H. Semih Yildirim and George C. Philippatos
This study sets out to examine the evolution of competitive conditions in the banking industries of 14 Central and Eastern European (CEE) transition economies for the period…
Abstract
Purpose
This study sets out to examine the evolution of competitive conditions in the banking industries of 14 Central and Eastern European (CEE) transition economies for the period 1993‐2000.
Design/methodology/approach
The basis for the evaluation of competitive conditions is the extant oligopoly theory in the new industrial organization literature, specifically, the competition model developed by Panzar and Rosse.
Findings
The results of the competition analysis suggest that the banking markets of CEE countries cannot be characterized by the bipolar cases of either perfect competition or monopoly over 1993‐2000 except for FYR of Macedonia and Slovakia. That is, banks earned their revenues as if operating under conditions of monopolistic competition in that period. An analysis of changes in competitive structure shows a higher degree of competition in the later years of the sample period. Large banks in transition countries are found to be operating in a relatively more competitive environment compared with small banks or, in other words, competition is lower in local markets compared with national and international markets.
Research limitations/implications
The period under investigation corresponds to early years of the ongoing transition from central planning when these countries were lacking many market‐supportive institutions essential for efficient financial markets. Therefore, the results of this study should be interpreted with the necessary scholarly scrutiny.
Practical implications
The paper measures the level of market contestability that may have been facilitated by the recent liberalization and deregulation progress.
Originality/value
The paper is highly original. Although research on the bank competition in the USA and other developed countries is voluminous, research that focuses on transition economies is relatively scant.
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Thomas Anning-Dorson, Michael Boadi Nyamekye and Raphael Odoom
The purpose of this paper is to investigate the nature and the extent of moderation effect of the regulatory regime and competition, on the innovativeness-performance relationship…
Abstract
Purpose
The purpose of this paper is to investigate the nature and the extent of moderation effect of the regulatory regime and competition, on the innovativeness-performance relationship among financial services firms. Based on the absorptive capacity theory, this study argues that firms must gather adequate knowledge from the external environment (specifically on regulatory systems and competitive landscape) to assist in developing competitive innovation strategies, and to realize the needed performance benefits from such strategies.
Design/methodology/approach
Data were collected from the Ghana’s financial services sector with a focus on banking and insurance institutions. Structural equation modeling and regression models were specified to test both the direct effects of variables of interest, and the moderation effects of environmental factors on the independent and dependent variables.
Findings
The results of the study show that both process and product innovativeness enhance financial services firms’ performance. While competition was found to stifle innovativeness, regulatory regime was found to promote innovativeness in financial services. Regulatory regime was also found to positively moderate the relationship between process innovativeness and performance, while competition was found to positively moderate the relationship between product innovativeness and performance.
Research limitations/implications
The firms sampled are from an emerging economy with a growing financial services sector, and as a result, the findings may not apply to contexts with different economic characteristics.
Originality/value
This study asserts that in enhancing innovativeness in the financial services markets, firms must recognize the value of new external information on regulatory regime and competition as key environmental factors. Financial service firms must assimilate, transform, and apply such new knowledge in their innovation efforts in order to improve performance. For firms to fully benefit from their innovation, process innovativeness must be aligned with regulatory systems while product innovation yields best returns in competitive periods.
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Bijoy Rakshit and Samaresh Bardhan
The paper measures the degree of bank competition in Indian banking over the period 1996–2016. Using bank-level annual data, we revisit the case of banking competitiveness during…
Abstract
Purpose
The paper measures the degree of bank competition in Indian banking over the period 1996–2016. Using bank-level annual data, we revisit the case of banking competitiveness during the prefinancial and postfinancial crisis and examine whether the global financial crisis alters the level of bank competition in India. Additionally, this paper addresses the misspecification issues associated with the widely used Panzar–Rosse model in Indian banking context.
Design/methodology/approach
We apply Panzar and Rosse (1987) H-statistic and evaluate the degree of bank competition by estimating the extent to which changes in input prices are reflected in revenues earned by banks. Subsequently, we link this measure of competitiveness to a number of structural indicators (HHI and CRn) to examine the structure-conduct-performance hypothesis, which assumes that a concentrated banking system can impair competition. The simple panel regression model was used to handle the empirical estimations.
