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.

Integration and devolvement of human resource practices in Nepal

Purpose: The purpose of this study is to explore the nature of human resource management in publicly listed finance sector companies in Nepal. In particular, it explores the extent to which HR practice is integrated into organisational strategy and devolved to line management. Design/methodology/ approach: A structured interview was conducted with the senior executive responsible for human resource management in 26 commercial banks and insurance companies in Nepal. Findings: The degree of integration of HR practice appears to be increasing within this sector, but this is dependent on the maturity of the organisations. The devolvement of responsibility to line managers is at best partial, and in the case of the insurance companies, it is more out of necessity due to the absence of a strong central HR function. Research limitations/implications: The survey is inevitably based on a small sample; however this represents 90 per cent of the relevant population. The data suggest that Western HR is making inroads into more developed aspects of Nepalese business. Compared with Nepalese business as a whole, the financial sector appears relatively Westernised, although Nepal still lags India in its uptake of HR practices. Practical implications: It appears unlikely from a cultural perspective that the devolvement of responsibility will be achieved as a result of HR strategy. National cultural, political and social factors continue to be highly influential in shaping the Nepalese business environment. Originality/value: Few papers have explored HR practice in Nepal. This paper contributes to the overall assessment of HR uptake globally and highlights emic features impacting on that uptake. © Emerald Group Publishing Limited.

Design and development of agent-based procurement system to enhance business intelligence

The purpose of this research is to propose a procurement system across other disciplines and retrieved information with relevant parties so as to have a better co-ordination between supply and demand sides. This paper demonstrates how to analyze the data with an agent-based procurement system (APS) to re-engineer and improve the existing procurement process. The intelligence agents take the responsibility of searching the potential suppliers, negotiation with the short-listed suppliers and evaluating the performance of suppliers based on the selection criteria with mathematical model. Manufacturing firms and trading companies spend more than half of their sales dollar in the purchase of raw material and components. Efficient data collection with high accuracy is one of the key success factors to generate quality procurement which is to purchasing right material at right quality from right suppliers. In general, the enterprises spend a significant amount of resources on data collection and storage, but too little on facilitating data analysis and sharing. To validate the feasibility of the approach, a case study on a manufacturing small and medium-sized enterprise (SME) has been conducted. APS supports the data and information analyzing technique to facilitate the decision making such that the agent can enhance the negotiation and suppler evaluation efficiency by saving time and cost.

Design and development of an agent-based information system for process improvement

To meet changing needs of customers and to survive in the increasingly globalised and competitive environment, it is necessary for companies to equip themselves with intelligent tools, thereby enabling managerial levels to use the tactical decision in a better way. However, the implementation of an intelligent system is always a challenge in Small- and Medium-sized Enterprises (SMEs). Therefore, a new and simple approach with 'process rethinking' ability is proposed to generate ongoing process improvements over time. In this paper, a roadmap of the development of an agent-based information system is described. A case example has also been provided to show how the system can assist non-specialists, for example, managers and engineers to make right decisions for a continual process improvement. Copyright © 2006 Inderscience Enterprises Ltd.

The comparative impact of privatisation and regulation on productivity growth in the English and Welsh water and sewerage industry, 1985-99

After the 10 regional water authorities of England and Wales were privatized in November 1989, the successor WASCs (water and sewerage companies) faced a new regulatory regime that was designed to promote productivity growth while simultaneously improving drinking water and environmental quality. As legally mandated quality improvements necessitated a costly capital investment programme, the industry's economic regulator – the Office of Water Services – implemented a RPI + K pricing system, designed to compensate the WASCs for their capital investment programme while also encouraging faster rates of productivity growth. This paper considers the relative effects of privatization and regulation on productivity growth in the industry using both non-parametric and parametric methods to provide a crosscheck on the robustness of the results. While there is evidence that labour productivity improved after privatization, there is no evidence that privatization led to a growth in TFP (total factor productivity). However, there is some evidence of a small increase in the rate of TFP growth in the aftermath of a substantial tightening of the regulatory regime that took place in 1995. These results, therefore, are consistent with evidence from other research that privatization, in the absence of effective competition and/or regulation, is not necessarily associated with improved economic performance.

Employability and the psychological contract in European ICT sector SMEs

This article explores the employability of information and communication technology (ICT) professionals from the perspective of small- and medium-sized enterprises (SMEs). The first stage of analysis, based on over 100 interviews with managers of ICT supplier companies in seven European countries (Germany, Greece, Italy, the Netherlands, Norway, Poland and the UK), showed most SMEs to have a generally ad hoc approach to managing the employability of their ICT professionals. Assessment and development plans were used primarily to keep skills current to business needs; however, the more developed northern European markets showed greater awareness of the ‘high commitment’ benefits of a more sophisticated approach towards career management (e.g. through mentoring or career planning). A second stage of analysis based only on UK interviews builds on this to propose a model of positive employer influence on psychological contracts through career and employability management practices.

Exporting and innovation performance: analysis of the Annual Small Business Survey in the UK

This paper analyses the determinants of the export propensity of UK small and medium-sized enterprises (SMEs) based on the 2004 Annual Small Business Survey. Particular emphasis is placed upon the relationship between innovation activities (distinguishing product from process innovation) and export performance. In general the data suggest that some 17 per cent of firms within this group sell outside the UK. Businesses that export are also characterized by high levels of innovation activity (43 per cent of exporters innovate in products, 27 per cent innovate in process and 21 per cent innovate in both). When considering product and process innovation independently we find that both impact positively on the decision to export. However, once we consider the interdependence between both innovation activities, we find no robust evidence that process innovation increases the probability to export beyond product innovation.

