Narrow Results

This study examines the impact of R&D spillover and firm size on the R&D intensity of electronic firms operating in India for the time period 2000–2015. The study finds that firms benefitting from R&D spillover in their line of business are spending more on in-house R&D, indicating complementarity between R&D spillover and R&D efforts. When we consider possible R&D spillover with firm size, the positive association between R&D spillover and in-house R&D activity holds after a certain threshold of firm size is reached. A probable implication for the moderating influence of firm size suggests that large-sized firms have financial resources and the capability to assimilate technological knowledge in their product designs and processes. An inverted-U relationship between firm size and R&D suggests that support and assistance with the cost of research and development can spur the innovation incentive of small- and medium-sized firms. The empirical finding indicates that fringe firms in the electronics sector aim at developing new technology. The import of intermediate inputs appears to be negatively associated with in-house R&D. This suggests substitutability between imported intermediaries and R&D activity. In the case of R&D reporting firms, the coefficient of embodied technology and capital intensity turns out to be positive and significant. As it remains, an increase in the import of capital goods promotes in-house R&D of electronic firms. At the same time undertaking R&D activity in a high-tech sector is capital intensive. Hence, firms require capital reserves to engage in innovative activities and remain competitive.

This study describes the impact of leverage on earnings management and determines varying relationships with the moderating effect of firm size in linear and nonlinear setting. Results from selected firms of members’ countries of Asia Pacific Trade Agreement (APTA) unequivocally revealed that in all countries the relationship between the leverage and earnings management is sigmoid in nature. Firms can limit the managers reporting of income-increasing accruals through debt creation up to a certain threshold after which further debt creation challenges the debt covenants. The firm size substantially moderates the relationship of leverage and earnings management and systematically converses the relationship through moderation. The relationship between accruals and firm size is also sigmoid in nature. The specific behavior is seen in Indian firms in which relationship between leverage and accruals is like Richard’s curve in nature due to higher agency cost issue. In Pakistan, firm size has been found as a major factor that guides the accrual due to higher political cost. Additionally, in the setting of comparative static analysis, at the first place, we examine cash flows-risk determining liquidity-risk position of the firms in Pakistan and Bangladesh. At the second place, in the case of China, India and Pakistan, this study reveals an increasing relationship between the effective tax rate and the probability of reporting negative accruals which may create attitude of tax evasion among the firms in these countries. In the third place, in the case of China, India and Bangladesh, sales growth depicts an increasing relationship with the likelihood of reporting positive accruals. However, decreasing relationship is observed for Pakistan and Sri Lanka between the sales growth and the possibility of positive accruals. This study has major implications for funding institutions, debt manager and regulatory bodies of Asian Economies.

This study uses a representative sample of Korean manufacturing firms for the period 2010–2018 to examine the relationship between firm size and growth in various aspects. The main findings are as follows. First, smaller firms have a higher average growth rate and wider growth dispersion (growth variance) across the firms. Second, the growth rates of micro and small firms show negative growth persistence resulting in a volatile growth pattern. In contrast, medium and large firms have a high probability that the growth rates persist over time, indicating a stable growth pattern. Third, the first and second findings are robustly observed regardless of the disaggregated sectors in the manufacturing industry, which are divided based on their technological-intensity levels. The findings imply that (a) it is necessary to analyze and understand differences in growth patterns by firm size and (b) firm growth requires policies tailored to the size of firms.

In this paper, we develop the idea that firm sizes evolve as log Brownian motions dS_t = S_t(σdW_t + μdt) where the constants μ, σ are characteristics of the firm, chosen from some distribution, and that the firms are wound up at some random time. At any given time, we see a firm of a given size. What can we say about its characteristics given its size? How would we invest in such a market? What do these assumptions imply about the distribution of sizes? By making simple and well-chosen modeling assumptions, we are able to develop quite concrete forms of the dependence of firm characteristics on size, from which we are able to deduce optimal investment weights as a function of size alone. As in the approach of Fernholz [2002, Stochastic Portfolio Theory. Springer], this avoids the need to estimate growth rates of stocks in order to decide on investment strategy.

