeness and degree of research and development (R&D) activity in EU countries in the years 2014 and 2020 using Hellwig’s measure of development. To achieve this, qualitative and quantitative analysis, synthesis, deduction and induction, comparative analysis, and reasoning by analogy of phenomena were employed. The research was conducted on the basis of the expertly selected variables for their relation to R&D activity from a number of sources, such as Eurostat, World Bank Data, etc.. The indicated variables were analysed using statistical methods and then subjected to a linear ordering procedure based on the Hellwig development pattern method. Thanks to the research results, it is possible to indicate areas in which the initiation of activities would have the greatest degree of influence on development of R&D activity, thus influencing the increase in the level of innovativeness of a country. Indicators relating to R&D activity were selected and then used as variables to study the effect of the degree of R&D activity in EU countries in the years 2014 and 2020 on the level of innovativeness of these countries. The conducted research coincides with the results presented in the European Innovation Scoreboard. There is a significant correlation between the development of R&D activities and innovation performance.
... The output of innovation is a critical component of R&D success and is often monitored using patentrelated metrics. The number of patents has traditionally been used to gauge innovation (Coluccia et al., 2020). The creation and transmission of knowledge is another critical component of good R&D. ...
... Therefore, it can be inferred that due to the inefficiency in quantitatively distinguishing the two variables, scholars have not yet analyzed the two in a unified manner. Subsequently, we innovatively used the frequency of text words related to the two, extracted from financial reports as an indicator to measure the difference in the company's focus on AI development and innovation activities, which is also combined with traditional measurements (Coluccia et al., 2020), thereby confirming the effect and difference in the role of the two as mediating variables. ...
Although research in the field of corporate governance has been exhaustive recently many scholars have focused on the relationship between corporate governance attributes and artificial intelligence, corporate governance attributes and corporate innovation, there are few studies that combine corporate governance, artificial intelligence and corporate innovation. The main reason is due to the quantitative difficulties in measuring and distinguishing artificial intelligence activities and corporate innovation activities in enterprises. This study examines the relationships among corporate governance attributes, artificial intelligence, and corporate innovation. Adopting a new perspective, we have tried to help resolve the issue using a content analysis that integrates data from over 50 United States companies to analyze the relationship between board attributes, practice of artificial intelligence (AI) and firm innovation for the period 2018–2022. The results suggest that certain aspects of boards, such as board size, board diversity, and ownership concentration show the most significant correlations with firm AI development and innovation for overall industries, but the levels of associations also vary depending on different innovation measurements and samples considered in specific industries. Moreover, the mediating effects of AI and innovation are examined, respectively. Lastly, we also discovered changes in the industry’s attention to AI development before and after COVID-19 (2020). This research offers implications to corporate decision-makers as to how to proceed if the intent is to offer commercialized AI advancements and successful breakthrough innovations
... CG variables were derived from Subedi (2018). And the variable of Innovation performance was adopted from Coluccia et al. (2020). A five-point Likert scale system was used; ranging from 1 to 5 (1 indicates strongly disagree, 2 indicates disagree, 3 indicates neutral, 4 indicates agree, and 5 indicates strongly agree). ...
Corporate governance (CG) is the system of rules, procedures, and processes by which an organization is operated and controlled. Effective corporate governance helps mitigate risk by ensuring the company complies with applicable laws and regulations and maintains appropriate internal controls. CG is an essential aspect of the overall management of companies and can have a significant impact on their Financial Performance (FP). In China, CG practices have undergone significant modifications over the last few years as the country shifted from a centrally planned economy to a market‐based economy. The study's novelty evaluated the effect of corporate governance on finance and Chinese‐listed firm creation. Data obtained from 345 employees working in 8 firms in China, the relationship between CG, financial performance, and innovation is investigated. The study adopted PLS‐SEM analysis and the findings of the study indicate that CG is positively related to better FP and innovation output. The study analysis found that firms with stronger governance structures have better access to external financing, lower agency costs, and higher levels of innovation investment. Also, the result identified that improving CG can lead to better FP and innovation, which in turn improves the firm's competitiveness and long‐term sustainability.
Purpose
The environmental, social and governance (ESG) topic has recently received increasing attention from scholars due to increasing regulations for firms’ non-financial disclosure with respect to environmental and social issues. For instance, the European Union (EU) recently issued the Corporate Sustainability Reporting Directive (CSRD) in December 2022 and implemented it starting in 2024 in member states. Non-financial disclosure is relevant for various stakeholders and could affect firm value. Therefore, this study aims to examine the effect of ESG disclosure on firm value in the EU context.
Design/methodology/approach
This study uses panel data on listed EU firms extracted from the Bloomberg database from 2014 to 2024. The final sample comprises 11,003 firm-year observations. The ordinary least squares method is used as a baseline regression. This study addresses the endogeneity issues by applying instrumental variable and two-step system dynamic panel generalised method of moments approaches.
Findings
The results of the univariate tests, including the mean-difference comparison test based on pre-CSRD and CSRD issuance periods, reveal a significant decrease in the average ESG disclosure score in the CSRD issuance period. These results are similar for individual ESG pillars. Further, the results show a significant reduction in average firm value in the CSRD issuance period. The regression results report a significant and positive effect of ESG disclosure on firm value.
Practical implications
This study provides practical implications for policymakers, firms and stakeholders. Based on the findings and the contexts of signalling and institutional theories, regulatory requirements for non-financial reporting on environmental and social issues affect a firm’s sustainable behaviour. This directly impacts various stakeholders, including market participants, and eventually affects market value.
