Disruptive Information and the Cost of Equity Finance of Small Firms : Moderating of CEO Succession Mechanism

Authors

  •   Tarek Kandil Assistant Professor, Faculty of Commerce and Business Administration , Helwan University, Cairo
  •   K. G. Taramol Assistant Professor, School of Business, Manipal Academy of Higher Education, Dubai Campus, Dubai
  •   Ganga Bhavani Assistant Professor, School of Business, Manipal Academy of Higher Education, Dubai Campus, Dubai

DOI:

https://doi.org/10.17010/pijom/2018/v11i1/120820

Keywords:

Disruptive Innovation

, Family Business Risk, CEO Succession

G4

, O1, O2, O3

Paper Submission Date

, September 5, 2017, Paper sent back for Revision, October 10, Paper Acceptance Date, December 13, 2017.

Abstract

The present paper examined the implementation of radio frequency identification (RFID) as a new platform for developing dynamic capabilities and competencies that enable family businesses to assimilate and respond to unprecedented changes and to reduce the cost of capital finance. In family businesses, the implementation of innovative and advanced technology may be perceived negatively by some entrepreneurs. There is insufficient empirical evidence to support a full understanding of the impact of disruptive information technology on the family firm's financing costs and the related risk. Understanding of the disruptive innovation effects has valuable implications during the family firms' succession. The paper tested a sample of 146 listed family businesses in the London Stock Exchange that adopted RFID innovative technology. The findings showed that the UK family firms, which employed the disruptive innovation technology, achieved a better financial performance through enhanced share returns in the short term as well as in the long term. Besides, the listed family firms in the service industry achieved a significant reduction in the equity cost of capital in the long term. During the CEO succession period, the investor of family businesses recognized the benefits of adopting RFID on their supply chain operations.

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Published

2018-01-01

How to Cite

Kandil, T., Taramol, K. G., & Bhavani, G. (2018). Disruptive Information and the Cost of Equity Finance of Small Firms : Moderating of CEO Succession Mechanism. Prabandhan: Indian Journal of Management, 11(1), 9–21. https://doi.org/10.17010/pijom/2018/v11i1/120820

Issue

Volume 11, Issue 1, January 2018

Section

Technology and Operations Management
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