A new slacks-based measure of Malmquist–Luenberger index in the presence of undesirable outputs

In the majority of production processes, noticeable amounts of bad byproducts or bad outputs are produced. The negative effects of the bad outputs on efficiency cannot be handled by the standard Malmquist index to measure productivity change over time. Toward this end, the Malmquist–Luenberger index (MLI) has been introduced, when undesirable outputs are present. In this paper, we introduce a Data Envelopment Analysis (DEA) model as well as an algorithm, which can successfully eliminate a common infeasibility problem encountered in MLI mixed period problems. This model incorporates the best endogenous direction amongst all other possible directions to increase desirable output and decrease the undesirable outputs at the same time. A simple example used to illustrate the new algorithm and a real application of steam power plants is used to show the applicability of the proposed model.     

Ownership structure,investors’ protection and corporate valuation: the effect of judicial system efficiency in family and non-family firms

Research on the effect of ownership structure on firm performance shows no convergent evidence concerning the sign and form of the above-mentioned relationship. Similarly, there is no homogeneous evidence documenting family ownership concentration is always positively or negatively correlated with firm value, or irrelevant. This paper analyses whether and how the de facto investor protection provided by the judicial system affects the relationship between corporate performance and ownership structure in 1314 firms operating in four European countries (Germany, France, Italy, and Spain) over a five-year period, 2010–2014. Moreover, we analyse whether judicial system efficiency influences if and how family firms in the controlling coalition collude for expropriating minority shareholders. Our findings show that the level of shareholder protection, derived from judicial efficiency, is relevant to the relationship between ownership structure and firm performance, thus corroborating literature in that institutional contexts matter in explaining such relations. The results suggest the need for more efficient external mechanisms of corporate governance to facilitate investment in equity capital, thus decreasing the country risk perceived by investors.     

Tweaking the entrepreneurial orientation–performance relationship in family firms: the effect of control mechanisms and family-related goals

Management literature is currently giving growing conceptual and empirical attention to the peculiarity and relevance of entrepreneurial attitudes in family firms, with divergent outcomes. Aiming at concretizing the effects of these attitudes, denoted by the entrepreneurial orientation construct, on family business performance and considering that family dynamics come into play in this relationship, we particularly investigate the impact of control mechanisms and family-related goals. Findings are based on a sample of 180 family firms and show that Proactiveness and Autonomy are particularly relevant to financial performance. Agency-problems avoiding control mechanisms moderate the effect of Innovativeness and Autonomy, while socioemotional wealth (SEW) goals moderate the effect of Risk-Taking, respectively. The usage of these mechanisms and managing SEW goals provide opportunities for a more efficient exploitation of entrepreneurial attitudes.     

Required and obtained equity returns in privately held businesses: the impact of family nature—evidence before and after the global economic crisis

This paper analyses the impact that family businesses have on the minimum rate of return required by owner–investors (k _e ) and on the equity returns (ROEaT) obtained in privately held businesses. This influence is analysed for an economic growth period (2002–2007) and for a crisis period (2008–2013) in the European context. Moreover, our study also explores the family nature through the heterogeneity among family firms in their required and obtained equity returns by considering the degree of family involvement in the ownership and management. Our findings reveal that while family businesses always have a negative and significant impact on k _e regardless of the economic environment, they only have a positive and significant impact on ROEaT in economic upturns. Thus, non-economic goals do not necessarily imply underperformance but may involve a lower cost of equity capital in privately held family businesses than in privately held non-family businesses, which also leads to differences in the value creation.     

The effects of international diversification on the link between product diversification and performance in a boom and bust cycle: Evidence from Spanish firms (1994–2014)

This study examines the individual effects of product diversification on performance and the moderating effects of international diversification on the product diversification–performance link in the context of a boom and bust cycle. Most prior research on firm strategies largely neglect the business cycle. We use data on a large sample of Spanish manufacturing firms from 1994 to 2014. In this period, the Spanish economy experienced a boom period (1994–2008) and a bust period involving a severe economic crisis (2009–2014). Our study highlights the important role of each stage of the economic cycle. Specifically, with respect to product diversification, our findings show that in a boom, moderate diversifiers obtain better profitability levels than their highly diverse or limited diversification counterparts do. In contrast, during an economic downturn, moderate and high diversifiers can be equally effective up to some point of optimization. Our findings also reveal a negative and significant effect of internationalization on profitability, independent of the stage of the economic cycle. Product and international diversification are complementary strategies during a period of economic growth when firms opt for moderate levels of product diversification. Meanwhile, when firms choose high levels of product diversification, both types of strategies are complementary during the boom cycle, but substitutive during the bust cycle.