Originality/value
This study contributes to the literature on the relationship between ESG disclosure and firm value in the context of the transition from the non-financial reporting directive to CSRD.
Purpose
The purpose of this paper is to examine the impact of innovation capability on shareholders and market value using panel data analysis, both static and dynamic, in addition to predicting return on equity (ROE) and Tobin’s Q using various machine learning algorithms to reach the most accurate model.
Design/methodology/approach
This study uses different econometric model and machine learning models. Both static and dynamic panel regression analyses have been considered.
Findings
This study finds that innovation capability significantly improves financial performance, with CatBoost outperforming other machine learning models in predictive accuracy. Key drivers include leverage, firm size and net income, highlighting the strategic importance of innovation in enhancing ROE and Tobin’s Q. These insights emphasize innovation’s role in achieving competitive advantage in emerging markets like Egypt.
Originality/value
This paper uniquely combines econometric and machine learning methods to analyze innovation capability’s impact on financial performance in Egypt, offering a novel framework and actionable insights for enhancing shareholder and market value in emerging markets.
This study investigates the interplay between operations capabilities (OC) and research and development capabilities (RC), emphasizing the influence of green initiatives (GN). While prior research has primarily explored these capabilities in isolation, the mechanisms underlying their interaction remain unclear. Moreover, the differential impacts of GN on this interplay have not been examined. Addressing these gaps, we employ a hybrid regression-neural network approach to analyze U.S. manufacturing firms, capturing synergistic rents of OC and RC across varying levels of GN. Our measure of GN is based on Newsweek’s Green Scores as a proxy for firm-level environmental engagement. Our findings reveal that: (1) the combined impact of OC and RC is distinctive rather than uniform, reflecting firm-specific resource conditions; (2) their interplay exhibits divergent synergistic effects, moving beyond conventional views of conflict versus cooperation; and (3) GN influences the OC–RC interplay asymmetrically, with effects differentiated by RC. Anchored in dynamic capabilities theory, this study advances resource management frameworks and offers actionable insights for sustainability-focused strategies.
Purpose
This paper examines the multifaceted relationship between firm ESG (environmental, social and governance) performance and innovation outcomes, incorporating a comprehensive set of metrics: innovation volume, technological impact intensity and financial capability. This study aims to explore how ESG performance influences these dimensions of innovation and to provide insights into the strategic value of ESG.
Design/methodology/approach
Data were collected from multiple sources, including patent databases, financial datasets and ESG repositories, covering a wide range of industries. A series of robust empirical methods, including White robust regression with clustering, Newey–West and Driscoll–Kraay estimations, were used to ensure reliable and consistent results.
Findings
The findings reveal the dual role of ESG performance in shaping firm innovation. ESG performance is positively associated with innovation volume and financial capability. However, a negative relationship between ESG performance and technological impact intensity highlights that ESG-driven innovations tend to be more specialized and firm-specific, limiting their broader technological influence.
Originality/value
This paper offers valuable insights into the strategic potential of ESG as a driver of innovation and financial performance. The findings also offer practical guidelines for firms, highlighting the importance of aligning ESG initiatives with innovation strategies to achieve sustainable competitive advantage.
Purpose
The purpose of the study is to investigate the relationship between customer companies’ digital transformation and the Environmental, Social and Governance (ESG) performance of suppliers from a supply chain sustainability perspective. Building on stakeholder and legitimacy theories, the research explores the moderating effects of suppliers’ innovation capability and financial slack, together with the mediating effect of analyst attention on this relationship.
Design/methodology/approach
The analysis focuses on companies listed on the Shanghai and Shenzhen A-share markets between 2018 and 2022. Data is sourced from the China Stock Market & Accounting Research (CSMAR) database, text mining, the China Research Data Services (CNRDS) database and the Wind database. Hypotheses are tested using fixed-effects models by Stata 17.0.
Findings
Results show that (1) customer companies’ digital transformation significantly enhances suppliers’ ESG performance; (2) suppliers’ innovation capability strengthens the positive relationship between customer digital transformation and ESG performance, while financial slack weakens this relationship and (3) analyst attention partially mediates the relationship between customer digital transformation and suppliers’ ESG outcomes.
Originality/value
Drawing on stakeholder and legitimacy theories, the study offers empirical evidence and strategic insights for policymakers, supply chain managers and investors, deepening the understanding of how digital transformation influences supply chain management. It further contributes to the literature by expanding knowledge on the relationship between digital transformation and supply chain sustainability.
Purpose
This study aims to explore the association of board quality and firm innovation on climate risk disclosure in the context of large listed companies in India. It builds upon the framework developed by the stakeholder theory and the legitimacy theory to examine the association between the key variables of the study.
Design/methodology/approach
The climate risk disclosure is measured through content analysis of the annual reports of the respective companies. A panel data framework analyzes the relationship between board quality, firm innovation and climate risk disclosure.
Findings
The findings indicate a gradual increase in climate risk disclosure throughout the sample period. This study also finds that certain board characteristics and investment in innovation are significant determinants of a firm’s approach toward identifying and mitigating risks arising from rapid climate change. This study has implications for practitioners, policymakers and academicians who strive toward creating resilient and sustainable organizations.
Research limitations/implications
This study is relevant for practitioners as it identifies an increasing trend in the identification and reporting of climate risk disclosure in the sample firms. This would be beneficial for managers and other stakeholders of the organizations who would be interested in the mitigation of climate risk. The organizational leadership may identify key parameters of their firms, which helps them prepare against the adverse impact of climate change on business.
