Economies, Volume 10, Issue 5 (May 2022) – 27 articles

Building an adequate system of indicators to assess the financial development of countries and its practical application can improve the robustness and effectiveness of government decision-making. This paper aims to create such a system. The study used the methods of structured system, comparative, matrix, and gap analysis. The key outcome of the study is a matrix system of indicators for assessing the financial development of countries. This indicator system is based on a matrix of all financial assets. Elements of the matrix of financial assets were calculated in relation to the population and used as indicators of the level of financial development of countries as a whole and in the context of financial instruments and sectors of the economy. Simultaneous recording of financial assets across the entire range of financial instruments and sectors of the economy, as well as their interrelations, is a relatively new direction for financial development assessment. The study produced criteria for the qualitative assessment of the level of the financial development of countries. Testing of the developed matrix system of indicators and criteria for financial development was carried out on current and potential members of OECD (OECD+) for the period 2018–2019. As part of the testing, the level of financial development of the analyzed countries was calculated, their ranking was gauged, and international positions were determined. A structural analysis of the financial development of OECD+ countries in terms of types of financial assets (instruments) and sectors of the economy was carried out. Promising areas of Italy’s financial development have been identified. The test results confirmed that the matrix system of indicators and the developed criteria are an objective and convenient tool for assessing the level of financial development of countries. Their use makes it possible to increase the complexity and quality of the analysis of financial development, and it also forms a platform for making evidence-based and effective decisions in the development of national strategic documents. Full article

In recent decades, the emergence of global value chains (GVCs) has changed international trade patterns. Today, the production of goods involves international production sharing, which allows countries to trace the value-added distribution to international trade. However, the COVID-19 pandemic has lowered the trade intensity between countries and can disrupt many sectors. This study uses a dynamic panel approach with the generalized method of moments estimator to investigate the pandemic’s impact on GVC participation. We also investigate whether gross domestic product (GDP) per capita may influence GVC participation, and use institutional quality as control variables. We used the Asian Development Bank Multi-Regional Input-Output (ADB MRIO) data for the 2010–2020 period. We employ backward and forward linkage approaches based on value-added exports to address the overvaluation problems in gross exports. The empirical results illustrate that the COVID-19 pandemic led to a decrease in GVC participation, on average. Furthermore, GDP per capita plays a significant role in GVC participation in backward and forward linkages with higher-quality institutions. Full article

This study analyses the nonlinear dynamic impact of economic development on income inequality in a prudential policy regime in a panel of 15 emerging markets from 1985–2019. More importantly, we seek to extend the existing debate on this subject, with roots back to the seminal work by Kuznets and many others, and add a twist by introducing a distinction between a prudential regime (1985–1999) and a non-prudential regime (2000–2019), as well as the threshold level at which economic development reduces inequality, using Panel Smooth Transition Regression (PSTR). The Generalized Method of Moments and fixed-effect models will be used to support our baseline results. The PSTR model was adopted due to its ability to deal with features that cannot be accounted for in dynamic panel techniques, such as endogeneity, homogeneity, cross-country variability, and time instability within the model. We found evidence of a non-linear effect between the two variables, where the threshold was found to be US$13,800, above which economic development reduces inequality in selected countries, and this further confirms the Kuznets inverted U-shape in both regimes. Macroprudential policies were found to trigger development-inequality relationships. Our evidence largely suggests that policymakers ought to formulate policies that aim to attract investment, which will then create job opportunities and foster an improvement in the stan-dard of living, and also should be abreast of the level of economic development before implementing macroprudential policies. Full article

