Sales Growth Of Firms Research Articles

Does ambidexterity in marketing pay off? The role of absorptive capacity

Research in marketing and other organizational domains shows that the ambidexterity–firm performance relationship is elusive, and high levels of both exploitation and exploration may not always lead to higher firm performance. To shed light on this topic, this study examines marketing ambidexterity (MA) as balanced levels of exploitation and exploration across marketing activities and tests how firm-level absorptive capacity (AC) moderates the MA–firm performance relationship. Analyzing a unique dataset that combines survey and archival financial data from 318 private firms, this study finds that MA is positively associated with sales growth for firms with relatively strong AC. This relationship becomes negative for firms with weak AC. Results are robust when the additive and multiplicative terms of exploitation and exploration are controlled for. Study findings underscore the critical role of organizational knowledge processing in ensuring that firms can benefit from the pursuit of MA.

The Effects of Non-price Competition on Sales Growth in Content Firms - R&D and Advertising

The Effects of Non-price Competition on Sales Growth in Content Firms - R&D and Advertising

Financial constraints, corruption, and SME growth in transition economies

In this study, I investigate the impact of firm-level financial constraints and corruption in the business environment on growth for over 10,000 small- and medium-sized enterprises (SMEs) in 28 Eastern European and Central Asian countries. I also examine the determinants of firms’ financial constraints and the relevant role of country-level development, institutions, and corruption. I find that financial constraints negatively affect both firm sales growth and employment growth while corruption has no direct impact on growth. Older, larger, foreign-owned firms and firms with higher ownership concentration report lower financial constraints while exporting firms report higher financial constraints. In countries with higher levels of GDP per capita, stock market development, legal systems and property rights, and lower levels of corruption, firms face lower levels of financial constraints. I provide novel empirical evidence that firm-level corruption hinders SMEs’ access to financing and seriously hampers their growth in transition economies.

The nonlinear relationship between entrepreneurial orientation and sales growth: The moderating effects of slack resources and absorptive capacity

The present study aims to advance the understanding of the complex and context-dependent relationship between entrepreneurial orientation (EO) and firm sales growth by investigating the linearity assumption and assessing the moderating role of financial slack resources and absorptive capacity in the mature industry context. Departing from some recent EO studies, the analysis based on a dataset of 86 companies operating in the food manufacturing industry suggests that EO has a nonlinear relationship with sales growth. Moreover, the results suggest that in companies with high levels of slack resources, an increase in EO from low to moderate levels accelerates sales growth; however, to capitalize on the sales growth potential of high EO, a high absorptive capacity is also required. Thus, the present study demonstrates a nonlinear effect of EO on sales growth, and particularly from moderate to high levels of EO, the positive moderating effects of absorptive capacity and slack resources.

Corporate debt, firm size and financial fragility in emerging markets

The post-Global Financial Crisis period shows a surge in corporate leverage in emerging markets and a number of countries with deteriorated corporate financial fragility indicators (Altman's Z-score). Firm size plays a critical role in the relationship between leverage, firm fragility and exchange rate movements in emerging markets. While the relationship between firm-leverage and distress scores varies over time, the relationship between firm size and corporate vulnerability is relatively time-invariant. All else equal, large firms in emerging markets are more financially vulnerable and also systemically important. Consistent with the granular origins of aggregate fluctuations in Gabaix (2011), idiosyncratic shocks to the sales growth of large firms are positively and significantly correlated with GDP growth in our emerging markets sample. Relatedly, the negative impact of exchange rate shocks has a more acute impact on the sales growth of the more highly levered large firms.

Corporate debt, firm size and financial fragility in emerging markets

The post-Global Financial Crisis period shows a surge in corporate leverage in emerging markets and a number of countries with deteriorated corporate financial fragility indicators (Altman’s Z-score). Firm size plays a critical role in the relationship between leverage, firm fragility and exchange rate movements in emerging markets. While the relationship between firm-leverage and distress scores varies over time, the relationship between firm size and corporate vulnerability is relatively time-invariant. All else equal, large firms in emerging markets are more financially vulnerable and also systemically important. Consistent with the granular origins of aggregate fluctuations in Gabaix (2011), idiosyncratic shocks to the sales growth of large firms are positively and significantly correlated with GDP growth in our emerging markets sample. Relatedly, the negative impact of exchange rate shocks has a more acute impact on the sales growth of the more highly levered large firms.