Originality/value
To the best of the authors’ knowledge, this is the first study to evaluate climate risk disclosure practices of large listed companies in India. This study highlights how large Indian companies are developing an overall approach for identifying and mitigating risks associated with rapid climate change, which has not been conducted for any economy.
This study examines the relationship between ESG sub‐indicators and the performance of Taiwan's semiconductor industry from 2016 to 2020. Using a combination of data envelopment analysis, truncated regression, and classification and regression trees, the research evaluates the influence of 12 ESG factors on innovation, sustainability, and market performance. The findings reveal that midstream manufacturers lead in innovation and market performance, while upstream manufacturers excel in sustainability. Corporate governance transparency emerges as the most critical factor driving overall performance, followed by employee management, product quality, and stakeholder treatment. Conversely, greenhouse gas emissions and waste management have limited impact due to high costs and regulatory challenges. The study highlights the need for firms to balance ESG strategies with performance goals, emphasizing energy management and governance as key levers for innovation and competitiveness. This research provides practical insights into optimizing ESG implementation to enhance performance across the semiconductor value chain.
Purpose
The study examines the relationship between having a female owner and firm innovation in India.
Design/methodology/approach
The paper employs a linear probability model as well as probit specification to assess the empirical relationship between female ownership and innovation. To ensure that the results are not driven by endogeneity related to the female owner variable, the paper also uses a propensity score matching method and instrumental variable approach.
Findings
The study finds that having a female owner increases firm’s likelihood of innovation in India. We use three measures of innovation given by product innovation, process innovation and engagement in R&D. The positive relationship between a female owner and innovation is driven by the set of more gender equal states. We find that the relationship is weaker for older firms and firms facing financing constraints. Further, we find that firms having female owners are more likely to conduct a formal training of their employees. This can possibly be one of the channels through which female owners improve firm innovation.
Originality/value
This study highlights the need to promote female ownership as a potential channel for promoting firm innovation in emerging economies like India. It also emphasizes the fact that female owners tend to train their employees, which is the channel through which it enhances firm innovation. The findings also highlight that regional gender equality is necessary for female owners to influence firm innovation.
This study looks at the effect of intellectual capital on firm performance and risk as well as the moderating effect of political connections. Companies in the current economic era are required to pay more attention to intangible resources. Intellectual capital is considered as the main intangible asset for companies used to create and use knowledge to increase firm value. The population in this study are non-financial companies listed on the Indonesia Stock Exchange in 2014-2021. The analysis method used in this study uses Moderated Regression Analysis. The study finds that the effect of intellectual capital has a significant effect on firm performance and risk, respectively. The moderating effect also affects the overall performance and market-side risk of the firm. Political connections make corporate decision-making inefficient. Future research can consider industry differences in the relationship of intellectual capital to firm performance and risk. This research has managerial implications, namely companies should consider increasing investment in the development and utilization of intellectual capital. Intellectual capital should be integrated into long-term corporate strategy. The limitations of this study are that the findings of this study are limited to developing countries and the need for more comprehensive measurements for intellectual capital.
The literature on digital servitization calls for more research linking specific organizational choices related to the implementation of digital services to financial outcomes of the providing firm. This study evaluates how two fundamental such organizational choices – i.e., strategic emphasis on value creation activities over value appropriation activities, and outsourcing intensity – affect firm profitability, along with the moderating role of firm size. Analysis of longitudinal archival data, collected for a sample of 176 manufacturing firms engaged in digital servitization, reveals several noteworthy relationships. Greater relative emphasis on value creation activities negatively impacts firm profitability, but to an extent that decreases with firm size. In addition, while outsourcing intensity has a positive direct effect on firm profitability, the relationship is observed to change with the size of the firm; that is, greater outsourcing intensity may lead to lower profitability in the case of large firms. For managers of manufacturing firms, the study provides insights that may help tackle the implementation challenges of digital servitization, enhancing their abilities to determine appropriate resource allocation strategies and configurations of value chain activities to increase financial performance. The appropriate organizational choices vary with the size of the firm.
Se presentan el análisis de una serie de aspectos a ser tratados durante los procesos de desarrollo tecnológico a partir de conocimiento generado de las ciencias aplicadas. Inicialmente se analizan los criterios recientes respecto a la productividad de organizaciones que desarrollan proyectos tecnológicos en lo general, y de los proyectos mismos de manera particular. Se considera que el uso de la escala de maduración tecnológica TRL (technology readiness level) es una herramienta altamente recomendable para recorrer el proceso de maduración desde las invenciones y desarrollos conceptuales y teóricos, pasando por la validación de conceptos identificación de oportunidades y desarrollo tecnológico. En esta escala de maduración tecnológica se recomienda considerar con especial atención aspectos de viabilidad económica, de mercado y sobre todo de propiedad intelectual no solo para proteger oportunamente los resultados del proceso, sino de sustentar sobre esta base el valor económico que debe ser evaluado y formalizado en su momento como activos intangibles tecnológicos y de propiedad intelectual
This study investigates the role of corporate innovation in moderating the impact of working capital management on profitability for a Chinese high‐tech manufacturing industry. Using a two‐way fixed effect model and subgroup analysis, we found that net working capital (NWC) negatively impacted corporate profitability, while corporate innovation magnified the inverse association between the NWC and profitability. This moderating effect was stronger in non‐state‐owned enterprises (SOEs) than in SOEs, and different company sizes exhibited varying effects. This study enhances our understanding of the role of corporate innovation financial management and provides valuable insights for innovation research in emerging economies.
