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The Nonlinear Relationship Between Firm Size and Growth in the Automotive Industry

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Abstract

The automotive industry dominates the economy of the west part of Romania, making necessary the identification of firm growth drivers. Accordingly, the purpose of this paper is to analyse the nonlinear impact of firm size in influencing firm growth. To do so, we use a panel quantile regression with fixed effects for a set of 19 automotive companies over the period 2007–2015, while controlling for the role of research and development activities and firm’s financial performances. We show that firm size positively sustains firm growth at all quantiles, whereas this relationship is stronger for companies that grow less fast. Our findings are robust to the computation of firm growth and size based on different indicators and are not influenced by the agglomeration effect.

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Notes

  1. The limitation of this approach resides, however, in the absence of limiting distribution for the coefficients’ estimator (see Besstremyannaya and Golovan 2019).

  2. Most of these companies are held by German owners. The German culture is very present in the historical Banat region (including the Timis county) in Romania. Therefore, in addition to traditional factors sustaining the foreign investment in the automotive industry, the cultural proximity can also explain the interest of German companies in the region (for a discussion about firm investment and cultural proximity, please refer to Cieślik 2020).

  3. The statistics presented in this section are based on data extracted from the Amadeus database (Bureau Van Dijk).

  4. The methodology is drawn from Stancu et al. (2021).

  5. The dummy variable for the CEO nationality is not significant. Therefore, we have excluded this variable from the main analysis, although it does not significantly influence our results. Table 7 (Appendix) presents the results with the dummy variable included.

  6. The assets of “Johnson Controls Jimbolia” were bought in 2017 by “Adient”, whereas starting with the same year, “Johnson Controls Jimbolia” is recorded as company in the Bucharest area.

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Funding

This work was supported by a grant of the Romanian National Authority for Scientific Research and Innovation, CNCS–UEFISCDI, project number PN-III-P1-1.1-TE-2019–0436.

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Authors and Affiliations

  1. Research Centre in Engineering and Management, Management Department, Politehnica University of Timisoara, 2, P-ta. Victoriei, 300006, Timisoara, Romania

    Claudiu Tiberiu Albulescu, Matei Tămășilă & Ilie Mihai Tăucean

  2. CRIEF, University of Poitiers, 2, Rue Jean Carbonnier, Bât. A1 (BP 623), 86022, Poitiers, France

    Claudiu Tiberiu Albulescu

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  1. Claudiu Tiberiu Albulescu
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  2. Matei Tămășilă
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  3. Ilie Mihai Tăucean
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Correspondence to Claudiu Tiberiu Albulescu.

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Appendix

Appendix

Table 7 Quantile regression results—dummy GEO nationality
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Albulescu, C.T., Tămășilă, M. & Tăucean, I.M. The Nonlinear Relationship Between Firm Size and Growth in the Automotive Industry. J Ind Compet Trade 21, 445–463 (2021). https://doi.org/10.1007/s10842-021-00364-6

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  • DOI: https://doi.org/10.1007/s10842-021-00364-6

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