This paper introduces the concept of dynamic strategic agency to explain how firms translate internal capabilities into superior performance in highly competitive markets. Dynamic strategic agency captures the intensity and breadth of firms’ discretionary strategic actions, including changes in product scope and market positioning. Using a large firm-level survey conducted by the Italian National Statistical Institute, we construct synthetic indicators of dynamic strategic agency as well as organizational and personnel capabilities through multivariate techniques. We show that firms with higher levels of dynamic strategic agency experience significantly higher labour productivity growth, especially in business services activities. Moreover, organizational and personnel capabilities emerge as key drivers of dynamic strategic agency, indicating that internal resources affect performance primarily through their role in enabling active and adaptive strategic behaviour (especially in the industry sector). These results highlight the importance of combining strategic action and internal capabilities in a unified framework and carry relevant managerial and policy implications.
Recent studies highlight the digital economy’s potential to enhance environmental quality by reducing carbon emissions. However, the mechanisms by which the digital economy influences nitrogen emissions, especially at the provincial level in developing countries, remain underexplored. Drawing on provincial nitrogen footprint data from China, this study investigates both the direct effects and the spatial spillover mechanisms through which the digital economy shapes the nitrogen footprint. Our findings reveal a pronounced inverted U-shaped correlation between the digital economy and the nitrogen footprint, along with a nonlinear, U-shaped spatial spillover effect on neighboring provinces. Furthermore, the analysis shows that the digital economy indirectly mitigates the nitrogen footprint by promoting industrial restructuring and advancing green technological innovation. These findings provide important insights for designing regional development strategies and informing policy aimed at reducing nitrogen emissions.
We examine whether China’s Carbon Emission Trading Scheme pilot affects corporate debt financing costs. Using a difference-in-differences design and a sample of Chinese A-share listed firms from 2008 to 2020, we find that the CETS pilot significantly increases debt financing costs for treated firms. This result withstands a battery of robustness tests. Mechanism analysis reveals that CETS elevates debt financing costs by increasing operational risk and reducing information quality. Heterogeneity analysis further demonstrates that the positive effect is more pronounced among non-state-owned enterprises, financially constrained firms, firms with limited carbon cost transfer capacity, firms operating in carbon markets with higher prices and trading volumes, and those with weaker green innovation capability. We also find that CETS reduces the availability of bank credit for pilot firms. Our findings contribute to the literature by extending research on the economic consequences of carbon trading in emerging markets, shifting attention from environmental outcomes to financial consequences, and identifying market-based environmental regulation as an important determinant of corporate debt financing costs.
Numerous studies deal with the link between daily recovery experiences (DRE) and mental health for employees. Hardly any studies exist for small business owners. This is surprising, given that their health is important not only to them but also to their environment (including employees, clients, suppliers, and networks). In the present cross-sectional study, we analyse whether this link also works for some 2,400 Japanese small business owners. Next to overall DRE, four dimensions of DRE are distinguished (detachment, relaxation, mastery, and control). Mental health is captured using well-being (psychological well-being and job satisfaction) and ill-being (burnout and stress). First, we compare our DRE levels with those reported in many other (employee) studies. Second, controlling for many phenomena, including participating in nomikai (a typical Japanese custom of getting together after office hours), both linear regressions and structural equation modelling show that for Japanese small business owners, the quality of overall DRE is positively linked to psychological well-being and job satisfaction, and negatively to burnout and stress. Third, like the quality of overall DRE, nomikai activities of the owner are positively linked to their psychological well-being and job satisfaction, and negatively linked to burnout and stress. Its role seems to be independent of that of the quality of DRE. Fourth, surprisingly, we find that the detachment dimension is negatively correlated with psychological well-being and job satisfaction, while the other three dimensions show the expected positive links. Fifth, and surprisingly, unlike the relaxation and mastery dimensions, the detachment and control dimensions do not show the expected negative links with burnout and stress. Many implications are discussed.
This study contributes to the literature on technology sourcing in multi-location R D by providing novel regional-level evidence on how green knowledge embedded in host locations shapes the green innovation trajectory of global R D leaders. Using data from 231 top R D companies with inventive activities dispersed across 118 European regions over the period 2000–2018, we adopt a two-step empirical strategy combining conditional fixed-effects logistic and Poisson models. The results show that higher green innovation intensity in host regions is significantly associated with both the occurrence and count of green patents by R D units located within them. To address potential endogeneity concerns, we implement a Control Function Approach (CFA), and validate our findings through extensive robustness checks. Heterogeneity analyses indicate that these results hold only when host regions are foreign, located within the European core area, environmentally “brown” and subject to stricter environmental regulation than firms’ home countries. We also find that local knowledge, rather than neighboring regional innovative activity, drives these patterns. Overall, the findings reveal reverse technological externalities from host contexts to corporate R D units and underscore the importance of local embeddedness in shaping the environmental direction of corporate innovation. Policy implications point to the strategic role of attracting R D investments to strengthen regional green knowledge bases and cumulative technological capabilities, while managerial implications emphasize the value of leveraging location-specific conditions to foster sustainable innovation.
