Electronic commerce investments, the resource-based view of the firm, and firm market value

Firms have embraced electronic commerce as a means of doing business, either because they see it as a way to improve efficiency, grow market share, expand into new markets, or because they view it as essential for survival. Recent research in the United States provides some evidence that the market does value investments in electronic commerce. Following research that suggests that, in certain circumstances, the market values noninnovative investments as well as innovative investments in new products, we partition electronic commerce investment project announcements into innovative and noninnovative to determine whether there are excess returns associated with these types of announcements. Apart from our overall results being consistent with the United States findings that the market values investments in electronic commerce projects, we also find that noninnovative investments are perceived as more valuable to the firm than innovative investments. On average, the market expects innovative investments to earn a return commensurate with their risk. We conclude that innovative electronic commerce projects are most likely seen by the capital market as easily replicable, and consequently have little, if any, competitive advantage period. On the other hand, we conclude from the noninnovative investment results that these types of investments are seen as being compatible with a firm's assets-in-place, in particular, its information technology capabilities, a view consistent with the resource-based view of the firm.

Trade liberalization and the efficiency of firms in Indian manufacturing

Has the efficiency of firms in India improved since its liberalization in 1991? The authors attempt to answer this question by analyzing the determinants of firm-level efficiency in six manufacturing sectors in India while focusing on the effects of liberalization and domestic competition. They find that there was an increase in overall efficiency in the post-reform period in India in five out of six sectors. While imports do not seem to improve efficiency, liberalization did increase efficiency in four of the sectors.

Profit sharing, technical efficiency change and finance constraints

This paper analyses the mechanisms through which profit-sharing schemes may induce debt constrained firms to improve technical efficiency over time to guarantee positive profits. This hypothesis is first formalised in a partial equilibrium framework and then is tested on a sample of Italian traditional and cooperative firms. Technical efficiency change indexes are computed by DEA. These are regressed on a measure of finance constraints to analyse their impact on firms’ efficiency growth. The results support the hypothesis that a restriction in the availability of financial resources can affect positively the growth in efficiency in firms with profit-sharing schemes.

Patterns of corporate governance and technical efficiency in Italian manufacturing

The purpose of this paper is to analyse the relationship between the corporate governance system and technical efficiency in Italian manufacturing. We use a non-parametric frontier technique (DEA) to derive technical efficiency measures for a sample of Italian firms taken from nine manufacturing industries. These measures are then related to the characteristics of the corporate governance system. Two of these characteristics turn out to have a positive impact on technical efficiency: the percentage of the company shares owned by the largest shareholder and the fact that a firm belongs to a pyramidal group. Interestingly, a trade-off emerges between these influences, in the sense that one is stronger in industries where the other is weaker. Copyright © 2007 John Wiley & Sons, Ltd.

Does institutional quality affect firm performance? Insights from a semiparametric approach

Using a novel modeling approach, and cross-country firm level data for the textiles industry, we examine the impact of institutional quality on firm performance. Our methodology allows us to estimate the marginal impact of institutional quality on productivity of each firm. Our results bring into question conventional wisdom about the desirable characteristics of market institutions, which is based on empirical evidence about the impact of institutional quality on the average firm. We demonstrate, for example, that once both the direct impact of a change in institutional quality on total factor productivity and the indirect impact through changes in efficiency of use of factor inputs are taken into account, an increase in labor market rigidity may have a positive impact on firm output, at least for some firms. We also demonstrate that there are significant intra-country variations in the marginal impact of institutional quality, such that the characteristics of “winners” and “losers” will have to be taken into account before policy is introduced to change institutional quality in any direction.

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.

The role of pre-existing liquidity in determining pricing efficiency and liquidity gains following the introduction of SETSmm

In this paper we examine the impact that the new trading system SETSmm had on market quality measures such as firm value, liquidity and pricing efficiency. This system was introduced for mid-cap securities on the London Stock Exchange in 2003. We show that there is a small SETSmm return premium associated with the announcement that securities are to migrate to the new trading system. We find that migration to SETSmm also improves liquidity and pricing efficiency and these changes are related to the return premium. We also find that these gains are stronger for firms with high pre SETSmm liquidity and weaker for firms with low SETSmm liquidity.

Efficiency and the trading system:The case of SETSmm

This paper studies the impact that a change from a dealer system to a market-maker supported auction system has on market quality. We study the impact that the introduction of SETSmm at the London Stock Exchange had on firm value, price efficiency and liquidity. We discover a small SETSmm return premium associated with the announcement that securities are to migrate to the new trading system. Moreover, securities that migrate to SETSmm are characterized by improvements to liquidity and pricing efficiency. We find that these changes are related to the return premium.

