Decomposing Firm Performance in Emerging Markets: The Difference Between Growth and Profit

Nan Zhou and Seung Ho Park

Management and Organization Review, 2024, vol. 20, issue 2, 316-335

Abstract: This study adopts the resource-based view (RBV) to explain the difference in firm profit and growth determinants. We argue that profit is driven more by valuable, rare, inimitable, and non-substitutable (VRIN) resources, and growth is driven more by versatile resources. Since some versatile resources, such as cash, are less firm-specific, the firm effect is more critical in determining profit than growth. We also expect that emerging market firms are more capable of utilizing versatile resources than developed market firms, and developed market firms are more capable of utilizing VRIN resources than emerging market firms. As a result, the determinants of firm performance also differ between emerging and developed markets. The study employs multilevel mixed models to decompose firm performance in US, Chinese, and global samples. The findings confirm that the firm effect is more important in influencing profit than growth, persisting across all three samples. The firm effect is also more important in influencing performance in developed countries than in emerging markets.

Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.cambridge.org/core/product/identifier/ ... type/journal_article link to article abstract page (text/html)

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:cup:maorev:v:20:y:2024:i:2:p:316-335_7

Access Statistics for this article

More articles in Management and Organization Review from Cambridge University Press Cambridge University Press, UPH, Shaftesbury Road, Cambridge CB2 8BS UK.
Bibliographic data for series maintained by Kirk Stebbing ().