Search results

The purpose of the paper is to investigate the role of customers and employees in the buffer effect of CSR around the 2008 financial crisis in the European context.

Using a sample of 323 European firms listed in STOXX Europe 600 Index, different models are estimated to test whether the effect of CSR ratings on firms' relationships with their customers and employees could be different during the 2008 financial crisis relative to the pre-crisis and post-crisis periods.

The paper shows that CSR rating has a significantly negative impact on firms' accounts receivable and a significantly positive effect on employee productivity during the crisis period (from 2007 to 2009). However, there is no significant effect of CSR rating during the non-crisis periods. These results suggest that during negative events, customers are willing to continue supporting high-CSR firms by paying their invoices faster. Furthermore, these firms benefit from higher productivity of their employees who are willing to work harder in periods of uncertainty.

Firms should invest in CSR practices to maintain strong and cooperative relationships with their customers and employees. Also, investors should choose firms engaging in more social capital. Moreover, policymakers should encourage implementing CSR practices which act as an insurance-like protection in times of negative events.

This paper adds to the previous studies by investigating whether the cooperative role of customers and employees can explain the buffer role of CSR around the crisis. Furthermore, it considers companies located in several European countries for a long period (from 2004 to 2012) to compare periods of crisis and non-crisis.

The purpose of this paper is to investigate the impact of product market competition and ownership structure on total factor productivity and the interaction between these two governance tools.

Using a sample of 90 Tunisian non-financial firms over the period 1998-2012, the authors use fixed effects and Generalized Method of Moments models to test the complementary/substitutability effect between family ownership and competition.

The authors find that product market competition boosts productivity in that it mitigates agency problems. Moreover, the authors show that large blockholders have a positive impact on firms’ performance. When considering ownership types, it seems that families play an important role in improving productivity. However, this ownership structure is less effective when firms operate in competitive industries. Thus, the results suggest that a substitution effect exists between internal governance mechanisms (particularly family ownership) and competition.

Tunisian politicians must review the investment code and remove barriers and restrictions in order to assure fair product market competition. Also, regulation must be changed to encourage foreigners’ shareholding and the creation of private equity firms. Moreover, large shareholders operating in a competitive environment should open up their capital to new shareholders in order to undertake more investments and to benefit from certain advantages.

To the best of the authors’ knowledge, this is the first study to examine the effect of product market competition on the relation between corporate governance and productivity in the Tunisian context. Moreover, the complementary/substitutability effect between family ownership and competition has not been examined before in any context.