The role of pre-existing liquidity in determining price efficiency and liquidity gains following the introduction of SETSmm

In this paper we examine the impact that the new trading system SETSmm had on market quality measures such as firm value, liquidity and pricing efficiency. This system was introduced for mid-cap securities on the London Stock Exchange in 2003. We show that there is a small SETSmm return premium associated with the announcement that securities are to migrate to the new trading system. We find that migration to SETSmm also improves liquidity and pricing efficiency and these changes are related to the return premium. We also find that these gains are stronger for firms with high pre SETSmm liquidity and weaker for firms with low SETSmm liquidity. © 2013 John Wiley & Sons Ltd.

Combining an enterprise resource planning system and informality:a study of efficiency and flexibility complmentarity [sic]

DUE TO COPYRIGHT RESTRICTIONS ONLY AVAILABLE FOR CONSULTATION AT ASTON UNIVERSITY LIBRARY AND INFORMATION SERVICES WITH PRIOR ARRANGEMENT One of the current research trends in Enterprise Resource Planning (ERP) involves examining the critical factors for its successful implementation. However, such research is limited to system implementation, not focusing on the flexibility of ERP to respond to changes in business. Therefore, this study explores a combination system, made up of an ERP and informality, intended to provide organisations with efficient and flexible performance simultaneously. In addition, this research analyses the benefits and challenges of using the system. The research was based on socio-technical system (STS) theory which contains two dimensions: 1) a technical dimension which evaluates the performance of the system; and 2) a social dimension which examines the impact of the system on an organisation. A mixed method approach has been followed in this research. The qualitative part aims to understand the constraints of using a single ERP system, and to define a new system corresponding to these problems. To achieve this goal, four Chinese companies operating in different industries were studied, all of which faced challenges in using an ERP system due to complexity and uncertainty in their business environments. The quantitative part contains a discrete-event simulation study that is intended to examine the impact of operational performance when a company implements the hybrid system in a real-life situation. Moreover, this research conducts a further qualitative case study, the better to understand the influence of the system in an organisation. The empirical aspect of the study reveals that an ERP with pre-determined business activities cannot react promptly to unanticipated changes in a business. Incorporating informality into an ERP can react to different situations by using different procedures that are based on the practical knowledge of frontline employees. Furthermore, the simulation study shows that the combination system can achieve a balance between efficiency and flexibility. Unlike existing research, which emphasises a continuous improvement in the IT functions of an enterprise system, this research contributes to providing a definition of a new system in theory, which has mixed performance and contains both the formal practices embedded in an ERP and informal activities based on human knowledge. It supports both cost-efficiency in executing business transactions and flexibility in coping with business uncertainty.This research also indicates risks of using the system, such as using an ERP with limited functions; a high cost for performing informally; and a low system acceptance, owing to a shift in organisational culture. With respect to practical contribution, this research suggests that companies can choose the most suitable enterprise system approach in accordance with their operational strategies. The combination system can be implemented in a company that needs to operate a medium amount of volume and variety. By contrast, the traditional ERP system is better suited in a company that operates a high-level volume market, while an informal system is more suitable for a firm with a requirement for a high level of variety.

Good and bad institutions:is the debate over? Cross-country firm-level evidence from the textile industry

Using firm-level data from nine developing countries, we demonstrate that certain institutions, like restrictive labour market regulations, that are considered bad for economic growth might be beneficial for production efficiency, whereas good business environment, which is considered beneficial for economic growth, might have an adverse impact on production efficiency. We argue that our results suggest that there might be significant difference in the macro- and micro-impacts of institutional quality, such that the classification of institutions into 'good' and 'bad might be premature. © The Author 2013. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved.

Technical efficiency determinants within a dual banking system:a DEA-bootstrap approach

The purpose of this study is to provide a comparative analysis of the efficiency of Islamic and conventional banks in Gulf Cooperation Council (GCC) countries. In this study, we explain inefficiencies obtained by introducing firm-specific as well as macroeconomic variables. Our findings indicate that during the eight years of study, conventional banks largely outperform Islamic banks with an average technical efficiency score of 81% compared to 95.57%. However, it is clear that since 2008, efficiency of conventional banks was in a downward trend while the efficiency of their Islamic counterparts was in an upward trend since 2009. This indicates that Islamic banks have succeeded to maintain a level of efficiency during the subprime crisis period. Finally, for the whole sample, the analysis demonstrates the strong link of macroeconomic indicators with efficiency for GCC banks. Surprisingly, we have not found any significant relationship in the case of Islamic banks.

