Does innovation lead to global orientation? Empirical evidence from a sample of Italian firms

This paper analyses the relationship between innovation at firm and industry level, and the global vs regional strategy of multinational enterprises (MNEs). Based on data from a sample of large Italian manufacturing firms, the analysis shows that technological assets affect a firm’s ability to overcome the liability of (regional) foreignness: the extent to which MNEs can exploit their firm-specific technological advantages is greater within their home region, but they also exploit them outside it. Furthermore, the results show that a firm’s foreign (outside the home country) and global sales (outside the home region) are higher, the greater the technology intensity of the industry in which they operate. These findings suggest that, although MNEs tend to operate regionally rather than globally, their strategic orientation is contingent upon firm- and industry-specific factors. Managers need to take the potential for globally exploiting R&D investments into account, even if it may not be equally successful within and outside the home region, and may be constrained by a number of inter-regional barriers.     

Customer satisfaction: Cost driver or value driver? Empirical evidence from the financial services industry

We investigate the relation between customer satisfaction, customer servicing costs, and customer value in a financial services firm. We find that customer satisfaction is positively associated with future customer servicing costs, as well as with customer value. The relation between customer satisfaction and customer value appears non-linear; higher customer satisfaction appears to have a higher return for the most profitable customer segments. Our findings indicate that customer satisfaction is a value driver; however, customer satisfaction is not cost-free and managers have to consider the costs, as well as the benefits, of increasing customer satisfaction.     

Do women directors contribute to R&D? The role of critical mass and expert power

Journal of Management and Governance - The paper provides insights into the implications for innovation input of having women on company boards. It sheds light on the effects of critical mass and...     

Does director capital influence board turnover after an incident of fraud? Evidence from Italian listed companies

Studies in U.S. have found that that director capital influences turnover within the board after an incident of fraud. We analyse whether there is a relationship between the probability of non-executive director turnover in Italian listed firms in which fraud has occurred and each director’s level of: (1) general business knowledge, (2) industry knowledge, and (3) relational capital. Our results suggest that non-executive director departure can be explained as a result of decisions by companies to clean their house of directors with lower expertise, industry knowledge and relational capital. These findings indicate that firms encourage the departure of these non-executive directors to signal to their stakeholders that they want to repair legitimacy and want to enhance the monitoring and resource provider tasks of the board. Indeed, in Italy, director turnover is more marked when the fraud visibility is greater. Furthermore, our study findings indicate that the cleaning house strategy is not influenced by the ownership structure and identity.     

Do minimum wages increase job satisfaction? Micro‐data evidence from the new German minimum wage

On January 1, 2015, a new statutory minimum wage of € 8.50 per hour of work was introduced in Germany. Using a difference‐in‐differences approach, we estimate effects on worker‐level outcomes of continuing employees. The results reveal a meaningful absolute increase in the affected workers' pay satisfaction. The increase in job satisfaction is modest and predominantly driven by changes in pay satisfaction implying only a small effect on all other dimensions of job satisfaction. Moreover, effects from the minimum wage on work engagement and turnover intention are virtually zero.     

Do board characteristics and ownership structure matter for bank non-performing loans? Empirical evidence from US commercial banks

Journal of Management and Governance - This paper aims to study the ability of the corporate governance of banks to reduce non-performing loans. The dynamic panel GMM estimation is applied to 184...     

