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We use firm‐level data provided by the fourth U.K. Community Innovation Survey (CIS4) to investigate the relationship between business group affiliation, innovation, internationalization, and firm performance. We carry out a semiparametric estimation procedure and find that: (1) firm performance is higher for those firms that join business groups rather than for stand‐alone firms; (2) the introduction of innovation through organizational and/or managerial practices provides higher performance in business groups affiliated than in unaffiliated firms; (3) the joint adoption of innovations is more beneficial than the individual adoption; (4) the interplay between business group affiliation and innovation leads to better performance in those firms that face competition in international markets rather than in those whose product market is domestic only.

Purpose The purpose of this paper is to identify firms in the UK adopting a policy of high cash and low leverage and investigate how executive ownership contributes to this decision. Design/methodology/approach Firms following this policy are identified both by using a fixed classification approach and the analysis of the distribution of cash and leverage. Logit analysis is then used to estimate the probability of adopting the policy as a function of executive ownership. Findings Extreme financial policies are suboptimal as firms adopting these policies tend to undershoot (overshoot) their target leverage (cash holdings) ratios. The impact of the executive ownership on the probability of adopting this policy is U-shaped, in line with the alignment–entrenchment hypothesis. Practical implications Despite the substantial presence of non-executive directors in the boards and a significant amount of shareholdings by executive directors, the firms under analysis have adopted suboptimal financial policies possibly because poorly governed or because executive ownership is the range where entrenchment is feasible. Originality/value This is the first attempt at recognising policies of high cash and low leverage as being explicitly interdependent. It is also the first study focussing on the UK, a country of interest, because ownership structure is relatively dispersed. Moreover, instead of choosing fixed threshold levels of the variable in defining the extreme financial policy, this paper proposes the analysis of the distribution of cash holdings and leverage and accounts for target levels of cash and leverage.

PurposeThis paper aims to contribute to the debate on the drivers of the productivity gap that exists between the UK and its major international competitors.Design/methodology/approachFrom the macro perspective the paper explores the quantitative evidence on the productivity differentials and how they are measured. From the micro perspective, the article explores the quantitative evidence on the role of management practices claimed to be a key determinant in promoting firm competitiveness and in bridging the UK gap.FindingsThis study suggests that management practices are an ambiguous driver of firm productivity and higher firm performance. On the methodological side, qualitative and subjective measures of either management practices or firm performance are often used. This makes the results not comparable across studies, across firms or even within firms over time. Productivity and profitability are often and erroneously interchangeably used while productivity is only one element of firm performance. On the other hand, management practices are multi‐dimensional constructs that generally do not demonstrate a straightforward relationship with productivity variables. To assume that they are the only driver of higher productivity may be misleading. Moreover, there is evidence of an inverse causal relationship between management practices and firm performance. This calls into question most empirical results of the extant literature based on the unidirectional assumption of direct causality between management practices and firm performance.Research limitations/implicationsThese and other issues suggest that more research is needed to deepen the understanding of the UK productivity gap and more quantitative evidence should be provided on the way in which management practices contribute to the UK competitiveness. Their impact is not easily measurable due to their complexity and their complementary nature and this is a fertile ground for further research.Originality/valueThis paper brings together the evidence on the UK productivity gap and its main drivers, provided by the economics, management and performance measurement literature. This issue scores very highly in the agenda of policy makers and academics and has important implications for practitioners interested in evaluating the impact of managerial best practices.