Optimal combinations of factors influencing the sustainability of Taiwanese firms

Abstract

PurposeThe authors aim to obtain the optimal combinations of factors from institutional environment adaptation mechanisms and internal resources or capabilities that influence the sustainability of a firm.Design/methodology/approachThe authors develop a new index, called the sustainability index, based on the stakeholder perspective by employing a corporate credit risk index, an evaluation of a firm's corporate governance, corporate financial performance and firm age. The authors then apply both Ordinary Least Squares (OLS) Regression Analysis and Fuzzy set Qualitative Comparative Analysis (FsQCA) to obtain the optimal models for firms' sustainability.FindingsThe OLS analysis shows that the variables including financial leverage, slack, innovation capability, manufacturing capability and human capital that have significant influences on the sustainability of firms. Our FsQCA analysis obtains configurations of several solutions for firm sustainability and concludes that the fit of combinations of institutional factors and/or internal resources and capabilities of a firm is related to its sustainability.Research limitations/implicationsThe limitations in our new index include these: first, one may add more key metrics to measure the index; second, the findings do not provide any necessary nor a sufficient condition to get sustainability for sure. The limitations of using multiple regression analysis are that it is not able to reveal the combinations of causal conditions that can lead to the outcome in the real world as well as to the sustainability of a firm in our study. To overcome the limitations, the authors apply fsQCA analysis to identify combinations of causal conditions to a firm's sustainability in our study.Practical implicationsIntroducing the sustainability index enables us to find out all factors influencing the sustainability of a firm. The authors’ analysis can be used to identify combinations of causal conditions to lead to outcomes in the real world. Their analysis enables managers to know how to predict the sustainability of the firm. For example, the authors’ fsQCA analysis shows that low marketing capability will lead to the high sustainability of the firm. This information helps managers to make the decision or plan to achieve good results toward their businesses and get better allocate their resources and get a better investment.Social implicationsThe authors’ analysis can be used to identify combinations of causal conditions to lead to outcomes in the real world and enable managers to know how to predict the sustainability of the firm. A correct prediction can assist companies in developing their future operations, which would enhance their competitiveness vis-à-vis rivals during this time of global economic volatility, which, in turn, enables firms to perform better and employ more employees that could help the entire society.Originality/valueThe sustainability index the authors developed in our paper is new in the literature and the findings obtained by both OLS Regression Analysis and FsQCA are new in predicting a firm's sustainability. The authors’ findings are useful for academics, managers and policymakers in predicting and maintaining a firm's sustainability.

Collaboration, eco-innovation and economic performance in the automotive industry

“…In this sense, in literature it is possible to find that eco-innovation management is a vital function in the survival of manufacturing firms, since this activity allows organizations to adopt activities of collaboration, reconstruction, growth and sustainability (Saleh et al, 2022). IJIEOM 5,3 Lo et al (2021) demonstrated the importance for organizations of the management capacity of eco-innovation in development of long-term sustainable value propositions, which allows manufacturing firms to respond as quickly as possible to the changes that current markets demand (Sakis, 2020;Ivanov, 2020;Correa et al, 2021). Therefore, collaboration plays an essential role in eco-innovation management, since collaboration is usually considered in literature as a great facilitator of organizational agility that helps manufacturing firms to respond both to unforeseen emergencies and to short-term and long-term crises (Wang et al, 2017;Saleh et al, 2022).…”

Predictive Analytics in Business Analytics: Decision Tree

“…PA methodology allows corporations to be proactive, future-orientated, forecast outputs and behaviors based on data and not by assumptions without any supporting data or information. In addition, PA also suggests actionable instructions to benefit users from its predictions (Javaid et al, 2021;Lo et al, 2021). Moving forward, PA will be integrated into business applications and will no longer be a premium domain of mathematicians and statisticians (Dagnino, 2021;Saxena et al, 2021).…”

Editorial statement and research ideas for behavioral financial economics in the emerging market

“…By using the stakeholder perspective, including firm age, a corporate credit risk index, corporate financial performance and an evaluation of a firm's corporate governance, Lo et al (2021) first develop a new sustainability index. Thereafter, they employ both regression and fuzzy set qualitative comparative analysis (FsQCA) to obtain several models to optimize firms' sustainability.…”

“…In this special issue, we invite academics and practitioners to submit their research or review manuscripts that fit in the spirit and scope of our special issue. The special issue of Behavioral Financial Economics in Emerging Markets has published five papers including Hong et al (2021), Lo et al (2021), Shen et al (2021), Wong (2021) and Yeap et al (2021).…”

“…By using the stakeholder perspective, including firm age, a corporate credit risk index, corporate financial performance and an evaluation of a firm's corporate governance, Lo et al . (2021) first develop a new sustainability index.…”