Haowen Luo, Steven A. Hanke and Hui Hanke
This paper aims to examine the customer-based and supplier-based trade credit gaps for USA firms from 1970 to 2020.
Abstract
Purpose
This paper aims to examine the customer-based and supplier-based trade credit gaps for USA firms from 1970 to 2020.
Design/methodology/approach
The authors' study examines USA companies from 1970 to 2020. The authors begin with an analysis of the trends in aggregate working capital, the capital's components and the trade credit gaps. Various regression models are used to estimate the impacts of identified firm characteristics and unidentified sources on customer-based and supplier-based trade credit gaps over time. The authors then decompose the impacts of firm characteristics to further understand whether changing firm characteristics and/or changing sensitivity to firm characteristics drive the variation in trade credit gaps.
Findings
There is a gradual reduction in the customer-based trade credit gap and a substantial expansion in the supplier-based trade credit gap. Though identified firm characteristics have dominant impacts on observed trade credit gaps, there is evidence of the effects of time and unobservable factors. The main source of changes in customer-based and supplier-based trade credit gaps lies in changes in sensitivity to firm characteristics. In addition, the authors find that firm age is the factor with the largest average effect on both trade credit gaps when examining the full sample period. However, different firm characteristics appear to be the key driver of variations in trade credit gaps over time and across the two types of trade credit gaps. The authors also find that financial distress has the least impact on both customer-based and supplier-based trade gaps. There are variations in the firm characteristics with the largest impacts when evaluating decade-long evaluation periods.
Originality/value
To the authors' knowledge, this is the first paper to examine the customer-based and supplier-based trade credit gaps. The connection between trade credit and the trade credit's corresponding inventory (INV) component extends prior literature on the joint management of trade credit and INV. The authors analyze both identified firm characteristics and unidentified sources in the search for explanations of the trade credit gaps. Furthermore, the authors' study explores the channels through which firm characteristics affect different types of trade credit gaps. The authors' findings help identify relevant and irrelevant risk factors of corporate working capital policy.
Details
Keywords
Haowen Chen, Heng Liu and Han Cheung
This study aims to investigate the relationships between radical innovation, market forces and political/business relationships in China by combining social capital theory and…
Abstract
Purpose
This study aims to investigate the relationships between radical innovation, market forces and political/business relationships in China by combining social capital theory and contingent theory. The paper focuses on how two types of managerial ties (i.e. business and political ties) impact firms’ capacity for radical innovation. It also examines the different moderating effects of market forces (i.e. demand uncertainty, technological turbulence and competitive intensity) on the linkage of managerial ties with radical innovation in the Chinese transitional context.
Design/methodology/approach
A systematic literature review on managerial ties, radical innovation and market forces in emerging markets provides the theoretical foundation of our conceptual model and hypothesis. Using a survey sample of 119 Chinese firms, the authors conduct a regression analysis on the theoretical model and hypotheses.
Findings
The results show that business ties have an inverted U-shape effect on radical innovation, while political ties have a positive impact on radical innovation. Furthermore, the market forces in transitional economies (i.e. demand uncertainty, technological turbulence and competitive intensity) have different moderating effects on the relationships between two types of managerial ties and Chinese firms’ radical innovation.
Research limitations/implications
This study adopts its data set from the Chinese context. It would be necessary to replicate this research in other transitional economies because of specific differences between China and other transitional economies.
Practical implications
Findings from our study indicate that firms which wish to succeed in radical innovation may need to adapt their tie-based strategies according to different market settings.
Originality/value
The paper is original in its comparative investigation of the effect of business ties and political ties on radical innovation in contingent transitional market environments using a combination of social capital and contingent theories.
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Zelin Tong, Fang Ma, Haowen Xiao, Perry Haan and Wenting Feng
The purpose of this research is to explore how experienced scarcity affects home country consumers' attitudes toward the firm engaging in cross-border philanthropy by analyzing…
Abstract
Purpose
The purpose of this research is to explore how experienced scarcity affects home country consumers' attitudes toward the firm engaging in cross-border philanthropy by analyzing perceived distributive justice as a mediating variable. This research also investigates the moderating factor of this effect to identify practical strategies for managers.
Design/methodology/approach
This research conducted one survey (Study 1) and three experiments (Studies 2–4) by manipulating scarcity to provide robust evidence for the influence of experienced scarcity on consumer perception of the company conducting cross-border philanthropy.
Findings
This paper provides empirical insights about the significant negative effect of experienced scarcity on consumer attitudes toward the firm engaging in cross-border philanthropy. It proposes that home country consumers with high versus low experienced scarcity show lower perceived distributive justice for cross-border philanthropy, which generates less favorable attitudes toward the firm. To alleviate the negative impact of experienced scarcity on consumers' perceptions of corporate reputation, providing donation amount comparisons between home and foreign countries has a significant moderating effect.
Practical implications
This paper provides several suggestions for marketers seeking cross-border philanthropy to improve consumers' attitudes toward the firm.
Originality/value
This paper enriches the literature on corporate social responsibility in the domain of cross-border philanthropy and explains contradictory findings on consumers' attitudes toward corporate cross-border philanthropy. Moreover, this study makes meaningful contributions to the scarcity and justice literature.