This study investigates the effect of sharia firms on the cost of debt in the Indonesian market. We use OLS regression to examine the relationship by applying 1870 data observations of nonfinancial companies registered on the Indonesia Sharia Stock Index (ISSI) during 2012–2018. We found that sharia firms are negatively related to the cost of debt, and sharia firms with a higher percentage of independent commissioners are not associated with the cost of debt. These findings indicate that a more significant number of independent commissioners sitting on the board will not stimulate a sharia firm’s position to get a lower cost of debt. Furthermore, our results are robust after performing the endogeneity test. Based on this study, we suggest that independent commissioners who represent aspects of governance also need to be developed using firm characteristics as other moderating variables. Sharia firms are viewed by lenders as having corporate behaviors that are ethical and worthy to get low interest on the debt. Even though the financial structure of sharia firms has lower leverage than non-sharia firms, it does not mean that they are seen as closed firms. Full article

There is dense literature on the relationship between financial sector development (FSD) and income inequality. However, most of these studies employ a depth measure of FSD. This study argues that different components of FSD have a heterogenous impact on income inequality. This study first empirically tests the overall impact of FSD on income inequality. Thereafter, I investigate both the linear and nonlinear impact of financial sector development dimensions (depth and access) on income inequality. The study’s novelty lies in using financial access data such as ATM per adult and financial access index and comparing their impact on income inequality versus the impact of financial sector depth (growth in domestic credit) on inequality. Adding to this, fewer studies have investigated the overall impact of FSD. To solve the endogenous problem, the study uses the system General Method of Moments (GMM) on the panel data of 120 countries, from 2004 to 2019. The findings of the study are threefold. Firstly, the study finds that the overall FSD index, individual financial institutions, and market development index all narrow income inequality. Secondly, this study finds that different dimensions of FSD have heterogenous impacts on income inequality, where increased access to financial services reduces income inequality in both linear and nonlinear models. While financial sector depth narrows income inequality in the linear model, the nonlinear model reveals that the Too Much Finance hypothesis holds, as the results confirm a U-shaped relation with income inequality. These results are important for policy decisions concerning financial reforms and income distribution. These results imply that financial sector reforms can be shaped to reduce income inequality by increasing access to credit and through credit policy provisions. Full article

Indonesia’s government policy recommends that medium and large companies carry out corporate social responsibility programs. These programs provide sustainability for the company because they can involve community social relations, economic growth, and increasing environmental awareness. This study aimed to test corporate social responsibility on firm performance with green innovation as a mediation. This study used PROPER companies in 2015–2019, which were chosen using a purposive sampling method involving annual reports and financial reports, yielding 253 companies as a sample. Data were obtained from the Indonesia Stock Exchange and tested using STATA. This study indicates that corporate social responsibility can increase green innovation in companies with the stability of environmentally friendly materials, emission reductions for the surrounding community, and saving energy use. Corporate social responsibility has a positive effect on firm performance because the company has maintained the continuity of the process. After all, it has a harmonious relationship with the community. Furthermore, green innovation positively affects firm performance because the company can reduce energy use and utilize environmentally friendly resources. Therefore, green innovation can mediate the influence of corporate social responsibility and firm performance. This research contributes to senior managers who are part of their company’s top management to understand the critical role of corporate social responsibility in maintaining the company’s sustainability by paying attention to the part of the company’s environment and implementing government regulations. Corporate social responsibility can maintain good stakeholder relations and increase green innovation and firm performance. Theoretical contributions can enrich research related to the context of sustainable performance. Full article

The purpose of this study is to determine the interests of stakeholders and their influence on the strategic guidelines for the sustainable development of industrial enterprises in the Russian fuel and energy complex. Environmental safety is one of the components of the corporate strategy implementation for the sustainable development of industrial enterprises. The significance of this component is determined not so much by the regulatory institutional impact as by the transformation of economic agents’ behavior in the market: consumers, partners, investors, competitors who are stakeholders. This study defines the composition of stakeholders for Russian industrial enterprises leading in the field of sustainable development based on the results of ESG-ratings. It also identifies their priority interests and the sustainable development goals of industrial companies. Based on the analysis of open reports on the sustainable development of Russian industrial enterprises, the article identifies the key goals of sustainable development for stakeholders of Russian industrial enterprises in the fuel and energy complex. An analysis of the mechanism for organizing interaction with stakeholders shows that for most stakeholder groups, interaction is implemented through the non-financial reporting of companies. The study concludes that a proactive approach will enable companies to identify sustainable development issues with the greatest long-term potential, and thus to create a system of preventive strategic action. Full article

