Wealth shocks, credit-supply shocks, and asset allocation:evidence from household and firm portfolios

We use a unique dataset with bank clients’ security holdings for all German banks to examine how macroeconomic shocks affect asset allocation preferences of households and non-financial firms. Our analysis focuses on two alternative mechanisms which can influence portfolio choice: wealth shocks, which are represented by the sovereign debt crisis in the Eurozone, and credit-supply shocks which arise from reductions in borrowing abilities during bank distress. We document het- erogeneous responses to these two types of shocks. While households with large holdings of secu- rities from stressed Eurozone countries (Greece, Ireland, Italy, Portugal, and Spain) decrease the degree of concentration in their security portfolio as a result of the Eurozone crisis, non-financial firms with similar levels of holdings from stressed Eurozone countries do not. Credit-supply shocks at the bank level (caused by bank distress) result in lower concentration, for both households and non-financial corporations. We also show that only shocks to corporate credit bear ramifications on bank clients’ portfolio concentration, while shocks in retail credit are inconsequential. Our results are robust to falsification tests, propensity score matching techniques, and instrumental variables estimation.

Is more capability always beneficial for firm performance? Market orientation, core business process capabilities, and business environment

This study examines the role of capabilities in core marketing-related business processes–product development management (PDM), supply chain management (SCM) and customer relationship management (CRM)–in translating a firm’s market orientation (MO) into firm performance. The study is the first to examine the interplay of all three business process capabilities simultaneously, while investigating how environmental conditions moderate their performance effects. A moderated mediation analysis of 468 product-focused firms finds that PDM and CRM process capabilities play important mediating roles, whereas SCM process capability does not mediate the relationship between MO and performance. However, the relative importance of the capabilities as mediators varies along the degree of environmental turbulence, and under certain conditions, an increase in the level of business process capability may even turn detrimental.

Understanding inter-firm networks and types of innovation in SMEs:a social network perspective

Innovation is one of the key drivers for gaining competitive advantages in any firms. Understanding knowledge transfer through inter-firm networks and its effects on types of innovation in SMEs is very important in improving SMEs innovation. This study examines relationships between characteristics of inter-firm knowledge transfer networks and types of innovation in SMEs. To achieve this, social network perspective is adopted to understand inter-firm knowledge transfer networks and its impact on innovation by investigating how and to what extend ego network characteristics are affecting types of innovation. Therefore, managers can develop the firms'network according to their strategies and requirements. First, a conceptual model and research hypotheses are proposed to establish the possible relationship between network properties and types of innovation. Three aspects of ego network are identified and adopted for hypotheses development: 1) structural properties which address the potential for resources and the context for the flow of resources, 2) relational properties which reflect the quality of resource flows, and 3) nodal properties which are about quality and variety of resources and capabilities of the ego partners. A questionnaire has been designed based on the hypotheses. Second, semistructured interviews with managers of five SMEs have been carried out, and a thematic qualitative analysis of these interviews has been performed. The interviews helped to revise the questionnaire and provided preliminary evidence to support the hypotheses. Insights from the preliminary investigation also helped to develop research plan for the next stage of this research.

Firm-level productivity growth in Northern Ireland:the impact of exporting, innovation and public financial assistance

Motivated by the historically poor productivity performance of Northern Ireland firms and the longstanding productivity gap with the UK, the aim of this thesis is to examine, through the use of firm-level data, how exporting, innovation and public financial assistance impact on firm productivity growth. These particular activities are investigated due to the continued policy focus on their link to productivity growth and the theoretical claims of a direct positive relationship. In order to undertake these analyses a newly constructed dataset is used which links together cross-sectional and longitudinal data over the 1998-2008 period from the Annual Business Survey, the Manufacturing Sales and Export Survey; the Community Innovation Survey and Invest NI Selective Financial Assistance (SFA) payment data. Econometric methodologies are employed to estimate each of the relationships with regards to productivity growth, making use in particular of Heckman selection techniques and propensity score matching to take account of critical issues of endogeneity and selection bias. The results show that more productive firms self-select into exporting but there is no resulting productivity effect from starting to export; contesting the argument for learning-by-exporting. Product innovation is also found to have no impact on productivity growth over a four year period but there is evidence of a negative process innovation impact, likely to reflect temporary learning effects. Finally SFA assistance, including the amount of the payment, is found to have no short term impact on productivity growth suggesting substantial deadweight effects and/or targeting of inefficient firms. The results provide partial evidence as to why Northern Ireland has failed to narrow the productivity gap with the rest of the UK. The analyses further highlight the need for access to comprehensive firm-level data for research purposes, not least to underpin robust evidence-based policymaking.

