Business Financial Performance Research Articles

Leadership Styles, Firm Characteristics and Business Financial Performance of Small and Medium Enterprises (SMEs) in Tanzania

This article investigates the relationship between leadership styles and business financial performance of Small and Medium Enterprises (SMEs) in Tanzania. Previous empirical studies mainly focused on a direct influence of a single leadership style. However, there is a possibility that the combined leadership styles moderated by firm characteristics to have more influence on business performance especially in the SMEs setting. Specifically, the article analyses the relationship between four leadership styles (i.e. transactional, transformational, combination of transactional and transformational leadership and, passive-avoidant) and Business financial performance of SMEs considering the moderating effect of firm characteristics. Cross sectional survey design was adopted to carry out the research. The article is guided by Transactional leadership theory, transformational leadership theory and Contingency theory while Mean and multiple regressions were used to analyze data elicited from one hundred and ten (110) randomly selected SMEs. The results revealed that transformational leadership style and, combined transformational and transactional leadership styles had significant positive influence on SMEs’ financial performance. On the other hand, transactional leadership style had significant negative influence on SMEs’ financial performance. Passive- avoidant leadership style was found to have insignificant influence on SMEs’ financial performance. Furthermore, the results revealed that ownership structure and firm age moderated the influence of transactional leadership style, passive-avoidant leadership style and the combination of transformational and transactional leadership styles on SMEs’ financial performance. Among others, the article recommends that SMEs’ leaders have to apply the combination of transformational and transactional leadership styles if they want to realise relatively high SMEs’ financial performance.

How financial performance of world’s top companies are related to business environment?

ABSTRACT Businesses need an environment in which business conditions in features such as starting a business, registering property, getting credit, paying taxes, trading across borders and enforcing contract be simple. Every year, the world bank publishes a report on the business environment of different countries around the world with the aim of improving doing business environmental conditions. The purpose of the present study is to investigate the relationship between the financial performance of world’s top companies and the business environment indicators. For this purpose, 176 top companies in the world from 2013 to 2018 that were profitable were selected as the statistical population. Doing business annual reports, and Fortune site were used to collect the data. Also the data analysis was done according to the panel data method using Eviews10 software. The results shows that there is a positive relationship between business environment Indicator and financial performance of world’s top companies. On the other hand, the per capita income of the countries in which the top companies belonged was considered as a control variable and the results show that the per capita income has a positive and significant relationship with the financial performance of the top companies in the world.

Analysis of modern methods for increasing and managing the financial prosperity of businesses in the context of performance: a case study of the tourism sector in Slovakia

Research background: In the context of constantly changing business environment, the financial sector is focusing on new trends in financial management systems. Nowadays, there is a need to achieve long-term financial growth, so financial managers try to develop new models for managing and improving the financial performance of businesses in economic practice.
 Purpose of the article: This article aims to determine the financial performance of travel agencies by applying modern business performance evaluation methods in order to create a performance portfolio (ranking) for the years 2013?2017, subsequently to reveal the concordance rate of order of the selected business entities by comparing applied financial methods in the context of performance benchmarking. The research question is as follows: Does the multidimensional PCA method in the form of the performance portfolio of travel agencies provide similar financial results compared to the EVA indicator?
 Methods: For measuring the financial performance of businesses, the method of Principal Component Analysis (PCA) and the indicator Economic Value Added (EVA) were chosen. Spearman?s rank-order correlation was applied in order to reveal the concordance rate of the analyzed travel agencies.
 Findings & Value added: The results indicate that by applying the PCA method, 6 key performance factors can be identified. Moreover, the findings revealed that the assessment of travel agencies using the PCA method and EVA indicator did not lead to the same financial results. Individual financial methods identified a different number of strong-performing and inefficient business entities. In this backdrop, we concluded that the business performance measurement based on the PCA method is not a suitable alternative to measuring performance using the EVA indicator.

Technological Innovativeness and Business Financial Performance of Medium Sized Enterprises in Southwestern Nigeria

Technological Innovativeness and Business Financial Performance of Medium Sized Enterprises in Southwestern Nigeria

Factors Affecting the Audit Quality of Financial Statements of Listed Businesses

Financial statements are written records that convey the business operations and financial performance of a company, directly affecting investors' decisions. However, at present, the awareness of investors or auditing firms is still limited in controlling the quality of audits. Through quantitative research methods and multivariate regression analysis to measure the level of influence of these factors, the article has found 5 factors affecting the audit quality of financial statements of listed businesses which include (1) Auditing firm size, (2) In-depth skill of auditors, (3) Quality control procedures at the audit firm, (4) Price of auditing, (5) Service range of the auditing company. Then, the study made a number of recommendations for independent auditing companies and related agencies to improve the audit quality of financial statements of listed companies, at the same time, to find the development direction for the audit profession.