An empirical investigation on firm-level performance of cross border mergers and acquisitions

This empirical study investigates the performance of cross border M&A. The first stage is to identify the determinants of making cross border M&A complete. One focus here is to extend the existing empirical evidence in the field of cross border M&A and exploit the likelihood of M&A from a different perspective. Given the determinants of cross border M&A completions, the second stage is to investigate the effects of cross border M&A on post-acquisition firm performance for both targets and acquirers. The thesis exploits a hitherto unused data base, which consists of those firms that are rumoured to be undertaking M&A, and then follow the deal to completion or abandonment. This approach highlights a number of limitations to the previous literature, which relies on statistical methodology to identify potential but non-existent mergers. This thesis changes some conventional understanding for M&A activity. Cross border M&A activity is underpinned by various motives such as synergy, management discipline, and acquisition of complementary resources. Traditionally, it is believed that these motives will boost the international M&A activity and improve firm performance after takeovers. However, this thesis shows that such factors based on these motives as acquirer’s profitability and liquidity and target’s intangible resource actually deter the completion of cross border M&A in the period of 2002-2011. The overall finding suggests that the cross border M&A is the efficiency-seeking activity rather than the resource-seeking activity. Furthermore, compared with firms in takeover rumours, the completion of M&A lowers firm performance. More specifically, the difficulties in transfer of competitive advantages and integration of strategic assets lead to low firm performance in terms of productivity. Besides, firms cannot realise the synergistic effect and managerial disciplinary effect once a cross border M&A is completed, which suggests a low post-acquisition profitability level.

Three essays on hospital efficiency

This dissertation analyzes hospital efficiency using various econometric techniques. The first essay provides additional and recent evidence to the presence of contract management behavior in the U.S. hospital industry. Unlike previous studies, which focus on either an input-demand equation or the cost function of the firm, this paper estimates the two jointly using a system of nonlinear equations. Moreover, it addresses the longitudinal problem of institutions adopting contract management in different years, by creating a matched control group of non-adopters with the same longitudinal distribution as the group under study. The estimation procedure then finds that labor, and not capital, is the preferred input in U.S. hospitals regardless of managerial contract status. With institutions that adopt contract management benefiting from lower labor inefficiencies than the simulated non-contract adopters. These results suggest that while there is a propensity for expense preference behavior towards the labor input, contract managed firms are able to introduce efficiencies over conventional, owner controlled, firms. Using data for the years 1998 through 2007, the second essay investigates the production technology and cost efficiency faced by Florida hospitals. A stochastic frontier multiproduct cost function is estimated in order to test for economies of scale, economies of scope, and relative cost efficiencies. The results suggest that small-sized hospitals experience economies of scale, while large and medium sized institutions do not. The empirical findings show that Florida hospitals enjoy significant scope economies, regardless of size. Lastly, the evidence suggests that there is a link between hospital size and relative cost efficiency. The results of the study imply that state policy makers should be focused on increasing hospital scale for smaller institutions while facilitating the expansion of multiproduct production for larger hospitals. The third and final essay employs a two staged approach in analyzing the efficiency of hospitals in the state of Florida. In the first stage, the Banker, Charnes, and Cooper model of Data Envelopment Analysis is employed in order to derive overall technical efficiency scores for each non-specialty hospital in the state. Additionally, input slacks are calculated and reported in order to identify the factors of production that each hospital may be over utilizing. In the second stage, we employ a Tobit regression model in order to analyze the effects a number of structural, managerial, and environmental factors may have on a hospital’s efficiency. The results indicated that most non-specialty hospitals in the state are operating away from the efficient production frontier. The results also indicate that the structural make up, managerial choices, and level of competition Florida hospitals face have an impact on their overall technical efficiency.

The Impact of Regulation on a Firm's Incentives to Invest in Emergent Smart Grid Technologies

This paper analyzes the implementation of new technologies in network industries through the development of a suitable regulatory scheme. The analysis focuses on Smart Grid (SG) technologies which, among others benefits, could save operational costs and reduce the need for further conventional investments in the grid. In spite of the benefits that may result from their implementation, the adoption of SGs by network operators can be hampered by the uncertainties surrounding actual performances. A decision model has been developed to assess the firms' incentives to invest in "smart" technologies under different regulatory schemes. The model also enables testing the impact of uncertainties on the reduction of operational costs, and of conventional investments. Under certain circumstances, it may be justified to support the development and early deployment of emerging innovations that have a high potential to ameliorate the efficiency of the electricity system, but whose adoption faces many uncertainties.