Sources of variation in firm profitability and growth

Goddard, John; Tavakoli, Manouche; Wilson, John O. S.

doi:10.1016/j.jbusres.2007.10.007

Cited by 100 publications

(88 citation statements)

References 95 publications

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“…This implies that profitability will converge across countries and that country effects are close to zero. As the elimination of trade barriers and the formation of a single market is one of the main motives of the EU formation (Goddard et al, 2009), studies that focus on the EU only detect weak country effects with a contribution below 2.0% (Table 1). In contrast, if estimated for regions outside the EU country effects are generally larger (Goldszmidt et al, 2011;Ketelhöhn & Quintanilla, 2012).…”

Section: Methodsmentioning

confidence: 99%

What drives firm profitability? A multilevel approach to the Spanish agri-food sector

Zouaghi¹,

Sánchez

Hirsch

2017

Span. j. agric. res.

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Strategic management research has demonstrated the importance of firm-and industry structure as drivers of firm profitability. However, less is known about how firms´ geographical locations affect profitability. Applying a multi-level approach of hierarchical linear modeling we estimated firm-, industry-, and region-specific effects on profitability of 3,273 agri-food firms operating in different Spanish districts over the time span 2006-2013. The results reveal the dominance of firm-specific effects which contribute up to 48.8% to variance in firm profitability while the contribution of industry effects (0.8-4.2%), geographical location (0.1-1.8%), and year effects (0.1-2.5%) is rather small. Moreover, firm size, risk, and innovative activity turn out as significant profit drivers at the firm level. Although firm-effects outweigh industry-and region-specific factors, the results indicate that industry concentration as well as regional education and unemployment influence profitability. In addition, proximity to technological institutes as well as the degree of urbanization of the region in which a firm operates can be drivers of profitability. Hence, despite the superiority of firm effects the results indicate that agri-food managers should also consider possible advantages from location-based resources in order to ensure competitiveness.Additional keywords: agri-food profits; firm-, industry-, and location effects; hierarchical linear model.

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Section: Methodsmentioning

confidence: 99%

What drives firm profitability? A multilevel approach to the Spanish agri-food sector

Zouaghi¹,

Sánchez

Hirsch

2017

Span. j. agric. res.

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“…This observation resembles the lively debate on industry effects of the industrial organisation view versus firm-specific effects or production (RBT) as determinants of firm growth and performance variance (Caloghirou et al, 2004;Goddard, Tavakoli & Wilson, 2009;Hansen & Wernerfelt, 1989). It seems at first glance that 'success' in SME growth and performance lies at the intersection of the dominant themes of 'capital' (social or network, managerial, entrepreneurial, knowledge, financial, resources) and 'market' (strategy, orientation, technology and innovation, products and services, quality, competitiveness).…”

Section: Conceptsmentioning

confidence: 57%

“…However, most of the studies seem to agree with RBT that firm-specific factors are more important than industry structure in explaining performance variance for both SMEs and large firms, albeit with nuanced differences (Caloghirou et al, 2004;Claver, Molina & Tarí, 2002;Galbreath & Galvin, 2008;Goddard et al, 2009;Mauri & Michaels, 1998;McGahan & Porter, 1997). Even though a firm's resource endowment seems to be favoured above industry structure, it has to be stressed that both have been found to impact performance regardless of their relative importance (Hansen & Wernerfelt, 1989).…”

Section: Linking the Dominant Themes And Concepts With The Theories Omentioning

confidence: 79%

SME performance: the role of networking, innovation breadth, and business model design

Gronum¹

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Because small and medium-sized enterprises (SMEs) are pivotal to the health and vibrancy of economies, it is crucial for researchers to understand the factors that significantly underlie SME performance. Two of the most widely identified antecedents to SME performance are innovation and networking. However, despite widespread attention, the theoretical and empirical status of the relationships between innovation, networks and SME performance remain uncertain. Some researchers note that claims regarding a direct positive relationship between innovation and networks with performance fail to adequately account for the variables that mediate this relationship.In contrast, while much research has been undertaken into the performance benefits of innovation and networks, the exponential increase in the number of publications heralding the performance benefits of business model design and business model innovation received very scant empirical support, almost non-existent for SMEs. Business model design is seen as a powerful mechanism for unlocking and enhancing the value of business processes, including innovation.Empirical evidence presented in this thesis tangibly supports this assertion and thus creates a more solid foundation for future development of the business model view of the firm.The purpose of this thesis, comprising four studies, is to theorise and research the nature of the relationship between innovation breadth, networks and business model design with SME performance. The central research question of this thesis asks: How do innovation breadth, networks and business model design relate to SME performance?Study One systematically reviews a large sample of SME growth and performance literature to identify and interpret emergent concepts, themes, trends and gaps. Study One backgrounds the three empirical studies that that follow to argue, using Resource-Based Theory, that the resources required for developing competitive advantage are both physical and intangible; of the two, intangible resources have the greatest strategic potential. In other words, the thesis finds that SMEs lacking physical resources could develop more sustainable competitive advantage by relying more heavily on leveraging path dependent, socially complex, and causally ambiguous intangible resources. Social capital and technological competence, associated with networks and innovation, represent highly desired intangible resources. Business model design organises these resources to create value for the customer. Therefore, innovation across the elements of the business model when designing or reconfiguring the SME's business model acts as dynamic capabilities that enhance SME performance.iii The systematic literature review is followed by three empirical studies that use longitudinal and cross-sectional datasets of Australian SMEs. Study Two introduces the concept of innovation breadth, as the number of distinct types of innovation that firms use, or their innovation diversity, and examines the linearity and temporality of its re...

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“…Based on [26], the survey evidence from managers involved suggests such decisions are not always based on financial information. However, [5] argued that as in several previous studies, the firm-level effects are the most important class of effect in explaining the variation in performance.…”

Section: Literature Reviewmentioning

confidence: 67%

Do Downsizing and Global Financial Crisis Affect SMIs Labour Productivity in Malaysia?

Ibrahim¹,

Suhaimi²,

Chong³

2015

JOEBM

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Abstract-This paper examines the effect of downsizing and global financial crisis on the labour productivity of the manufacturing industries in Malaysia. Due to the crisis, many industries retrenched their workers to adjust to the declining demand in their respective industries. Two distinctive subindustries that have the highest retrenchment rates are the manufacturing of radio, television and communication (27%) and the manufacturing of rubber and plastics (13.

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Sources of variation in firm profitability and growth

Cited by 100 publications

References 95 publications

What drives firm profitability? A multilevel approach to the Spanish agri-food sector

What drives firm profitability? A multilevel approach to the Spanish agri-food sector

SME performance: the role of networking, innovation breadth, and business model design

Do Downsizing and Global Financial Crisis Affect SMIs Labour Productivity in Malaysia?

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