Are Small Firms More Profitable than Large Firms?

2012 ◽  
Author(s):  
Amélie Lafrance
Keyword(s):  
Small Firms ◽  
Large Firms

The Strategic Behavior of Firms with Debt

2016 ◽  
Vol 51 (5) ◽  
pp. 1611-1636 ◽  
Author(s):  
Jérôme Reboul ◽  
Anna Toldrà-Simats
Keyword(s):  
Small Firms ◽  
Strategic Behavior ◽  
Financing Constraints ◽  
Large Firms ◽  
Market Shares ◽  
Probability Of Bankruptcy ◽  
The Difference

We empirically study the strategic behavior of levered firms in competitive and noncompetitive environments. We find that regulation induces firms to increase leverage, and this reduces their ability to compete when deregulation occurs. Large and small levered firms adopt different strategies upon deregulation. Whereas more levered small firms charge higher prices to increase margins at the expense of market shares, highly levered large firms prey on their rivals by increasing output and reducing prices to increase their market shares. The difference in their behavior is due to differences in their probability of bankruptcy and their financing constraints.

scholarly journals Innovation in the Textiles Sector: A Firm-Level Analysis of Technological and Nontechnological Innovation

2016 ◽  
Vol 21 (Special Edition) ◽  
pp. 129-166 ◽  
Author(s):  
Waqar Wadho ◽  
Azam Chaudhry
Keyword(s):  
Small Firms ◽  
Innovation Process ◽  
Foreign Market ◽  
Knowledge Flows ◽  
Innovation Activity ◽  
Local Market ◽  
Large Firms ◽  
Firm Level ◽  
Innovation Activities ◽  
Innovation Rate

In a knowledge-based economy, it has become increasingly important to better understand critical aspects of the innovation process such as innovation activities beyond R&D, the interaction among different actors in the market and the relevant knowledge flows. Using a sample of 431 textiles and apparel manufacturers, this paper explores the dynamics of firms’ innovation activities by analyzing their innovation behavior, the extent and types of innovation, the resources devoted to innovation, sources of knowledge spillovers, the factors hampering technological innovation and the returns to innovation for three years, 2013–15. Our results show that 56 percent of the surveyed firms introduced technological and/or nontechnological innovations, while 38 percent introduced new products, these innovations were generally incremental as the majority of innovations were new only to the firm. Furthermore, the innovation rate increases with firm size; large firms have an innovation rate of 83 percent, followed by medium firms (68 percent) and small firms (39 percent). Technologically innovative firms spent, on average, 10 percent of their turnover on innovation expenditure in 2015. Acquisition of machinery and equipment is the main innovation activity, accounting for 56 percent of innovation expenditures. Large firms consider foreign market sources (clients and suppliers) and small firms consider local market sources their key source of information and cooperation. 63 percent of technological innovators cite improving the quality of goods as their most important objective. Lack of available funds within the enterprise is the single most important cost factor hampering innovation, followed by the high cost of innovation. Our results show that 67 percent of the turnover among product innovators in 2015 resulted from product innovations that were either new to the market or new to the firm.

scholarly journals DOES SIZE MATTER?: Technical Efficiency and Industry Size in Indonesia

2013 ◽  
Vol 4 (3) ◽  
pp. 297
Author(s):  
Richard V. Richard V. Llewelyn ◽  
Wang Sutrisno
Keyword(s):  
Technical Efficiency ◽  
Small Firms ◽  
Nonparametric Analysis ◽  
Large Firms ◽  
Small Companies ◽  
Output Data ◽  
Small Business Development ◽  
Manufacturing Sectors ◽  
Programming Techniques ◽  
Size Matter

The debate over which size industry is best suited for Indonesiacontinues with proponents of both large and small sizes pointing out the benefits of each. However, little empirical analysis has been done regarding economic matters such as technical efficiency. Nonparametric analysis of technical efficiency for three sizes of firms in seven manufacturing sectors is estimated using linear programming techniques. Aggregated input and output data from BPS from 1991 to 1997 are used.Household size firms are found to be most efficient relative to the other sizes for five of the seven sectors analyzed. Large firms are relatively more efficient in ‘Food, Beverage, and Tobacco’ sector. Small companies are relatively less efficient than household firms in all but one case, but relatively more efficient than large firms in five of seven sectors. The results validate and perhaps explain the duel economy in Indonesia with both large and small firms existing in the same industry.When each sector is analyzed for each firm size, the ‘Non-MetallicMineral Products Other Than Petroleum and Coal’ sector is most efficient for all sizes of firms. The least efficient sector is the ‘Chemical and Plastics’ industry.The results suggest that government policy should be focused oncreating a stable environment for business, which promotes growth of efficient businesses, either large or small. Specific policies and intervention for small business development are not necessary, given the relative efficiency of small firms in Indonesia.

scholarly journals Strategy-making process and firm performance in small firms

2006 ◽  
Vol 12 (3) ◽  
pp. 209-222 ◽  
Author(s):  
Martie-Louise Verreynne
Keyword(s):  
Firm Performance ◽  
Empirical Study ◽  
Structural Equation ◽  
Small Firms ◽  
Large Firms ◽  
Structural Equation Analysis ◽  
Equation Analysis ◽  
Strategy Making

