Firm growth and barriers to growth among small firms in India

Empirical work on micro and small firms focuses on developed countries, while existing work on developing countries is all too often based on small samples taken from ad hoc questionnaires. The census data we analyze here are fairly representative of small business structure in India. Consistent with findings from prior research on developed countries, size and age have a negative impact on firm growth in the majority of specifications. Enterprises managed by women have lower expected growth rates. Proprietary firms face lower growth on the whole, especially if they are young firms. Exporting has a positive effect on firm growth, especially for young firms and for female-owned firms. Although some small firms are able to convert know-how into commercial success, we find that many others are unable to translate it into superior growth.

The carbon dioxide emissions of firms:a spatial analysis

In order to gain a greater understanding of firms' 'environmental behaviour' this paper explores the factors that influence firms' emissions intensities and provides the first analysis of the determinants of firm level carbon dioxide (CO2) emissions. Focussing on Japan, the paper also examines whether firms' CO2 emissions are influenced by the emissions of neighbouring firms and other possible sources of spatial correlation. Results suggest that size, the capital-labour ratio, R&D expenditure, the extent of exports and concern for public profile are the key determinants of CO2 emissions. Local lobbying pressure, as captured by regional community characteristics, does not appear to play a role, however emissions are found to be spatially correlated. This raises implications for the manner in which the environmental performance of firms is modelled in future. © 2013 Elsevier Inc.

Self-selection into export markets by business services firms:evidence from France, Germany and the United Kingdom

This study investigates business services firms that (start to) export, comparing exporters to firms that serve the national market only. We estimate identically specified empirical models using comparable enterprise data from France, Germany, and the UK. Our findings show that exporters are on average more productive and pay higher wages in all three countries. However, results for profitability differ across borders, where profitability of exporters is significantly smaller in Germany, significantly larger in France, and does not differ significantly in the UK. The results for wages and productivity hold in the years before firms start exporting, which indicates self-selection into exporting of more productive services firms that pay higher wages. The surprising finding of self-selection of less profitable German services firms into exporting does not show up among firms from France and the UK. In all three countries we do not find evidence for positive effects of exporting on firm performance. © 2012 Elsevier B.V.

Does the Chinese banking system promote the growth of firms?

Using a large panel dataset of Chinese manufacturing enterprises during 1999-2005, which accounts for over 90% of China’s industrial output, and robust econometric procedures we show that the Chinese banking system has helped to support the growth of both firm value added and TFP. We find that access to bank loans is positively correlated with future value added and TFP growth. We also find that firms with access to bank loans tend to grow faster in regions with greater banking sector development. While the effects of bank loans on firm growth are more pronounced in the case of purely private-owned and foreign firms, they are positive and statistically significant even in the case of state-owned and collectively-owned firms. We show that excluding loss-making firms from the sample does not change the qualitative nature of our results.

New career models in UK professional service firms:from up-or-out to up-and-going-nowhere?

In this paper, we empirically examine how professional service firms are adapting their promotion and career models to new market and institutional pressures, without losing the benefits of the traditional up-or-out tournament. Based on an in-depth qualitative study of 10 large UK based law firms we find that most of these firms do not have a formal up-or-out policy but that the up-or-out rule operates in practice. We also find that most firms have introduced alternative roles and a novel career policy that offers a holistic learning and development deal to associates without any expectation that unsuccessful candidates for promotion to partner should quit the firm. While this policy and the new roles formally contradict the principle of up-or-out by creating permanent non-partner positions, in practice they coexist. We conclude that the motivational power of the up-or-out tournament remains intact, notwithstanding the changes to the internal labour market structure of these professional service firms.

Collaborative entrepreneurship:how communities of networked firms use continuous innovation to create economic wealth

Book Review: Raymond E. Miles, Grant Miles and Charles C. Snow Collaborative Entrepreneurship: How Communities of Networked Firms Use Continuous Innovation to Create Economic Wealth, 2005, Palo Alto, CA: Stanford University Press 144 pages

Institutional entrepreneurship:a literature review and analysis of the maturing consulting field

With few exceptions (e.g. Fincham & Clark, 2002; Lounsbury, 2002, 2007; Montgomery & Oliver, 2007), we know little about how emerging professions, such as management consulting, professionalize and establish their services as a taken-for-granted element of social life. This is surprising given that professionals have long been recognized as “institutional agents” (DiMaggio & Powell, 1983; Scott, 2008) (see Chapter 17) and professionalization projects have been closely associated with institutionalization (DiMaggio, 1991). Therefore, in this chapter we take a closer look at a specific type of entrepreneurship in PSFs; drawing on the concept of “institutional entrepreneurship” (DiMaggio, 1988; Garud, Hardy, & Maguire, 2007; Hardy & Maguire, 2008) we describe some generic strategies by which proto-professions can enhance their “institutional capital” (Oliver, 1997), that is, their capacity to extract institutionally contingent resources such as legitimacy, reputation, or client relationships from their environment.

