Energy consumption, capital expenditures, R&D cost and company profitability: evidence from paper and allied industry

Abstract

This paper aims to empirically examine the relations between energy consumption, R&D costs and capital expenditures on the profitability of manufacturing companies in the paper and allied industry. The main focus in this article is on the companies, which are operating in the manufacture of pulp from wood and the paper production industry. Multiple regression analysis was used to test if the energy consumption, R&D costs and capital expenditures significantly predict EBITDA profitability. The results of the regression analysis indicated that all used predictors explained (R2) 35.7% of the company profitability variance (R2 = 0.357, F (3; 80) = 14.82, p-value < 0.01). The performed regression analysis also shows that energy consumption has a significant contribution to the profitability of the company. The results also indicate that only energy consumption explains 12.1% of the profitability variance (R2 = 0.121, F (1; 101) = 13.86, p-value = 0.01). The results of the regression analysis show that EBITDA profitability will increase by about 3.7 · 10–7% for each 1 000 GJ energy consumed.

Genetic algorithm modeling of European Union firms' competitive advantage

“…Results are in line with existing academic research affirmation that the purpose of investments is to create and exploit opportunities for positive economic rents and that investments allow firms to protect from rivals competitive actions, and reinforce the need for investment decision makers to consider the environment in which the firm is competing, in terms of degree of concentration and investment capacity of competitors, when defining the amount of investment that must be done to achieve and maintain a favorable competitive advantage position. These results are in line with the findings of Tsai and Wang (2004), Zuoza and Pilinkienė (2019), Kim et al. (2021), Peng et al.…”

“…and exploit opportunities for positive economic rents and that investments allow firms to protect from rivals competitive actions, and reinforce the need for investment decision makers to consider the environment in which the firm is competing, in terms of degree of concentration and investment capacity of competitors, when defining the amount of investment that must be done to achieve and maintain a favorable competitive advantage position. These results are in line with the findings of Tsai and Wang (2004), Zuoza and Pilinkien_ e (2019), Kim et al (2021), Peng et al (2021), andO'Leary et al (2022), who identified a positive effect of firms' investment on competitive advantage, and also with the findings of Miller et al (2005), Tubbs (2007), Rav selj and Aristovnik (2020), Machokoto et al (2021), who identified that the effects of firm's investment on competitive advantage are contingent on the degree of competition faced by firms, and with the findings of Dias et al (2022), who identified a positive effect of task environment on firm's competitive advantage.…”

“…The effects of firms' investments on competitive position have been approached by many authors with different results. Some of them concluded that firm growth by investment positively influences firm's competitive advantage (Kulatilaka and Perotti, 1998;del Sol and Ghemawat, 1999;Tsai and Wang, 2004); that firms investment have a positive effect on firms' performance, which is commonly used as a proxy to competitive advantage (Brailsford and Yeoh, 2004;Amir et al, 2007;Gupta and Banga, 2009;Fang Yang, 2014;Pandya, 2017;Zuoza and Pilinkien_ e, 2019;Kim et al, 2021); that the effects of R&D investments on competitive advantage are contingent on the degree of competition faced by firms (Miller et al, 2005;Tubbs, 2007;Rav selj and Aristovnik, 2020), and that firms adjust their investment in R&D and in Capex when facing financial constraints in times of crisis (Flammer and Ioannou, 2021).…”