Innovation diffusion across firms

This chapter seeks to add to the study of innovation diffusion as enacted within the UK construction sector. Whereas using relevant theoretical frames as touch points, the chapter maps out challenges associated with understanding innovation diffusion within the UK construction sector. Central to the argument developed here is just how diverse the UK construction sector is, resulting in the need to focus upon a specific constituent perspective within the sector. It is argued that constituents of the UK construction sector experience the reality of innovation diffusion differently. The chosen focus here is medium-size and typically regionally based construction firms rather than the big guns, because statistics continually demonstrate that this group of smaller firms undertake more than 80% of the sector’s output. As is pointed out in other chapters in the present volume, and as argued theoretically in the industrial network perspective of chapter 7, firms do not innovate in a vacuum. Innovation and diffusion occur within networks of firms typically around a project. A framework drawing upon empirical data is provided to additional insight on the process and the interconnections. It is argued here that the unit of analysis or level of understanding termed the firm can actually be fairly unhelpful for understanding innovation and its manifestation and diffusion within the broader UK construction sector, because this occurs across networks of firms.

Sustainable construction: exploring the capabilities of Nigerian construction firms

As the built environment accounts for much of the world's emissions, resource consumption and waste, concerns remain as to how sustainable the sector is. Understanding how such concerns can be better managed is complex, with a range of competing agendas and institutional forces at play. This is especially the case in Nigeria where there are often differing priorities, weak regulations and institutions to deal with this challenge. Construction firms are in competition with each other in a market that is growing in size and sophistication yearly. The business case for sustainability has been argued severally in literature. However, the capability of construction firms with respect to sustainability in Nigeria has not been studied. This paper presents the preliminary findings of an exploratory multi-case study carried out to understand the firm's views on sustainability as a source of competitive advantage. A international firm and a lower medium-sized indigenous firm were selected for this purpose. Qualitative interviews were conducted with top-level management of both firms, with key themes from the sustainable construction and dynamic capabilities literature informing the case study protocol. The interviews were transcribed and analysed with the use of NVivo software. The findings suggest that the multinational firm is better grounded in sustainability knowledge. Although the level of awareness and demand for sustainable construction is generally very poor, few international clients are beginning to stimulate interest in sustainable buildings. This has triggered both firms to build their capabilities in that regard, albeit in an unhurried manner. Both firms agree on the potentials of market-driven sustainability in the long term. Nonetheless, more drastic actions are required to accelerate the sustainable construction agenda in Nigeria.

The determinants of inward foreign direct investment in business services across European regions

The determinants of inward foreign direct investment in business services across European regions, Regional Studies. The role of forward linkages with manufacturing sectors and other service sectors as attractors of business services foreign direct investment (FDI) is studied at the regional level. Using data on 146 NUTS-2 regions, it is found that regions specialized in those (manufacturing) sectors that are high potential users of business services attract more FDI in the business services than other regions. Results are robust to the inclusion of the traditional determinants of foreign investments at the regional level as well as to controls for spatial dependence. The results suggest that regional policies aimed at attracting foreign investors in the business service industry might prove ineffective in the absence of a pre-existing local intermediate demand

Firms in international trade: importers’ and exporters’ heterogeneity in Italian manufacturing industry

Combining data on structural characteristics and economic performance for a large sample of Italian firms with data on exporting and importing activity, we uncover evidence supporting recent theories on firm heterogeneity and international trade, together with some new facts. In particular, we find that importing is associated with substantial firm heterogeneity. First, we document that trade is more concentrated than employment and sales, and show that importing is even more concentrated than exporting both within sectors and along the sector- and country-extensive margins. Second, while supporting the fact that firms involved in both are the best performers, we also find that firms involved only in importing activities perform better than those involved only in exporting. Our evidence suggests there is a strong self-selection effect in the case of importers and the performance premia of internationalised firms correlate relatively more with the degree of geographical and sectoral diversification of imports.

Procedural justice, not absorptive capacity, matters in multinational enterprise ICT transfers

This paper empirically tests the effectiveness of information and communications technology (ICT) knowledge transfer and adoption in the multinational enterprise (MNE) as an issue of critical importance to contemporary MNE functioning. In contrast to mainstream thinking on absorptive capacity, but in line with prevailing international business theory, our research supports the proposition that perceptions of procedural justice, rather than absorptive capacity, determine effectiveness, especially in cases of high tacit knowledge transfers. Data was collected from senior ICT representatives in 86 Canadian subsidiaries of foreign owned MNEs. Each of these subsidiaries recently experienced a significant ICT transfer imposed by the parent organization. Support was found for the main propositions: Procedural justice significantly predicted successful ICT transfer and adoption, while absorptive capacity was not significant. These findings are consistent even when knowledge tacitness was high. The perceived success of the ICT transfer as well as its adoption varied widely across these firms. The potential reasons for this divergence in effectiveness are manifold, but our findings suggest that in situations of substantial knowledge tacitness, a higher level of procedural justice, rather than a higher level of absorptive capacity, is critical to effective transfer and adoption.