Purpose
This study investigates how the introduction of a stricter loss carryforward offset rule affects firms' innovation.
Design/methodology/approach
This study investigates the overall impact of a Korean tax reform that introduced a tighter loss deduction through a difference-in-differences approach and regression discontinuity design.
Findings
This study finds that firms subject to the more restrictive tax loss offset provisions tend to file fewer patents than firms not subject to the provision. The authors further find that this effect is more pronounced for firms with high R&D intensity, more investment opportunities and weaker monitoring mechanisms.
Research limitations/implications
The results of this study suggest that more restrictive loss carryforward provisions may deter firms from innovation. This study contributes to the literature on the impact of tax loss rules, the effect of tax policies on investments and the real effects of corporate taxation.
Practical implications
This study sheds light on the debate of the consequences of a Korean tax reform. Specifically, the authors examine whether a stricter tax loss offset policy indeed dampens corporate innovation.
Originality/value
This study exploits a unique and infrequent exogenous tax policy change. The South Korean tax reform creates a treatment group of large firms that were affected by the tax reform, and a control group of small and medium-sized firms that were unaffected. This study takes advantage of this setting to examine the research question.
This article investigates the determinants of research organizations’ performance. A theoretical construct is built based on the traditional “environment–conduct–performance” framework applied to industrial organizations and operationalized by using information from a recent extensive survey of research organizations. From an empirical point of view, using hierarchical clustering techniques, we first underline the diversity of research organizations in terms of structure and conduct parameters (in order to better identify their “behavioral patterns”) and then investigate the link between these classifications and institute performance by means of binomial regression models. From a managerial point of view, this research could help to formulate policy and management recommendations for improving performance. This article addresses two critical issues: 1) Performance measurement of research organizations remains a challenge despite multiple efforts made by academics, research organizations, management, and policymakers. The broad range of impacts resulting from research institutes can be tacit or codified, direct or indirect, among other characteristics. In many cases, these impacts are related to humans, which makes them a) difficult to measure as such, and b) involves challenges in terms of the causalities of impacts. 2) The determinants of research organization performance remain a partial black box.
This study provides an examination of Indonesian corporate social and environmental disclosure in the Positive Accounting Theory (PAT) perspective. This study identified three key hypotheses such as management compensation hypothesis (bonus plan hypothesis), the debt hypothesis (debt/equity hypothesis), and the political cost hypothesis. The population of this study is about 1857companies (for five year period), yielded in a sample of 911 usable companies listed in Indonesia Stock Exchange. The social and environmental disclosure level is measured using combination of Clarson'Environmental Index (2007) and Sutantoputra' social index (2009). The regression analysis shows that corporate social and environmental in Indonesia is associated with: ROA, firm' size, and firm's earning management. Thus, the result support the bonus plan hypothesis and political cost hypothesis, conversely debt/equity hypothesis can not be support.
Purpose
The purpose of this paper is to examine the gender role phenomenon and the stereotyping of requisite managers’ personal characteristics in the Greek society of today.
Design/methodology/approach
Data were collected quantitatively based on the informants’ perceptions on successful managers’ personality traits and according to the informants’ personality characteristics. Questionnaires were administered online to two separate convenience samples. Reliability analysis (Cronbach’s α) was employed for scale refinement, while intraclass correlation coefficient (r’) and t-test analysis examined the similarity of respondents’ responses across the items of the refined scale.
Findings
The results indicate that gender role stereotypes are challenged. It seems that the perceived managers’ personality is comprised of both agentic/masculine and communal/feminine characteristics and this perception is not perceived differently by men and women. This debates on whether the “glass ceiling” exists due to other determinants.
Originality/value
The study contributes to the literature on gender role stereotyping research and perceptions of managerial personality characteristics in Greece.
The Multiple Streams Framework is applied to investigate why material efficiency solutions are a limited part of the climate policy agenda. The case study under investigation is the UK agenda to reduce greenhouse gas emission from cars. Evidence from 14 semi-structured interviews, document analysis and academic studies is used to develop and substantiate the arguments made. In the UK, inefficient material use is only perceived as a problem in so far as it increases in-use vehicle emissions, which disadvantages some material efficiency solutions. The appeal of material efficiency solutions is further limited by a lack of real-world and modelling evidence, creating uncertainty around the anticipated costs and impacts of any policy intervention. Recent political developments are unlikely to make the UK government more receptive to the problem of greenhouse gases arising from inefficient material use in the future. This is further compounded by policy lock-in. Although a small community of policy entrepreneurs are promoting material efficiency solutions, they have disparate priorities, which impacts their effectiveness. The insights from this paper can inform future research and policy entrepreneurship to increase the likelihood of material efficiency solutions becoming a larger part of the climate policy agenda. The problem of climate change is too significant for any potential solutions to remain underexplored by policy-makers in the UK and the rest of the world. © 2017 The Authors. Environmental Policy and Governance published by ERP Environment and John Wiley & Sons Ltd
This paper examines the influence that the age of a firm has on the probability of product innovation by taking into account two factors: the role of the CEO’s tenure and the lifecycle of the last product introduced. In a sample of Italian manufacturing firms (n = 2163), analysis reveals that the new entrants’ high innovative activity is mainly driven by the new CEO’s innovation propensity, which is strictly dependent on his tenure. Likewise, the lower innovation activity observed in mature firms is mostly explained by the dynamics of the product’s lifecycle and the CEO’s tenure. More generally, the existence of a negative relationship between innovation and firm age is questioned, as controlling for time-related variables that overlap during the company’s lifecycle —product age and CEO’s tenure — turns the relationship positive. Finally, the innovative behavior of incumbent companies turns out to be dependent on the renewal abilities of newly appointed external CEOs, whereas CEOs from within the family play a minor role.