Relationship Between Concentrations of Foreign Trade and Financial Performance: An Application in Drug Sector in Turkey

This study investigates possible connections between two performance ends - foreign trade and financial performance - of a leading drug company in Turkey within January 2014-December 2018 period. A unique approach is that these two are not under the spotlights directly, in other words, their financial figures are not under consideration. Instead, the primary goal is to calculate each performance end’s concentration index values. Put other way, this study primarily seeks to explore the extent, to which the company is able to keep its outcomes of foreign trade and financial activities steady. The main and secondary aim, in this case, is to scrutinize if and how foreign trade concentration (steadiness) is a descriptor of financial performance concentration. Due to foreign trade being an important factor of business financial performance, it is also expected that the trade’s extent of steadiness should also be a determinant of the financial performance stability. For the analysis, foreign trade and real operating profits’ data on a quarter-basis that belong to 2014 January-2018 December period are collected. After concentration calculations of the trade and financial performance using Hirschman-Herfindahl Index (HHI) are made, analyses reveal that there are indeed some similarities and differences between the concentration index values of foreign trade and financial performance. It is, however, not much possible to state that foreign trade concentration is able to affect concentrated financial performance.

Financial performance of Hungarian and Romanian retail food small businesses

PurposeChanges in food retailing (globalization, concentration) have negative impacts on smaller, “traditional” food retail businesses. Their market share decreasing year by year. The purpose of this study is to examine and compare the financial performances of these businesses under the given circumstances and current economic environment in a Hungarian and a Romanian county.Design/methodology/approachThe study is based on two complete databases, including all companies that behoove retail food activity (considering the NACE cod) in the counties of Hajdu-Bihar (Hungary) and Cluj (Romania). The database analyzed contains the financial statements for five consecutive years for 212 and 690 businesses. Databases were examined by the most typical financial indicators using the multivariate and univariate analysis of variance and the k-medoid cluster analysis methods.FindingsThe results of the analysis have shown that there are differences in the number of retail food companies in the case of two counties, both in number and in financial performance. Companies in Hajdú-Bihar county perform better in terms of financial ratios than those in Cluj county. The groups created by k-medoids cluster analysis are relatively well distinguished in the case of Hajdú-Bihar county, while the picture is much more mixed in the case of Kolozs county. However, it is also important to note that the companies analyzed should generally perform better to survive.Research limitations/implicationsAmong the limitations of the study, it is important to note that the findings are relevant only to the two counties examined. Another limiting factor is that quite several companies had to be excluded from the analysis due to missing data or outliers.Practical implicationsThe study presents for the corporate decision-makers the current performance of the companies of the sector examined in the two counties. The results of the study highlight the business areas of concern in management. The findings show that they need to change this performance to strengthen their market position. We believe that it is not enough to complain about the expansion of the supermarket chains, but they should take appropriate actions to improve their situation. Based on the results of the study, it can be concluded that there is a need to improve the financial efficiency of retail food companies in both counties to survive in the long run. This improvement is essential because retailers can play an important role in smaller settlements and narrower residential environments.Originality/valueComparative analysis of retail food companies in similar counties in these two neighboring countries has not been conducted using complex financial analysis. The study revealed the common and/or individual characteristics of these companies.

Knowledge Management and its Effects on Financial Performance: Evidence from Dangote Flour Mills, Ilorin

