The effect of enterprise size on the profitability of sales: Evidence from the manufacturing industry in the Czech Republic

Competition in the manufacturing industry is of great importance; in other words. Customers have a lot to choose from. Businesses must pay more attention to the sustainability of the environment because this is currently important in the ranking of values, especially for the young generation. Of course, this is not the only thing that affects business plants, as businesses must constantly cope with the consequences of the Covid-19 pandemic or the rising prices of input materials for production. Several strategic studies have already investigated the reasons for the survival and disappearance of some companies. One of the reasons for survival is how a business can adapt to environmental changes. In the case of a slow response to the changing environment, a company in a widely represented industry can lose its competitiveness. All this has an impact on the profitability of sales of business plants. Therefore, the company asks whether the size of the company affects the profitability of the company. The contribution deals with the company’s size and effect on sales profitability. The article will aim to compile a model of how much the size of the enterprise contributed to the profitability of sales in the years 2016-2020 for the manufacturing industry in the Czech Republic. The data is taken from the CRIBIS database of CRIF – Czech Credit Bureau from 2016 to 2020. Data from the manufacturing industry from active and, at the same time, profitable enterprises are selected for the paper. For the industry analysis, an empirical approach is used using an analysis of the industry structure, analysis of sales profitability and tracking the development of average profitability for the monitored period 2016-2020. It is essential to find out the structure of companies in the industry and the average profitability of sales in individual groups. The most significant representation is among small businesses with up to 25 employees, and here the average profitability for the monitored period shows the most significant fluctuations. Big enterprises with more than 500 employees are the most stable. The obtained data using correlation establishes that the size of enterprises, in terms of the number of employees, does not affect sales profitability.