Orienting toward sales growth? Decomposing the variance attributed to three fundamental organizational strategic orientations

While firm strategic orientations have received considerable attention, most research has focused on singular orientations without considering their complementarity for firm's outcomes. In this study, we decompose the unique and complementary variance of several strategic orientations – market (MO), entrepreneurial (EO), and learning orientation (LO) – on firm sales growth. Our investigation of the individual unique effects of these orientations reveals that, within our cross-national random sample of 221 firms from Finland and Russia, sales growth is principally driven by EO. Second, our results show, that the complementary or shared effects of EO, MO, and LO explain a significant portion of the variance in sales growth. Building upon past research, we offer evidence that a higher-order construct- proactive learning culture- is supported at the intersection of these fundamental strategic orientations with important implications for future scholarship examining multiple strategic orientations.

Do profitable start-up firms grow faster? Evidence from Colombia

This study explores the impact of profitability on the growth of start-up firms. Using data on start-up firms in Colombia, we examine the relationship between firm growth and profitability. We provide evidence that start-up firms with higher profitability increase their total assets. However, we find little evidence that profitability positively affects sales growth for start-up firms. In contrast, the results provide support for the notion that profitability is derived from sales growth. Furthermore, we find that firm growth depends heavily on firm age during the start-up stage.

Growth and job creation at the firm level: Swedish SME data

Purpose The purpose of this study is to investigate the association between firm sales growth and employment level as a proxy for job creation among small and medium-sized enterprises (SMEs). Design/methodology/approach The hypotheses were empirically examined by performing several univariate and multivariate regressions to investigate a large panel data set of 13,548 Swedish SMEs in four industry sectors in the four-year period from 2009 to 2012. Findings The results indicate that growth, in terms of sales, as a competitive advantage is positively related to the number of employees hired by the sampled firms. In addition, the size and age variables are also positively associated with the number of employees hired. The results support the suitability of implementing the resource-based view to explain job creation by SMEs. Originality/value While previous studies have mostly ignored the impact of these firm-level variables on job creation, the current study highlights the effect of firm-specific characteristics such as sales growth, size, age and industry. The authors use a combination of models to analyse a large cross-sectoral data set regarding the association, in SMEs, between the firms’ sales growth and job creation.

Determinants of Trade Credit Extended by Manufacturing Firms Listed in Pakistan

This paper investigates the determinants of trade credit extended by listed manufacturing firms in Pakistan. Dynamic panel model is estimated by applying system GMM one step and two step estimators on the financial data of 327 manufacturing firms listed in PSX Pakistan for the period 2005 to 2015. Results of the study reveal that trade credit policies of firms are dynamic instead of static. Firms have the target level for trade credit extended and make partial adjustment over time to reach at its optimal level. However, the speed of making adjustments is relatively low due to high cost of making adjustments. Positive and significant relationship of trade credit extended with credit received from suppliers and banks indicates that listed manufacturing firms are following the credit redistribution hypothesis. Further, it is also observed that sales growth and market power of firms have significant and negative effect whereas inventory and relative liquidity position have significant and positive effect on the trade credit extended by listed manufacturing firms. Overall findings of the study suggest that managers should consider changes in the financial characteristics of their firms while making partial adjustments in the trade credit policy. For future research, investigation of the effects of customers' characteristics and financial development on the trade credit extended by listed manufacturing firms is proposed.

The innovation activities of small and medium-sized enterprises and their growth: quantile regression analysis and structural equation modeling

Using an augmented version of Gibrat’s law, we theorized the relationship between the innovation activities of small and medium-sized enterprises (SMEs) and their growth in sales, firm value, and research and development (R&D) investment in the following years. Based on 17 years of data from 598 SMEs in South Korea, this study examined the mediating role of sales growth and firm value growth in the relationship between innovation activities and R&D investment growth in a longitudinal setting. The study findings suggested that the innovation activities of SMEs at Time 1 influenced the sales growth of high-growth firms and high-tech sectors at Time 2 more positively than that of low-growth firms and low-tech sectors, and that SMEs consequently invested more in R&D at Time 3. However, the innovation activities of SMEs at Time 1 did not significantly affect their firm value growth at Time 2. Theoretical and managerial implications are discussed for scholars, managers, and policy makers.