Do nonprofessional investors value the assurance of integrated reports? Exploratory evidence

Using an experimental design, this explorative study provides unique empirical evidence of the effects of an integrated reporting assurance (IRA) on nonprofessional investors’ (NPIs) financial decision-making in a laboratory experiment. For this purpose, two independent experiments were carried out, one relying on a sample of Master’s students, and one focusing on managers of large corporations. In line with our agency theoretical reasoning, we find that students value an IRA positively, evidenced through significantly higher investments, while, contrary to expectations, an IRA has the opposite effect for managers. The results reveal that, dependent on the empirical model, an IRA has either no, or even an investment-decreasing, impact on executives. In order to assess the sense-making process underlying this conundrum, subsequent interviews with the managers were carried out which revealed three dimensions that shape practitioners’ critical attitudes towards assurance engagements. First, managers expressed a general disbelief in the decision usefulness of integrated reporting (IR) to (nonprofessional) investors. Second, interlocutors referred to negative practical experiences with audit and assurance engagements and had technical doubts specific to IRA. Third, managers voiced emotional caveats regarding the audit and assurance profession. These findings indicate a prevailing divergence between the extolled theoretical contribution of an IRA to report credibility and its actual nature in practice. In the further course of the investigation, we also find that the assurance provider (Big 4 auditor versus specialized consultant) does not affect investment decisions, but that a higher assurance level leverages investments among students. The results of this study add to the growing, albeit still small, IRA research body and deliver valuable insights for research, regulators, and practice.     

Correction to: Do women directors contribute to R&D? The role of critical mass and expert power

Journal of Management and Governance - An amendment to this paper has been published and can be accessed via the original article.     

Do Chief Executives’ Traits Affect the Financial Performance of Risk‐trading Firms? Evidence from the UK Insurance Industry

We examine the effects of four key dimensions of Chief Executive Officers’ (CEOs’) traits on six financial performance metrics using panel data for 1999?2012 drawn from the UK's property?casualty insurance industry. We find that CEO insurance experience and CEO financial expertise enhance financial performance, while two other CEO traits ? power and age ? are generally not significant. Our results thus reinforce the importance of CEO insurance industry expertise and CEO financial expertise in the management and trading of risks. Our results have potential commercial and policy implications.     

Is the Employment Function Structurally Unstable? An Empirical Test: Italian Manufacturing Industry, 1970–1984

Abstract. This paper tests the hypothesis that the high variability of the real input prices (especially real wage) coefficients in the empirical employment equations reflects structural characteristics of the economy considered, namely the balance of power between trade unions and fums. A dynamic equation with output, real wage and real prices of raw materials as explanatory variables is estimated using Italian manufacturing industry data 1970-1984. The model appears to be well specified and consistent with the literature. However, extensive parameter stability analysis yields results compatible with the view of the employment equation as structurally unstable. The fact that the equation appeared to be well specified and representative arouses the suspicion that other equations for different periods and economies could be equally unstable.     

What effect does the aggregate industrial R&D offshoring have on you? A multilevel study

The present study argues that R&D offshoring is not only a matter of firm's decision as in previous literature, but also has an important industrial externality component. For a sample of manufacturing and services industries in the period 2005–15, I study the externalities coming from R&D offshorers in a given industry and the heterogeneous effects of enterprises' internal knowledge base characteristics. The evidence points to offshoring externality (OE) presenting an inverted U-shape with respect to the firms' innovative processes. However, firms with higher levels of human capital and/or internal R&D investments obtain higher returns coming from the OE. Overall, it seems that a strategy (R&D offshoring) that is highly beneficial for enterprises individually, might be also optimal for the Spanish economy.     

Complements or substitutes? The contingent role of corporate reputation on the interplay between internal R&D and external knowledge sourcing

Existing research does not provide a clear answer to the question of whether internal knowledge development and external knowledge sourcing are complementary or substitutive innovation activities. This paper adopts a contingent approach for addressing this issue by examining whether and how the interactive effect of internal R&D efforts and external knowledge sourcing on product innovation performance may be affected by the firm’s corporate reputation. In doing so, a three-way interaction model is applied to a sample of 251 Spanish high-technology manufacturing firms. Interestingly, initial results support the substitutive argument: the positive effect of internal R&D on product innovation performance diminishes as the exposure to external knowledge increases. However, in well reputed companies, interaction becomes positive, revealing a complementary effect. Thus, the study extends the traditional approach focused on determining whether internal and external knowledge sourcing are complements or substitutes by showing that their interplay depends on other firm-specific characteristics. Moreover, identifying corporate reputation as a source of complementarity between both activities provides an additional explanation of how corporate reputation contributes to a more effective management of knowledge assets.     

