SECTORAL AND FIRM-LEVEL DETERMINANTS OF PROFITABILITY: A MULTILEVEL APPROACH

Authors

  • Ivana Blažková Department of Regional and Business Economics, Mendel University in Brno, Brno, Czech Republic
  • Ondřej Dvouletý Department of Entrepreneurship University of Economics, Prague, Czech Republic

DOI:

https://doi.org/10.37335/ijek.v6i2.76

Keywords:

firm profitability; return on assets (ROA); industry and firm effects; multilevel analysis; Czech food and drink industry.

Abstract

The paper aimed to contribute to the literature on the determinants of firm profitability, from the perspective of the Czech economy. We followed a multilevel/hierarchical approach towards the analysis of the sectoral and firm-level determinants of the profitability of companies operating in the Czech food processing industry during years 2005-2012 (622 Firms in 10 Sectors). We assessed an impact of industry (i.e. market concentration, sector growth rate and growth rate of imports) and firm-level characteristics (i.e. market share, firm age, firm size, number of employees, debt/equity ratio and short-term risk) on the return on assets (ROA). Surprisingly, there were no substantial differences between the separate models for industry and firm-level determinants and a combined one. We found a positive impact of market concentration and market share and a negative effect of age and risk-taking behaviour on a firm profitability. Based on these findings, managers in the Czech food and drink industry should pay more attention to the debt policy.

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Published

2018-12-31

How to Cite

Blažková, I. ., & Dvouletý, O. . (2018). SECTORAL AND FIRM-LEVEL DETERMINANTS OF PROFITABILITY: A MULTILEVEL APPROACH. International Journal of Entrepreneurial Knowledge, 6(2). https://doi.org/10.37335/ijek.v6i2.76

Issue

Vol. 6 No. 2 (2018): International Journal of Entrepreneurial Knowledge

Section

Research

License

Copyright (c) 2018 International Journal of Entrepreneurial Knowledge

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International Journal of Entrepreneurial Knowledge (ISSN 2336-2960) is published by the Center for International Scientific Research of VŠO and VŠPP in cooperation with the following partners:

  • University College of Business in Prague, Czech Republic
  • University of Entrepreneurship and Law, Prague, Czech Republic
  • School of Business and Administration of the Polytechnic Institute of Setúbal, Portugal
  • Faculty of Operation and Economics of Transport and Communications, University of Zilina, Slovakia
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