Exchange rate exposure:do size and foreign operations matter?

Purpose – The purpose of this paper is to examine the effect of firm size and foreign operations on the exchange rate exposure of UK non-financial companies from January 1981 to December 2001. Design/methodology/approach – The impact of the unexpected changes in exchange rates on firms’ stock returns is examined. In addition, the movements in bilateral, equally weighted (EQW) and trade-weighted and exchange rate indices are considered. The sample is classified according to firm size and the extent of firms’ foreign operations. In addition, structural changes on the relationship between exchange rate changes and individual firms’ stock returns are examined over three sub-periods: before joining the exchange rate mechanism (pre-ERM), during joining the ERM (in-ERM), and after departure from the ERM (post-ERM). Findings – The findings indicate that a higher percentage of UK firms are exposed to contemporaneous exchange rate changes than those reported in previous studies. UK firms’ stock returns are more affected by changes in the EQW, and US$ European currency unit exchange rate, and respond less significantly to the basket of 20 countries’ currencies relative to the UK pound exchange rate. It is found that exchange rate exposure has a more significant impact on stock returns of the large firms compared with the small and medium-sized companies. The evidence is consistent across all specifications using different exchange rate. The results provide evidence that the proportion of significant foreign exchange rate exposure is higher for firms which generate a higher percentage of revenues from abroad. The sensitivities of firms’ stock returns to exchange rate fluctuations are most evident in the pre-ERM and post-ERM periods. Practical implications – This study provides important implications for public policymakers, financial managers and investors on how common stock returns of various sectors react to exchange rate fluctuations. Originality/value – The empirical evidence supports the view that UK firms’ stock returns are affected by foreign exchange rate exposure.

Purchasing green transport and logistics services:implications for small business

Considering its strong environmental impact, logistics plays a critical role in green supply chain management. It provides strategic links in the supply chain and is an essential function in the delivery of green products to the consumer. There is a general consensus on the fact that more environmentally sustainable companies may be achieved only if transport and logistics activities also become greener. To achieve this objective, buyer companies need to incorporate green considerations in the purchasing of transport and logistics services. This appears particularly challenging for small and medium sized enterprises (SMEs) because of their traditional lack of managerial, organisational and financial resources that often result in failure to adopt an environmental perspective. In the extant literature, green purchasing has received increased attention over the past decade and the strategic importance of introducing green aspects into purchasing practices has been recognised. However, little has been written in relation to purchasing green transport and logistics services. The aim of this paper is to explore practices in the buying of green transport and logistics services and to derive implications for small buyer companies. The paper analyses how general environmental company ambitions and environmental purchasing practices are reflected when green transport and logistics services are purchased in three different European countries (Italy, Ireland and Sweden) using a multiple case study research approach. The results of the paper indicate that while the case companies show a relatively high concern for green issues at corporate level, a lower importance is attributed to green issues at the purchasing function level. When green concerns in the purchasing of transport and logistics services are analysed the level of importance decreases further. Thus, a conflicting attitude is evident between the overall corporate level and the purchasing of transport and logistics services specifically. This suggests that there is potential for improvement especially in the area of green collaboration in buyer and supplier relationships.

An Investigation into Outsourcing Practice in Ireland:A New Direction in Logistics and Supply Chain Management

Companies are increasingly focusing on the development of core competencies as an integral part of their overall strategy development and implementation. The corollary of this is that functions regarded as being non-core are being outsourced. This paper investigates the case for and against outsourcing and in addition what is happening in Ireland regards outsourcing. Furthermore to analysis of current literature in the field, an Irish-wide postal and e-mail survey, as well as three case studies revealed many interesting facts. The key findings of the work are manufacturing outsourcing is now the most popular function to be outsourced for both small to medium sized enterprises (SMEs) and large enterprises. Large enterprises (LEs) do not prepare or examine hidden costs more than SMEs, nor do they differ much in relation to the use of consultants. Furthermore, the importance of time spent on preparing or producing contract, and the impact the contract can have on the supplier-buyer relation do not differ significantly. It was found that most companies outsourced within Ireland, which led to further investigation in that area. In relation to logistics outsourcing specifically, this has become very important in the supply chain over the last 20 years as an activity that was traditionally handled by firms as a support function. At that time logistics activities such as warehousing, distribution, transportation and inventory management were given low priority compared with other business functions within the organisation. However, since the customer has become more demanding, the logistics function has now become a source of competitive advantage and there has been a growing emphasis on providing good customer service.