Technological Innovation in Chilean Firms: An Empirical Study Based on Patents
Literature has focused on studying patents in particular industries, subsectors or firms, mainly in developed countries. The level or quantity of patents in Chile during the period 2007-2012 on average reached 12 triadic families, while in countries like Argentina and Mexico presented averages of 12 and 15 respectively. The overall average for the same period amounted to 48,242 OECD triadic patent families. This shows the interest of the scientific community to study the phenomenon of patent creation, and, on the other hand, the large technological gap between developed and developing countries. We propose to study the determinants of patenting in Chilean firms, as a case of a developing country. We use a probit model where the dependent variable takes value one if the firm has or is in the process of obtaining an invention patent (technological) and zero if not. Our database has 4,338 Chilean firms, is cross-sectional and corresponds to an extract of the Eighth Survey of Innovation in Firms 2011-2012. The results show that the age of the firm, the base of existing knowledge, and the use of governmental instruments to support R&D have a positive effect on creation of patents.
The aim of this study is to determine the impact of spatial proximity to customers, suppliers and competitors on innovation activity in medium high and high technology manufacturing industries in Poland. It is assumed that innovation activity is facilitated by both local suppliers and customers whereas it is decreased by local competitors. The scope of the survey relates to innovation in medium high and high technology manufacturing industries in Poland. It concerns innovation at the firm level and takes into account the diffusion to the "new to the company." The study shows that both local and regional suppliers and customers decrease innovation activity whereas both national and foreign ones positively influence on it. For competitors the hypothesis proved to be right. Foreign suppliers, customers and competitors have the highest positive influence on innovation activity whereas local ones have the most negative impact.
Innovation is considered to be one of the key factors that influence the long-term
success of a company in the competitive markets of today. As a result, there is a growing interest
in the further study of the determining factors of innovation. Today, the focus is on these factors
related to people and behavior, emphasizing the role of organizational culture, as a factor that
can both stimulate or restrain innovation, and therefore affect company performance. However,
there is little empirical research linking these variables, particularly in the Spanish context.
The purpose of this paper is to study these links by using a sample of industrial companies. The
results show that culture can foster innovation, as well as company performance, or it could also
be an obstacle for both of them, depending on the values promoted by the culture. It has been
found specifically, that an adhocratic culture is the best innovation and performance predictor.
Based on these results, it can be concluded that, innovation mediates the relationship between
certain types of organizational cultures and performance.
Updated version of my model in my dissertation. ----------------------------------- Open Innovation describes the opening of companies' innovation process towards their environment (e.g. customers, suppliers, even competitors). Besides other benefits described in literature, companies profit by more radical innovations, shorter time-to-market and better satisfaction of customers' needs. In the context of an explorative interview study with several German large enterprises from different industries we surveyed the application and the transfer of Open Innovation from research into practice, regarding benefits and potential impediments. Besides the overall positive experience of companies using Open Innovation, the majority of them stated that it is still a big challenge to select and involve the right extern actors, fitting to the specific company's situation/condition and issue, as well as to select an appropriate way of involvement. To fulfill this demand, the paper presents a guideline methodology for selecting the right external actors for a specific company's situation and issue, and for selecting the right method for involvement. The concept combines Open Innovation with elements from Requirements Engineering and stakeholder analysis into a holistic approach.
This paper analyses the determinants of voluntary disclosure on research and development (R&D) activities by listed Canadian firms. Using content analysis, we examine the extent of R&D voluntary disclosure by examining the annual reports from 150 companies listed on the Toronto Stock Exchange (TSX). By using a large set of factors that are expected to impact on voluntary disclosure, this study investigates the extent to which firm characteristics (size, leverage, listing status), R&D related variables (R&D intensity, R&D partnership greement, R&D accounting policy) and corporate governance attributes (board independence and the separation of the CEO and Board Chair roles) influence voluntary disclosure on R&D activities. After controlling for industry membership, our results, obtained from a negative binomial regression, show that firm size, R&D intensity, R&D partnership agreement and the separation of the CEO and Board Chair functions have a significant positive impact on the extent of voluntary disclosure on R&D activities. However, the findings reveal that leverage, listing status, R&D accounting policy and board independence are not significant in explaining the level of R&D voluntary disclosure.
We investigate the impact of R&D narrative disclosure on the market value of equity for a sample of French companies during the period 2000–2004. Using 3SLS estimation on a panel data of 98 French firms, we find, ceteris paribus, positive (but insignificant) association between R&D voluntary disclosure and the market value of equity. Both R&D intensity and R&D capitalization lead French firms to disclose more R&D narrative information. However, they impact differently the relationship between R&D-related disclosure and market value. Indeed, a positive and significant association is found when we control for R&D capitalization. In contrast, when controlling for R&D intensity, we find a negative association. We also find that equity-based compensation and audit committee independence are the most important drivers for R&D narrative disclosure.
In different innovation life cycle stages, firms need to accumulate specific innovation capabilities to face new challenges and reach a high performance. This study aims to investigate the impacts of innovation strategies on organisational performance, and whether the relationships change in different stages. We collect data from US Patent Office (USPTO), firms' financial reports in Taiwan TEJ database, and Taiwan innovation survey in 2009 to test in regression models. The evidence shows that organisational innovation characteristics, including innovation assets, capabilities, and the strategies to integrate external resources, positively affect organisational sale performance. Organisational innovation assets and innovation capabilities have different impacts on gross profit and Tobin's Q. Furthermore, the relationship between innovation characteristics and performance changes during different innovation life cycle stages. Comparing to the impacts in the emerging stage of product and process innovation, the influences of innovation assets or capabilities on performance are weaker in the mature stage.