Use of the Internet and its Impact on Productivity and Sales Growth in Female-Owned Firms: Evidence from India

The Internet has completely transformed our lives on an individual basis in many ways, ranging from the way we communicate through the way we socialize to the way we shop and travel. Businesses are no exception to this premise. This paper studies the adoption of the Internet by female-owned firms in India. It uses the World Bank’s Enterprise Surveys Program data set for the year 2014 to study the adoption of the Internet by more than 10,000 firms in the country. After controlling for a large number of firm-level characteristics, empirical results obtained indicate that female-owned firms are more likely to use the Internet than their male counterparts. However, further empirical analysis shows that more intensive adoption of the Internet by these female-owned firms does not necessarily translate into better performance. Specifically, the adoption of the Internet does not make female-owned firms more or less likely to have better productivity and sales growth in contrast to that of their male counterparts.

The effect of asymmetric information on product market outcomes

We explore how asymmetric information in financial markets affects outcomes in product markets. Difference-in-difference tests around brokerage house merger/closure events (which increase asymmetric information through reductions in analyst coverage) indicate worse industry-adjusted sales growth for shocked firms than for their peers. Our results are consistent with Bolton and Scharfstein's (1990) tradeoff between investor agency concerns and predation risk. Further support is found in stronger treatment effects among firms with ex ante greater agency concerns, financing constraints, asymmetric information, and those operating in ex ante more competitive (fluid) product market spaces. Our results are concentrated in industries where we can clearly identify either net firm entry or exit.

Shock Propagations in Granular Networks

This paper studies a number of features of transaction networks, firm sales growth, and buyer-supplier comovements of sales using a large-scale dataset on the Japanese interfirm transaction network. Larger firms have higher sales growth rates and smaller growth dispersion. Well-connected firms also exhibit higher growth rates, but there is no systematic relationship between the number of partners (degree) and sales growth dispersion. Using a statistical test for spatial interdependence, it is confirmed that there exists a significant network interdependence of sales growth. By employing spatial autoregressive models, various propagation factors are estimated. In the baseline specification, the elasticity of average sales growth of suppliers is estimated to be 0.153 while that of customers is 0.257 for year 2012. In all years, the upstream propagation factor is larger than the downstream factor implying a difficulty of replacing an existing customer or adjusting to a demand shock. The manufacturing sector is characterized by a large degree of propagation. For both downstream and upstream propagations, manufacturing and wholesale sectors exhibit higher propagations factors while retail and service sectors exhibit lower propagation factors. The interdependence of intermediate physical inputs produced by other firms may generate an additional margin for the buyer-supplier comovements. It was also found that larger firms have higher propagation factors. Larger firms have more partners, and their degree of propagation is also higher. This result stresses an even larger impact of big firms for aggregate fluctuations in a granular production network.

Using web mining to explore Triple Helix influences on growth in small and mid-size firms

While broad “Triple Helix” frameworks of industry, government and university collaborations have the potential to enhance innovation and economic development at macro-levels, at the micro-level of the firm it should not be assumed that such relationships are uniform in character or outcomes. Each firm will negotiate and develop its own set of relationships with other innovation system actors based on its capabilities and strategies. To better understand these dynamics, particularly from the perspective of small and medium-sized enterprises, this study probes the micro-level characteristics and impacts of external enterprise relationships. Novel website-based Triple Helix measures are introduced that extend the analytical scope beyond customary indicators (such as patent analysis or entropy measures) to include communication and coordination among all three helices at the micro-level of individual firms. This approach is used to explore the micro-level characteristics and impacts of industry, government and university relations for small and medium-sized enterprises by analyzing a subset of 271 U.S. green goods small and medium-sized manufacturing enterprises. We compare the website-based measures with case study results to authenticate the method. A panel data regression model is then employed to analyze the simultaneous impacts of various combinations of industry, government and university links on firm sales growth (2008–2011), with controls for region, scale, and application domains. The ability of website-based indicators to distinguish the impacts of different mixes of Triple Helix relations is demonstrated. While relationships with all three helices have a positive total marginal effect on firm sales growth, local relationships and relationships that emphasize links with government and industry make particularly notable contributions to growth in the sample green goods enterprises. The implications of these findings are discussed.

