The aim of this paper is to study the influence of chief executive officers' overconfidence on corporate research and development (R&D). We analyze a sample of 766 firms from the United Kingdom, France, Germany, Switzerland, Italy, Spain, and the Netherlands between 2008 and 2013. We use 3 measures of managerial overconfidence: the press coverage of chief executive officers, his/her age, and his/her experience in the industry. Our results show that the firms run by overconfident managers actually invest more in R&D expenditures, even after controlling for country, industry, and time factors. Overconfident managers not only spend more on R&D but also amplify the effect of financial determinants of R&D such as firm liquidity or profitability. Nevertheless, overconfident managers do not invest efficiently in R&D, and these expenditures can negatively affect the value of the firm.
Purpose – The purpose of this paper is to analyse the demand for tickets in the Brazilian State Championships focussing in the impact generated by the brand teams as well as the play-off matches in the demand for tickets and, consequently, in the match day revenues. Design/methodology/approach – An equations system by three-stage least square estimator is employed. The data set comprises 1,114 matches from Mineiro, Carioca and Paulista Championships over the seasons 2013-2015. Findings – All explanatory variables increase both attendance and match day revenues. However, the most important goal is the distribution of wealth found. The presence of brand teams in those championships provides a financial aid for smaller teams. Practical implications – The proposals from the mass media to exclude the brand teams and design those championships exclusively in play-off stages should not be implemented by the policymakers. On the contrary, rearranging the design of the competition with more matches between small teams and brand teams may help to all of them. Originality/value – The paper contributes to introduce the Brazilian State Championships in the sport economics literature as well as evidences the redistribution effect of wealth among clubs.
This study provides readers with new information about key drivers of performance in the emerging area of eSports. Competitive computer gaming (eSports) is becoming increasingly popular, and the number of gamers and amount of prize money is growing. We therefore explore some key country-level characteristics that may contribute to players’ success, measured as money won. We use gamers’ prize earnings aggregated by country and a hurdle model to understand the determinants of performance. The results show that a 1% increase in GDP per capita leads to a 2.2% increase in prize money per capita. Country population is not statistically significant in the outcome model. This finding may indicate that eSports talents are not uniformly distributed across the world population. Surprisingly, post-Soviet and planned or post-planned economies are more likely to participate in eSports.
Purpose - The purpose of this paper is to examine the relationship between export activity and firm performance for a positive impact of foreign direct investments. We also analyse two possible causes of the effect: technology transfer and financial support. The theoretical background is rooted in the resource-based approach taking into account multinational companies’ perspective and the specifics of emerging markets. Design/methodology/approach - We propose testable hypotheses based on a review of the theory. To test the hypotheses, we build a sample of over 500 Russian public manufacturing firms covering the period from 2004 to 2014 and estimate regression models. Given concerns about endogeneity, the instrumental variable approach for panel data, using GMM-estimator, is implemented. Findings - Consistent with the view that foreign direct investments generate spillover effects, our results support the positive impact of foreign ownership on the link between exports and firms’ performance. Our results underline the importance of foreign ownership: shareholders from developed countries can provide benefits to exporting companies through transferring advanced technologies and loosening financial constraints by lowering interest and raising availability of bank loans.
Originality/value - We provide new insights on the relationship between exports and firm performance. Given our focus on Russia, a market with high potential to draw foreign investments, our research sheds some light on how emerging country firms can benefit from having foreign shareholders with paying attention to geographical distribution of such investments. Specifically, through the overcoming of technological barriers and loosening of financial constraints, we show empirically that foreign capital can make up for weak local institutional infrastructure and enhance the company’s’ returns from internationalization.
This paper investigates how the recent crisis of 2008 changed relations between innovation and firm performance in Western Europe. We apply a structural framework of CDM modelling, which incorporates different stages of the knowledge creation process and takes into account the complex nature of innovations. The study is based on a balanced panel data of 420 listed manufacturing firms from the U.K., Germany and France. All the information is gathered from common sources, thereby reducing subjectivity, a typical problem in the field. We found, the crisis resulted in appreciable changes in the model. The most important evidence is enhancement of the role of firm resources in the post-recession period. We also reveal larger barriers for innovations, increased uncertainty and lower state dependence in R&D engagement, product creation and economic performance. These results could indicate the ‘cleaning effect’ of the crisis, which has worsened the business environment and enhanced competition.
Abstract Purpose – This paper aims to analyse the location as root of the specificity of the sources of competitiveness in subsistence small businesses (SSBs) of wood industry to improve the situation of poverty and the different behaviour of subsistence entrepreneurs. Design/methodology/approach – The research uses an exploratory analysis based on principal components in two phases and confirmatory analysis based on partial least square techniques applied to a sample of 113 small and medium enterprises of wood industry in Oberá, a region of Argentina. Findings – The analysis evidences the use of competitiveness sources of SSBs and a double behaviour in SSBs according to subsistence threshold. Satisfactory SSBs use competitiveness sources to improve organizational and economic performance. Unsatisfactory SSBs find economic performance without relation to organizational performance. Research limitations/implications – Data are cross-sectional, and in a conjuncture of economy expansion, future research should monitor the sample of firms using panel data to assess the development of relations. Sample is in a particular region and sector, and generalizations should be done carefully. Practical implications – SSBs should raise the strategy integrating short and long term, which requires a strengthening of intellectual capital, especially in cooperation, professionalism and training. They could integrate and share a business community to develop competitive advantages of collective systemic. Originality/value – The research shows the importance of the location for the competitiveness of SSBs and provides a classification of SSBs according to their performance.