Family firms are often portrayed as an important yet conservative form of organization that is reluctant to invest in innovation; however, at the same time, evidence shows that family firms are still flourishing and that many of the world’s most innovative firms are indeed family firms. Our study contributes to disentangling this puzzling effect. We argue that family firms—owing to the family’s high level of control over the firm, wealth concentration, and importance of non-financial goals—invest less in innovation but have an increased conversion rate of innovation input into output and, ultimately, a higher innovation output than non-family firms. Empirical evidence from a meta-analysis based on 108 primary studies from 42 countries supports our hypotheses. We further argue and empirically show that the observed effects are even stronger when the CEO of the family firm is a later-generation family member. However, when the CEO of the family firm is the firm’s founder, innovation input is higher and, contrary to our initial expectations, innovation output is lower than that in other firms. We further show that the family firm–innovation input/output relationships depend on country-level factors, namely, the level of minority shareholder protection and the education level of the workforce in the country.
We test the relationship between shareholder value, stakeholder management, and social issue participation. Building better relations with primary stakeholders like employees, customers, suppliers, and communities could lead to increased shareholder wealth by helping firms develop intangible, valuable assets which can be sources of competitive advantage. On the other hand, using corporate resources for social issues not related to primary stakeholders may not create value for shareholders. We test these propositions with data from S&P 500 firms and find evidence that stakeholder management leads to improved shareholder value, while social issue participation is negatively associated with shareholder value. Copyright © 2001 John Wiley & Sons, Ltd.
The authors develop a conceptual framework of the marketing–finance interface and discuss its implications for the theory and practice of marketing. The framework proposes that marketing is concerned with the task of developing and managing market-based assets, or assets that arise from the commingling of the firm with entities in its external environment. Examples of market-based assets include customer relationships, channel relationships, and partner relationships. Market-based assets, in turn, increase shareholder value by accelerating and enhancing cash flows, lowering the volatility and vulnerability of cash flows, and increasing the residual value of cash flows.
The purpose of the study is to evaluate the impact of R&D investment on firm performance and
firm value among G-7 countries. To testify such relationship, we use firm level and country
level data collected from firms’ financial statements, countries stock exchanges, and World
Bank databases. Based on data structure (country level, industry level and firm level), we use HLM regression analysis technique along with robust standard error. By using diverse range of
control variables (firm size, age, leverage, GDP growth, interest rate and financial crises
dummy), results suggest that same year R&D investment has negative impact on firm
performance and, positive impact on firm value. However, one year lagged period R&D
investment has positive relationship with both firm performance, and firm value. Nevertheless,
two years lagged period R&D investment has not effect on both firm performance -and value.
This paper investigates the existence and nature of knowledge-spillovers at the micro-level and, in turn, the capacity of firms to absorb new ideas generated in R&D laboratories. It evaluates the merits for a firm of attracting or retaining “key” inventors, or assembling a wide team of inventors. First, using the EPO-OECD data, we identify “key” and “normal” inventors by means of the Hill’s estimator. Then, we test the hypothesis that the presence of one “key” inventor in a firm’s R&D laboratory would have a positive effect on the Italian firms output. Our results are threefold: 1) the patent portfolio positively affects the value of production; 2) the simple presence of “key” inventors in a R&D laboratory does not significantly affect the output; 3) for a given number of patent applications by firm, a less concentrated patents distribution across inventors employed in the same R&D laboratory makes a positive impact on the production.
Purpose
The purpose of this paper is to present a comprehensive model of the relationship between control and sales performance contingent upon the commitment and adaptive selling variables. Specifically, the study tests the mediator effects of adaptive selling and organizational commitment on the effect of managerial control systems on self-assessed performance of the salespeople working in the field of industrial marketing.
Design/methodology/approach
In total, 472 firms active in the industrial marketing field for tangible industry products in Turkey were selected for the research. The proposed model that tested posits relationships among management control variables and adaptive selling, organizational commitment and sales performance measures. Management controls are related to sales performance through the mediating effect of adaptive selling and organizational commitment. Management control styles (output as formal and professional as informal) were the independent variables, while changes in organizational commitment and adaptive selling were tested both as mediators and sales performance as dependent variable, consistent with the reciprocal effects model under analysis.
Findings
The findings demonstrated that “control” is positively associated with “sales performance” and “commitment” and “adaptive selling” mediate this relationship. Findings indicate that control impacts sales performance through a mediating mechanism that involves adaptive selling and commitment. Taken together, results showed that adaptive selling and commitment played a critical role in sales performance.
Originality/value
This research is the first to empirically analyse the model regarding the relationship between sales performance, control, adaptive selling and commitment variables.
Purpose
The purpose of this paper is to examine the impact of debt financing on both performance and systematic risk in Amman Stock Exchange listed firms. The authors focus the study to analyze the differences between services and industrial firms in one sense and the differences between international and domestic firms in the other sense, as the study depends on the geographical distribution of sales to classify the nationality of firms.
Design/methodology/approach
The study sample includes all listed Jordanian firms in Amman Stock Exchange from 2005 to 2013 for both industrial and services sectors. Using panel data techniques, fixed effects regression with modified Driscoll-Kraay standard error as a remedy for heteroscedasticity problem is employed.
