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Macroeconomic and microeconomic determinants of the profitability of Indian manufacturing firms

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  • Sumit Kumar Maji
  • Arindam Laha
  • Debasish Sur

Abstract

The present paper seeks to identify the major microeconomic and macroeconomic determinants of profitability of the firms in different sectors of Indian manufacturing industry. This study is based on 515 companies which were selected following stratified random sampling procedure from the ten sub-groups of Indian manufacturing industry chosen by adopting purposive sampling procedure. The data for the period 1999-2000 to 2013-2014 used in this study were taken from various secondary sources. The study revealed that leverage, intellectual capital, sales growth, age, openness and size of the firm amongst the major microeconomic factors and economic growth, inflation and exchange rate amongst the principal macroeconomic variables played significant role in determining profitability of the Indian manufacturing firms during the period under study. Another notable outcome of the study was that the industry sub-sector wise differences in delineating the contribution of specific factors in explaining firm level profitability were noticed.

Suggested Citation

  • Sumit Kumar Maji & Arindam Laha & Debasish Sur, 2024. "Macroeconomic and microeconomic determinants of the profitability of Indian manufacturing firms," International Journal of Business and Globalisation, Inderscience Enterprises Ltd, vol. 37(2), pages 167-195.
  • Handle: RePEc:ids:ijbglo:v:37:y:2024:i:2:p:167-195
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