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Sources of variation in firm profitability and growth

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  • Goddard, John
  • Tavakoli, Manouche
  • Wilson, John O.S.

Abstract

This article reports an analysis of the sources of variation in profitability and growth for manufacturing firms located in eleven European countries. A variance decomposition analysis determines the importance of the country, industry, corporate group and firm effects on profitability and growth. The analysis reveals evidence of differences between industries in the comparative advantage offered by different countries, reflecting a tendency for specialization and geographic concentration. However, as in several previous studies, the firm-level effects are the most important class of effect in explaining the variation in performance.

Suggested Citation

  • Goddard, John & Tavakoli, Manouche & Wilson, John O.S., 2009. "Sources of variation in firm profitability and growth," Journal of Business Research, Elsevier, vol. 62(4), pages 495-508, April.
    • Handle: RePEc:eee:jbrese:v:62:y:2009:i:4:p:495-508
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