This paper studies the moderating role of the rule of law in the relationship between firm internationalization and propensity to innovation. An empirical investigation of 24,000 enterprises across 39 countries (data from the Enterprise Surveys, 2018–2020) confirms the importance of international openness and the rule of law for innovation. More importantly, the moderating role of the rule of law is evaluated. The central result is that institutional quality negatively moderates the effect of firm internationalization. With a strict rule of law, the impact of internationalization on innovation is still positive but weaker. To interpret this result, we argue that domestic firms have a lower attitude toward innovation because of their inability to access foreign knowledge and technology. However, a strict rule of law facilitates knowledge circulation and appropriation of value from innovation, acting as a substitute for internationalization and alleviating the relative disadvantage of domestic firms.
This study examines the relationship between executive-employee pay gap (EEPG) and technological innovation using data from firms listed on the Korea Stock Exchange from 2013 to 2022. The baseline result indicates a significant negative relationship between EEPG and technological innovation. Additionally, EEPG is decomposed into explained and unexplained components. The results reveal a clear asymmetry: explained EEPG is positively associated with technological innovation, whereas unexplained EEPG has a negative impact. These results are robust across various model specifications, including Poisson and negative binomial regressions, and subsample tests. Additional tests reinforce the main findings. Using an alternative decomposition method, the residual component of EEPG continues to exhibit a negative impact. Further analysis reveals that this adverse effect is particularly pronounced in compensation structures where executives are overpaid and employees are underpaid, or vice versa. In summary, the EEPG’s economic justifiability is more crucial for technological innovation.
Based on data from Chinese A-share listed companies between 2000 and 2023, this paper empirically examines corporate capital structure decisions and adjustments under capital market regulation using both a static capital structure model and a partial dynamic adjustment model. The study finds that enterprises with equity-financing qualifications tend to maintain a capital structure characterized by a low debt-to-asset ratio. However, during periods of tight monetary policy, these enterprises are more inclined to choose debt financing, which increases their leverage ratio. This capital structure decision is driven by cost differences between equity and debt financing under market regulatory rules. Enterprises with equity-financing qualifications have a more flexible range of financing strategies. Benefiting from the cost advantages provided by the equity market, these enterprises often exhibit equity-financing stickiness, thereby reducing the speed at which they adjust their capital structure. This paper reveals the strong preference of Chinese enterprises for equity financing and explains the low leverage ratios from the perspective of financing costs. It offers both theoretical and practical support for the regulation of capital market financing in emerging economies, including China.
In this study, we examine the performance difference between robo-advisors of young enterprises and those from established investment firms. We find that robo-advisors from young enterprises underperform compared to their counterparts from established firms, whether using raw returns or risk-adjusted returns as performance measures. The superior performance of established firms’ robo-advisors may be explained by the synergy between machines and experienced asset managers. However, during the COVID-19 crisis, robo-advisors of young enterprises outperformed, which could be explained by their flexibility, adaptability, and innovative capabilities. These findings provide new insights into the dynamics of robo-advisory services and their implications for investors and the financial industry. Our empirical analysis focuses exclusively on companies operating in the United States; therefore, the conclusions should be interpreted within the U.S. institutional and regulatory context.
The top management team plays a crucial role in a company’s specialization strategy. Vertical interlocking is a common practice in which executives serve concurrently in different organizations. This study examines the impact of vertical interlocking on specialization and investigates the role of vertical interlocking between shareholders and companies in enterprise specialization. The empirical results show that vertical interlocking facilitates specialization while limiting and restricting management’s self-interested behavior. The size of related capital transactions and financial constraints is identified as mediating mechanisms for this positive effect. This study deepens the understanding of the relationship between vertical interlocks and enterprise specialization, provides guidance for executive selection and top management team structure, and offers empirical evidence for leveraging vertical social networks and collaborative managerial allocation to promote specialization.
Using restricted-access data from the 2021 National Financial Capability Study in the United States, this study examines the effects of financial literacy on risk attitude in financial investments. The instrumental variable quantile regression model is employed to account for the endogeneity of financial literacy and to quantify whether and how the effects vary across different quantile levels of risk attitude. For financial literacy, the percentage of college graduates in the Zip Code Tabulation Area serves as an instrumental variable. The results suggest that financial literacy has differential impacts across quantiles from 0.1 to 0.7 of risk attitude. However, its influence is not significant in the 0.8 and 0.9 quantiles. In contrast, the model that does not control for endogeneity underestimates the magnitude of financial literacy’s impact.
