On the issue of industry firm dynamics

Abstract

Today, in the Russian scientific literature, the peculiarities of the development of industry firm dynamics remain understudied, especially from the standpoint of their potential effects on the firms effectiveness. This article evaluates the impact of the entry and exit of firms on financial results and performance indicators of dairy companies. It is proved that the entry and exit parameters of firms, along with the level of industrial concentration, are significant factors determining both the dynamics of gross profit of companies and the industry average rate of gross profit margin. Against the background of declining industry dynamics in 2017—2020, a slowdown of a number of indicators of innovative activity of dairy industry companies and an increase of their profitability indicators have been revealed. At the same time, the impact of industry dynamics on efficiency indicators is ambiguous: it is noticeable on labor productivity values, but no such impact is observed on the efficiency indicators of the use of fixed capital. The influence of the age of industrial companies on labor productivity and capital return has also been established, and the hypothesis of higher production efficiency of younger companies has been confirmed. It is necessary to stimulate the influx of young and innovative companies into the industrial sector, increase the number of new firms, reduce the impact of structural and strategic barriers to entry, and improve the conditions of entrepreneurship in the manufacturing sector of the Russian economy.