Impact of the inter-firm cooperation on company's performance: major changes during the economic crisis

November 27, 2013

Oksana Kabakova

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Paper structure• Introduction• Literature review• Research design• Data analysis

• Database• Methodology

• Results• Conclusions and limitations

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Introduction. Research question

Are investments in the creation of the strong inter-firm cooperation allow the company to be better off,

even if the markets go down?

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Value & significance to knowledge

Lack of information about alternative crisis-management strategies

Need for investigating the creation of company’s value through the intangible factors, particularly, inter-firm collaboration

Lack of researches combining the idea of inter-firm cooperation and financial performance of a company during crisis periods

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• Ellis, Jarboe, 2010

• Jagannathan, Wang, 1996

• Lev, Sougiannis, 1999,Chan et al., 2001, Chambers et al., 2002

Literature review

Types of cooperation

Reasons for cooperation

Inter-firm relationships in the framework of the value-creation theory

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Research design. Hypothesis

H1: Inter-firm relationships contribute to improving the financial performance of the company in a crisis environment.

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Database• 1692 public companies from such European

countries as Germany, Italy, France, Spain, the UK

• The data is available for 8 years from 2004 to 2011

• Information about more than 150 parameters

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Methodology: econometric specification

Inputs

Control variables

Output/outcome

• Participation in the inter-firm relationships

• Board of directors qualification

• Company’s age• Number of patents• Intangible assets

• Number of employees

• Industry

• Economic Value Added

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ResultsVariable Model 1, 2006 Model 2, 2008 Model 3, 2011

EVA®(millions €) Coef. St.Er. t-stat. Coef. St.Er. t-stat. Coef. St.Er. t-stat.

IR_INTERFIRM 134,73* 61,07 2,86 112,83** 62,32 1,81 98,61* 70,13 1,59

IH_N_EMP 0,01*** 0,001 5,84 0,003*** 0,001 2,69 0,001* 0,001 1,68

W_ENERGY 53,56 51,52 1,02 195,67*** 52,65 3,75 124,9* * 58,42 2,14

IS_PATENTS 474,33*** 111,66 4,25 541,02*** 109,8 4,87 635*** 126 5,06

IH_BOARD_QF 0,49*** 0,055 10,81 0,37*** 0,04 9,46 0,27*** 0,045 6,64

C_AGE 3,16 68,59 0,04 -176,40* 73,5 -2,41 -100,98 251,27

-0,40

IS_INT_ASSETS -0,23*** 0,01 -28,63

-0,108*** 0,007 -13,9 -0,01 0,01 1,06

C -95,1 74,1 -1,50 -338,45*** 73,7 -4,61 -218*** 81,59 -2,72

Adj. R-2 64% 37% 16%

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Conclusions

Hypothesis

Companies should participate in the inter-firm cooperation in order to survive during

economic crisis. Moreover, collaboration positively influence financial performance in

both growth and recovery periods.

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Research Limitations

A lot of proxy-indicators

Only one business cycle

Low quality of models in 2008 and 2011

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Research Opportunities

I• Change of the model specifications (nonlinear)

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• Comparative study of different markets: prosperous economies VS economies with protracted economic crisis

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• Comparative study of different industries: traditional vs. innovative, production vs. services, high concentrated vs. industries with high competition, etc.

• Implementation of the model to the Russian market

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Thank you for attention!