Sales Growth Of Firms Research Articles

Digital finance and MSME performance in India: evidence from World Bank Enterprise Survey data

PurposeThe impact of digitalisation on smaller firms remains sparsely studied across emerging economies. The paper aims to examine the relationship between digital adoption and multiple performance parameters of micro, small and medium enterprises (MSME) in a prominent emerging economy.Design/methodology/approachThe study employs data from the World Bank Enterprise Survey (WBES) 2022, capturing 9,024 Indian MSME firms spread across the country. Performance indicators are derived from growth in sales, employment and labour productivity (LPROD). Multiple regression estimates are derived that also correct for sample selection bias using Heckman’s two-step process.FindingsDigital proliferation is found to increase as firms mature up in terms of age, size and constitution. A significant difference could also be observed in business performance across digital and non-digital businesses, with sales growth (SG) and productivity higher for digital firms. Digital financial variables are found to have a significant impact on SG but not as much in the case of employment growth and LPROD. The results are robust to correction for sample selection bias in digital adoption using inverse mills ratio (IMR).Practical implicationsThe study highlights digital adoption gaps across various strata of MSMEs, highlighting lower adoption when firms are younger, smaller and lacking formal constitutional setup. Digital variables indicating positive association with SG highlight the need for concerted efforts at the public policy level for building appropriate skills and infrastructure for micro and small enterprises to boost their digital adoption to promote growth.Originality/valueThere is a lack of micro-level empirical evidence measuring the impact of advanced digital technology usage on multiple aspects of enterprise performance amongst micro and small firms. The study deploys unique digital variables including TReDS and use of online credit applications to assess the impact on business performance. The findings provide insights for practice and public policy, besides making the case for a higher focus on launching digital initiatives for smaller enterprises.

Frugal Innovation and Business Success of Food and Beverage Firms in South-South Nigeria

This study examined frugal innovation and business success of food and beverage firms in South-South Nigeria. The study employed the correlational research design. The population of this study consisted of all the 82 registered food and beverage firms in South-South Nigeria. The unit of analysis was made up of managers of the selected food and beverage firms in South-South Nigeria. The sample size was determined using the Taro Yamene’s formula. A structured questionnaire was used to elicit data from the respondents. The data collected were analyzed statistically while the Pearson Product Moment Correlation Coefficient (PPMCC) was used to test the formulated hypotheses. The SPSS software program version 24 was used to correlate the data collected on the study variables. The findings revealed that value innovation has a significant relationship with business success (sales growth and profitability growth) of food and beverage firms in South-South Nigeria. This study also reported that cost cutting advancement has significant positive with business success (sales growth and profitability growth) of food and beverage firms in South-South Nigeria. The study equally revealed that technological innovation has a significant relationship with business success (sales growth and profitability growth) of food and beverage firms in South-South Nigeria. Based on these findings, it was concluded that frugal innovation is a significant predictor of business success of food and beverage firms in South-South Nigeria. Based on the findings and conclusion, it was recommended that food and beverage firms in South-South Nigeria should practice frugal innovation as it would enhance business success of food and beverage firms in South-South Nigeria.

The Effect of Working Capital Management on The Profitability of the Textile Industry: Evidence from Pakistan Textile Industry

The working capital management has significant importance in business investment because it impact on company’s Profitability and efficiency. The current study has taken the textile sector of Pakistan comprising of three sectors , that is spinning weaving and composite comprising of 155 companies in total . The aim of the paper is to investigate the effect of working capital management on profitability of the textile firms. A sample of 20 businesses is randomly selected for a period of six years to carry out the current study. In the existing study ROA is taken as a measure of profitability of the firm. While the working capital is taken as the measure of the cash conversion cycle. Account receivable collection period, Account payable time period size of the firm sales growth and current ration. Regression analysis is done and to address the issue of multicollinearity VIF test is done. The study's conclusions demonstrate that working capital utilization matters to Pakistani textile enterprises and that effective working capital utilization affects profitability. Studies show that when a company's inventory turnover period increases, its profitability decreases. The prompt transformation of raw materials into final products has a significant impact on the profitability of the company. The analysis did not uncover any proof that profitability and the cash conversion cycle (CCC) were significantly correlated.