Rising income inequality has become a defining global challenge that hinders the achievement of the United Nations Sustainable Development Goals. The paper investigates the effect of fiscal policy and institutional capacity on income inequality among developed and developing countries. Applying the system Generalized Method of Moments (GMM) to control potential endogeneity for countries from 2000 to 2019, the following results have been established. The dynamic effect captured by the first lag of inequality suggests that the widening income gap is persistent in both developed and developing countries. We also find evidence that income tax is more progressive and may abate income inequality in developing countries and not in developed countries. However, taxes on goods and services were found not to impact income equalization globally. Furthermore, the findings reveal that government size, education expenditure, and health expenditure are negatively associated with income inequality in developed countries only. Public debt was observed not to influence income distribution across the world. We observed that corruption and government effectiveness do not significantly impact income distribution in developed and developing countries for institutional capacity. However, in most cases, the coefficients of the interactions between fiscal policy and institutional capacity bear the expected signs, albeit insignificant. Some policy recommendations have been offered. Full article

By focusing on the tacit and explicit characteristics of informal and formal institutional distances, this study investigates the competitive advantage of foreign subsidiary firms from developed countries and emerging markets operating in Latin America. Following recent research on distances in international management, this study measured the size and direction of distances and computed formal institutional distances based on the world governance indicators from the World Bank, whereas informal institutional distances are calculated using the four original dimensions of Hofstede. Considering that culture is tacit, whereas formal institutions are explicit, it is argued that these differences affect the ability to convert experience dealing with cultural and formal institutional conditions in the home country into firm specific advantages (FSAs) in a foreign host country. These assumptions are tested quantitatively using data from the Orbis database, a sample that includes over 4200 firm-year observations covering 10 of the largest economies in Latin America. In a departure from previous studies investigating the implications of FID direction, it is shown that the effects in specific directions are different for foreign subsidiaries from developed countries and from emerging markets. The results reveal that emerging market firms are at an advantage when operating in less developed host countries, whereas foreign subsidiaries from developed countries can adjust more positively when operating in host countries with strong formal institutions. On the other hand, the effects of the different CD dimensions depend on the direction towards host countries with specific cultural profiles. These findings indicate that foreign subsidiaries from emerging markets have a clear advantage in dealing with institutional voids in Latin America (i.e., FID towards less developed host countries), whereas the effects of CD are the same for all firms. This suggests that the cultural profile of the host country is what really matters. Full article

Climate change and environmental crises are currently affecting the living environment of both people and the planet in general. This necessitates businesses to have a prompt and effective response to minimize or improve the harmful effects that lead to environmental imbalance and fulfill corporate social responsibility through focusing on transitioning to a model of sustainable economic development and encouraging the development and production of green products. This study discovers that the five factors green creativity, green dynamic capabilities, green transformational leadership, reactive green innovation, and proactive green innovation have a positive influence on and aid in the creation of exceptional green product development performance. A survey questionnaire was used to collect data for this research with the participation of more than 1000 people. These figures reveal that the participants are people who are knowledgeable about environmental issues and are actively interested in environmental protection (as well as people who have used green products). Research using software to support SPSS.20 and AMOS.24 to test the hypotheses. The study serves as a framework to help businesses better comprehend the relationship between economics and the environment with the purpose of providing valuable data and raising awareness for innovation in development models for businesses and organizations. Full article

Virtual cross-border medical tourism allows many residents in the United States to purchase brand name medicines from companies in Mexico without travelling there. Monthly economic reports indicate that the online brand name pharmaceutical product prices in Mexico are noticeably lower than the corresponding internet prices in the United States. There have been very few econometric studies on how these prices are linked and the dynamic nature of those relationships. Results in this study indicate that online medicine prices in Mexico respond very rapidly to online prices changes in the high-price market. Full article

