The variance composition of firm growth rates

Abstract

BSTRACTFirms exhibit a wide variability in growth rates. This can be seen as another manifestation of the fact that firms are different from one another in several respects. This study investigated this variability using the variance components technique previously used to decompose the variance of financial performance. The main source of variation in growth rates, responsible for more than 40% of total variance, corresponds to individual, idiosyncratic firm aspects and not to industry, country, or macroeconomic conditions prevailing in specific years. Firm growth, similar to financial performance, is mostly unique to specific firms and not an industry or country related phenomenon. This finding also justifies using growth as an alternative outcome of superior firm resources and as a complementary dimension of competitive advantage. This also links this research with the resource-based view of strategy. Country was the second source of variation with around 10% of total variance. The analysis was done using the Compustat Global database with 80,320 observations, comprising 13,221 companies in 47 countries, covering the years of 1994 to 2002. It also compared the variance structure of growth to the variance structure of financial performance in the same sample.

Variance decomposition of firm performance: past, present and future

“…Some studies have also found higher corporate effects than country effects (Goddard et al , 2009; Kattuman et al , 2011; Makino et al , 2004). However, Brito and Vasconcelos (2009) and Chen (2008, 2009) yielded country effects of higher magnitude than industry effects.…”

“…Interestingly, and perhaps, unsurprisingly, studies that have been conducted using data from developing and emerging market countries have found higher country effects than studies conducted using data from developed countries (Bamiatzi et al , 2016; Brito and Vasconcelos, 2009; Esho and Adegbesan, 2016; Etiennot et al , 2013; Ketelhohn and Quintanilla, 2012; Table 2 [2]). There are two plausible theories on the size of country effects.…”

Influência da Internacionalização e da Inovação na Competitividade Empresarial

“…Ainda na Tabela 1, percebe-se ainda que a variável internacionalização é analisada por meio do Logaritmo Natural do número de bolsas de valores em que a empresa é listada e do número de países onde ela possui unidades instaladas, ambos considerados proxies para internacionalização, coletados no website da Securities and Exchange Commission (SEC), por meio dos formulários 20-F referentes aos três exercícios financeiros em análise. As informações para a variável inovação -pesquisa e desenvolvimento (P&D) e registro de patentestambém foram coletadas dos formulários 20-F. Alinhado à literatura especializada, o estudo adotou como variáveis de controle organizacional o tamanho da empresa, representado pelo Logaritmo Natural do valor do Ativo (Huguet & Gandía, 2016); a rentabilidade, mensurada pelo Retorno Sobre o Patrimônio Líquido (ROE), obtido mediante divisão do valor do Lucro Líquido pelo do Patrimônio Líquido (Lima & Carmona, 2010); o índice de endividamento, calculado mediante divisão do valor do Passivo (Circulante + Não Circulante) pelo do Ativo (Circulante + Não Circulante) (Kayo et al, 2006); e o crescimento, mensurado pela divisão do valor da Receita Operacional no ano t pelo do ano t-1 (Brito & Vasconcelos, 2009).…”

Crescimento de pequenas empresas: revisão de literatura e perspectivas de estudos

“…Further, the dynamics of the sector and the industry are an important determining factor for growth. In fact, several enterprises grew because the sector has grown too (Brito & Vasconcelos, 2009;Davidsson et al, 2010). Daunfeldt & Elert (2013) state that the context of the sector influences size and growth relationships.…”