Small businesses created as a way of subsisting are very important in Latin America in alleviating extreme poverty. These businesses possibly need to innovate to compete. Innovativeness is strongly linked with intellectual capital, but the limitations of subsistence small businesses weaken this link. In particular, human capital possibly affects innovativeness, but the effect can be mediated or moderated by other components of intellectual capital. This paper uses partial least squares to study the impact of the different dimensions of intellectual capital on innovativeness as a dynamic capability in small businesses in the timber industry in an area of Latin America, and, in particular, the mediation effect among them. The results show that human capital generates relational capital. The relational capital needs structural capital to improve the innovativeness of subsistence small businesses.
According to behavioral economics, coaches may be unconsciously biased, and this could lead to deviations from rational behavior, which in turn affects team performance. We analyze the influence of a particular behavioral bias of coaches, overconfidence, on the performance of soccer teams. We use a sample of 63 coaches managing all the soccer clubs involved in the Russian Football Premier League during the four seasons between 2010 and 2013/2014. To measure overconfidence, we use a press-based metric that is generally accepted in corporate governance studies and complement it with an additional continuous measure. Coaches' overconfidence positively and significantly influences team average scores, both in the baseline regression and robustness checks. Additional testing allows us to draw conclusions regarding the inverse U-shaped relationship between overconfidence and performance. We cannot conclude that overconfidence has any effect on coaches' risk-taking that can be approximated by goals scored or allowed. We apply the well-studied methodology of overconfidence measurement to the new field of sport economics, thereby generating novel results. Although overconfidence is perceived negatively in corporate governance, we show that in sport, it is beneficial to be overconfident. The findings contribute to sport literature, more specifically to the field of performance in soccer, with results that support the importance of a coach's personal traits.
Purpose – Subsistence small businesses (SSBs) do not seek the maximum benefit; they only seek a benefit that enough satisfies their basic needs. In consequence, a dual behaviour of companies is expected and possibly the competitiveness of these companies is different. The purpose of this paper is to study the dual behaviour of SSBs and the differences about their competitive advantages. Design/methodology/approach – Data were obtained by conducting surveys with owners and managers of wood processing companies located in a region of Misiones (Argentina). The results were checked by interviews in 2012 and 2015. The research uses principal component analysis and K-means to classify the different behaviour and MANOVA analysis to study the relationships. Findings – The findings suggest two types of SSBs and show that competitive advantages are different into two groups of companies. Research limitations/implications – The data used refer to a certain period of time, with interviews in next periods. Sample is in a particular region and sector and generalisations should be done carefully. The variables are measured with subjective questions. Practical implications – The findings suggest instruments to change the strategy of unsatisfied SSBs to grow. Social implications – The growth of SSBs is very important in poorest areas. The paper suggest governments’ politics that facilitate a stable environment for improving competitiveness of SSBs. Originality/value – SSBs are very important in developing countries, but they are not sufficiently studied. The research shows the importance of satisfying principle in the competitiveness of subsistence entrepreneurs.
The determinants of sporting success in Olympic Games and international football have been analysed. Nevertheless, few studies are found on football club-level. The aim of this paper is to identify the determinants of sporting success at professional club-level studying the Brazilian League. The dataset comprises all 30 football clubs that competed in the First Division of the Brazilian League from 2010 to 2014. The econometric approach consists in an ordered logit regression. The dependent variable is the final position of each club. The findings reveal that team payroll, placement in a city with higher standard of living, the number of previous participations and a current title in the State Championships maximize the likelihood of success. However, the number of players used negatively affects the sporting performance. The peculiarities of Brazilian football are used to discuss the findings. Further papers on European football are recommended as some determinants could vary.
This study uses a combination of multinational enterprises and dynamic capabilities perspectives to illustrate how the involvement of foreign investors is able to contribute to a company’s corporate performance. Using Russian companies as an empirical sample and applying PLS-SEM, we test hypotheses regarding the impact of dynamic capabilities in terms of absorptive, adaptive and communicative capabilities, on the relationship between foreign ownership and performance. Findings indicate that dynamic capabilities fully mediate the process of foreign direct investments transformation into firm’s results. Our findings contribute to the understanding of the mechanism by which dynamic capabilities enhance the positive effects of foreign direct investments on business performance, and advance the theoretical understanding of how a dynamic capabilities concept could be incorporated into multinational enterprises theory in the framework of relationships between companies from economies with different knowledge endowment.
