Abstract
Welcome to the summer issue! I am delighted to introduce articles in this issue authored by scholars researching general management in international contexts.
One of the motivations for companies to report high-quality earnings is to reduce their information risk. Some studies of US-listed firms have shown that earnings quality can affect the cost of debt. Dr Houcine’s paper examines this relationship using a sample of listed firms in France. They extend research on the effect of earnings quality on the cost of debt in common-law country companies to code-law country companies, namely, listed banks in France. Debts are the main sources of corporate finance for French companies. Financial reporting practices tend to be country-specific, especially France, with closely aligned accounting and tax systems as well as strongly aligned ownership and management. The study focuses on accruals quality and the ratio of interest expense to interest bearing debt as proxies to examine the effect of earnings quality on the cost of debt. This provides a means to assess both earnings increasing choices and earnings decreasing practices as main incentives determining earnings quality. Using a sample of French-listed firms during the period from 2005 to 2015, the study shows that firms that observe better accruals quality support a decrease in their cost of debt. The findings suggest the importance of financial reporting quality in mitigating information asymmetry and thus motivate managers to prepare quality financial reports.
Dr Lajili and her colleagues explore the associations between human capital resources, firm performance and corporate governance mechanisms. In an increasingly dynamic, globalized and disruptive business environment, a major priority of successful managers is knowledge about how to manage their human and organizational assets. The study explores how corporate governance mechanisms can facilitate strategic human capital development and deployment through a relational stakeholder approach. The study draws on the resource-based view of the firm with regard to human capital resources and strategic human capital. Specifically, it hypothesizes relationships between human resources, firm performance and governance in an international setting using a global survey ranking of ‘most attractive employer’. The findings suggest that corporate governance mechanisms moderate the relationship between strategic human capital and firm performance. Managers can use corporate governance mechanisms to influence human resource performance and enhance firm performance. For example, long-term incentives in executive compensation package can have positive interactions with human resource performance.
Dr Zhu and his colleagues investigate emerging market small and medium-sized enterprises’ (SMEs) internationalization by identifying the issues and challenges they faced and the strategies and processes adopted to overcome them. In the contexts of India and China, international expansion of emerging SMEs plays a significant role in contributing to economic growth of these countries. At the same time, SMEs in emerging markets face considerable barriers in terms of resources, technology and innovative brands as well as institutional barriers. In particular, SMEs’ choice of internationalization destination can influence their business outcomes and eventual success. While the factors and barriers to internationalization are quite well-documented in the literature, the strategies and processes adopted by emerging market SMEs in the process of internationalization can be different from developed markets. In the case of China, the Chinese government policy has been a major influencing factor in SME internationalization as well as the ongoing increase of transaction costs associated with doing business across boundaries within China. The international success of Indian SMEs has been identified by their commitment to internationalization, entrepreneurial orientation and ability to leverage human capital. SMEs in China and India share quite similar issues and challenges in terms of lack of resources and capabilities. Managers also need to be knowledgeable about normative rules in emerging markets in that interpersonal relationships are more important for Chinese firms while Indian firms emphasize rational thinking.
A rather persistent issue in career advancement and promotion of women to senior levels at workplace is the inherent mindset predominant in high power distance and masculine countries such as India. Dr Srivastava and her colleagues examine the impact of glass ceilings on the career satisfaction level of middle-level managers in India mediated by organization identification and organizational trust. Drawing on the gendering theory in a society, they argue that women often have to prove themselves and work harder than men to advance their career and/or get promoted to a senior management role especially in the context of India. In spite of the increased participation of women in the workforce as well as professionalism, women representation at top management positions in major companies can be considered relatively low in India. The study recognizes that the opportunity for career development is at the heart of career satisfaction while trust, shared values and goals also play a key role in reducing the effect of glass ceilings. The study highlights the importance of trust, shared values and goals for improving career satisfaction and lessening the effect of glass ceilings. Managers can formulate policies to gain trust from women employees such as through empowerment and delegation. In addition, the positive effect of career satisfaction on performance means that managers can enhance productivity of their employees with shared values and goals for both men and women or across functions in an organization.
In the book review section, Dr Mandy Mok reviews a book entitled Essentials of Digital Marketing by Waite and Perez Vega (2018). The book provides an accessible introduction to digital marketing concepts with good illustration of practical application. Since the notion of digital marketing is rather broad, this book illustrates and expands on the marketing of product and/or services through digital technologies using easy-to-follow and contemporary application of technologies and marketing practices. The book chapters are structured in such a way to provide readers the flexibility to either learn about basic digital marketing concepts independently or general implementation of digital marketing from technology adoption, digital marketing content to digital marketing metrics and analytics. This book is a useful addition and reference for students and practitioners to learn and explore marketing practice through application of digital technologies.