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

Author

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  • Muhammad Azeem Qureshi
  • Tanveer Ahsan
  • Saqib Aziz
  • Muhammad Yousaf

Abstract

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.

Suggested Citation

  • Muhammad Azeem Qureshi & Tanveer Ahsan & Saqib Aziz & Muhammad Yousaf, 2020. "Technological capabilities and rent eroding battles: Scandinavia centric evidence on firm profitability," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 19(2), pages 130-151.
    • Handle: RePEc:ids:ijecbr:v:19:y:2020:i:2:p:130-151
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    Cited by:

    1. Muhammad Azeem Qureshi & Sina Kirkerud & Kim Theresa & Tanveer Ahsan, 2020. "The impact of sustainability (environmental, social, and governance) disclosure and board diversity on firm value: The moderating role of industry sensitivity," Business Strategy and the Environment, Wiley Blackwell, vol. 29(3), pages 1199-1214, March.
    2. Muhammad Azeem Qureshi & Fred H. Strønen & Marius Tyseng & Marius Urdal, 2020. "Sustainable Business in Norway: The Firm or the Industry Effect?," Sustainability, MDPI, vol. 12(8), pages 1-13, April.

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