R&D Cyclicality and Credit Constraints: Comparative Micro-Evidence from New EU Member States

The opportunity cost approach suggesting a countervailing cyclical effect between RD and Community Innovation Survey (CIS) conducted by national statistical offices. The first one (BEEPs) is superior in measuring firm finances and credit constraints, and the second one (CIS) might be favoured for measuring firm innovation activities and factors hampering innovation. Both datasets are cross-sectional by construction but contain modest dynamics in demand – real growth in firms’ sales over recent three years. Our results on two independently conducted surveys (BEEPs and CIS4) show surprisingly similar negative effect of credit constraints and a resembling positive effect of subsidies upon firm R&D activity in new EU member states. Also the direct effect of real sales growth serving as a demand proxy returns highly comparable positive effect in both surveys, though the estimate remains insignificant in considerably smaller BEEPs sample. Disentangling the direct effects from R&D equation and indirect effects from credit constraints equation provides deeper insight. This approach implies that foreign ownership promotes R&D due to relieved credit constraints, whilst reducing the incentives to conduct R&D per se. Finally, the real sales growth is no straightforward measure for tackling the R&D cyclicality puzzle. Firm sales growth not only captures the demand, but also strengthens firm financial standing via improved liquidity and reduces credit constraints. Whilst the last effect is more obvious and has expected positive impact upon R&D, the direct effect – interaction between R&D incentives and demand fluctuations – is still open for debate.

The Impact of Price-Based and New Product Promotions on Fast Food Restaurant Sales and Stock Prices

ABSTRACTA key tool used in demand or revenue management marketing strategies is the application of pricing tactics based on anticipated demand to enhance both customer utility and maximize firm performance (Wirtz et al., 2003). In the restaurant segment, particularly in quick-service restaurants (QSR), organizations focus on two main promotion formats to attract customers: price-based promotions and new product promotions. The purpose of this article is to explore how the number of price-based promotions and new product promotions influence firm sales growth or decline and change in stock prices. Results suggest that new product promotions can have a significant and positive effect on same store sales, whereas price-based promotions tend to results in lower same-store sales changes and changes in stock price. As an additional control for these results, the study controls for economic and seasonal conditions effects.

Prize or Price? Corporate Social Responsibility Commitment and Sales Performance in the Chinese Private Sector

ABSTRACTStudies on the relationship between corporate social responsibilities (CSR) and firm performance have mostly looked at large public firms in developed countries. In this study, we analyze this relationship using a sample of privately owned firms in China, a developing economy context. We hypothesize a negative relationship between commitment to CSR and average sales growth for privately-owned firms operating in weak institutional environments. Further, we hypothesize that smaller firms will show a stronger negative relationship than larger firms. CEO survey data from a sample of 630 Chinese private firms confirm the moderating role of firm size. However, the results are not entirely as expected. The negative relationship is observed in small firms (100 or fewer employees), but the relationship is positive for large firms (greater than 1000 employees), consistent with the literature. We discuss implications for public policy and future research.

The Impact of Cross-Channel Integration on Retailers’ Sales Growth

The authors propose a conceptual framework to explain whether and under what firm-level conditions cross-channel integration impacts firm sales growth. To test the theory, the authors conduct a qualitative grounded-theory study to build a measurement tool for cross-channel integration at four levels and analyze longitudinal data on 71 publicly traded U.S. retail firms from 2008 to 2011, gathered from multiple secondary sources. The findings reveal that cross-channel integration stimulates sales growth, but that firm online experience and physical-store presence weaken this effect.

Vertical Coopetition and the Sales Growth of Young and Small Firms

Vertical coopetition describes a situation where a firm has a vertical exchange relationship with a direct competitor. Drawing on resource‐based perspectives and resource dependence theory, we examine specific characteristics of vertical coopetition that affect the sales growth of young and small firms. We propose that the size of the competitor and mutual dependence as well as overdependence among the cooperating rivals affect the growth potential of young and small firms differently. Our research makes a contribution to the literature by disentangling some of the benefits and threats related to vertical coopetition for young and small firms.