Manufacturing firm performance: Evidence from European, Scandinavian and Balkan Countries
Purpose: The study aims at analyzing the performance of manufacturing firms in European and Scandinavian countries in terms of financial measures and compares them with that of Greece and Balkan countries. The study also aims in examining the effect of firm productivity and other factors on export intensity.
Design/methodology/approach: The study investigates the financial performance of manufacturing firms in North and South European, Scandinavian and Balkan countries and compares them in terms of size, growth, profitability, productivity, leverage, liquidity and capital intensity. A Multivariate Analysis of Variance and a T- test of means are used to check for differences and to compare their performance with the performance of the core European countries. Furthermore, through econometric modeling, the effect of firm level productivity on country export intensity is investigated, controlled for FDI, R&D, labor productivity and cost of financing. The period of the study is 2008-2012, covering the post economic crisis effects. A total of 1159 firms from seventeen (17) countries are included in the sample. Data were taken from the Datastream data base.
Findings: The findings suggest that there exist statistically significant differences in size and performance, among the countries, with North European and Scandinavian firms exhibiting the best performance. Greek firms fall behind and show similarities to the Balkan countries. Also, a positive correlation is found between firm productivity and export intensity.
Originality/Value: To the best of our knowledge this is the first comparative study that investigates firm performance and characteristics of manufacturing firms in European, Balkan and Scandinavian countries, based on firm level financial data and the effect of firm level productivity on exports, controlled for other micro and macro variables.
Implications: The findings have implications for academia, practitioners, managers and policy makers of developing countries, such as Greece and the Balkans. The State and firm managers can get valuable insight on manufacturing firm performance detect the factors that need improvement. Findings provide information to global investors by comparing the financial characteristics of firms in different countries. Availability of low cost financing, R&D, innovation, foreign ownership and labor productivity, which are shown to have a strong impact on export intensity, should be supported by policy makers. The development of technological and R&D cooperation among European manufacturing firms is also suggested.