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Market, organizational and managerial correlates of economic performance in the U.K. Electrical Engineering Industry
Author(s) -
Grinyer Peter H.,
McKiernan Peter,
YasaiArdekani Masoud
Publication year - 1988
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.4250090402
Subject(s) - profitability index , diversification (marketing strategy) , business , industrial organization , decentralization , market share , operating margin , profit (economics) , management styles , marketing , economics , return on assets , finance , microeconomics , management , market economy
Hypotheses relating to market, organizational and managerial determinants of profitability and growth are developed and tested using data collected by structured interviews in 45 randomly selected companies in the electrical engineering industry. Multiple regression analysis suggests that market share and barriers to entry are the principal determinants of profit margins, but that tightness of control of working capital and aggressive management style also have an important influence. Centralization of decision‐taking among smaller companies, too, was associated with greater profitability, whilst more extensive budgetary control and planning of acquisitions or diversification were both negatively correlated with the latter. Profitability was the single most important predictor of the rate of company growth of sales but constraints from organized labor, from sources of finance, and conservative management styles, the rate of product change, R&D intensity, and decentralization all entered significantly.