Revisiting the firm, industry, and country effects on profitability under recessionary and expansion periods: A multilevel analysis

Abstract

Despite voluminous research over the past several decades, we have yet to clearly establish the relevance of firm, industry and country effects in accounting for variations in firm profitability, particularly in adverse contexts. Based on a synthesis of the resource-based view, industrial organization economics and institutional theory, we consider the role of the 2008 global economic crisis and its impact on the firm, industry, country effects -performance relationship. Using a 3-Level random coefficient model, we examine 15,008 firms within 10 emerging and 10 developed countries, accounting for variations among countries of different economic development. We find that firm effects become stronger under adverse economic conditions; industry effects become weaker during recessions, as well as country main and interaction effects, particularly among the emerging markets.

How Supplier Economies of Scale Drive Supplier Selection Decisions

“…We define all other years as growth periods. This definition of recession or economic crisis years is consistent with years used by other studies (Bamiatzi, Bozos & Cavusgil, ; Blome & Schoenherr, ).…”

An Exploratory Study of Cooperative Survival: Strategic Adaptation to External Developments

“…The primary advantage of adopting the co-evolution view is the ability to integrate micro-and macro-level evolution within a single framework [33]. In the marketing and strategic management literature, simultaneous consideration of internal and external adaptation constitutes a combination of industrial organization and theory of the firm paradigms (e.g., [34]). Empirically, the paradigm of organizational co-evolution is most often manifested by the case study approach to inform qualitative observations [18].…”

Sectoral and Firm-Level Determinants of Profitability: A Multilevel Approach

“…Liu et al, 2010;Bernard, 2011;Shen et al, 2014;Soukup, 2006), but also in economics (e.g. Ozkaya et al, 2013;Hirsch et al, 2014;Macher & Mayo, 2015;Bamiatzi et al, 2016). This approach examines the relationships within and between the hierarchical levels of clustered data, making it more effective in detecting variations between variables at different levels better than other existing methods (Woltman et al, 2012).…”

“…The models were estimated in the software HLM7 -Hierarchical Linear and Nonlinear Modelling. For a detailed description of the logic, rationale and parameter estimation approaches behind hierarchical linear models see for example Bamiatzi et al (2016), Raudenbush & Bryk (2002) or Woltman et al (2012).…”

“…We acknowledge there is large body of knowledge on factors impacting business performance (e.g. Hirsch et al, 2014;Setiawan et al, 2012;Lin et al, 2014;Chaddad & Mondelli, 2013;Sauka, 2014;Daher & Le Saout, 2015;Bamiatzi et al, 2016;Burger et al, 2017;Adámek et al, 2017;Blažková & Dvouletý, 2018a, 2018b. However, at the same time, there are still under-researched regions, where the empirical evidence is still scarce.…”