Findings
The results show that there is a significant negative impact of debt financing on the firm’s performance, where the sector and the sales nationality play an important role. Moreover, the results indicate that there is a significant positive impact of debt financing on the firm’s systematic risk. Taking the sector and sales nationality into consideration, the authors find that the debt financing has no significant impact on the systematic risk of services firms and domestic firms. Additionally, the findings indicate that services firms and international firms are, on average, more riskier than industrial firms and domestic firms, respectively.
Originality/value
The paper provides a visibility on the comparison between international and local firms in Jordan in terms of the impact of debt financing on the financial performance and systematic risk in one research.
The neoclassical theory of investment has mainly been tested with physical investment, but we show that it also helps explain intangible investment. At the firm level, Tobin’s q explains physical and intangible investment roughly equally well, and it explains total investment even better. Compared with physical capital, intangible capital adjusts more slowly to changes in investment opportunities. The classic q theory performs better in firms and years with more intangible capital: Total and even physical investment are better explained by Tobin’s q and are less sensitive to cash flow. At the macro level, Tobin’s q explains intangible investment many times better than physical investment. We propose a simple, new Tobin’s q proxy that accounts for intangible capital, and we show that it is a superior proxy for both physical and intangible investment opportunities.
To develop innovative solutions for complex societal and scientific challenges, organizations need to move beyond the boundaries of single firms and engage in collaborative networks. In these networks, multiple, diverse stakeholders are working together to co-create innovative value. Co-creation in a network creates new challenges in terms of changed processes and outcomes. Guided by grounded theory methodology, we explore these aspects by studying a public-private partnership involving 57 stakeholders. We take the number and diversity of stakeholders into account to shed light on the distinct processes through which value is co-created and captured. We also identify the types of value outcomes that accrue to the network and its participants. Overall, we present a multi-level cyclical process framework for leveraging value in multi-stakeholder collaborations and visualize these collaborations as a value space in which all stakeholders are uniquely positioned. In doing so, this study provides novel insights into the systemic, multi-actor nature of value co-creation and supports collaborators in maximizing value for both individual stakeholders and the network as a whole.
Corporate governance guidelines all over the globe are focusing on adding independent directors to the board to improve board effectiveness. Does the addition of more number of independent directors improve firm performance? The extant literature does not give a unanimous answer. In the given background, the present work explores the impact of board independence on firm performance for the emerging Indian market. The study examines Nifty firms over a period of six years from 2005-2010 using panel regression. The results show board independence to have positive impact on Tobin's Q, the proxy for firm value. The study found no direct impact of board independence on operating performance.
In this paper we propose a new approach (based on the Multiple Indicator Multiple Cause (MIMIC) model of Joreskog and Goldberger (1975)) to assess the performance of firms assuming that the ‘true’ firm performance is latent but there are many observable indicators of it. In our MIMIC model, the latent firm performance variable is linked with some observed explanatory variables (determinants) like age, size, advertising expenses, debt equity ratio, etc. Since there are many observed indicators (ROE, ROA, Tobin’s Q, etc.) of the unobserved latent firm performance, the measurement equations in the MIMIC model link these observed indicators to the latent performance measure. We use firm level data from India during the period 2001 to 2008 to estimate the latent firm performance using the predicted factor scores and rank the firms according to the proposed measure. Finally, we estimate two stochastic frontier models and compute Pearson’s correlation between pairs of performance measures. We find high rank correlation between the two measures of firm performance/efficiency, which justifies the use of the MIMIC model as a complementary method of performance measures.
We test the relationship between shareholder value, stakeholder management, and social issue participation. Building better relations with primary stakeholders like employees, customers, suppliers, and communities could lead to increased shareholder wealth by helping firms develop intangible, valuable assets which can be sources of competitive advantage. On the other hand, using corporate resources for social issues not related to primary stakeholders may not create value far shareholders. We test these propositions with data from S&P 500 firms and find evidence that stakeholder management leads to improved shareholder value, while social issue participation is negatively associated with shareholder value. Copyright (C) 2001 John Wiley & Sons, Ltd.
This paper studies the impact of capital structure or financial leverage on firm financial performance. A sample size of 422 listed Indian manufacturing companies on Bombay Stock Exchange (BSE) has been taken to analyze the relationship between leverage and firm performance. A period of 10 years from 2003–2004 to 2012–2013 and annual financial standalone data have been considered to analyze the leverage effect. Ratio analysis and panel data approach have been applied to perform the empirical study. Return on asset, return on equity and Tobin’s Q are used as the proxy for measuring the firm’s financial performance. It was found that financial leverage has no impact on the firm’s financial performance parameters of return on asset and Tobin’s Q. However, it is negative and significantly correlated with return on equity. Other independent variables like size, age, tangibility, sales growth, asset turnover and ownership structure are significant determinants of a firm’s financial performance in the Indian manufacturing sector. Thus, the findings of the study would enhance the literature on capital structure and is relevant for the Indian manufacturing industry in taking its capital structure decisions as it is based on the most recent data and covers the period of both pre- and post-recession of 2008–2009. There is an adverse effect of recession on the financial performance of the Indian manufacturing firms.
In this paper, we examine how the cash holdings have an impact on R&D expenditures and whether the ownership mechanisms moderate the R&D expenditures- the resource of internal funds relationship. The result showed that cash holdings have a positively relationship with R&D expenditures. Specially, we found that institutional ownership had a positive moderating effect of the R&D expenditures-the resource of internal funds relationship. In additional analysis, the large business group and the share of managers doesn’t moderate the relationship between cash holdings and R&D expenditures. These results provide that institutional investor in Korea tend to be long-term oriented, “active” and “sophisticated” investor. They are less likely to evaluate corporate executives on the basis of short-term earnings alone and are more likely to support value-creating.
