Search

To enrich the research on the economic consequences of enterprise digital development from the perspective of capacity utilization. Using a sample of listed firms from 2010 to 2020, this paper exploits text analysis of annual reports to construct a proxy for enterprise digital development. Results show that enterprise digital development not only improves their own capacity utilization but also generates a positive spillover effect on the capacity utilization of peer firms and firms in the supply chain. Next, based on the incomplete information about market demand and potential competitors when making capacity-building decisions, the mechanism tests show that improving the accuracy of market forecasts and reducing investment surges are potential channels behind the baseline results. Cross-sectional tests show the baseline result is more pronounced when industries are highly homogeneous and when firms have access to less information. This paper contributes to the research related to the economic consequences of digital development. With the development of the digital economy, the real effects of enterprise digital development have also triggered extensive interest and exploration. Existing studies mainly examine the impact on physical operations, such as specialization division of labor, innovation activities, business performance or total factor productivity (Huang, Yu, & Zhang, 2019; Yuan, Xiao, Geng, & Sheng, 2021; Wang, Kuang, & Shao, 2017; Li, Liu, & Shao, 2021; Zhao, Wang, & Li, 2021). These studies measure the economic benefits from the perspective of the supply (output) side but neglect the importance of the supply system to adapt to the actual market demand. In contrast, this paper focuses on capacity utilization, aimed at estimating the net economic effect of digital development by considering the supply-demand fit scenario. Thus, our findings enrich the relevant studies on the potential consequences of digital development.

Food security in Russia seems to be one of the important criteria for guaranteeing the state security of the country in the medium and long–term forecast. In Russia, this process is regulated by the Food Security Doctrine of the Russian Federation, which defines a number of important tasks: their implementation contributes to maintaining food security, regardless of external and internal conditions. The state program of the agro–industrial complex provides for the comprehensive formation of all industries and sub–sectors, as well as areas of activity of the agro–industrial complex, taking into account Russia’s membership in the WTO, as well as participation in the EEC and other regional associations in the economic space of the CIS. The following main objectives of the state program of the republic in the context of agricultural products have been identified: to ensure the implementation of the Doctrine of Food Security of the Russian Federation for production; create favorable conditions for the development of exports of agricultural products in the republic; ensure sustainable development of cattle breeding; increase the efficiency of the agro–industrial complex through the introduction of innovative and high–tech technologies, etc. The article presents the results of a study on the development of agriculture and regulation of the markets of products of the Republic of Bashkortostan in the context of the global financial crisis.

As firms use advertising to gain product market advantages and increase their valuation in financial markets, disclosing their advertising spending is influential—whether it erodes organizational competitive advantages in product markets or signals quality in financial markets. The authors argue that firms learn from peers' decisions to reduce the uncertainty in their own advertising disclosure, and they empirically investigate information-based organizational herding in the context of advertising spending disclosure, where a 1994 reporting rule made advertising spending disclosures voluntary in the United States. The authors examine whether a firm relies on information from benchmark leaders or similar peers to resolve disclosure uncertainty. A novel identification strategy, which uses partially overlapping strategic groups to mitigate simultaneity and correlated unobservables, shows robust evidence for herding effects among peer firms in the same strategic group. Moreover, firms are more likely to resolve disclosure uncertainty from similar peers rather than from benchmark leaders. The authors discuss how firms can use knowledge of competitors' predicted advertising disclosure decisions conditional on their disclosure to their strategic advantage in product and financial markets. [ABSTRACT FROM AUTHOR]

