Institutional environment, innovation capacity and firm performance in Russia

Purpose – Following the demise of the Soviet Union in 1992, Russia undertook major institutional and market-oriented reforms to enhance the competitive advantage of domestic enterprises. Although Russia has experienced rapid growth over the last two decades, the extent to which institutions in Russia impact on firm innovation and performance remains poorly understood due to a lack of research on the subject. This paper seeks to contribute to the literature on the competitiveness of Russian firms by focussing specifically on the extent to which the state of the regulatory quality, rule of law, and corruption affect the innovation capacity and performance of firms in Russia.

Design/methodology/approach – The study uses structural equation modelling and data from a large-scale firm level survey (n=787) of firms in Russia undertaken by the World Bank in 2009. It investigates the direct and indirect perceptions of respondents of the effects the current institutional environment has on the innovation capacity and performance of their respective organisations.

Findings – The results show that regulatory quality, rule of law and corruption have strong direct and negative impacts on both the innovation capacity and performance of firms, and that innovation capacity strongly mediates the effects of institutions on firm performance. The results suggest that the current state of the regulatory quality, rule of law and corruption in Russia inhibit firm innovation and their resulting performance.

Research limitations/implications – The findings should be interpreted with caution to the extent that the study is limited to only three elements of the formal institutional environment and does not take into consideration the role of informal institutions. These two limitations present avenues for future research.

Originality/value – The study is one of the first to provide empirical evidence based on a large-scale survey of the extent to which formal institutions inhibit innovation and firm performance in Russia, and provides valuable guidance to business policy-makers in Russia on possible avenues for enhancing the overall competitiveness of Russian firms.

Board structure and firm performance : evidence from an emerging economy

We investigate the relationship between corporate board structure and firm performance of Bangladeshi companies. Using a sample of 654 firm- year observations for the period 2005-2009, the results show some support for aspects of agency theory as a greater proportion of independent directors on boards is related to better firm performance. Supporting resource dependence theory our result also suggest that larger boards provide valuable business experience, expertise, skill and social and professional networks which might add substantial business resources to the firms and thus positively impact on performance. We also find that female and foreign directors in Bangladesh provide more monitoring which leads to better firm performance. Our study contributes to extant research on board structure–performance relationship by providing evidence from an emerging economy context which is characterised by ownership concentration, family dominance and poor regulatory oversight.

Board composition, board activity and ownership concentration, the impact on firm performance

This paper provides a parallel investigation on the impact of board composition, board activity and ownership concentration on the performance of listed Chinese firms. We find that independent directors enhance firm performance effectively than other board factors. The frequency of shareholder meetings, rather than board meetings, is positively associated with firm value. Tradable share ownership concentration has a positive and linear relationship with firm value, while state and total share ownership concentration represent U(V) shapes. Importantly, companies with the highest levels of both total share and tradable share ownership concentration have a greater firm values than companies with the highest levels of only a single concentration.

HRM retrenchment practices and firm performance in times of economic downturn: exploring the moderating effects of family involvement in management

A substantial number of studies have indicated a significant negative relationship between human resource management (HRM) retrenchment practices such as downsizing, and firm performance. However, a consideration of the potential effects of business family involvement in management is largely absent from the general employment restructuring literature. Using a sample of 218 Taiwanese publicly listed firms, this study seeks to further our understanding in this area by examining the moderating effects of family involvement in management on the relationship between the adoption of HRM retrenchment practices and firm performance during the period of global economic downturn that erupted in the middle of 2008. Data analysis reveals that HRM retrenchment practices had a negative influence on firm performance, and that the relationship between HRM retrenchment practices and firm performance was negatively and significantly moderated by family involvement in management.

Non-wage benefits, corporate ownership and firm performance in post-communist economies: evidence from Ukraine

The economic reforms in the transition economies of Central and Eastern Europe have fundamentally reshaped ownership and governance of economic production, notably through the privatization of former state-owned enterprises. These reforms were expected to transform management practices by displacing ‘cradle-to-grave’ welfare arrangements administered by state-owned enterprises. Using data drawn from two large samples of Ukrainian establishments, we investigate, in two different time points, the relationship between non-wage benefits and firm performance during the period of transition to a market economy (1994–2004). We found that non-wage benefits continued to be a critical feature of HRM practices in Ukraine during this period, and were positively associated with firm performance.

Effects of entrepreneurial and environmental sustainability orientations on firm performance: a study of small businesses in the Philippines

Why do small businesses in developing countries embrace sustainable business practices and what are the effects on their performance? We address these questions by drawing on the natural-resource based view of the firm to argue that the environmental sustainability orientation of small businesses can be explained by their entrepreneurial orientation. Our study of 197 small businesses in the Philippines shows that an entrepreneurial strategic orientation enables them to develop a more proactive stance toward environmental sustainability practices which lead to superior firm performance. The implications of the findings for future research and for public policy for small businesses are also discussed.

Investment opportunity set, corporate governance practices and firm performance

Prior research on the relationship between corporate controls and firm performance is premised on the notion that, in theory, there is direct association between corporate governance and firm performance. However, extensive research has produced mixed and often weak results. In this paper, we posit, as a primary relationship, a negative association between growth and firm performance and then examine whether corporate governance variables moderate this negative relationship. Our results support this notion and show that the role of corporate governance variables in firm performance should be evaluated in the context of the firm’s external environment measured in this study in terms of growth opportunities.

Brand compass: charting a course to improve firm performance

This study contributes to the internal brand management domain from a firm asset perspective. We argue brand compass is an inside-out identity-focused firm asset consisting of brand vision, brand commitment and shared brand understanding. We build a theoretical argument for examining brand compass together with two important outward focused orientations: market orientation and innovation orientation. Through structural equation modelling, within the context of retailing, the findings chart a course to improve firm performance.

Valuing talent: do CEOs' ability and discretion unambiguously increase firm performance

This study investigates how the association between more able managers and firm performance, documented in prior research, is affected by the joint effect of managerial discretion and monitoring quality. We find that higher levels of managerial discretion afford more able managers to further improve firm outcomes only when such discretion is monitored closely to curb more able managers' rent seeking incentives. Our results are robust to a battery of additional and sensitivity analyses that we perform.