India’s small-scale industry (SSI) product reservation policy was an unusual instrument: instead of subsidizing firms, it reserved products for exclusive manufacture by small units. Starting in the late 1990s, the policy was dismantled gradually—product by product, creating a rare opportunity to study what happens when a long-standing protection is withdrawn. Using plant-level panel data with product detail from India’s Annual Survey of Industries (1999–2016), we estimate the causal effects of de-reservation on product scope (new product introductions and the sales share of new products) and on performance (labour productivity and sales growth). We exploit staggered treatment timing using a recent multi-period difference-in-differences framework. The main finding is straightforward: de-reservation is associated with more new product introductions and faster sales growth on average. But the more important and more policy-relevant finding is that the gains are highly uneven. Larger plants within the SME universe, innovative units, and establishments that adopt new inputs are the ones that consistently translate liberalization into improved outcomes. Small plants, by contrast, show at best a modest rise in product switching, with little evidence of performance gains. The takeaway is not that small firms are inherently disadvantaged, but rather that capabilities—not just size—mediate who benefits when protections are removed, highlighting the importance of policy design that strengthens SME capabilities by addressing these uneven adjustment dynamics.
In the context of emerging market firms, this paper considers the relationship between their environmental international diversification and environmental proactivity, incorporating the influence of home country institutional constraints, with particular regard to the moderating roles of home country corruption and innovation. The study was conducted using a panel dataset obtained from the LSEG Workspace database to analyse the published results of 370 firms across ten business sectors for the period 2012–2022. The main findings provide evidence of a significant relationship between firms’ environmental proactivity and their international expansion. The findings indicate that environmental proactivity serves as a critical legitimacy-building mechanism for firms seeking to escape corrupt home-country institutions, thereby strengthening its effect on environmental international diversification. In contrast, strong domestic innovation systems reduce the need for such legitimacy-driven internationalisation, weakening the relationship between environmental proactivity and environmental international diversification. The present study contributes to the international business literature by revealing how institutional factors in emerging markets influence the relationship between environmental proactivity and environmental international diversification. It also offers valuable insights for policymakers and business leaders wishing to enhance emerging market firms’ global market presence through policies focused on environmental proactivity.
We investigate if and how the degree of urbanization of an entrepreneur’s living area influences its ICT use frequency at work. Earlier research has shown that more intensive ICT use by entrepreneurs is associated with stronger entrepreneurial performance. At the regional level this implies that a higher ICT use frequency by the region’s entrepreneurs is associated with stronger regional performance and more scope for regional development. Hence it is important to understand entrepreneurs’ ICT use frequency and the role of regional context. Using survey data for 305 NUTS-2 regions in 35 European countries, and controlling for the regional level of digital infrastructure, we find that ICT use frequency by entrepreneurs is substantially higher in urban areas compared to rural territories. Importantly, when investigating various moderation effects, we also find that the impact of urbanization on entrepreneurs’ ICT use frequency at work is smaller in regions with a higher level of general human capital and/or a higher level of digital infrastructure, that is, the lower ICT use frequency of entrepreneurs living in rural areas can partly be compensated for by higher regional levels of general human capital and digital infrastructure. Moreover, we also identify compensating effects related to entrepreneurs’ characteristics such as age and household’s income level. Policy implications for the economic development of rural areas are discussed.
A significant body of research assumes that modern management practices are less relevant for smaller firms, especially in developing countries. We analyze the relationship between structured management practices and firm performance using World Bank Enterprise Survey (WBES) data covering 94 countries. The positive relationship between structured management practices and firm sales, often documented for larger firms in developed countries, is also present for smaller firms in developing economies. This association is stronger for smaller firms. This points to a resolution to a persistent question in the economics of management literature: if modern management techniques are so good, why don’t more firms use them? Our findings suggest the answer is not low marginal benefits; the marginal benefits are highest among smaller firms. Instead, barriers to adoption such as implementation and regulatory costs may be more relevant, consistent with prior work by Bloom (American Economic Review 109:1648–1683, 2019).