Determinants of Firm-Level Growth: Lessons from the Czech Republic, Hungary, and Poland

Abstract This paper examines the determinants of firm-level growth based on three eastern European countries – the Czech Republic, Hungary, and Poland. We investigate whether there exist common firm-level characteristics that play a significant role in determining firm-level performance across the three countries, and whether development in financial markets can facilitate the growth of individual firms, particularly for firms that require external financing (borrowing). Our empirical analysis shows that in the case of Poland, firm-level characteristics, such as firm age and firm size, turn out to be significant, and that the role of these factors on the sales growth of firms is quite consistent with the findings in the existing literature. The same firm-level characteristics do not appear to be significant in the cases of Czechia and Hungary, which suggests that these factors play a different role in the firm-level growth of these countries. However, a firm’s access to external financing matters for the determining the firm’s growth and its development of financial markets, which enables the firm to have easier access to external sources of financing, thereby especially facilitating the growth of the individual firm that might need external funds. Our findings provide additional empirical evidence on the existing literature that emphasizes the positive impact of financial development on the individual firms’ growth based on a cross-country analysis.

Working capital management and firm sales growth: Evidence from fish processing industry

AbstractWorking capital management (WCM) is a critical matter for the growth of firms, especially small and medium‐sized manufacturing companies faced with liquidity shortages whose current assets account for a significant part of their investments. These characteristics describe most companies in the fish processing industry. Using a sample of more than 1050 European fish processing companies during the period 2013–2020 and applying dynamic panel data methods, this paper analyses the extent to which working capital investment and financing policies affect firm's sales growth. The empirical evidence reveals that the trade credit channel (i.e., accounts receivable and accounts payable) enhances sales growth, while the opposite effect is found for investment in inventories. Additionally, the findings insist on the importance of financing current assets with positive working capital to boost sales growth. [EconLit Citations: C23, G31, L25, L79, Q22].

Exploring Effects of Firm, Industrial, Market and Macroeconomic Volatility on Firm Sales Growth under Heterogeneity in Pakistan

The impact of industrial, firm, macroeconomic and market volatility on growth of 457 non-financial firms listed at Pakistan Stock Exchange (PSX) is examined by using annual unbalanced panel data over the period 1988-2017. Further, we categorize firms into constrained and unconstrained firms based on Whited and Wu (2006) index. In addition, the differential effects of firm, industrial, market and macroeconomic volatilities are also explored for constrained and unconstrained firms. We find that constrained firms are positively affected by macroeconomic and firm level volatility and unconstrained firms are negatively affected by macroeconomic and firm level volatility. On the basis of the empirical findings, it is recommended that the decision makers should take into account the heterogeneity of firms (based on financial constraints) while making decisions. Finally, to achieve higher growth of the firms as well as the economic growth prudent and investor friendly policies should be designed.

Can a signal mitigate a dilemma? Quality management standards, corruption, and business ethics

In this study, we employ theWorld Bank Enterprise Survey (WBES)data for 93,570 firms in 141 mostly developing countries to examine the signaling value of International Organization for Standardization (ISO) certification and the role corruption plays in the signaling value of ISO adoption. We also investigate whether ISO adoption reduces the magnitude of corruption activities in corrupt business environments. We find that ISO adoption can facilitate firm sales growth and the signaling value of ISO adoption increases as corruption at both firm and country levels increases. In corrupt business environments, ISO adoption has a moderating effect on corruption activities.

Strategic similarity in the co-evolution of technological and business diversification for firm growth: Evidence from smart-manufacturing related firms

The reflection of external firms' strategies enables a firm to optimize its evolutionary processes that keep a balance between path-dependent and self-renewing evolution. This study employs firm-level strategic similarity and defines it as the extent to which a firm's technological or business profile resembles those of other firms. The study investigates the role of firm-level strategic similarity in the co-evolutionary relationship of technological and business diversification for firm growth. To this end, it constructs a panel dataset of applicant firms obtaining granted patents of smart-manufacturing technologies during 2010–2019 from the U.S. Patent and Trademark Office. The results show that a firm's strategic similarity is a significant driving force of the variation of technological and business profiles through diversification within the firm. Particularly, the firm's business strategic similarity is the imperative determinant of the co-evolutionary path through technological and business diversification for firm sales growth. The findings suggest firm-level strategic similarity plays a critical role in the firm's evolutionary paths to balance between exploitative and exploratory innovation for firm growth.