This paper summarizes the arguments and counterarguments within the scientific discussion on the issue of knowledge management and their impact on the financial performance of economic entities. It is determined that despite the key role of knowledge both for the development of the country (which in the 21st century is based mainly on knowledge) and to increase the value of the company, today companies do not fully use arrays of knowledge and data, which forms barriers to increase competitiveness in the strategic perspective. The main purpose of this study is to assess the impact of knowledge management on the financial performance of companies. Data for the study were obtained from a primary source based on a structured questionnaire with which Dangote Flourmills staff worked. The methodology of the work is a software product for statistical data processing – STATA 11, while the data analysis was performed on the basis of regression analysis, which was used to test hypotheses at the level of 5% significance. The analysis of the data confirmed the significance of the impact of all indicators of knowledge management on the financial performance of the economic entity. The results theoretically confirmed and empirically proved that strategic leadership, organizational culture, information, and communication technologies, effective human resource management practices have a significant impact on financial performance. This study concludes that knowledge management has a significant impact on the financial performance of businesses. The paper states that knowledge management activities help to focus the company’s management on the accumulation, storage, and use of knowledge to solve problems, dynamic learning, strategic planning, and making sound financial and economic decisions. The authors have formed the following recommendations: assistance from the management of the company to exchange knowledge, training and professional development; introduction of the latest digital technologies to improve communication and management mechanisms, based on the specifics, features, and needs of companies; ensuring and developing a corporate culture that allows you to balance and coordinate the actions of management policy. Keywords: knowledge management, human resources, strategic leadership, organizational culture, financial results of the company.

The Impact of Mobile Money on the Financial Performance of the SMEs in Douala, Cameroon

Often financially excluded by the traditional banking system, small and medium-sized enterprises (SMEs) in many developing countries have found in mobile money services (MMS) a sustainable alternative. Despite its potential in propelling inclusive growth, the use and adoption of mobile money (MM) by SMEs has generally been low in developing countries, and one of the reasons has been limited data that supported its impact on financial performance. As a result, there was a need to investigate the impact of the mobile money payment and receipt services on the financial performance of the SMEs in Cameroon. This paper implemented a mixed research paradigm with data collected through the administration of a survey questionnaire and from one-on-one in-depth interviews. A sample of 285 SMEs responded to the survey, while 12 owners/managing directors were purposively selected to participate in the personal interviews. Version 25 of the Statistical Package for the Social Sciences (SPSS) software was used to analyse the quantitative data, while the qualitative data was analysed along themes. The results were, after that, triangulated for credibility reasons. The concluding findings indicated that the mobile money payment and receipt services contributed of the order of 73% of the total variance in the turnover of the SMEs in Douala after they had begun to use the technology. By confirming the positive relationship between the use of mobile money services and the financial performance of businesses, it is hoped that all the relevant stakeholders will see this as a possible solution to the financial challenges that SMEs face in developing economies.

The Effect of Asset Use Activities on Capital Structure, Business Risk, Financial Performance and Corporate Value (Study of Manufacturing Industry Companies in the Indonesia Stock Exchange)

This study aims to examine and explain the effect of the asset usage activities on the capital structure, business risk, financial performance and corporate value. Test and explain the effect of capital structure on the business risk, financial performance and corporate value. Test and explain the effect of the business risk on the financial performance and corporate value. Test and explain the effect of the financial performance on corporate value. Analysis techniques, using the generalized structured component analysis (GSCA). Data sampled 84 companies listed in Indonesia Stock Exchange in 2010 - 2015.The findings of this study is the asset usage activities has a significant negative effect on capital structure and a significant negative effect on business risk. The asset usage activities has a significant positive effect on financial performance and corporate value. The capital structure has a significant positive effect on business risk. The capital structure has a significant negative effect on financial performance, and is significantly positive to corporate value. The business risk has a significant negative effect on financial performance and corporate value. Financial performance has a significant positive effect on corporate value. The study concludes that asset usage activities can determine the capital structure, financial performance and corporate value. Therefore, the corporate's management and financial analysts can examine the asset usage activities and capital structure, busines risk and financial performance to predict the future value of the corporate. Keywords : Asset usage Activities, Capital Structure, Business Risk, Financial Performance, Corporate Values. DOI : 10.7176/EJBM/11-36-07 Publication date : December 31st 2019

The Financial Impact of High-Performance Work Practices

High-performance work practices (HPWP) have been found to increase financial performance. Institutional theory suggests that this effect may be moderated by labor market institutions, such as labor market flexibility and labor market efficiency. We explore this relationship using a combined data set comprised of data on HPWP from ASSET4, financial and other company-level data from the Worldscope Database, and national institutional context data from the World Economic Forum’s Global Competitiveness Report. With an international sample of roughly 20,000 archival firm-year observations across a seven-year period, we use pooled OLS regression models with robust standard errors, clustered at the firm level. We find support for all predicted relationships except for a direct relationship between labor market flexibility and performance: Strong formal institutional pressure (low labor market flexibility) increases the positive financial impact of HPWP. Strong informal institutional pressure (high labor market efficiency) affects the financial performance of businesses directly and positively, and also indirectly by increasing the positive effect of HPWP on financial performance. We conclude that companies seeking the most financially-rewarding approach to human resource management (HRM) should engage in HPWP, encourage the local population to expect and value such practices (e.g., by promoting women’s rights), and, counterintuitively, encourage more government regulation of business around HRM practices.