Human resource management (HRM) practices along with appropriate leadership have a paramount role in enhancing employees’ performance. Even though there was much literature on the subject of HRM and leadership, there were still some unanswered questions about the set of HR practices that most effectively contribute to improved employees’ performance through proper leadership. The primary goal of this research was to look at how leadership quality affects employee performance, as well as the function of human resource management in mediating the relationship between leadership and employee performance in manufacturing industries in Addis Ababa, Ethiopia. The study used an explanatory and descriptive research design, and a mixed research approach (qualitative and quantitative), to achieve its goal. More specifically, a multi-stage sampling technique (simple random and purposive sampling) was employed. The data was collected from both primary and secondary sources, and analysis was made using a structural and measurement model by AMOS Version 2021. The finding of the study implies that; leadership has a positive and significant relationship with employee performance through human resource management, hence the full mediating role of human resource management was observed between leadership and employee performance. This study is novel in that, it contributes new finding to the existing literature by combining the relationship between leadership and employee performance in a single study and two different directions (direct and indirect). Hence, the recommendations can be applied by industry managers to boost employees’ performance through appropriate HRM practices and leadership by taking this finding as a benchmark. Based on the finding of the study, we recommend industry managers focus on human resource management indicators such as collaboration, involvement, actualization, perceivance, and teamwork to boost their leadership quality that deliberately influences employees’ performance. Full article

Despite the general usefulness of citations as a sort of test of the value of one’s work in the marketplace of ideas, journals and publishers tend to use alternative bases of judgment, namely committees, in selecting candidates for the conferral of journals’ best paper awards. Given that recognition—sometimes in the form of compensation and on other occasions in the form of awards—in academe is geared toward incentivizing the production of impactful research and not some less desirable goal or outcome, it is important to understand the sensitivity in the outcomes of best paper award selection processes to the types of processes used. To that end, this study compares the selection of best paper awards for journals affiliated with several of the world’s top economic associations by committees to a counterfactual process that is based on citations to published studies. Our statistical exploration indicates that in most cases and for most awards, the most cited paper was not chosen. This requires further discussion as to the core characteristics that quantitatively represent the highest impact. Full article

The vigorous growth of the Chinese economy together with its increasingly successful role in international trade may have profoundly impacted developing countries. This study examines the large increase in the international trade exposure of the Brazilian economy during 2000–2012 to assess the impacts of import competition on its manufacturing formal and informal labor markets. In this period, import penetration grew by more than 20 percent in Brazil, and the share of the import penetration originating in China increased from 3 to 20 percent. At the same time, the share of informal workers in manufacturing declined from 27 to approximately 15 percent. Employing a switching regression model and Brazilian household survey data, this study finds that a greater industry-level Chinese and ‘rest of the world’ import penetration increases the likelihood of jobs becoming informal at different intensities, and these effects are smaller in unskilled-labor intensive industries and manufacturing states. Additionally, both types of import penetration positively impact the average informal wage. In contrast, the estimates suggest that a larger Chinese import penetration reduces average formal wages, while imports from elsewhere have the opposite effect. The results also indicate that the magnitude of the effects on wages are moderated by the unskilled labor intensity of the industry and whether the worker is located in a manufacturing state. Full article

The COVID-19 pandemic has put immense pressure on the fiscal situation. Central revenues have decelerated while expenditures had to be increased to facilitate economic recovery. Local governments faced even harder challenges as intergovernmental transfers were reduced and room for mobilizing alternative finances was limited. This paper employs qualitative and secondary data analysis on local budget and fiscal capacities at the subnational level in Indonesia to find insights into the implications and responses of the provincial government in a decentralized economy during the pandemic. Provinces with a high dependence on intergovernmental transfer are struggling to adopt a countercyclical mitigative fiscal policy. However, provinces with high local own-source revenue have suffered the most during the crisis as low economic activity reduced tax revenues and indirectly lead to lower fiscal space. As fiscal policy is critical to containing the pandemic and facilitating recovery, this paper proposes several strategies toward a more sustainable fiscal policy for rebuilding local government capacity in the medium-to-long term in the aftermath of the crisis. Full article