Findings
findings reveal that the Indian banking system operates under competitive conditions and earns revenues as if under the monopolistic competition. We also find evidence that Indian banks are competitive, even under a concentrated market structure. This observation runs, in contrary, to the prediction of the structure–conduct–performance hypothesis. The findings also indicate the differences in the estimated H-statistic value after considering the misspecifications of the P–R model.
Practical implications
From policy perspectives, policymakers should focus more on maintaining an optimal level of bank competition by mitigating entry restrictions, exercising less consolidation and withdrawing overregulation from banking activities. A competitive banking industry ensures both efficiency and stability.
Social implications
A competitive banking sector by lowering interest rates margin provides easier access to finance to both households and small and medium enterprises (SMEs).
Originality/value
This is the only study that addresses the misspecification of the P–R model while assessing competition in Indian banking and provides a thorough understanding of the role of concentration on bank competition.
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Classical assumptions of agency theory (AT) fall short of providing satisfactory answers to modern management and organizational knowledge (MOK) problems, and there is a need for…
Abstract
Purpose
Classical assumptions of agency theory (AT) fall short of providing satisfactory answers to modern management and organizational knowledge (MOK) problems, and there is a need for extending the scope of the field. This article aims to compare modern AT assumptions with the agency perspective of Islamic historical political treatises (namely, siyasetnamas) and point out how AT can be furthered.
Design/methodology/approach
This article applies content analysis method to find out agency perspectives in Islamic political treatises and then compare them with those of the basic AT assumptions to find out similarities and differences between them in explaining agency problems.
Findings
The agency perspective in siyasetnamas are based on the following assumptions which could contribute to the development of AT with their emphasis on (1) responsibilities beyond contracts, (2) entrustment rather than ownership, (3) shared societal responsibility rather than conflicting individual interests, (4) importance of self-control for both principals and agents and (5) trust discourse which emphasizes inner virtues rather than control discourse.
Originality/value
Agency perspectives cannot be considered independent of cultural imprints. By introducing siyasetnamas' agency perspective, this article makes an effort to suggest implications for how to further modern MOK based overwhelmingly on individualistic cultural assumptions to rediscuss agency problems from the viewpoint of specifically the emerging markets in which collectivist culture plays an important role in social and economic life. In this respect, siyasetnamas' agency perspective based on the notion of entrustment seems, arguably, to be a better fit to the contextual realities and managerial practices of emerging markets.
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Semih Ceyhan, Ismail Cagri Dogan, Mehmet Yildiz and Mehmet Barca
This study looks to the answer of whether importers and exporters can develop relational trust and minimize the monitoring and control costs used to prevent opportunistic behavior…
Abstract
Purpose
This study looks to the answer of whether importers and exporters can develop relational trust and minimize the monitoring and control costs used to prevent opportunistic behavior in a trust relationship. Despite increasing scholarly interest in calculative and relational trust, the boundary conditions affecting the transformation of calculative trust into relational trust remain unaddressed. In response, this study aims to investigate the boundary conditions for the emergence of relational trust in inter-organizational relationships between Chinese exporters and Turkish importers.
Design/methodology/approach
Data were collected from Turkish SMEs that import from China. To measure trust between parties, semi-structured interviews with top managers and/or decision-making company owners were conducted. Interview questions covered three categories: antecedents of trust, ways of developing trust and outcomes of trust.
Findings
Results indicated that inter-organizational relationships between Chinese and Turkish firms lack relational-based trust. Most trade transactions between two parties are based on calculations of profit/loss, and Turkish firms use intermediary mechanisms to overcome lack of trust in this environment. The most important boundary conditions for the emergence of relational trust are behavioral uncertainty, the opportunistic behavior of Chinese suppliers and language and cultural barriers.
Originality/value
This study contributes to the existing literature by addressing the hitherto unaddressed question of what the boundary conditions are for the transformation of calculative trust into relational trust.