In this study we examined Japanese firm-level data to test whether increments in intangible assets will leads to differences in productivity growth. Our results show that the marginal contribution of inputs varies a greatly among sectors, industries and depending on firm's size. Therefore, marginal increments in intangibles investments are not always associated with productivity growth suggesting that when intangibles exceed a threshold, additional investments could be inefficient. We conclude that among intangibles, firm-specific organizational capital and advertising are two of the critical factors in determining the productivity growth.

This paper examines the relationship between liquidity and profitability of the non-financial firms listed in Dhaka Stock Exchange (DSE) for the period of 1998–2013. Pedroni and Johansen co-integration results show that liquidity, profitability, firm size and long-term debt (LTD) have significant co-integration relationship in the long run. The causality test results expose that a strong bidirectional casual relationship exist among the variables of liquidity and profitability, LTD and liquidity profitability and firm size in the short run. Also, there exists unidirectional causality among the variables of firm size and liquidity, profitability and LTD in the short run. Furthermore, Pooled Mean Group results show that profitability, firm size and LTD have long-run co-integration relationship with liquidity. However, in the short run, profitability and LTD significantly contribute to the liquidity and the error correction mechanism shows that speed of adjustment to equilibrium is significant within the year. Impulse response analysis indicates shocks in the firm size, LTD and profitability have positive and significant impact on liquidity.

Following the empirical work of Jones (1995a,b) that test the scale effects predicted by the AK models and the R&D based models, this paper tests the scale effects of a major new trade model, the Krugman (1979) version of the Dixit-Stiglitz (1977) model, using the Yang-Heijdra (1993) formula for own price elasticity of demand. Time series data from six economies are used to test the relationships between the average size of firms, population and per capita income. The results show that the scale effects predicted by the revised Krugman model are incompatible with empirical evidence.

This project investigates the impact of contextual factors on the relationship between potential and realised absorptive capacity. The paper proposes that a firm’s size negatively affects this relationship, thus hindering the firm’s ability to create and exploit new knowledge. Nonetheless, as the paper posits, large firms can alleviate this negative effect of size by increasing a level of employee empowerment. The empirical analysis, based on the data collected from over 370 employees at 71 hospitals located in the United States, confirms main assumptions of the proposed model. The study considers key implications for strategy research as well as for managerial practices.

This study investigates the firm size-innovation puzzle through distinguishing radical from incremental innovation, and examining the country-level context (i.e., university–industry collaboration in R&D and competition intensity) that the firm size-innovation relationship is contingent on. The meta-analysis including 162 studies with 112,639 firms reveals that firm size can simultaneously benefit for radical and incremental innovations, while the measurement of firm size using the non-personnel indices can result in significant difference between the firm size-radical innovation and firm size-incremental innovation. Additionally, it is found that the positive relationship between firm size and radical innovation increases when university–industry collaboration in R&D and competition intensity is stronger. This study quantitatively summarises the relationship between firm size and radical/incremental innovation and updates the correlations reported in established literatures. Drawing on awareness-motivation-capability perspective, it takes an essential and frontier step in testing the country-level context that can influence the effect of firm size on innovation.

The aim of this study is to analyse how firms combining the use of all types of innovation during a certain period differ from other firms. Zhang (2022) argues that side-by-side innovation practices are understudied in the innovation literature. The paper is based on the OECD typology of innovation (product, process, marketing and organisational). This study offers a new and timely perspective on the innovation literature by examining firms’ side-by-side innovation practices, which are understudied in the innovation literature. The paper is based on data from 387 Finnish SMEs and analyses the factors related to the innovativeness of SMEs. The research provides comprehensive information on how different factors contribute to the emergence of SME innovation practices and create competitive combinations of their resources in the form of side-by-side implementation of different types of innovation.