This study aims to assess how the adoption of new digital/Industry 4.0 technologies has spurred the demand for both technical and business skills, and whether such skill requirements are met through hiring and/or training. To this end, we use a representative sample of about 950 Italian companies that took part in both waves of a unique survey. We find that the implementation of Industry 4.0 technologies is associated with an increase in both technical skills and business skills. Moreover, significant heterogeneity emerges when we separately consider software, hybrid and machine-based technologies, as well as when we distinguish between hiring and training needs. Specifically, we observe that technologies with a strong software component are more closely associated with business skills, which are mainly sourced through hiring; conversely, hybrid technologies (e.g., IoT) are more closely associated with the demand for new technical skills, which are mostly integrated through training. These findings may help enhance the match between labour demand and supply, especially in this particularly uncertain and complex scenario.
This study investigates the impact of executives’ environmental awareness (EA) on driving corporate green innovation (GI) in Chinese A-share manufacturing enterprises. The study utilizes a sample of 1,052 firms for the period from 2012 to 2022. This study draws on the Upper Echelons Theory and Operational Efficiency Theory to provide a basis for constructing a moderated mediation framework that addresses the objectives. The study employs various econometric techniques for analysis, including Ordinary least squares regressions, Heckman two-stage estimation, robustness checks with Tobit, and bootstrapping. The outcomes show that EA directly enhances GI and indirectly does so through improvements in operational efficiency (OE). Heterogeneity findings indicate that this effect is especially prominent among small-scale businesses, including non-state-owned enterprises, and those located in eastern regions, particularly in the post-COVID-19 period. Furthermore, market openness (MO) significantly moderates this relationship, thereby enhancing the impact of awareness on innovation results. The moderated mediation analysis indicates that the indirect effect of EA on GI through OE is enhanced at elevated levels of MO. The recent work is a fresh theoretical contribution to how managerial thinking interacts with both internal competencies and external environments to achieve sustainability-related innovation. It provides practical implications for policymakers and enterprises seeking to promote green development amid globalization and environmental regulation.
Since 2019, the Korea Exchange (KRX) has required listed firms to disclose corporate governance reports following the “Comply or Explain” (“CoE”) approach, which allows firms to either comply with governance indicators or provide explanations for non-compliance. Under this approach, firms have the flexibility to choose the optimal governance structure, and capital market participants evaluate the adequacy of such choices in light of each firm’s circumstances. This study investigates whether the relationship between compliance with Key Corporate Governance Indicators (KCGIs) and firm value varies depending on firm attributes such as size and ownership concentration. Using data from Korean-listed firms that disclosed mandatory corporate governance reports from 2019 to 2023, we find that compliance with KCGIs, particularly those linked to the board of directors, positively impacts the value of large firms. This effect, however, is not statistically significant for non-large firms. We also find that compliance with KCGIs, especially those related to shareholders and the board, is positively (not significantly) related to the value of firms with high (low) ownership concentration. Our results suggest that investors assess KCGI compliance differently in the context of each firm’s unique circumstances, reflecting variations in compliance costs and monitoring needs across firms.
This study examines the asymmetric volatility spillovers and interconnectedness among 15 major cryptocurrencies using high-frequency data at 5-min intervals. We adopt a comprehensive methodology to analyze both symmetric and asymmetric volatility, using realized volatility and semi-variances to capture positive and negative spillovers. We decompose volatility spillovers into short- and long-term frequency bands to provide insights into the directional and temporal aspects of volatility dynamics. Our findings reveal significant asymmetric spillovers, with negative volatility spillovers persistently dominating positive ones across total, short-term, and long-term horizons, particularly during turbulent periods such as the COVID-19 pandemic and the Russia–Ukraine War. Short-term spillovers are the most pronounced, reflecting rapid contagion driven by downside risk and investor sentiment, while long-term dynamics exhibit alternating phases shaped by macroeconomic, political, and regulatory conditions, with negative volatility remaining the primary driver during stress episodes. Additionally, exogenous factors such as environmental attention (ICEA), cryptocurrency policy uncertainty (UCRY), CBDC-related uncertainty, US economic policy uncertainty (USEPU), and global risk and sentiment indicators significantly affect cryptocurrency connectivity in a heterogeneous and horizon-dependent manner. This study offers valuable insights into diversification strategies for cryptocurrency portfolios and informs regulatory bodies on market stability and risk management, particularly during turbulent periods.
The role of CEOs extends beyond managing individual companies and involves influencing strategic decision-making and inter-firm collaborations. This study investigates CEO turnover’s economic impact on strategic alliance formation, focusing on the disruption and reconfiguration of social networks. Using a dataset of 4101 firm-year observations from U.S. S P 1500 high-tech firms (2000–2015), we find that CEO turnover results in a temporary but significant decline in new strategic alliances, driven by the loss of trust-based relationships embedded in the outgoing CEO’s social network. Over time, firms rebuild these alliances as the incoming CEO establishes novel social connections. The impact varies according to the succession type as follows: while firms appointing outside CEOs experience an approximately 50