Stock market efficiency, the small firm effect and cointegration

The cointegration methodology commonly used for testing the efficiency of the foreign exchange market is applied to a sample of UK share prices. Specifically we test for static market efficiency in the share prices of small and large firms, using monthly data from January 1975 to December 1989. The empirical findings provide evidence of market efficiency for portfolios of large firms but of inefficiency for small firm portfolios. These results are indicative of a small firm effect in the UK stock market.

An expert system for the development of a health and safety policy/risk assessment in the plastics industry

Health and safety policies may be regarded as the cornerstone for positive prevention of occupational accidents and diseases. The Health and Safety at Work, etc Act 1974 makes it a legal duty for employers to prepare and revise a written statement of a general policy with respect to the health and safety at work of employees as well as the organisation and arrangements for carrying out that policy. Despite their importance and the legal equipment to prepare them, health and safety policies have been found, in a large number of plastics processing companies (particularly small companies), to be poorly prepared, inadequately implemented and monitored. An important cause of these inadequacies is the lack of necessary health and safety knowledge and expertise to prepare, implement and monitor policies. One possible way of remedying this problem is to investigate the feasibility of using computers to develop expert system programs to simulate the health and safety (HS) experts' task of preparing the policies and assisting companies implement and monitor them. Such programs use artificial intelligence (AI) techniques to solve this sort of problems which are heuristic in nature and require symbolic reasoning. Expert systems have been used successfully in a variety of fields such as medicine and engineering. An important phase in the feasibility of development of such systems is the engineering of knowledge which consists of identifying the knowledge required, eliciting, structuring and representing it in an appropriate computer programming language.

Purchasing in small firms – past assumptions, current evidence and future research

This paper reviews the literature on purchasing in small and medium sized enterprises (SMEs), in the context of the wider literature on SMEs. Evidence from these sources is related to insights from exploratory interviews with the owner-managers of 15 small firms, to derive recommendations for further research. Our findings complement those of Ellegaard (2006) but also extend these with specific proposals for the process and settings of future research, notably that the priority is to understand purchasing in small firms (cf medium or micro-firms) firms and research should be ‘small firm-centric’.

Ownership structure and investment finance in transition economies:a survey of evidence from large firms in Hungary and Poland

Using survey data on 157 large private Hungarian and Polish companies this paper investigates links between ownership structures and CEOs’ expectations with regard to sources of finance for investment. The Bayesian estimation is used to deal with the small sample restrictions, while classical methods provide robustness checks. We found a hump-shaped relationship between ownership concentration and expectations of relying on public equity. The latter is most likely for firms where the largest investor owns between 25 percent and 49 percent of shares, just below the legal control threshold. More profitable firms rely on retained earnings for their investment finance, consistent with the ‘pecking order’ theory of financing. Finally, firms for which the largest shareholder is a domestic institutional investor are more likely to borrow from domestic banks.

Growth expectations of business owners:impact of human capital, firm characteristics and environmental transition

This paper presents an empirical study based on a survey of 399 owners of small and medium size companies in Lithuania. Applying bivariate and ordered probit estimators, we investigate why some business owners expect their firms to expand, while others do not. Our main findings provide evidence that SME owner's generic and specific human capital matter. Those with higher education and 'learning by doing' attributes, either through previous job experience or additional entrepreneurial experience, expect their businesses to expand. The expectations of growth are positively related to exporting and non-monotonically to enterprise size. In addition, we analyse the link between the perceptions of constraints to business activities and growth expectations and find that the factors, which are perceived as main business barriers, are not necessary those which are associated with reduced growth expectations. In particular, perceptions of both corruption and of inadequate tax systems seem to affect growth expectations the most.

ICT diffusion and foreign direct investment:a comparative study between Asia-Pacific and the Middle Eastern economies

This chapter investigates the impact of inward and outward FDI on ICT diffusion in the Asia-Pacific and Middle East regions for the period 1996-2008. The results indicate that while inward FDI has generally had a positive and significant impact on ICT diffusion in Asia-Pacific economies, its impact on the Middle Eastern countries has been detrimental. In contrast, the results of this study also show that outward FDI has had, in general, the inverse effect, it has been in general positive and significant for the Middle East countries but insignificant for Asia-Pacific economies.

Do foreign direct investment (FDI) and trade openness explain the disparity in ICT diffusion between Asia-Pacific and the Islamic Middle Eastern countries?

This study investigates the impact of FDI and trade openness on ICT diffusion in the Asia-Pacific and Middle East regions from 1996-2005. The results indicate that while dissimilarities exist between the economies included in this study in terms of their level of socio-economic and political development, education and the growth of GDP have had a positive impact on ICT diffusion in both regions. However, while FDI has generally had a positive and significant impact on ICT diffusion in Asia-Pacific economies, its impact on Middle Eastern economies has been detrimental. The results of this study also show that trade-openness has had, in general, a positive and significant impact on ICT diffusion. Copyright © 2010, IGI Global.

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.