The impact of outward investments on parent company's employment and skill composition

This paper investigates the impact of outward foreign direct investment (FDI) by Italian multinationals on their total employment and skill composition. Specifically, by comparing data on 108 Italian manufacturing firms that became multinational (for the first time) in the period 1998–2004 with a counterfactual group of 2500 national firms that remained national in the same period, we provide descriptive and econometric evidence that the internationalisation of production activities did not reduce domestic employment in the parent companies neither for investments in developed or developing countries. As far as the skill composition is concerned, results reveal that only firms investing in Central and Eastern European countries experience some skill upgrading relative to firms that remained national.

Business life cycle and capital structure: evidence from Chinese manufacturing firms

This paper uses a panel data-fixed effect approach and data collected from Chinese public manufacturing firms between 1999 and 2011 to investigate the impacts of business life cycle stages on capital structure. We find that cash flow patterns capture more information on business life cycle stages than firm age and have a stronger impact on capital structure decision-making. We also find that the adjustment speed of capital structure varies significantly across life cycle stages and that non-sequential transitions over life cycle stages play an important role in the determination of capital structure. Our study indicates that it is important for policy-makers to ensure that products and financial markets are well-balanced.

Action learning: how learning transfers from entrepreneurs to small firms

The paper presents research with small and medium enterprise (SME) owners who have participated in a leadership development programme. The primary focus of the paper is on learning transfer and factors affecting it, arguing that entrepreneurs must engage in ‘action’ in order to ‘learn’ and that under certain conditions they may transfer learning to their firm. The paper draws on data from 19 focus groups undertaken from 2010 to 2012, involving 51 participants in the LEAD Wales programme. It considers the literatures exploring learning transfer and develops a conceptual framework, outlining four areas of focus for entrepreneurial learning. Utilising thematic analysis, it describes and evaluates what (actual facts and information) and how (techniques, styles of learning) participants transfer and what actions they take to improve the business and develop their people. The paper illustrates the complex mechanisms involved in this process and concludes that action learning is a method of facilitating entrepreneurial learning which is able to help address some of the problems of engagement, relevance and value that have been highlighted previously. The paper concludes that the efficacy of an entrepreneurial learning intervention in SMEs may depend on the effectiveness of learning transfer.

The financial and environmental performance of firms exposed to the EU Emissions Trading Scheme

This thesis is an empirical-based study of the European Union’s Emissions Trading Scheme (EU ETS) and its implications in terms of corporate environmental and financial performance. The novelty of this study includes the extended scope of the data coverage, as most previous studies have examined only the power sector. The use of verified emissions data of ETS-regulated firms as the environmental compliance measure and as the potential differentiating criteria that concern the valuation of EU ETS-exposed firms in the stock market is also an original aspect of this study. The study begins in Chapter 2 by introducing the background information on the emission trading system (ETS), which focuses on (i) the adoption of ETS as an environmental management instrument and (ii) the adoption of ETS by the European Union as one of its central climate policies. Chapter 3 surveys four databases that provide carbon emissions data in order to determine the most suitable source of the data to be used in the later empirical chapters. The first empirical chapter, which is also Chapter 4 of this thesis, investigates the determinants of the emissions compliance performance of the EU ETS-exposed firms through constructing the best possible performance ratio from verified emissions data and self-configuring models for a panel regression analysis. Chapter 5 examines the impacts on the EU ETS-exposed firms in terms of their equity valuation with customised portfolios and multi-factor market models. The research design takes into account the emissions allowance (EUA) price as an additional factor, as it has the most direct association with the EU ETS to control for the exposure. The final empirical Chapter 6 takes the investigation one step further, by specifically testing the degree of ETS exposure facing different sectors with sector-based portfolios and an extended multi-factor market model. The findings from the emissions performance ratio analysis show that the business model of firms significantly influences emissions compliance, as the capital intensity has a positive association with the increasing emissions-to-emissions cap ratio. Furthermore, different sectors show different degrees of sensitivity towards the determining factors. The production factor influences the performance ratio of the Utilities sector, but not the Energy or Materials sectors. The results show that the capital intensity has a more profound influence on the utilities sector than on the materials sector. With regard to the financial performance impact, ETS-exposed firms as aggregate portfolios experienced a substantial underperformance during the 2001–2004 period, but not in the operating period of 2005–2011. The results of the sector-based portfolios show again the differentiating effect of the EU ETS on sectors, as one sector is priced indifferently against its benchmark, three sectors see a constant underperformance, and three sectors have altered outcomes.