Size And Firm Performance In Extractive Industries: Lessons For Entrepreneurs

Despite the attempts of an impressive number of theories to identify and clarify the determinants of business performance and of the many studies that considered various variables that may impact performance, the issue of corporate performance remains a boundless topic that draws attention of practitioners and researchers. Entering this debate, our paper investigates the impact of firm size on the performance of EU extractive firms by examining a sample of 66 EU headquartered firms from the mining and quarrying industry, a valuable industry to industrial, social, and technological progress. Using three size-based samples of EU mining and quarrying companies (small, medium and large companies), our research has two main objectives: to determine possible differences in the general performance of EU mining and quarrying companies depending on their size and to analyze probable dissimilarities in the relationship between firm size and performance between EU mining and quarrying companies. In order to evaluate the performance of EU mining and quarrying companies, we use two aggregate performance ratios: Return on assets (ROA) and Return on equity (ROE). Besides these two measures of performance we delve into the differences in performance between firms of different size using other relevant indicators. This study uses data collected for the period between 2010 and 2016 from the Orbis Bureau van Dijk database. As far as we are aware, this is one of the first studies to tackle differences in the performance of mining and quarrying firms with different countries-of-origin in the EU from the point of view of size and corporate performance. Our results show that firm size represents a significant factor explaining the differences in performance among firms in the extractive industry in the EU.