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Cevahir Uzkurt, Emre Burak Ekmekcioglu, Semih Ceyhan and Muhammed Bugrahan Hatiboglu
The purpose of this article is to examine the impact of digital technology (specifically mobile applications) use on employees' perceptions of motivation at work (MW) and job…
Abstract
Purpose
The purpose of this article is to examine the impact of digital technology (specifically mobile applications) use on employees' perceptions of motivation at work (MW) and job performance (JP).
Design/methodology/approach
Survey data were collected from 4,089 employees working in small and medium-sized enterprises (SMEs) registered to Small and Medium Enterprises Development Organization (SMEDO) in Turkey. The relationships were assessed through structural equation modeling with bootstrap estimation.
Findings
The results support the proposed framework illustrating the positive effect of perceived usefulness (PU) and perceived ease of use (PEOU) of mobile applications on employees' perceived JP. Findings indicate that MW has exhibited a mediating effect between both PU and JP and PEOU and JP.
Originality/value
This article discusses the accelerating role of coronavirus disease 2019 (COVID-19) pandemic on SMEs' technology acceptance and the acceptance's positive impact on employees' motivation and performance. This article adds to the literature on SMEs by enabling researchers and practitioners to understand the issues in digital technologies acceptance by SME employees and contributes towards enriching the knowledge on technology acceptance perceptions' role in SMEs coping strategies during the COVID-19.
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Salsa Dilla, Aidil Rizal Shahrin and Fauzi Zainir
This paper aims to examine how the rise of financial technology (Fintech) lending affects bank competition. Moreover, this study also identifies the structure of Indonesian…
Abstract
Purpose
This paper aims to examine how the rise of financial technology (Fintech) lending affects bank competition. Moreover, this study also identifies the structure of Indonesian commercial banking sector and the different behaviour of competition among bank groups (based on their size, type and ownership) and the joint impact of COVID-19 due to the rise of Fintech lending.
Design/methodology/approach
Using an unbalanced panel data set of 118 commercial banks in Indonesia over the period 2018–2022, both static panel and 2SLS/IV data analysis were used and found that random effect model is the best model.
Findings
The results show that the Indonesian commercial banking sector can be considered as monopolistic competition. Moreover, using the Lerner index reveals that the entry of the Fintech lenders increases bank competition. Furthermore, there were different responses to the impact of Fintech lending on bank competition among state-owned banks, private banks, regional development banks and foreign banks. Greater efficiency and stability lead to greater market power. In the meantime, higher level of asset growth, capitalisation and cost-to-income ratio increase the competition. Lastly, higher bank credit growth and lower inflation boost overall bank competitiveness.
Practical implications
This study highlights some policy recommendations for commercial banks to be aware of the coming of Fintech lenders because they have started to increase the market competition. The government should create a more collaborative ecosystem between banks and Fintech lending to anticipate unhealthy competition.
Originality/value
This study will contribute to the literature by expanding the determinants of bank competition by considering the rise of Fintech lending in the market.
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Cevahir Uzkurt, Semih Ceyhan, Emre Burak Ekmekcioglu and Musab Talha Akpinar
This paper aims to explore the effect of government support (short work allowances – SWA) on SME employees' job performance and employee motivation perceptions, during the…
Abstract
Purpose
This paper aims to explore the effect of government support (short work allowances – SWA) on SME employees' job performance and employee motivation perceptions, during the COVID-19 pandemic in Turkey.
Design/methodology/approach
Survey data were collected from 2,781 employees working in SMEs registered to Small and Medium Enterprises Development Organization (SMEDO) in Turkey. The relationships were assessed through structural equation modeling with bootstrap estimation.
Findings
The results support the proposed framework illustrating the positive effect of government support on employees' perceived motivation and job performance. Findings indicate that employee motivation has exhibited a mediating effect between government support and job performance. Another important finding is that, contrary to the classical understanding of Herzberg's two-factor theory, SWA system was able to perform as a motivating factor during the pandemic by meeting the hygiene needs.