With the background of public sector management reform in the world of education, the characteristics of the leaders have become the main thing in improving an institution’s performance theory; this study explores the influence of aspects of the heads of madrasah (their age, education, and tenure) and madrasah performance in Islamic educational institutions in East Java, Indonesia. This study shows that political relations strengthen the positive influence of the head’s age and tenure on madrasah performance. Meanwhile, political connections do not enhance the positive impact of the madrasah head’s formal educational background on madrasah performance. Full article

This paper investigates the impact of the moderate growth of government borrowing on debt sustainability in 11 Russian regions over about 10 years, starting in 2010. The current study aims to assess the debt sustainability of the Russian region’s budget by determining Euclidean distance budget constraints and cluster analysis. This study is based on the methodology of hierarchical cluster analysis, which makes it possible to isolate regions of accumulation of objects from the aggregate data and combine them into homogeneous segments. The central hypothesis of this study is that by using this method, it is possible to increase the accuracy of the values that limit budget constraints in a region’s financial system. This study, using open data from the Federal State Statistics Service, is based on a database of statistical, financial, and economic indicators of the Russian economy. The calculations include about 45 macroeconomic indicators, which reflect the ratios of socio-economic development of the region’s financial system. The methodology described in the paper for assessing the debt sustainability of budget policy proves the need to calculate six indicators and determine the debt limits for the regions of each cluster. It finds a need to reduce the high debt burden of 46% of the regions belonging to the Northwestern Federal District. Confidence intervals for the debt limit suggest that the negative growth effect of high debt may start from levels of around 5% of the debt-to-GDP ratio and about 43% of the debt-to-revenue ratio. The results indicate that regions with a high level of debt sustainability include St. Petersburg city, the Leningrad region, and the Kaliningrad region. From a state debt policy perspective, the results provide additional arguments for debt reduction for the Republic of Komi, the Republic of Karelia, the Arkhangelsk region, and the Pskov region. The general conclusion of the study boils down to the need to reduce the debt burden of the budgets of some regions of the SFZO, as well as to the need to change the upper limits of debt, which are equally set for all regions by the Budget Code of the Russian Federation, to differentiated values of public domestic debt, taking into account the results obtained in the study. Full article

This research aims to examine the effects of remittance outflows on Saudi’s non-oil economic growth (NOGDP). While few studies have examined the effects of remittance outflows on remitting countries’ economic development, none have looked into the asymmetric impact on Saudi Arabia’s non-oil economic growth. This research fills the gaps by looking at the uneven effects of remittance outflows on Saudi NOGDP from 1990 to 2020. The empirical estimation is based on the NARDL (Nonlinear Autoregressive Distributed Lags) method. The results show that remittance outflows have a considerable positive effect on Saudi NOGDP, indicating its economic benefit. We found that the government’s current and capital expenditures have statistically significant positive impacts on NOGDP in the long and short runs. Consequently, several policy insights could be considered to maximize the effectiveness of government fiscal policy in supporting non-oil sector development. The positive effect of remittance outflows on Saudi economic growth could be the vital role of the imported high-skilled and productive labour force in developing the non-oil private sector. The positive influence of remittances on Saudi economic growth is essential for policymakers who have to undertake a unique Saudi policy to diversify the labour market and encourage local consumption and investment spending by international workers. Full article