EXAMINING THE ROLE OF FIRM SIZE IN COMMITMENT - SMALL FIRM PERFORMANCE RELATIONSHIP AMONG SOUTHEAST EUROPEAN SMES

Studies on the effect of the firm size and commitment on small firm performance indicators are inconclusive, especially in the geographic area of Southeast Europe. This study examines the role of firm size in the relationship between commitment and firm sales growth, operating profit and market share. Alterations in firm size and commitment are attributed to differences in market structures, namely, non-European union and European union member states. Results of the empirical research state that firm size and commitment have a positive and significant effect on performance indicators (sales growth rate, operating profit, and market share). Separating firms that originate from the European union member states from those that do not, suggested that firms that are not part of the European union rely on commitment more firmly than those that from the European union member states. Moreover, firm size moderates the relationship between commitment and firm performance indicators only in the non-European union countries. Larger firm size indicates a smaller effect of the commitment on firm performance for firms from the non-European union countries. The study concludes with limitations and practical implications of the empirical research.

Birds of a feather?: Firm sales growth and narcissism in the upper echelons at the CEO-TMT interface

Blending conceptual framing from the CEO-TMT interface literature with upper echelons decision-making theory, we develop a model of the role of CEO narcissism and narcissism in the upper echelons. We argue that narcissistic CEOs tend to have higher narcissism in their Top Management Teams (N-TMTs). In turn, TMTs characterized by narcissism can benefit from positive aspects of narcissism while avoiding its pitfalls; especially when strategic decision speed is slower and behavioral integration is higher. In a field study of 104 TMTs from publicly-listed South Korean firms, we find an association between narcissistic CEOs and N-TMT, and that N-TMT mediates in the indirect, conditional relationship between CEO narcissism and sales growth. We also invoke threshold theory in anticipation that outcomes associated with N-TMT may be nonlinear. In support of our threshold hypothesis, we find a curvilinear relationship between N-TMT and sales growth; and this curvilinear relationship is stronger for a small number of TMTs scoring high on N-TMT (> +2SD), whereTMTs’ activities are defined by deliberative integration.The pattern of results we report provides evidence for the importance of accounting for narcissism in the upper echelons as a predictor of sales growth, and key contextual moderators of this relationship.

THE INDIAN MANUFACTURING SECTOR: FINANCE, INVESTMENT AND PERFORMANCE OF FIRMS

: The purpose of this paper is to explain the manufacturing stagnation in India, particularly, examining the hypothesis that financial stress caused the stagnation. Using a sample of 804 large, mid, and small cap manufacturing firms in India from Prowess database, the paper examines the performance of manufacturing sector during 2005-19 using simple financial indicators and dynamic panel data regression analysis. We estimate the structural equations of investments, leverage and profitability using a two-step Generalized Methods of Moments estimation. We do not find substantial support for the hypothesis that financial stress explains the investment slowdown in these firms. Our findings suggest that manufacturing firms, particularly the larger firms, are practicing debt conservatism. We also find that the declining growth in sales is a major determinant in explaining the slowdown in fixed investments and profits of these firms. In addition, the size of the firms measured in terms of sales also matters for small cap firms. We therefore suggest that measures to increase demand can help in reviving the sales growth of firms and thereby private investments and profits.

Impact of Volatility on Firm Sales Growth Some Insights from Pakistan

This paper empirically investigates how firm level, industrial level, market level and macroeconomic volatilities influencePakistani non-financial firms’ sales growth. It also examines how interactions between different kinds of volatilities affect sales growth. The empirical analysis is carried out using unbalanced annual panel data set covering the period 1988-2017.The results indicate that although all types of volatilities assert negative impacts, the intensity of the impact is quite different across different volatilities. Macroeconomic volatility has the highest adverse impact followed by firm volatility. Unexpectedly, the results provide evidence that one type of volatility significantly reduces the adverse impact of other type of volatility. These findings imply that firms may design and implement more effective sales growth strategies in periods when they face more than on type of volatility.

Pengaruh profibiltas, leverage, dan pertumbuhan penjualan perusahaan terhadap kondisi financial distress pada perusahaan property dan real estate di bursa efek Indonesia Tahun 2014-2018