Since COVID-19's emergence in 2020, all segments of life, including farming communities, have been impacted. The pandemic revealed both vulnerabilities and opportunities for resilience, particularly for those dwelling in the harsh mountainous terrains, which have already strained food ecosystems. Taking influence from an exhaustive literature review, this study proposes and tests a model for the transformations observed in the agriculture markets, particularly input, labor, and product markets, and elucidates the influence of these changes on cropping and consumption patterns. With data from two major mountainous terrains in north Pakistan spanning three years before and during the pandemic, a quantitative inquiry was carried out on the agriculture markets and farming patterns. A total of 5273 members of the farming communities were targeted for data collection. A two-step process was used for data analysis, including an evaluation of the outer or measurement model followed by the inner or structural model through partial least squares structural equation modeling (PLS-SEM). With a hitherto ignored focus on the already vulnerable mountainous communities, the findings confirm the direct influence of agriculture markets on changes in the farmers' cropping patterns as well as the moderating influence of the pandemic on these relationships. Consistent with previous literature, the results also affirm the influence of changes in cropping patterns and changes in consumption patterns. However, it was found that the agriculture input markets strongly predict the changes in cropping patterns, whereas the labor and product markets have comparatively lower prediction value. By investigating the various facets of food supply chains, this study offers valuable insights on market dynamics in times of a crisis, such as a pandemic. [ABSTRACT FROM AUTHOR]

This paper evaluates the relationship between public policy reforms and productivity, investment, employment and per capita income for OECD and non-OECD countries. More competition-friendly product market regulations are associated with improved economic outcomes: lower barriers to foreign trade and investment go in tandem with greater multi-factor productivity (MFP), and lower barriers to entry and less pervasive state control over the business sector with larger capital stock and increased employment rate. More flexible labour market regulations are found to go hand in hand with higher employment rates whereas no robust link between labour market regulations and MFP and capital deepening can be established. The findings also suggest that the quality of institutions is fundamental for economic outcomes. Finally, the paper shows that countries at different levels of economic development face different policy effects and that some policy reforms interact with each other by attenuating and amplifying each others’ economic impacts.

The relationship between profitability and leverage is controversial in the capital structure literature. We revisit this relation in light of a novel quasi-natural experiment that increases market power for a subset of firms. We find that treated firms increase their profitability throughout the treatment period. However, they only transiently reduce financial leverage, gradually reverting to their preshock level. Firms respond differently according to size with large firms gradually adjusting their leverage toward a new target and small firms reducing it. The patterns are broadly consistent with dynamic trade-off models with both fixed and variable adjustment costs. This paper was accepted by Gustavo Manso, finance. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2021.4235. [ABSTRACT FROM AUTHOR]

This paper evaluates the relationship between public policy reforms and productivity, investment, employment and per capita income for OECD and non-OECD countries. More competition-friendly product market regulations are associated with improved economic outcomes: lower barriers to foreign trade and investment go in tandem with greater multi-factor productivity (MFP), and lower barriers to entry and less pervasive state control over the business sector with larger capital stock and increased employment rate. More flexible labour market regulations are found to go hand in hand with higher employment rates whereas no robust link between labour market regulations and MFP and capital deepening can be established. The findings also suggest that the quality of institutions is fundamental for economic outcomes. Finally, the paper shows that countries at different levels of economic development face different policy effects and that some policy reforms interact with each other by attenuating and amplifying each others' economic impacts. [ABSTRACT FROM AUTHOR]

We examine the effect of firms' dividend policy on product market outcomes. Exploiting the 2003 dividend tax cut as the exogenous increase in demand for dividends from tax‐sensitive shareholders, we show that firms that raised dividends in response to the tax cut recorded lower sales growth in product markets after the tax cut. These firms experienced a reduction in financial flexibility, which led to a decrease in investment activities. Despite the negative effects of dividends on sales growth, firm value increased on average, indicating that the firms raised dividends when the shareholder benefits outweighed the costs. [ABSTRACT FROM AUTHOR]

We present a model of the TV-advertising market that encompasses both the product markets and the market for TV programs. We argue that the TV industry has several idiosyncratic characteristics that need to be modeled, and show that the strategic interaction in this industry differs from other industries in many respects. We find that a move from a TV monopoly to a TV duopoly may reduce both the total number of viewers and the total amount of TV advertising. A softening of price competition in each product market results in more investment in program quality, higher price per advertising slot, and more advertising. A reduction of the number of firms in each product market may have the opposite effect if the price competition in the product market is sufficiently soft initially. Finally, we find that even small asymmetries between product markets can cause large asymmetries with respect to which producers buy advertising on TV.

