Profits crisis: evolving patterns of firm size and performance in traditional U.S. industries

Abstract

With the arrival of the new millennium, many industries across the developed economies are increasingly facing volatile, uncertain, complex, and ambiguous business environments—often characterized as VUCA—caused by a host of disruptive factors hyper-competition, globalized value chains, high-velocity business cycles, frequent technological changes, shorter product life cycles, unstable financial markets, and the rise of the digital economy. These disruptions are triggering serious financial crises within the traditional scale-economy industries by decoupling the link between the firms' size and growth-related strategies and profitability. By capturing the changes in firms' assets, revenue, and financial performance with the help of long-range panel data on public companies, this study traces the impact of such disruptions on the financial performance of firms operating in the traditional scale-based industries in the U.S. economy. The study indicates emerging challenges to corporate management due to disruptive technologies, widening global competition, dynamic consumer trends, and volatile financial markets and highlights further the implications for firms' strategy, corporate governance, and organizational design.