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The relationship between efficiency and profitability with respect to the size of firms: An empirical investigation for Austria

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Abstract

In this paper, an attempt is made to investigate the performance of Upper-Austrian firms by size class. Considering the six derived hypotheses, why small firms have a better performance measure, some of the hypothesis with respect to profitability and labour cost efficiency are confirmed. On average, the gross residual quota (profitability measure) of small firms is higher than the one of medium-sized and large firms. However, a similar result could not be found for the productivity development. Considering the influence of the firm size on the productivity measure, there is in three out of four cases no statistically significant influence at all and in one case the opposite result is obtained indicating the larger the firm, the higher is the productivity. In the case of labour cost efficiency, the hypothesis (the smaller the firm the lower the labour cost per employee) is clearly confirmed.

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Authors and Affiliations

  1. Johannes Kepler University, Linz, Austria

    Friedrich Schneider

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  1. Friedrich Schneider
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Schneider, F. The relationship between efficiency and profitability with respect to the size of firms: An empirical investigation for Austria. Empirica 20, 245–264 (1993). https://doi.org/10.1007/BF01384256

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