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KLM, science-based targets, and the Paris Agreement. Expert Report

Judging the Wrongness of Firms in Social Media Firestorms

Social media firestorms pose a significant challenge for firms in the digital age. Tackling firestorms is difficult because the judgments and responses from social media users are influenced by not only the nature of the transgressions but also by the reactions and opinions of other social media users. Drawing on the heuristic-systematic information processing model, we propose a research model to explain the effects of social impact (the heuristic mode) and argument quality and moral intensity (the systematic mode) on perceptions of firm wrongness (the judgment outcome) as well as the effects of perceptions of firm wrongness on vindictive complaining and patronage reduction. We adopted a mixed methods approach in our investigation, including a survey, an experiment, and a focus group study. Our findings show that the heuristic and systematic modes of information processing exert both direct and interaction effects on individuals’ judgment. Specifically, the heuristic mode of information processing dominates overall and also biases the systematic mode. Our study advances the literature by offering an alternative explanation for the emergence of social media firestorms and identifying a novel context in which the heuristic mode dominates in dual information processing. It also sheds light on the formulation of response strategies to mitigate the adverse impacts resulting from social media firestorms. We conclude our paper with limitations and future research directions.

Dynamic Capital Structure Adjustment

This research investigates the factors influencing the capital structure of 271 non-financial firms listed on the Korean Stock Exchange (KSE) over a broad period from 1995 to 2021, encompassing both stable and crisis conditions. Employing a dynamic panel data model and the generalized method of moments (GMM) estimation, we address the endogeneity issue introduced by the inclusion of lagged dependent variables. Our research integrates firm-specific internal factors with macroeconomic external variables to provide a comprehensive understanding of the influence of varying economic environments on capital structure. Our study suggests that in times of economic stability, the capital structure decisions of a firm are more influenced by internal factors such as profitability. However, in periods of economic downturns, it is the external macroeconomic market conditions that tend to have a greater impact on these decisions. It is also noteworthy that both book leverage (BL) and market leverage (ML) exhibit quicker adjustments during stable periods as opposed to periods of crisis. This indicates a higher agility of firms in adapting their capital structures in stable, normal conditions. Our findings contribute to the existing literature by offering a holistic view of capital structure determinants in Korean firms. They underscore the necessity of adaptable financial strategies that account for both internal dynamics and external economic conditions. This study fills a gap in current research, presenting new insights into the dynamics of capital structure in Korean firms and suggesting a multifaceted approach to understanding capital structure in diverse economic contexts.

Productive opportunities, uncertainty, and science-based firm emergence

We provide greater theoretical precision to the concept of productive opportunities of Penrose. We show firm emergence as a recursive cycle of changing productive opportunities. We show how those opportunitiesresult from the technological base of the firm and are associated with the particular characteristics of the technology.We also show how productive opportunities require the assembly of different internal and externalresources, and therefore partners. We address explicitly how the firm and its potential partners perceive uncertainty and single out the different mechanisms used by the firm to address uncertainty—envisioning, pooling, and staging—to secure resources from external partners and exploit the identified productive opportunities in a timely manner.

When do acquirers invest in the R&D assets of acquired science-based firms in cross-border acquisitions?

Drawing on a multiple case study of acquisitions of UK biopharmaceutical firms, we develop an analytical framework that elucidates how key determinants of the knowledge base of science-based firms and their combinations through M&As interact and affect post-acquisition investment in the target's R&D projects. We show that two factors - the complementarity/similarity of the technology, and the complementarity/similarity of the discovery and development capabilities of the target and acquiring firm - interact to produce different outcomes in terms of investment in the acquired firm's R&D assets and for the local science and technology system.

Growing fast or slow?

The paper explores the process of early growth of entrepreneurial science-based firms. Drawing on case studies of British and Dutch biopharmaceutical R&D firms, we conceptualize the speed of early growth of science-based firms as the time it takes for the assembly (or combined development) of three types of critical resources - a functionally-diverse management team, early fundraising and development of technology. The development of these resources is an unfolding and interrelated process, the causal direction of which is highly ambiguous. We show the variety of paths used by science-based firms to access and develop these critical resources. The picture that emerges is that the various combinations of what we call "assisted" and "unassisted" paths combine to influence the speed of firm growth. We show how a wide range of manifestations of technology development act as signaling devices to attract funding and management, affecting the speed of firm development. We also show how the variety of paths and the speed of development are influenced by the national institutional setting.