strategic factors and firm performance in an emerging economy

ARTICLE TITLE PAGE:Strategic Factors and Firm Performance in an Emerging Economy

What is the main purpose of the paper. Explain the main idea of the paper?

The ma in pu rpo se of this paper is to indentify the strategic factors which influence

firm performance from Ghana (an emerging economy). Economies of emerging markets

(especially those in sub-Saharan Africa) have lagged behind their counterparts in the

developed countries (e.g. the USA, UK, & Europe). While, it is argued that the problem

is partly caused by low skill levels and lack of technological capabilities among firms

from emerging economies (Teal, 1999), it is also contended that firm level research,

which would facilitate efficient and effective resource mobilisation, allocation and

utilisation as well as encourage firm growth and socio-economic

transformation, is lacking among these economies (Granér & Isaksson, 2007; Sousa et

al.,2008).

What is the issue that makes the author conduct the study?

The issue is due to result of the lack of reliable data, systematic research that informs public

policy and practice from Ghana seems to be lacking. Although the World Bank’s survey

concerning Ghana’s manufacturing sub- sector has been available for some time now, yet little

is known as regards firm level research and so policy formulation has been affected

exceed ing ly .

What are the main variables explained by the author in the paper? Summarize

those variables.

Depended Variable - Firm Performance

The main variables is a organisational or firm performance whereby the author choose

accounting measures (e.g.the money value of Operating Profit, Return on Capital

Employed/ROE, and Return on Asset/ ROA) because widely used.

Independent Variables

1) Firm age – operationalised as the age of the firm since establishment;

2) Firm size – operationalised as number of employees, categorized as micro, small and

medium-sized firms, with the micro firms considered as the reference group;

3) Joint venture (Foreign ownership) – operationalised as a dummy variable where

foreign participation (JVs) = 1, otherwise wholly local = 0;

Zainorin bin AliUUM Matric No: 95191


4) Industry, consisting of eight different sectors (i.e. machinery, furniture, metal,

chemicals, bakery, wood, garments and textiles) – operationalised as a categorical

variable, using the garments sub-sector as a reference group;

5) Firm location, consisting of Accra (capital of Ghana), Kumasi (regional capital of

Ghana), Takoradi (regional capital of Ghana) and Cape Coast (regional capital of Ghana)

– operationalised as a categorical variable, using Accra as a reference group;

6) Productivity – log of productivity operationalised as output per employee.

How the authors conduct the study?

This study employs the World Bank data set relating to a panel of firms within the

Ghanaian manufacturing sector from 1991 – 2002. By pooling the data and setting OLS

regression, the results of the study indicate that joint venture (JVs) ownership predicts

significant performance compared with similar counterparts that are wholly indigenously

owned.

How many sample that he studied and what is the unit of analysis.

The World Bank’s data set was derived from the Ghanaian manufacturing sector over the

course of a 12-year period, 1991 – 2002. Six main rounds were employed to collect the

data. The composition of the sample is presented. The most highly represented firms

were medium-sized firms (67.2%) with workforces numbering between 30 and 99. Firms with

workforces numbering between 6 and 29 (i.e. small-sized firms) were the next most highly

represented firms, at 24.3%. The least represented firms were the micro- sized firms with

workforce sizes of between 1 and 5; they constituted 8.5% of the sample. With regard to

industrial representation, the garment sub-sector has the highest representation,

making up 22.36% of the sample. The furniture and metal sub-sectors came next, both

representing 21.95% of the sample, followed by the food processing (bakery) sub- sector,

which constituted 9.76%. The rest of the industries, in order of representation, were as follows:

wood sub-sector 9.35%, chemicals sub-sector 6.91%, textiles 4.07% and lastly the machinery

sub-sector, representing 3.66% of the sample. the majority of the firms were located in

the Accra metropolitan area (i.e. the capital city of Ghana). Firms located in Accra consisted

of 58.76% of the sample. The rest of the firms were from the regional centres of Ghana,

outside Accra. Of these 30.93% of the sample were located at Kumasi, 6.19% of the sample

were located at Takoradi, whilst 4.12% were located on the Cape Coast.



How do the author test his/her hypotheses.

The author use econometric model because of the structure of the data set, the data is

pooled and so an Ordinary Least Square (OLS) estimator is applied. In line with the pool

estimation method, the model is specified as follows.

And the hypothesis is analyzed using a t-test tool

What are the findings of the study?

In this study, notwithstanding the firm level elements (firm measure and workforce

profit), sort of industry and where a firm is placed were critical. Concerning firm

experience, the outcomes suggest that, new and more youthful firms, in distinguishment

of the challenges postured by their novelty, could at present position themselves with

added pugnacity from the begin of exchanging request to contend side-by-side with their

more built partners. This is elucidated by the way that in today's globalised planet, in

view of simple access to national and global business qualified information taking after

the headways in conveyance and transportation advances, distinction in firm age can't

drawback new and more youthful firms to a bigger degree.

What is your comment regarding the paper?

Strategic factors that explain firm performance in an emerging economy can be

consisting of both firm level and external factors. It is plausible therefore to argue that a

misfit between the external moderating factors and the firm level factors could

affect the degree of firm performance. In this study, in addition to the firm level factors

(firm size and workforce productivity), type of industry and where a firm is located were

significant. With regard to firm experience, the results imply that, new and younger

firms, in recognition of the challenges posed by their newness, could still position

themselves with extra aggression from the start of trading in order to compete side-by-

side with their more established counterparts.


strategic factors and firm performance in an emerging economy

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