Marketing capability and research and development intensity are firm resources used to increase firm performance and reduce investor risk. This study aims to link marketing capability and research and development intensity, and their interaction to firm default risk. This study is the first to examine marketing capability and research and development intensity regarding their influences on firm default vulnerability and to demonstrate how marketing capability may strengthen research and development intensities’ power on risk reduction. The results reveal a U-shaped relationship between research and development intensity and firm default risk, while marketing capability’s impact is unidirectional. Further, marketing capability strongly moderates the relationship between research and development intensity and firm default risk. For low marketing capability firms, the U-shaped pattern is more significant. For high marketing capability firms, the pattern is not salient and the risk reduction power of research and development intensity is stronger. This research provides useful implications for marketing theories, as well as business practice.
Environmental and social disclosures entail costs, yet increasingly, large listed firms are making higher and better quality disclosures. In this paper we examine the link between a firm's environmental and social disclosures and its profitability and market value. We find that past profitability drives current social disclosures. However, consistent with the existing evidence, we do not find any relation between environmental disclosures and profitability. Further, while prior literature has largely focussed on environmental disclosure, we find that it is the social disclosures that matter to investors. We find that firms that make higher social disclosures have higher market values. Further analysis reveals that this link is driven by higher expected growth rates in the cash flows of such companies. Overall our findings are consistent with the resource based view of the firm and the voluntary disclosure theory, suggesting that firms with greater economic resources make more extensive disclosures which yield net positive economic benefits.
We investigate the impact of R&D narrative disclosure on the market value of equity for a sample of French companies during the period 2000–2004. Using 3SLS estimation on a panel data of 98 French firms, we find, ceteris paribus, positive (but insignificant) association between R&D voluntary disclosure and the market value of equity. Both R&D intensity and R&D capitalization lead French firms to disclose more R&D narrative information. However, they impact differently the relationship between R&D-related disclosure and market value. Indeed, a positive and significant association is found when we control for R&D capitalization. In contrast, when controlling for R&D intensity, we find a negative association. We also find that equity-based compensation and audit committee independence are the most important drivers for R&D narrative disclosure.
This study assesses the relationship between organizational innovation and technological innovation capabilities, and analyzes their effect on firm performance using a resource-based view theoretical framework. The article presents empirical evidence from a survey of 144 Spanish industrial firms and modeling of a system of structural equations using partial least squares. The results confirm that organizational innovation favors the development of technological innovation capabilities and that both organizational innovation and technological capabilities for products and processes can lead to superior firm performance.
Market orientation (MO) lies at the very heart of modern marketing thinking and practice. Although research has shown that MO contributes to firm performance through innovation, an understanding is lacking on how the dimensions of MO (customer orientation, competitor orientation, and inter-functional coordination) may have differential effects on innovation, especially in the sales force context. Using data from business to business sales forces in the US manufacturing sector, this study identifies sales force outcome interdependence as a critical boundary condition that can strengthen the positive effect of competitor orientation but weaken the positive effect of customer orientation on sales force creativity. Moreover, results indicate that effect of sales force creativity on performance is fully mediated by innovation implementation, which can be bolstered by an innovative organizational culture.
This study analyzes how Spanish manufacturing firms' technological collaboration with suppliers affects these firms' product innovation. This research also considers innovation novelty (radical versus incremental). Using the 2007-2010 data from the ESEE (Business Strategies Survey), logistic regression analysis shows that technological collaboration with suppliers is an important factor in the innovation process. Novelty degree is also an important factor because collaboration's effect varies over time: early supplier involvement is not always essential.
Scholars regard customer knowledge management (CKM) as a strategic resource for businesses to improve innovation , facilitate the detection of new market opportunities, and support long-term customer relationship management. However, literature suffers from a lack of understanding of customer collaboration's role in the innovation process and innovation orientation in CKM. Accordingly, this paper tests a model examining how both variables act as antecedents of CKM. The model also explores CKM and customer collaboration's effect on marketing results. Findings have important academic and managerial implications, and show that collaboration with customers and openness to innovation are key inputs because of their effects on CKM and marketing results.
Purpose
– The purpose of this paper is to explore the relationships between corporate social responsibility (CSR) disclosure, corporate governance and financial analysts’ information environment, as proxied by their ability to forecast a firm’s earnings. Hence, we extend prior voluntary disclosure research.
Design/methodology/approach
– Our paper considers that the determination of CSR disclosure, corporate governance and financial analyst forecasting work are closely intertwined. Therefore, we rely on simultaneous equations to explore these relations.
Findings
– Findings show that there is a direct relation between both CSR disclosure and corporate governance and financial analysts’ information environment: more disclosure and better governance translate into a tighter consensus in earnings forecasts as well as less dispersion. However, corporate governance substitutes for CSR disclosure in improving analyst forecast precision, thus supporting a comprehensive view of corporate governance that encompasses disclosure. Finally, results also suggest that CSR disclosure, through its effect on governance and analyst following, has an indirect influence on analyst forecast precision. Overall, it appears that both CSR disclosure and good corporate governance attract analysts and improve their ability to forecast earnings.
Originality/value
– To the best of our knowledge, our study is the first to investigate the joint effect of corporate governance and CSR disclosure on analyst forecast precision.