This letter introduces a novel modified replicator dynamics model, which includes external influences on the population. This framework models a realistic market into which companies, the external dynamic influences, invest resources in order to bolster their product’s standing and increase their market share. The dynamic influences change in each time step of the game, and directly modify the payoff matrix of the population’s interactions. The model can learn from real data how each influence affects the market, and can be used to simulate and predict the outcome of a real system. We specifically analyze how a new technology can compete and attempt to unseat an entrenched technology as the market leader. We establish a relationship between the external influences and the population payoff matrix and show how the system can be implemented to predict outcomes in a real market by simulating the rise of the Android mobile operating system over its primary competition, the iPhone, from 2009 to 2017. [ABSTRACT FROM AUTHOR]

In this paper we examine customer firms’ managerial compensation policies when they have important supplier relations. We show that firms with greater reliance on their suppliers tend to offer higher total- and equity-based pay but lower risking-taking incentives to its top executives. Our results are consistent with the argument that suppliers making firm-specific investments are concerned about the customer firm’s prospects. Therefore, firms with important supplier relations use the compensation policies of their top executives (more equity-based and less risk-taking) to signal their commitment to a stable and promising performance in the future. To address endogeneity issues arising out of time-varying omitted variables, we exploit a 2SLS procedure to supplement our baseline OLS findings. Our results are robust alternate measures of suppliers’ relationship-specific investments and econometric models. Overall, our results indicate that some of the heterogeneity in managerial compensation can be attributed to characteristics of the firm’s supply-chain relations. [ABSTRACT FROM AUTHOR]

This chapter assesses the doctrine of reasonable interchangeability through the lens of the US Department of Justice's (DOJ's) successful effort to enjoin the megamerger of two of the largest national insurance companies, Aetna and Humana. The DOJ focused its challenge on the companies' Medicare Advantage business, arguing that it is a separate product market from original Medicare and the merger would substantially reduce competition in the market for Medicare Advantage in many geographic markets across the country. The case turned on whether there was reasonable interchangeability between original Medicare and Medicare Advantage in the eyes of consumers. The judge relied on both practical indicia of interchangeability, including evidence of how likely Medicare beneficiaries were to switch between Medicare Advantage and Original Medicare, along with econometric evidence. The decision provides a useful roadmap of how a knowledgeable judge reviewing a merger will consider both Brown Shoe factors and econometric evidence in assessing reasonable interchangeability. [ABSTRACT FROM AUTHOR]

From its beginnings (in 1923), the New Zealand Meat Producers' Board, a statutory agency representing the collective interests of farmers, unintentionally and indirectly empoxoered meatworkers and their unions. This empowerment ivas instituted despite farmers and the Board being inherently hostile towards labour organisation. Through the Board, farmers exercised a self-interested collective control in local and international product markets that also benefited meatworkers in localised labour markets. The Board used its statutory powers to limit the scale and scope of meat companies and, by limiting their powers in the product markets of central concern to farmers, made these companies commensurately weak in labour markets. This analysis oioes much to the insights of Fligstein and Fernandez (1988) regarding weak employers. Farmers' unintended empowerment of meatxvorkers as militant unionists was a remarkable irony given the often bitter antagonism between the two groups over industrial relations in New Zealand. [ABSTRACT FROM AUTHOR]

Earlier research focussed on firm characteristics and the interests of financial stakeholders (shareholders and bondholders) as determinants of corporate policies. Subsequent research recognized that corporate policies are determined in a broader environment that includes nonfinancial stakeholders such as suppliers, customers, labour etc. In this paper, we summarize the theoretical and empirical research that includes supplier/customer considerations in the determination of corporate policies such as capital structure, dividends, takeovers, earnings management, and product quality. We highlight the significant effect that the inclusion of supplier/customer interests has on these corporate policies.