India and the Republic of Korea (ROK) are on the path to forging deeper economic cooperation. Both countries signed a Comprehensive Economic Partnership in 2009, which was in effect in 2010, and agreed to reduce and/or eliminate tariffs on goods. In this paper, we examine the sectors—both merchandise goods and services—where India and the ROK have a comparative advantage. We analyze the tariffs and non-tariff measures in the context of India–ROK trade and the gains from trade that can result from a reduction in tariff barriers. Our results suggest that India has a comparative advantage in services and the ROK in merchandise goods. Therefore, future negotiations must focus on India offering market access to the ROK’s merchandise goods and the ROK providing access to India’s services. Full article

Malang city is supported by the informal sector, represented by 50.41% informal employees; 17.80% are street food vendors located by collector, neighborhood, local, and alongside footpaths. Those highly potential business opportunities are equipped by high-rate competitors that would be a failure factor. One of the most contributive factors of 50–60% of business failures is rough location planning without an effective solution. The purpose of this research is to analyze strategic selling locations for microbusiness and local franchises in Malang City. A quantitative approach was used to analyze numeric calculation while a geography information system (GIS) was used as the analysis method. Additionally, service area network analysis (SANA) as a GIS tool was used for counting the threshold of spatial factor. Both SANA and GIS integrate with mobile applications, which are called by LOLAKU (location = LO, or location to accelerate salability = LAKU). After analyzing the strategic location factor, these application are tested toward microbusinesses and local franchises around the study area. Respondents are involved in testing sessions after interview for microbusiness and local franchise criteria. The research showed that strategic locations for microbussiness and franchise local listed up to three rental points, there are: point 6 (112°36′44,571″ E–7°57′25,556″ S), point 9 (112°36′37,116″ E–7°57′28,496″ S), and point 21 (112°36′49,114″ E–7°57′48,281″ S). After comparing with respondents’ business criteria, point 6 is the most suitable one, which is located on alongside local roads, and traffic counted 37.8 unit/min on weekdays and 32.0 unit/min on weekends. LOLAKU received good responses from 36 respondents who took part in the criteria business determining and trial test sessions. We hope this application development will support and provide factual benefits for microbusinesses and local franchise actors in the future. Full article

The stock market is constantly shifting and full of unknowns. In India in 2000, technological advancements led to significant growth in the Indian stock market, introducing online share trading via the internet and computers. Hence, it has become essential to manage risk in the Indian stock market, and volatility plays a critical part in assessing the risks of different stock market elements such as portfolio risk management, derivative pricing, and hedging techniques. As a result, several scholars have lately been interested in forecasting stock market volatility. This study analyzed India VIX (NIFTY 50 volatility index) to identify the behavior of the Indian stock market in terms of volatility and then evaluated the forecasting ability of GARCH- and RNN-based LSTM models using India VIX out of sample data. The results indicated that the NIFTY 50 index’s volatility is asymmetric, and leverage effects are evident in the results of the EGARCH (1, 1) model. Asymmetric GARCH models such as EGARCH (1, 1) and TARCH (1, 1) showed slightly better forecasting accuracy than symmetric GARCH models like GARCH (1, 1). The results also showed that overall GARCH models are slightly better than RNN-based LSTM models in forecasting the volatility of the NIFTY 50 index. Both types of models (GARCH models and RNN based LSTM models) fared equally well in predicting the direction of the NIFTY 50 index volatility. In contrast, GARCH models outperformed the LSTM model in predicting the value of volatility. Full article

The core personal consumption expenditure (PCE) price index, the Federal Reserve’s preferred inflation gauge, rose to 5.2 percent on January 2022, which is the highest rate of increase since 40 years ago. Our estimates show that the annualized quarterly core PCE prices could reach 5.45% in the second quarter of 2022 and are as high as 8.57% in a longer time horizon unless corrected with restrictive monetary policies. Thus, the inflation shock since COVID-19 is not transitory, but it is persistent. As economists expect the Federal Reserve to tighten the money supply in March 2022, the insufficient policy responses may be attributed to a failure to incorporate a unique macroeconomic shock to unemployment during the pandemic. We propose a modified vector autoregression (VAR) model to examine structural shocks after COVID-19, and our proposed model performs well in forecasting future price levels in times of a pandemic. Full article

