What Drives Profitability in the Romanian ICT Sector?

Lucian Belascu, Dan Gabriel Dumitrescu, Alexandra Smedoiu Popoviciu and Alexandra Horobet ()
Additional contact information
Lucian Belascu: “Lucian Blaga” University, Sibiu, Romania
Dan Gabriel Dumitrescu: Bucharest University of Economic Studies, Bucharest, Romania
Alexandra Smedoiu Popoviciu: Bucharest University of Economic Studies, Bucharest, Romania
Alexandra Horobet: Bucharest University of Economic Studies, Bucharest, Romania

The AMFITEATRU ECONOMIC journal, 2021, vol. 23, issue Special15, 899

Abstract: Identifying the major driving factors behind variations in profitability across firms is a question addressed by many researchers, at industry, economic sector, country level, or through regional and international comparisons. Empirical approaches have shown that profitability variation across firms and industries, is the norm, rather the exception. The paper investigates the factors underlying the profitability of Romanian companies in the ICT sector within the company-industry-localization framework, applying the variance components methodology and using aggregate profitability (ROA – Return on assets) as a measure of profitability. The ICT sector in Romania, one of the most dynamic in the last decade and the “winning sector” of the pandemic, operates with different levels of profitability depending on its two main components, Production and Services. At the same time, other disparities resulting from the characteristics of the business – size, personnel costs, productivity – are present. Our results show the high heterogeneity of profitability between firms in the ICT sector, but also the greater importance of the factors intrinsic to the firm compared to that of industry or location factors, which raises the question of whether this sector has incorporated into profitability the tax advantages it enjoys and how sustainable its performance will be once these advantages will diminish.

Keywords: Aggregate profitability (ROA); ICT sector; the firm-industry-localization triad; variance components methodology; Romania (search for similar items in EconPapers)
JEL-codes: L23 L25 L86 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.amfiteatrueconomic.ro/temp/Article_3047.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aes:amfeco:v:23:y:2021:i:special15:p:899

Access Statistics for this article

More articles in The AMFITEATRU ECONOMIC journal from Academy of Economic Studies - Bucharest, Romania Contact information at EDIRC.
Bibliographic data for series maintained by Valentin Dumitru ().