The goal of this study, according to the analysis and discussion, is to establish the impact of profitability, leverage, and firm sales growth on financial distress in property and real estate companies listed on the Indonesian stock exchange from 2014 to 2018. Furthermore, this study approach used a sample size of 26 Indonesian public businesses. Financial statement data is derived from yearly financial statements of companies listed on IDX and IDX. Quantitative research is the form of research that was employed to discuss this study. Multiple linear regression tests are used in conjunction with the traditional assumption tests, such as normality, multicollinearity, autocorrelation, heteroscedasticity, T, F, and coefficient tests (R2). The following are the outcomes of this study's numerous testing methods: Profitability has a minimum of 0.00 and a high of 1.25, with a mean of 0.0973 and a standard deviation of 0.18003. The leverage variable has a minimum of 0.07 and a maximum of 11.43, with a mean of 0.9588 and a standard deviation of 1.21862. Sales Growth has a minimum of -1.03 and a high of 0.95, with a mean of -1.14581 and a standard deviation of 1.14581. Financial Distress has a minimum value of 0.44, a highest value of 2.08, a mean of 2.6623, and a standard deviation of 1.92402 for the variable.

Organizational innovativeness and firm performance: Does sales management matter?

Salespeople interact with individual customers to drive revenues by identifying and finding solutions for customer needs. The external knowledge salespeople acquire in conjunction with the network position they hold in their firm suggests that the sales force has great value in facilitating organizational innovativeness. Sales managers set the tone for sales operations, and an intellectually stimulating sales manager can create ripple effects of innovative thinking across the sales force and organization. In this paper, we propose that sales manager intellectual stimulation helps drive organizational innovativeness and, in turn, sales growth. Survey data collected from a cross-industry sample of business-to-business sales leaders are linked to an objective measure of firm sales growth. The results indicate that sales manager intellectual stimulation leads to organizational innovativeness. They also suggest that the degree to which the sales department is integrated within the firm strengthens this positive relationship. Finally, the relationship between organizational innovativeness and sales growth follows a non-linear U shape.

Leveraging synergies versus resource redeployment: Sales growth and variance in product portfolios of diversified firms

AbstractResearch SummaryThis article analyzes the relationship between sales growth and variance for diversified firms. Distinguishing product niches linked by scale free versus non‐scale free resources, this study predicts that the more a firm diversifies leveraging on a non‐scale free resource, the more likely its sales growth and variance are positively correlated. However, this relationship is negatively moderated by the presence of a scale‐free resource such that the presence of scale‐free resources of high value implies a negative correlation. These theoretical intuitions are consistent with data from 2008 to 2013, reflecting firm sales growth rates in five industries spanning 45 product niches in seven EU countries and the United Kingdom. These industries prioritize shelf space as a non‐scale free resource, and brand as a scale free resource.Managerial SummaryDiversifiers may base their value creation either in pursuing synergies or in exploiting the benefits derived by internal resource redeployment across products or across industries. Here, we highlight the different managerial implications on risk/performance structure derived from diversification based on resource redeployment compared to diversified companies exploiting synergies. Can the disparity of sales growth between products of the same firm's portfolio be good for the corporate performance? Here, we show that diversification based on resource redeployment goes hand in hand with a positive relation between overall firm growth and variance of results within the same firm. On the contrary, firm diversification based on synergies implies a negative relationship between within firm disparity and overall firm growth.

Entrepreneurs' human capital resources and tourism firm sales growth: A fuzzy-set qualitative comparative analysis

New private tourism firms play a key role in promoting local and national wealth creation. Building upon insights from entrepreneurial motivation and human capital theories, in this study fuzzy-set qualitative comparative analysis of longitudinal data was employed to identify the human capital pathways of 1182 entrepreneurs in Portugal engaged in tourism reporting high firm sales growth between 2008 and 2015. Two dimensions of entrepreneur human capital at firm start-up were found to be sufficient for high sales growth: a) Necessity- and opportunity-based entrepreneurs with specific human capital industry experience relating to tourism, and b) Opportunity-based entrepreneurs with managerial experience.

Firm Exit during the COVID-19 Pandemic: Evidence from Japan

Firms have exited the market since the start of the COVID-19 pandemic. To evaluate the number of firms exiting the market and their exit rate, we construct a simple model, in which firms optimally choose stopping time for their exit. We estimate the model using firm-level data on firm exits before the pandemic. Subsequently, using recent survey data on firm sales growth, we simulate potential firm exits during the pandemic under the condition that the institutional background, represented by activities such as bankruptcy procedures and government rescue plans, did not change the exit option value. Our main findings are as follows. First, we find sizable heterogeneity with respect to the number and rate of firm exits across industries and regions. Second, in aggregate, the pandemic potentially increased firm exits by around 20% compared to the previous year under the assumption that the recent reduction in firm sales is temporary and, thus, partially incorporated into firms’ expectations for future trend sales growth. In two extreme cases in which the recent sales reduction has a full or no impact on firms’ expectations for future sales, firm exits increased by 110% and 10%, respectively. Third, these increases are mainly due to the decrease in the expected sales growth rate, rather than the increase in uncertainty. Finally, we quantify the hypothetical amount of government subsidies needed to prevent excess increases in potential firm exits, which is around 10−3 of Japan’s GDP.