Peningkatan Hasil Bisnis Mochi Mitra (Mochi 3R) Dengan Melakukan Sub-Branding

Community Development is one of the best program of Prasetiya Mulya University in collaboration with various small businesses in remote areas of Cianjur and Cipanas. We had the opportunity to help Ms. Wiwi's mochi business in Cianjur. Mochi production by the community, especially Taman Jaya Dua Village, Gadog Village, Pacet District, Cianjur Regency, has high potential to be developed both in terms of quantity and quality. Many processes must be passed as the time goes by to help develop partners' mochi businesses, including increasing standardization and sub-branding of mochi styles, compiling production SOPs, using safe preservatives, making online marketing media, adding competent workforce, and monitoring business financial performance independent. Our results are very satisfying. Ms. Wiwi as the business owner is also very happy and open with the input we provide. The results we get from Community Service activities are very satisfying as well. The income earned by Ms. Wiwi has also improved in line with the development of Mochi Gaya.

DO ENVIRONMENTAL AND ETHICAL ASPECTS OF INTERFUNCTIONAL COORDINATION LEAD TO SMALLER BUSINESS PERFORMANCE?

The paper deals with interfunctional coordination (IFC) from ethical and environmental point of view. It will be interesting to know if the parts of IFC connected with ethical and environmental aspects have positive or negative influence on business performance. Data was gained from 60 SMEs producing electrical equipment and electronic components in the Czech Republic. Survey questionnaire and critical discussion with the literature were used. Kaiser-Meyer-Olkin (KMO) test and Bartett’s sphericity test were applied. For analysing the influence of ethical and environmental aspect on business performance Spearman’s rank correlation was used. The results show: (1) a positive relation between ethical aspects and business performance, (2) no positive relation between implementation of environmental aspects and business performance, and (3) no difference in results in marketing business performance and financial business performance. The results can suggest that a preference towards ethical decisions and behaviour leads to a higher business performance and by contraries, environmental aspects leads to smaller business performance. The collected data shows that environmental and ethical decisions of managers in the Czech Republic can differ from environmental and ethical decisions of managers in different countries.

Motivation, Productivity Growth, and Business Financial Performance – A Scoping Review Approach to Linkages and Impact

Motivation, Productivity Growth, and Business Financial Performance – A Scoping Review Approach to Linkages and Impact

The impact of sustainability in coffee production on consumers’ willingness to pay–new evidence from the field of ethical consumption

Although there is an abundance of literature on the general relationship between sustainability and financial performance of businesses, the results often remain controversial concerning the measurement of business sustainability performance. Especially for concrete managerial purposes, a clearer focus on the product level as a major driver for corporate success seems fruitful. On such topic, likewise a number of studies exist, of which several questions remain not fully settled. Particularly, one of the most cited studies in the field by Trudel and Cotte (MIT Sloan Manag Rev 50(2):61–68, 2009) provides only preliminary results, calling for further research. Consequently, following the considerations of the two authors, we conducted a study focusing on sustainability in coffee production to clarify some of the questions remaining open. Besides further scrutinizing whether sustainable conduct is valued and bad conduct punished by customers in changing their willingness to pay for coffee, we also differentiated between the social and environmental dimension, furthermore exceeding their research by considering whether consumers value additional certification of sustainability. Applying a vignette study, we find that sustainability measures do not necessarily have to pay off, while conversely, bad conduct, especially in the social dimension, is clearly punished. In addition, we can show that bad behavior is stronger punished than good behavior rewarded. Finally, our results reveal that certification does not significantly increase the average consumer’s willingness to pay.