The paper estimates the rates of return to investment in education in Egypt, allowing for multiple sources of heterogeneity across individuals. The paper finds that, in the period 1998–2006, returns to education increased for workers with higher education, but fell for workers with intermediate education levels; the relative wage of illiterate workers also fell in the period. This change can be explained by supply and demand factors. On the supply side, the number of workers with intermediate education, as well as illiterate ones, outpaced the growth of other categories joining the labor force during the decade. From the labor demand side, the Egyptian economy experienced a structural transformation by which sectors demanding higher-skilled labor expanded. In Egypt, individuals are sorted into different educational tracks, creating the first source of heterogeneity. Second, the paper finds that large-firm workers earn higher returns than small-firm workers. Third, females have larger returns to education. Formal workers earn higher rates of return to education than those in the informal sector, which did not happen a decade earlier. And finally, those individuals with access to technology (as proxied by personal computer ownership) have higher returns.

Firm size has been empirically found to be strongly positively related to capital structure. This paper investigates whether a dynamic capital structure model can explain the cross-sectional size–leverage relationship. The driving force that we consider is the presence of fixed costs of external financing that lead to infrequent restructuring and create a wedge between small and large firms. We find four firm-size effects on leverage. Small firms choose higher leverage at the moment of refinancing to compensate for less frequent rebalancings. Their longer waiting times between refinancings lead to lower levels of leverage at the end of restructuring periods. Within one refinancing cycle, the intertemporal relationship between leverage and firm size is negative. Finally, there is a mass of firms opting for no leverage. The analysis of dynamic economy demonstrates that in cross-section, the relationship between leverage and size is positive and thus fixed costs of financing contribute to the explanation of the stylized size–leverage relationship. However, the relationship changes sign when we control for the presence of unlevered firms.

This study analyzes how social media affects bank loan contracting. Using a sample of 642 US bank loan contracts, we hypothesize that social media can enhance information dissemination and mitigate the information asymmetry between borrowers and lenders. Consistent with this hypothesis, we find that borrowers that receive positive social media user opinion on social media enjoy more favorable price of bank loan contracts. Additional analyses indicate that the relations among social media user opinion and bank loan price vary with the firm size, loan structure and availability of public information of borrowers. Overall, this research provides evidence that social media reduces cost of bank loans by decreasing information asymmetry between borrowers and lenders in the capital markets.

Internet startups in China are currently facing a severe labor force shortage. The White Paper on Employment Insights in China’s Internet Industry (Enterprise Chapter) has highlighted that labor force distribution in China’s Internet Industry is imbalanced, with 60% of resumes going to 3% of big firms, leaving startups unable to hire enough employees, instead big firms unable to find the suitable staff. This study aims to determine how Internet startups improve their appeal to fill their labor force shortage. We have undertaken a conjoint analysis experiment online with Internet firms in China. Our results indicate that the annual salary is the most essential criteria for respondents when choosing a job, followed by firm size, weekly working hours, location, and team-building activities. There are also distinct preferences among employees. For example, female Internet employees and those with master’s degrees are more sensitive to income fluctuations. On this basis, Chinese Internet startups can attract Internet employees with a cost-effective strategy that combines improved pecuniary conditions and non-pecuniary conditions based on characteristics of different types of employees.

Unlike earlier studies that fail to measure CEO dominance accurately, our research develops a quantitative measure for CEO dominance based on a deep learning method, which can recognize the physical features from CEO’s facial photographs. Taking more than 1800 corporates’ data from 1992 to 2022 as a sample, this chapter aims to investigate the effects of CEO dominance on corporate performance. The results suggest that higher CEO dominance is associated with lower corporate performance. Furthermore, both CEO’s high non-salary compensation and large firm size significantly mitigate the negative impact of CEO dominance on corporate performance.