Maintaining stability while boosting growth? The long-term impact of environmental accreditations on firms' financial risk and sales growth

PurposeIn this research, we examine the impact of ISO 14001, an international environmental management accreditation, on the long-term financial risk and sales growth of firms.Design/methodology/approachWe employ a quasi-experimental design and construct 682 treated and control firms that are matched using propensity score matching. We then test our hypotheses using the difference in difference model.FindingsWe find that, although ISO 14001 leads to lower financial risk, standard management systems such as ISO 14001 actually hinder the sales growth of firms, an unanticipated outcome. In particular, this trade-off worsens over time, becoming particularly more severe among firms that adopt ISO 14001 early and operate in less-polluting industries.Research limitations/implicationsWe present a hidden side of environmental accreditations, indicating a potential trade-off in the long-term efficacy of environmental standard management systems.Practical implicationsFirms must be cautious about adopting environmental management systems. Over time, a focus on environmental certification could potentially hinder firms' long-term growth. Firms should also be aware of certification timing and levels of industry pollution to resolve the tension in the trade-off.Originality/valueThis research is one of the first studies demonstrating that environmental accreditations result in a trade-off between reducing financial risk and improving sales growth.

Innovation Types and Sales Growth in Small Firms: Evidence from Kosovo

Abstract The purpose of this paper is to investigate the impact of different forms of innovation on firm growth, in terms of sales. A total of 278 samples were collected from SMEs in the manufacturing, service and trade industries throughout Kosovo. The data were analysed using a logistic regression analysis. The findings confirm the hypotheses that marketing innovation is positively associated with firm growth, while new to the firm products is negatively associated with firm growth. Other innovation attributes have resulted with non-significance value. The findings in this study can be useful for theoretical discussion, as well as for policy formulation related to introduction of innovation and SMEs development considering that innovation is critical factor in today’s market and competition. Further studies should look into how SMEs could investigate over time from the initial stage to the full development of innovation.

Output additionality of R&D subsidy on manufacturing venture firms in Korea

PurposeThe purpose of this study is to determine the extent to which R&D subsidy can affect the innovation process of manufacturing venture firms by examining the output additionality measured as both proximal indicators of innovation and distal indicators of growth. Further, the differences in output additionality between the clusters in the subcontracting regime were examined to investigate whether the effect of R&D subsidy can vary depending on subcontracting practices and structure among large enterprises and venture firms.Design/methodology/approachThis study uses survey data of the Korea Venture Business Association conducted in 2012, 2013, 2014, 2015, and 2016 respectively, which selects a random sample from venture firms by stratified random sampling method based on the industry sector, size and location for each survey year. This study analyzed the data using an endogenous treatment effects model to estimate the average treatment effect of R&D subsidy, yielding more accurate estimates than a traditional treatment effects model by controlling the unobserved endogenous components.FindingsThis research found that R&D subsidy may not facilitate the process of transformation of innovation into financial growth even though R&D subsidy can facilitate the innovation process and contribute to producing new and improved products. This research also reveals that the relationship between R&D subsidy and innovation performance for firms heavily dependent on subcontracting is generally much weaker than those for independent subcontractors. Further, the present study exhibits that public R&D subsidy for independently subcontracting venture firms is more effective for the growth in both employment and sales than those for subcontracting with large enterprises or other subcontractors.Research limitations/implicationsR&D subsidy for venture firms does not relieve the burden of liability of newness and smallness of venture firms, especially the disadvantage in market penetration and competition. In addition, venture firms subcontracting with large enterprises or other prime subcontractors tend to achieve incremental innovation with the help of the technology and competence of large companies and run stable businesses through a predetermined market.Practical implicationsR&D subsidy for venture firms does not relieve the burden of liability of newness and smallness of venture firms, especially the disadvantage in market penetration and competition. Further policy measures should be implemented so as to identify and eliminate barriers to market acceptance for new products of venture firms.Originality/valueThis research verifies that the effect of R&D subsidy may harmful to the sales growth of venture firms and the output additionality differs with the degree of dependency on subcontracting practices and structure.