ABSTRACTThis paper argues that individual small firms just like large firms, place differing emphasis on strategy-making and may employ different modes of strategy-making. It offers a typology of the different modes of strategy-making that seem most likely to exist in small firms, and hypothesises how this typology relates to performance. It then describes the results of an empirical study of the strategy-making processes of small firms. The structural equation analysis of the data from 477 small firms with less than 100 employees indicates among other results that the simplistic, adaptive, intrapreneurial and participative modes of strategy-making exist in these small firms. Of these modes, the simplistic mode exhibits the strongest relationship with firm performance.

scholarly journals Attitude and Motives Towards Corporate Social Responsibility in the Kingdom of Saudi Arabia

2018 ◽  
Vol 10 (11) ◽  
pp. 63
Author(s):  
Rawan Al Mohanna ◽  
Lama Al-Kayed
Keyword(s):  
Saudi Arabia ◽  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Small Firms ◽  
Large Firms ◽  
Kingdom Of Saudi Arabia ◽  
Research Questions ◽  
Corporate Social ◽  
Contemporary Approach

This paper explores the attitudes of large and small firms’ managers toward Corporate Social Responsibility (CSR) in the Kingdom of Saudi Arabia and the motivations behind the implementation of such an initiative. The research revealed a gap in the minute number of studies exploring CSR practices the kingdom’s SMEs. There was a further gap in the managers’ motives towards CSR within the same region. As a way of responding to the four proposed research questions, the researchers surveyed 52 SME and large firms. Ideally, the results showed that large firms pursue traditional CSR practices and record their activities unlike SMEs, which follow a contemporary approach to CSR, with little regard to recording their activities. In addition, large firms significantly perceive CSR as an obligation, while SMEs rely on their board of management’s beliefs. This paper provides an insight for the policymakers to adopt different approaches for large and small firms in their implementation of CSR practices in pursuance of satisfactory reports.

scholarly journals SIZE EFFECT AND STOCK BEHAVIOR DURING THE EXPANSION AND CONTRACTION PHASES OF ECONOMIC CYCLE: An Empirical Evidence from Indonesian Stock Market

2013 ◽  
Vol 4 (3) ◽  
pp. 361
Author(s):  
Marwan Asri
Keyword(s):  
Statistical Analysis ◽  
Stock Market ◽  
Size Effect ◽  
Empirical Evidence ◽  
Small Firms ◽  
Large Firms ◽  
Economic Cycle ◽  
Stock Behavior ◽  
Better Than

Banz (1981) and Reiganum (1981) claim that, in terms of returncreation, small firms tend to perform better than large firms. They implicitly claim that the phenomena (which is known as size effect) is stable and exists over the period of examination. This study intends to investigate the existence of size effect in Indonesian market and more specifically, to test whether stages of economic cycle (expansion and contraction stages) determine the existence of the effect. The results of the study show that size effect does exist in the market for the whole period of observation (1991-2001). However, when the period is divided into two parts according to the stage of economic cycle, the  statistical analysis results are not supportive to the conclusion about the size effect.

The World of Small Business: A Suggested Typology

1977 ◽  
Vol 1 (4) ◽  
pp. 13-19 ◽  
Author(s):  
Lee E. Preston
Keyword(s):  
Small Business ◽  
Small Firms ◽  
Industrial Area ◽  
Small Enterprises ◽  
Large Firms ◽  
Industrial Activities ◽  
The World ◽  
New Business ◽  
Post Industrial

Detailed study of a sample of more than 200 originally-small firms in a single major industrial area, plus an examination of new business successes as identified by Fortune, reveals five major types of small enterprises, only a minority of which can be described as successful “post-industrial” activities based on new areas of knowledge and new sources of demand. By far the overwhelming portion of the firms studied were found to be operating within traditional “small business industries”, in highly specialized activities with very small total demand, and in satellite roles to major industries or large firms.

How do micro-firms manage coopetition? A study of the wine sector in France

2017 ◽  
Vol 36 (3) ◽  
pp. 331-355 ◽  
Author(s):  
Julien Granata ◽  
Frank Lasch ◽  
Frédéric Le Roy ◽  
Léo-Paul Dana
Keyword(s):  
Firm Size ◽  
Small Firms ◽  
Simultaneous Occurrence ◽  
Large Firms ◽  
Individual Level ◽  
Competition And Cooperation ◽  
South Eastern ◽  
Collective Structure ◽  
Wine Sector

Research on coopetition – the simultaneous occurrence of competition and cooperation among firms – is usually limited to the realm of large firms. While some research has examined the motives and outcomes of coopetition among small- and medium-sized business, little is known about how coopetition is managed among micro-firms. The French wine sector is dominated by micro-firms, among which coopetition is common. Focusing on the Pic Saint Loup area in south-eastern France, this article analyses how micro-firms manage coopetition. While we observe similarities in coopetition with respect to large firms, a distinct micro-firm coopetition mode is identified: (a) contrary to expectations, the management of coopetition is highly formalised in micro-firms; (b) as with large firms, the management of micro-firm coopetition requires a separation between competition and cooperation, but such separation occurs outside the firm – in the form of a collective structure; and (c) in contrast to large firms, small firms exhibit an increase in individual-level dimensions of coopetition with decreasing firm size. We conclude that policy should encourage coopetition among micro-firms provided that it is tailored to micro-firm specificities.

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