Investigating the impact of ECRM success factors on business performance

Purpose The purpose of this paper is to develop an integrated framework to explore the influences of electronic customer relationship management (ECRM) success factors (process fit, customer information quality and system support) on customer satisfaction, customer trust and customer retention, which, in turn, impact upon the business financial performance of Jordanian commercial banks in Amman city. Design/methodology/approach Using a sample of 343 branch managers, assistant branch managers and heads of departments in Jordanian commercial banks, who answered a self-administrated questionnaire, data were collected and analysed using structural equation modelling (AMOS 17.0). Findings The results showed that the ECRM success factors (process fit, customer information quality and system support) positively affected customer satisfaction, customer trust and customer retention. Furthermore, the authors discovered that customer satisfaction and customer trust positively influenced customer retention. It was determined that customer satisfaction, customer trust and customer retention positively impact on a business’s financial performance. Originality/value Previous research lacks the link between ECRM success factors and business performance (financial and non-financial).

Drivers of degree of sophistication in hotel revenue management decision support systems

Revenue management (RM) practices enhance financial performance of businesses. This study answers two research questions: (a) How should the sophistication of hotel RM be measured? and (b) What are the internal and external indirect drivers of the level of sophistication of hotel RM? The level of sophistication is based on decision tree tests, which include four steps: data capture, data foundation, rigor of analysis, and techniques used, including pricing, inventory allocation, and product configuration. Via an empirical analysis, we determine five positive drivers of hotel RM sophistication: electronic word-of-mouth utilization, customer segmentation, organizational structure, differentiation strategy, and competitive environment. Our study provides hoteliers with guidelines for determining whether their RM system is at the right level of sophistication given their operating environment, and provides a roadmap for hotels to enhance RM sophistication through efforts to improve both internal and external drivers.

Trends and problems of business decision-making

In the face of competition, business managers should focus on the quality of decisionmaking. This paper provides an assessment of decision-making methods by discussing the current trends of managers referring to decision-making methods. The paper is an analysis of the attitudes of managers towards decision-making methods. This paper is conducted through questionnaires. It also discusses the impact of decision-making methods on business financial performance. Eventually, some conclusions will be drawn.

The Impact of Banking Finance on Financial Performance of Egyptian Small Businesses in Period from 2013 to 2016

Small business becomes important for the economic development as it acts as an engine of employment. This research focuses on the impact of banking fi-nance at a normal interest rate on small business financial performance. The research approach adopted in this dissertation includes quantitative secondary data from annual reports of 90 small business firms in Egypt in period from 2013 to 2016 (2013 and 2014 without loan, 2015 and 2016 with a loan). Data was collected for the research variables; Loan Volume, Return on Assets, Re-turn on Equity and Net Profit Margin. Loans Volume at a normal interest rate represents the independent variable, Firm Leverage and firm age represent the control variable, and Financial Performance Indicators (ROE, ROA and NPM) represent the dependent variable. Results showed that loan volume has a nega-tive significant impact to financial performance of small business, firm lever-age has a negative significant impact to financial performance of small business and firm age has insignificant impact to financial performance of small business.

Does Electricity Access Relate to Stakeholders’ Satisfaction? Empirical Evidence from Small and Medium Enterprises in North-West, Nigeria

Several scholarly studies have been conducted to establish relationships of electricity access to business financial performance. Nonetheless, little is known about energy-stakeholders’ satisfaction relationships. The few studies that do exist on the topic often lack control variable. Thus, this is the motivation behind the present study. Therefore, this paper provides an empirical analysis of the effect of controlling firm characteristics in the energy-stakeholders’ satisfaction relationships. A multiple linear regression model is applied to primary data collected through structured questionnaire in five–point rating scale format to test the hypothesis via SPSS version 23. Results based on cross-sectional survey data from 245 sampled SMEs operating in the city of Kaduna, Kano, Katsina and Sokoto state in manufacturing, hotel & restaurant and wholesale & retail sector show evidence of a strong positive statistically significant relationships between electricity access and SMEs stakeholders’ satisfaction with electricity access t (245) = 9.138, p < 0.001; firm age t (245) = 4.404, p < 0.001. Subject to appreciable effect on stakeholders’ satisfaction, this study recommends an urgent need to step up electricity supply to SMEs in order to accelerate satisfaction level of firms’ stakeholders. Increasing electricity access should involve optimal production and utilization of generation capacity and/or reduction of transmission and distribution losses. Above all, SMEs villages/clusters should be built to promote industrial activities on the basis that access to reliable electricity supply is collectively and affordably provided by the relevant host authorities to investors and operators.