A conceptual framework for supply chain collaboration:empirical evidence from the agri-food industry

Purpose - The purpose of this paper is to analyse the concept of supply chain collaboration and to provide an overall framework that can be used as a conceptual landmark for further empirical research. In addition, the concept is explored in the context of agri-food industry and particularities are identified. Finally, the paper submits empirical evidence from an exploratory case study in the agri-food industry, at the grower-processor interface, and information regarding the way the concept is actually applied in small medium-sized enterprises (SMEs) is presented. Design/methodology/approach - The paper employed case study research by conducting in-depth interviews in the two companies. Findings - Supply chain collaboration concept is of significant importance for the agri-food industry however, some constraints arise due to the nature of industry's products, and the specific structure of the sector. Subsequently, collaboration in the supply chain is often limited to operational issues and to logistics-related activities. Research limitations/implications - Research is limited to a single case study and further qualitative testing of the conceptual model is needed in order to adjust the model before large scale testing. Practical implications - Case study findings may be transferable to other similar dual relationships at the grower-processor interface. Weaker parts in asymmetric relationships have opportunities to improve their position, altering the dependence balance, by achieving product/process excellence. Originality/value - The paper provides evidence regarding the applicability of the supply chain collaboration concept in the agri-food industry. It takes into consideration not relationships between big multinational companies, but SMEs. © Emerald Group Publishing Limited.

Coping with extreme weather:strategies of construction SMEs

Weather extremes have created a considerable impact on Small and Medium-sized Enterprises (SMEs) in the UK during the recent years, especially on SMEs in the construction sector. Evidence in relation to the recent weather extremes have demonstrated that SMEs are some of the worst impacted by the Extreme Weather Events (EWEs) and have confirmed them as a highly vulnerable section of the UK economy to the impact of extreme weather. This is of particular importance to the construction industry, as an overarching majority of construction companies are SMEs who account for the majority of employment and income generation within the industry. Whilst construction has been perceived as a sector significantly vulnerable to the impacts of EWEs, there is scant evidence of how construction SMEs respond to such events and cope with their impact. Based on the evidence emerged from case studies of construction SMEs, current coping strategies of construction SMEs were identified. Some of the strategies identified were focused at organisational level whereas others were focused at project level. Further, some of the strategies were general risk management / business continuity strategies whereas others have been specifically developed to address the risk of EWEs. Accordingly, coping strategies can be broadly categorised based on their focus; i.e. those focused at project or organisational level, and based on the risks that they seek to address; i.e. business / continuity risks in general or EWE risk specifically. By overlapping these two aspects; their focus and risks that they seek to address, four categories of coping strategies can be devised. There are; general risk management strategies focused at business level, general risk management strategies focused at project level, EWE specific strategies focused at business level, and EWE specific strategies focused at project level. It is proposed that for a construction SME to effectively cope with the impact of EWEs and develop their resilience against EWEs a rich mix of these coping strategies are required to suite the particular requirements of the business.

Technological capability development in China's energy service company industry

Technological capability (TC) plays a strategic role in the competitive advantage of not only individual corporate entities but also entire industries. This paper investigates the crucial factors that affect technological capability development by Energy Service Companies (ESCOs) in China. It identifies how differently sized ESCOs make progress in developing TCs. Through looking at the successes achieved by developed countries in the field of energy conservation, ESCOs are able to improve energy efficiency and reduce emissions and are deemed to provide an effective means of conserving energy in China. Existing literature indicates that limited TC levels of are one of the crucial barriers facing Chinese ESCOs. Through investigating three different sizes of Chinese ESCO - small, medium-sized and large - this paper provides a framework to present the idea that Chinese ESCOs' TC development is affected by four key internal and external capabilities: management capability, investment capability, innovation capability and linkage capability. Through comparative analysis, the paper establishes that small and medium-sized private ESCOs are mainly affected by investment and linkage capabilities. Large state-owned ESCOs are mainly affected by innovation and management capability. In addition, all three types of ESCO exhibit a strong desire to develop their technological capability, but small and medium-sized ESCOs exhibit a stronger desire to conduct research and development (R&D) than large ESCOs, whilst large ESCOs prefer to increase their technical reserves through acquisition. This paper identifies factors that affect Chinese ESCOs' TC, but it does intend to address the problem of how to reduce the negative effects of limited TC or the question of how to improve the TC development of Chinese ESCOs effectively. This paper contributes to the field of TC development in the ESCO industry.