Determinants of Firm Growth with respect to Exporting and Innovation Activities: Evidence from Egyptian SMEs

Small and medium-sized enterprises (SMEs) are considered to be the driving engine for employment growth, source of innovation and technological progress. Moreover, the success of small exporters is critical for economic growth and is considered as an important development stage for many SMEs. However, their competitive advantage lies within the firm’s ability to innovate. This thesis contributes to the above literature by examining two main factors believed to promote firm growth namely ‘exporting’ and ‘innovation’ activities. Growing interests on the relationship between exporting, innovation and growth have recently been tackled. However, there remains a gap in literature on the relationship between exporting, innovation and firm growth for SMEs in emerging economies. Previous studies are conducted in developed counties such as UK, Ireland, USA, Germany, and Switzerland, which leaves the gap for those developing countries. Thus, this thesis addresses the gap by examining the importance of innovation and exporting activities in the growth of SMEs in Egypt. It is also the researcher’s intent to recognise the unique contribution of innovation on firm exporting activities covering all sectors. gypt, one of the countries that were tremendously affected by the so-called ‘Arab Spring revolution’, is suffering from slow economic growth, high unemployment and poverty rate. Thus, the government must ensure economic growth and job creation. Programmes to encourage and develop SMEs should be part of inclusive growth strategy. Meanwhile, exporting is regarded as a key factor to help the economy recover from recession and stimulate economic growth. On the other hand, innovation leads to better performance in terms of growth, exporting and productivity. Therefore, SMEs and their exporting and innovation activities should be an integral part of any recovery and growth strategy for the economy. Moreover, Egypt is suffering from the so-called ‘Missing Middle’, which is problematic as medium firms tend to provide better employment growth and productivity. Therefore, more light is to shed on the importance of exporting and innovation in the growth of firms. The research design was quantitative in nature, testing the proposed hypotheses. The study was conducted in 2013 based on questionnaires of 406 Egyptians SMEs. The results of the empirical study suggest that both exporting and innovation activities are important in firm growth. However, the results show that, after controlling for endogeneity, innovation does not affect exporting activities in SMEs.

Determinants of firm growth with repect to exporting and innovation activities:evidence from Egyptian SMEs

Small and medium-sized enterprises (SMEs) are considered to be the driving engine for employment growth, source of innovation and technological progress. Moreover, the success of small exporters is critical for economic growth and is considered as an important development stage for many SMEs. However, their competitive advantage lies within the firm’s ability to innovate. This thesis contributes to the above literature by examining two main factors believed to promote firm growth namely ‘exporting’ and ‘innovation’ activities. Growing interests on the relationship between exporting, innovation and growth have recently been tackled. However, there remains a gap in literature on the relationship between exporting, innovation and firm growth for SMEs in emerging economies. Previous studies are conducted in developed counties such as UK, Ireland, USA, Germany, and Switzerland, which leaves the gap for those developing countries. Thus, this thesis addresses the gap by examining the importance of innovation and exporting activities in the growth of SMEs in Egypt. It is also the researcher’s intent to recognise the unique contribution of innovation on firm exporting activities covering all sectors. Egypt, one of the countries that were tremendously affected by the so-called ‘Arab Spring revolution’, is suffering from slow economic growth, high unemployment and poverty rate. Thus, the government must ensure economic growth and job creation. Programmes to encourage and develop SMEs should be part of inclusive growth strategy. Meanwhile, exporting is regarded as a key factor to help the economy recover from recession and stimulate economic growth. On the other hand, innovation leads to better performance in terms of growth, exporting and productivity. Therefore, SMEs and their exporting and innovation activities should be an integral part of any recovery and growth strategy for the economy. Moreover, Egypt is suffering from the so-called ‘Missing Middle’, which is problematic as medium firms tend to provide better employment growth and productivity. Therefore, more light is to shed on the importance of exporting and innovation in the growth of firms. The research design was quantitative in nature, testing the proposed hypotheses. The study was conducted in 2013 based on questionnaires of 406 Egyptians SMEs. The results of the empirical study suggest that both exporting and innovation activities are important in firm growth. However, the results show that, after controlling for endogeneity, innovation does not affect exporting activities in SMEs.

Organizing entrepreneurial judgment:a new approach to the firm

Book review: Organizing Entrepreneurial Judgment: A New Approach to the Firm. By Nicolai J. Foss and Peter G. Klein. Cambridge University Press, Cambridge. 2012. xxii + 299 pp. Pbk $36.99.

Age diversity and firm performance in an emerging economy: Implications for cross-cultural human resource management

This study tests the effect of age diversity on firm performance among international firms. Based on the resource-based view of the firm, it argues that age diversity among employees will influence firm performance. Moreover, it argues that two contextual variables—a firm's level of market diversification and its country of origin—influence the relationship between age diversity and firm performance. By testing relevant hypotheses in a major emerging economy, that is, the People's Republic of China, this study finds a significant and positive effect of age diversity and a significant interactive effect between age diversity and firm strategy on profitability. We also find a significant relationship between age diversity and firm profitability for firms from Western societies, but not for firms from East Asian societies. The paper concludes by discussing the implications of this study's findings. © 2011 Wiley Periodicals, Inc.