We isolate the two factors pointed out by previous literature as potential causes for the documented relation between returns and industry concentration: innovation risk (Creative Destruction Hypothesis, Dominant Replacement Effect Hypothesis) and distress risk (Market Power Hypothesis). Brazilian law allows us to isolate the two effects. Using data from Brazilian firms listed in BOVESPA, we estimate a regression model that uses State-Controlled Enterprises as a control group to separate the concentration/returns trade-off in two risk components. We find little evidence of the existence of a relation between industry concentration and stock returns. However, we do find evidence of the existence of innovation and market power effects. Oligopolistic firms are responsible for most of the investment ininnovation. Our findings do not support the Creative Destruction Hypothesis. They support the Dominant Replacement Effect Hypothesis. [ABSTRACT FROM AUTHOR]

We investigate the efficiency, foreclosure, and collusion rationales for vertical integration in a large sample of vertically related takeovers. The efficiency rationale, as discussed under the transaction cost economics and property rights theories, posits that vertical integration mitigates contractual inefficiencies between suppliers and customers (termed as holdup) and provides incentives to undertake relationship-specific investments. In contrast, the foreclosure and collusion rationales suggest that vertical integration is anticompetitive in nature. Specifically, the foreclosure argument suggests that vertical integration is used to raise costs of rival firms, and the collusion argument suggests that vertical integration facilitates coordination between the integrated firm and its rivals. To distinguish between the three hypotheses, we examine (1) the announcement period wealth effects to the merging firms, rival firms, and customer firms; and (2) the operating performance changes to the merging firms in vertical takeovers. We find that firms expand their vertical boundaries consistent with an efficiency enhancing rationale. [ABSTRACT FROM AUTHOR]

The main purpose of this paper is to investigate whether the capital structure of New Zealand firms influences their product-market performance in the period from 1984 to 2008. Our main findings are that the use of leverage by publicly listed New Zealand companies leads to an increase in relative-to-industry sales growth, but a decrease in relative-to-industry return on assets (ROA). We also conduct a reverse causality test by examining whether sales growth and ROA influence leverage. We find no evidence that sales growth has an impact on the use of debt, but significant evidence that ROA is negatively correlated with its use. Our results suggest that New Zealand firms use debt to compete more aggressively in their product markets, even though this strategy comes at a cost of lower relative-to-industry profitability. A possible explanation for this behavior is the more competitive trading environment that has developed in New Zealand over the last 25 years. [ABSTRACT FROM AUTHOR]

Studies of business have often sought to explain features of management activity, particularly labour management activity, with reference to the product market conditions faced by managers. This paper argues that a more nuanced understanding of management can be gained by examining both the product and financial market environment. These conditions influence the structuring of management and the development and application of managerial policy. This paper examines the management, particularly the labour management, of one of Australia's leading companies during the twentieth century. Specifically it examines how the product and financial market environment faced by this company in the 1970s influenced the labour management strategies pursued. It shows that particular market conditions will privilege or provide justification for certain types of labour management activity. This is illustrated by examining this company's operation under two distinct sets of market conditions. [ABSTRACT FROM AUTHOR]

Recognising the complexity and originality of contemporary marketing strategies, the authors present an updated version of Ansoff's product-market growth strategic matrix, with nine distinct growth options replacing the original four options in Ansoff's model. In the proposed product-market growth model, aggressive product-market growth strategies are defined as those involving new products, new markets or some combination of the two. Utilising data collected from firms in the financial services industry, the authors show a relationship between a firm's level of market orientation and the aggressiveness of their product-market growth approach. Finally, in looking at the profitability of the various product-market growth strategies, the results indicate that the most conservative strategy of penetration-saturation actually leads to significantly higher profitability, as measured by ROA, than three of the more aggressive strategies: related diversification, intensive product development or intensive growth.Journal of Targeting, Measurement and Analysis for Marketing (2008) 16, 108–114. doi:10.1057/jt.2008.2; published online 10 March 2008 [ABSTRACT FROM AUTHOR]