How can MNEs benefit from internationalizing their R&D across countries with both weak and strong IPR protection?

Although MNEs internationalize their R&D not only in developed countries but also in emerging economies that typically feature weak protection of intellectual property rights (IPR), it remains unclear how this strategic decision affects their productivity performance. This limitation has resulted in a rather incomplete understanding of why some MNEs become more productive through R&D internationalization while others do not. This study develops a new explanation, suggesting that R&D internationalization does not affect the productivity of all MNEs equally because of differences in the idiosyncratic way in which MNEs geographically distribute their R&D units across weak and strong IPR protection countries. In advancing this explanation, the study challenges the view that weak IPR protection is disadvantageous for MNEs by showing that (and specifying how) it: 1) increases the efficacy of MNEs' internal R&D, 2) strengthens the advantages of accessing globally dispersed knowledge, and (3) improves MNEs' ability to exploit cross-country differences in IPR protection. The study enhances understanding of the complex role of IPR protection, shifts scholarly attention from the degree of R&D internationalization to how MNEs should internationalize their R&D, and clarifies how the IPR context of their location choices matters.     

Do the Falling Earnings of Immigrants Apply to Self‐employed Immigrants?

It is well known that the earnings of recent cohorts of immigrant men have fallen further behind native‐born men. Using several years of Canadian Census data, this study finds that immigrants have turned to self‐employment at a much faster rate than the native born. In addition, the earnings gap between self‐employed immigrant and native‐born men has not grown with successive cohorts, but rather has followed a cyclical movement: narrowing at the peak, and widening in times of weaker economic activity. However, immigrants choosing self‐employment still face challenges, as their earnings are far below native‐born earnings, and convergence is a lengthy process.     

Do ownership and size affect the performance of water utilities? Evidence from Estonian municipalities

Concerns regarding rising water and sewerage prices have generated a renewed interest in measuring and assessing water utility performance. An efficiency analysis can serve as a basis for price setting decisions. This article examines the influence of ownership structure and corporate size on the efficiency of Estonian water companies, and assesses the empirical efficiency gaps through the lens of corporate governance and natural monopoly theories. To assess efficiency and the influence of ownership and corporate size on efficiency, we use a Data Envelopment Analysis and truncated regression with maximum likelihood estimation as well as an ANOVA test. The study sample consists of 43 water utilities, serving more than 68% of the Estonian population. One main finding of the study reveals that ownership structure does not affect the efficiency of Estonian water utilities, while efficiency does increase with corporate size: large water utilities outperform small utilities. An additional conclusion is that the Estonian water sector is too fragmented.     

Do Work-Life Benefits Enhance the Work Attitudes of Employees? Findings from a Panel Study

Several years of data were obtained from a survey administered in U.S. federal agencies. The results revealed that work-life programs did not negatively affect turnover intentions. In fact, two work-life programs (i.e., teleworking and employee assistance programs) were actually found to increase turnover intentions. However, one of the work-life programs (health and wellness) was found to positively affect satisfaction. The practical and theoretical implications of the article are discussed in the paper.     

Do exits proxy a liability of foreignness?: The case of Japanese exits from the US

Progress in understanding the liability of foreignness requires accurate measurement of this concept. This paper investigates whether exits of foreign affiliates from a given host market provide a reliable measure. We tackle this question by investigating 32 exits of Japanese manufacturing affiliates from the US. Our goal is to assess the extent to which exits are driven by a liability of foreignness and thus whether exits can serve as a reliable measurement of this liability. We find that less than half of our exits are attributable to a liability of foreignness. We conclude that while the data confirm a liability of foreignness for Japanese early entrants into the US, the presence of many other motives for exit suggests caution when inferring such a liability from exits, especially when exit costs are low.