Reputation and performance in large law firms

Reputation is a signalling device that serves as a proxy for the quality of a firm’s products, strategies and employees relative to its competitors, when communicating with clients and other stakeholders. It is especially important for professional service firms because of the complex and intangible nature of their service and because of the advantages it confers in the market for high-quality professional staff. This paper extends and refines existing research on reputation which shows positive returns to reputation for professional service firms. We use different rankings of the top 50 law firms in the UK to measure reputation and examine their relationship with financial performance as expressed in firm revenue and profits. We find positive but diminishing returns to reputation even within this group and we find a stronger relationship between reputation and profits than fee income. We conclude that reputation may be an important source of competitive advantage for leading firms but it seems to offer little leverage for others. If these results are generalizable across other professional sectors this raises the question of how the majority of firms can differentiate themselves.

Investment efficiency among a cross-section of UK firms:implications for the debate on financing constraints

In this paper, we address this policy issue using a stylised methodology that relies on estimates of the cash flow sensitivity of firms’ investment, as well as a relatively new methodology that enables us to generate a (0, 1) bounded measure of investment efficiency of firms, i.e., the efficiency with which firms can convert their sales into investment, after controlling for unobserved year- and industry-specific effects. Higher investment efficiency is associated with lower financing constraint. Our results indicate that there is considerable heterogeneity in investment efficiency across firms, during a given year; the range being 0.57-0.82. However, the average investment efficiency measure is similar across years, regions and NACE 2-digit industries. We also do not find discernible patterns in the relationship between investment efficiency and firm size, both before and during the financial crisis. The results suggest that while some firms are clearly less efficient at translating their performance into investment, broad policies targeting firms of a certain size, or those within a particular industry or region, may not successfully address the problem of financing constraint in the United Kingdom. The targeting of firms with financing constraints may have to be considerably more refined, and look at not easily observable factors such as credit history/events and organisational capacity of the firms.

Does ownership structure of emerging-market firms affect their outward FDI? The case of the Indian automotive and pharmaceutical sectors

This paper examines the impact of ownership structures of emerging-market firms, which are shaped by local institutions, on the decision of these firms to undertake outward FDI. Our results suggest that family firms and firms with concentrated ownerships (both ubiquitous in emerging markets) are less likely to invest overseas, and that strategic equity holding by foreign investors facilitates outward FDI. We conclude that organisational forms such as family firms, which are optimal outcomes of institutions prevailing in emerging markets, may be suboptimal in a changing business environment in which outward FDI is necessary for access to resources and markets.

The innovation value chain in new technology-based firms:evidence from the U.K.

Innovation is central to the survival and growth of firms, and ultimately to the health of the economies of which they are part. A clear understanding both of the processes by which firms perform innovation and the benefits which flow from innovation in terms of productivity and growth is therefore essential. This paper demonstrates the use of a conceptual framework and modeling tool, the innovation value chain (IVC), and shows how the IVC approach helps to highlight strengths and weaknesses in the innovation performance of a key group of firms-new technology-based firms. The value of the IVC is demonstrated in showing the key interrelationships in the whole process of innovation from sourcing knowledge through product and process innovation to performance in terms of the growth and productivity outcomes of different types of innovation. The use of the IVC highlights key complementarities, such as that between internal R&D, external R&D, and other external sources of knowledge. Other important relationships are also highlighted. Skill resources matter throughout the IVC, being positively associated with external knowledge linkages and innovation success, and also having a direct influence on growth independent of the effect on innovation. A key benefit of the IVC approach is therefore its ability to highlight the roles of different factors at various stages of the knowledge-innovation-performance nexus, and to show their indirect as well as direct impact. This in turn permits both managerial and policy implications to be drawn. © 2012 Product Development & Management Association.