Customer Concentration and Profitability in Private Healthcare Companies

Abstract

Previous studies suggest that the customer size and range have implications for the company's performance. In this paper, we investigate the impact of customer concentration on a firm's performance in the framework of healthcare companies. The base of this paper is the questionnaire data of the private Finnish health care companies. We shed light on one corner of diverse and complex combination of the profitability process in the small companies. Thus, we address that the customer, beside other factors, has an influence on a firm's performance. Especially, in small health care companies as most of this research companies are, one or few big customers is a common form of customer base. We found that the customer concentration of the company positively directs the company's performance. Furthermore, some of the contextual factors such as desire to grow contributed to the company's performance too.