Research limitations/implications
Since this is a cross-sectional research study, causal inferences cannot be derived from the research results.
Originality/value
There is a lack of empirical study on SME employees' perceptions on the government support during the pandemic, especially on the perspectives of emerging economies are infrequent. Turkey's case is unique in terms of providing insights on how perceived employee motivation is increased by the government supports (SWA) in Turkey, and how this motivation mediates the job performance perceptions. Besides, the impacts of government support are mostly studied at the firm or macro-levels, this study's unit of analysis is at individual level. Regarding the criticism from the motivation perspective of two-factor theory, COVID-19 context and its impact on the motivation needs have not been elaborated before. This article starts new discussions on how crisis contexts influence individual motivator factors.
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Cevahir Uzkurt, Emre Burak Ekmekcioglu and Semih Ceyhan
Based on the dynamic capability theory, the purpose of this study is to examine the mediating role of the adaptive capability of small- and medium-sized enterprises (SMEs) on the…
Abstract
Purpose
Based on the dynamic capability theory, the purpose of this study is to examine the mediating role of the adaptive capability of small- and medium-sized enterprises (SMEs) on the relationship between business ties and firm performance. This study also investigates the moderating role of technological turbulence in those relationships.
Design/methodology/approach
Data were collected from 1,265 SME managers in Turkey. Partial least squares analysis, a variance-based structural equation modelling, was applied to examine a mediated moderation model.
Findings
The results support the proposed framework illustrating that business ties are positively related to adaptive capability and firm performance. Moreover, adaptive capability mediates the relationship between business ties and firm performance. The results also indicate that the indirect effect of business ties on firm performance through adaptive capability was moderated by technological turbulence.
Practical implications
SMEs in emerging economies need to enhance their business ties and invest in their adaptive capabilities to increase their performances. This relation becomes more strategic under technologically turbulent environments.
Originality/value
By introducing empirical data from the Turkish emerging context, this paper contributes to our understanding of how SMEs’ relational networks contribute to firm performance. From the dynamic capability perspective, it shows how SMEs use their adaptive capabilities to environmental challenges. It also fills an important gap by showing that environmental uncertainties (specifically technological turbulence) moderate the adaptive capability’s mediating impact on the relationship between business ties and firm performance. The results also provide potential future directions for dynamic capabilities research in emerging contexts.
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Cevahir Uzkurt, Semih Ceyhan and Emre Burak Ekmekcioglu
As a contribution to the social ties and dynamic capabilities literature, the purpose of this study is to examine the boundary role of the industrial factors (competitive…
Abstract
Purpose
As a contribution to the social ties and dynamic capabilities literature, the purpose of this study is to examine the boundary role of the industrial factors (competitive intensity, dependence on suppliers and demand uncertainty) on the relationship between small and medium-sized enterprises (SMEs) social ties (business ties and political ties) and firm performance.
Design/methodology/approach
Data were collected from 1,077 SME top-level managers in Turkiye. The proposed model is analyzed using partial least squares (PLS) path modeling in SmartPLS 4.0 software.
Findings
The results elucidate how demand uncertainty serve to moderate the influence exerted by both business and political ties upon the performance of SMEs. However, the moderating effects of competitive intensity and dependence on suppliers, although initially hypothesized, were not found to have a significant impact on the relationships.
Practical implications
The relevance of social ties of SMEs may depend on the industrial factor. Although both political and business ties are effective on the customer side, these ties may become irrelevant when it comes to competition and supplier relations. In competitive SME settings, where businesses are vying for similar markets, the effectiveness of ties might be questionable. In such cases, SMEs might invest in building in-house capabilities and competencies, rather than relying on their relational networks.
Originality/value
This study contributes to the understanding of how relational networks, which are considered as dynamic managerial capabilities, impact SMEs performance. It also fills an important gap by testing the boundary role of industrial factors on this relationship. The empirical data is collected from the Turkish context, which is also an original aspect of the study, considering most of the social ties literature has a limited focus on a few contexts. The results also indicate new areas for discussion and exploration, indicating potential avenues for further research.