Purpose The purpose of this paper is to address the issue of efficiency of corporate universities. An efficiency is defined in relative terms: as having relatively better performance in comparison to other companies. Different indicators of performance were employed in order to analyze short-term and long-term efficiency. A comparative analysis of European companies and emerging Russian companies is performed in order to understand if there are country differences in the efficiency of corporate universities. Design/methodology/approach To avoid potential omitted variable bias, fixed effect within estimator is employed. This estimator enables controlling for a firm-specific time-constant effect which conditions company’s performance and is responsible for other individual traits. The rest of the characteristics are controlled with a proxy, which are traditional for corporate finance studies. Findings There are contradictory results for the efficiency of a corporate university; for the European companies, a corporate university brings positive effect for the short-term performance, nevertheless, as the authors have found that it destructs value in long term. A company with a corporate university has 70 percent less market value added than an average company. There is a negative short-term synergy while the long-term synergy is positive. The results for the Russian sample are very consistent: corporate universities have negative or neutral effect on the performance. Originality/value This study contributes to the literature about strategic management and human resources management. It addresses the issue on efficiency of corporate universities in companies considering this as one of the key strategic investment in human resource policy. It appears that the corporate university is not a panacea for all companies to develop their human development policy.
This study explores the recovery in the Market Value Added (MVA) of European companies after the recent global economic crisis in 2008–2009. It introduces empirical evidence that intangible-intensive strategy in human and relational capital reinforces speed of the after-crisis correction for companies. Based on a panel dataset of more than 1600 listed corporations this research aims to discover drivers of Market Value Added trends in 2011–2013. The established results contribute to the understanding of the advantages that companies can exploit for the recovery after systematic shocks of markets. Our study demonstrates that intangible-intensive strategy not always enabled faster recovery speed. Meanwhile, it provided year-to-year acceleration of MVA growth after crisis.
In the era of the knowledge economy intangibles are recognized by investors as pivotal value drivers. This paper proposes an intangibles-based tool for picking companies with value growth potential.
We suggest a model to select companies that effectively use unique intangibles (in contrast to the generic intangibles). To test whether these results can be explained by skill we implement a bootstrap procedure. Companies that are able to use unique intangibles efficiently are combined in a portfolio.
Only 22% of companies have the skills to use unique intangibles, but all of them are characterized by the efficiency of their use. The created portfolio demonstrates a higher cumulative return, Sharpe ratio and lower drawdown than S&P500. We also find the increasing importance of intangibles for investors during the crisis.
Both the created portfolio and the benchmark (S&P 500 index) are analyzed without transaction costs. Also the benchmark construction is based on equal-weighted sum of company M/B ratios.
We take into account the quality of intangibles (efficiency of unique intangibles use) while previous research of portfolio forming methods is based on quantity of intangibles.
We analyze the effect of pyramidal ownership levels on the performance of Chilean firms by considering the impact of business groups. Using an unbalanced panel of 1018 firm-year observations from 88 quoted firms for the period from 2000 to 2014, we find that higher levels of separation between ownership rights and control rights decrease performance in family firms that are not part of a business group. This result suggests that too much separation of ownership and control rights in family firms can result in deviant incentives for family members to extract private benefits. However, we also find that group affiliation reduces the negative impact of the separation of ownership and control rights in family firms, which corroborates the bright side of internal capital markets for these firms.
This paper analyses the relation between corporate risk-taking and firm performance for a sample of international listed firms over the period 2001–2013. We consider the approaches on individual behavior (specifically prospect theory) to propose a U-shaped relation between corporate risk-taking and firm returns. We find that firms adopt an attitude of risk-seeking when the expected performance is below a target performance (to avoid an anticipated loss) and an attitude of risk averse when the performance exceeds that target. This relation is affected by the economic context and the nature of the major shareholder: Firms controlled by families or institutional investors react more conservatively (taking or avoiding risk) to changes in corporate results. We are aware that our results, are affected by both the theoretical model and the temporal and spatial framework used.
This paper is aimed at identifying the role of digital manufacturing in changes of marketing activities of industrial companies from the point of view of a business management system. Authors define and conceptualize the notion of “digital manufacturing”. Research design is based on the Deloitte Company methodology based on value creation approach. Customers, product, economics of production, and value chain are essential methodology parameters. Our analysis shows that implementation of digital manufacturing will necessarily significantly change entire business model and marketing activity of the company. The main drivers of this process are building and maintaining relationship with customers and new opportunities related to product design and production. Interaction with customers without intermediaries, customers’ involvement in the processes of new products development, new technical possibilities of creating personalized product-service solution are main changes in marketing activities caused by the implementation of digital manufacturing at the company.
Prior evidence suggests that board independence may enhance financial performance, but this relationship has been tested almost exclusively for Anglo-American countries. To explore the boundary conditions of this prominent governance mechanism, we examine the impact of the formal and information institutions of 18 national business systems on the board independence-financial performance relationship. Our results show that while the direct effect of independence is weak, national-level institutions significantly moderate the independence-performance relationship. Our findings suggest that the efficacy of board structures is likely to be contingent on the specific national context, but the type of legal system is insignificant.