The purpose of this research is to investigate intellectual capital as a driver of technological innovation considering the industrial revolution in Russia’s transportation sector. The study was driven by the recent technological advancements in Russia’s transportation industry and the huge economic importance of the sector to the economy, showing the need to understand the progress achieved in the sector. The study was carried out using primary data collected from respondents in managerial positions in firms operating in the transportation sector. A total of 455 respondents were used, and data were collected using a structured closed-ended questionnaire. The fields of intellectual capital considered were structural, social, human, and relational capital. The model was evaluated using CFA, reliability, and validity tests, while the study hypotheses were tested using SEM. The results reveal that structural capital, social capital, human capital, and relational capital have a significant and positive influence on technological innovation in Russia’s transportation sector. Human and social capital was found to have the largest effect. The study recommends that, for firms to implement technological innovation, they should consider human capital, such as specialized knowledge, skills, expertise, experiences, and abilities embedded within organizations personnel, and social capital, such as effective communication, the laid down mechanisms of coordination and communications within the organization, human ties, trust, and relationships. They should also improve their absorptive technology capacity. Full article

This paper evaluates the effects of a place-based program in the Yangtze Delta of China—Special Economic Zones (SEZs). Taking into account spatial proximity, this paper quantifies the spillover effects of the human capital in SEZs. One major finding is that regional productivity benefits from the human capital in SEZs. The spillover effects are not only confined to their own counties, but also neighboring counties. SEZs contribute more to the regional productivity of neighboring counties than the one of the hosting county itself. Moreover, positive spillover effects of the human capital in SEZs still hold for the growth of regional productivity. Full article

This paper uses firm level data from World Bank Enterprise surveys conducted in 2019, and COVID-19 follow-up surveys conducted in 2020, in ten European countries to investigate the link between the gender of the firm’s owner and the firm’s survival until 2020. The empirical investigation uses econometric models that control for the firm’s characteristics that are known to be related to firm survival. The estimated effect of female ownership is positive ceteris paribus. Furthermore, the size of this estimated effect can be considered to be large on average. Having a female owner helped firms to survive. Full article

As the direction and strategies of new ventures depend on the top management team (TMT)’s stability and continuous efforts, we investigate the relationship between executive turnover and research and development (R&D) investment investment. Furthermore, we assess the moderating role of the founder chief executive officer (CEO)’s prior experiences to show that founders’ experiential knowledge mitigates the adverse side effects of executives’ departure. Our empirical analysis utilizes a large pool of firm-level survey datasets comprising 1897 Korean founder-led ventures. The empirical results show that executive turnover reduces R&D intensity, suggesting that new ventures’ longer-term investments may be affected by the instability of the management team. We also show that the negative effects of executive turnover weaken when the founder CEO has a longer prior work experience, prior business group experience, and founding experience. Our findings show that the founder CEO’s entrepreneurship based on valuable prior experiential knowledge mitigates the negative impact of organizational instability. While the TMT factor is essential for a new venture’s survival, our findings show that the manner in which leaders act should also be considered separately. Full article

Innovation in education has been heavily focused on pedagogical, technological, or regulatory elements, while service innovation relates to other elements involving interpersonal and community co-production too. This paper provides a conceptual framework to understand innovation in education from a service economic perspective. This is done by bridging two rather disconnected research areas: service innovation and education innovation. The results indicate that (i) the characteristics of education as a service (such as interactive co-production) should be taken into account to better understand how innovations are created and implemented; (ii) innovation modes in education can be aligned with service innovation modes, mainly when a public service logic is adopted; (iii) the tension existing in service innovation between customization and standardization is replicated in the education sector; and (iv) multiagent frameworks in service innovation are particularly visible in innovative learning communities. Managerial and policy implications should be guided by service-friendly principles such as freedom, autonomy, and subsidiarity. Full article