What Drives Profitability in the Romanian ICT Sector?
Identifying the major driving factors behind variations in profitability across firms is a question addressed by many researchers, at industry, economic sector, country level, or through regional and international comparisons. Empirical approaches have shown that profitability variation across fi...
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| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
| Published: |
Editura ASE
2021-11-01
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| Series: | Amfiteatru Economic |
| Subjects: | |
| Online Access: | https://www.amfiteatrueconomic.ro/temp/Article_3047.pdf |
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| Summary: | Identifying the major driving factors behind variations in profitability across firms is a
question addressed by many researchers, at industry, economic sector, country level, or
through regional and international comparisons. Empirical approaches have shown that
profitability variation across firms and industries, is the norm, rather the exception. The
paper investigates the factors underlying the profitability of Romanian companies in the
ICT sector within the company-industry-localization framework, applying the variance
components methodology and using aggregate profitability (ROA – Return on assets) as a
measure of profitability. The ICT sector in Romania, one of the most dynamic in the last
decade and the “winning sector” of the pandemic, operates with different levels of
profitability depending on its two main components, Production and Services. At the same
time, other disparities resulting from the characteristics of the business – size, personnel
costs, productivity – are present. Our results show the high heterogeneity of profitability
between firms in the ICT sector, but also the greater importance of the factors intrinsic to
the firm compared to that of industry or location factors, which raises the question of
whether this sector has incorporated into profitability the tax advantages it enjoys and how
sustainable its performance will be once these advantages will diminish |
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| ISSN: | 1582-9146 2247-9104 |