Technological capabilities and rent eroding battles: Scandinavia centric evidence on firm profitability

Muhammad Azeem Qureshi (1) , Tanveer Ahsan (2) , Saqib Aziz (2) , Muhammad Yousaf (3)

1 OsloMet - Oslo Metropolitan University
2 ESC [Rennes] - ESC Rennes School of Business
3 UET - University of Engineering & Technology Lahore

This paper furthers our understanding towards determinants of firm profitability using the data of listed firms from Scandinavia over the period from 2002 to 2015. Applying robust generalised method of moments (GMM) and ANCOVA techniques, we show that firm size, capital intensity, leverage, and growth are the major drivers of firm profitability in Scandinavia. A predominantly positive effect of size over profitability is in line with the broader prior evidence while a simultaneous negative capital intensity-profitability relationship is in contrast with the evidence from rest of the Europe. This contrasting effect may potentially be explained as an outcome of a suboptimal deployment of technological investments and/or rent-eroding battle among the incumbent firms operating in Scandinavia. Our results are robust to reverse causality and alternate proxies of capital intensity.

Mots clés: profitability; capital intensity; firm size; Scandinavia; panel data analysis

Domaines: Sciences de l'Homme et Société; Economies et finances; Sciences de l'Homme et Société; Gestion et management

Muhammad Azeem Qureshi, Tanveer Ahsan, Saqib Aziz, Muhammad Yousaf. Technological capabilities and rent eroding battles: Scandinavia centric evidence on firm profitability. International Journal of Economics and Business Research, 2020, 19 (2), pp.130. ⟨10.1504/IJEBR.2020.104756⟩. ⟨hal-02489815⟩