Despite the interest shown by many authors in ocean carriers’ strategies and operations, only a few contributions have tried to evaluate the impact of growth strategies on firms’ performance and profitability. This article, adopting a holistic approach, measures the impact of growth strategies on economic and financial performances that ultimately lead to value creation for shipping lines and their stakeholders. The sampled ocean carriers, controlling over 55 per cent of the overall fleet capacity, belong to 16 listed shipowning groups. The study has been carried out by performing correlation and regression analysis. Empirical outcomes reveal an inverted U-shaped relationship between the amount of resources invested in assets and firm profitability, measured by return on assets (ROA). In fact, after a certain threshold of increasing asset (book) value, the positive returns decline. The multiple regression model also shows ROA to be positively correlated with vessel size, both in average and growth rate terms. The article, by addressing the complexity and ultidimensionality of variables affecting firm performance, provides a pioneering and exploratory contribution on a topic that has received little attention in the literature.
Linking growth to performance: Insights from shipping line groups
SATTA, GIOVANNI;PAROLA, FRANCESCO;FERRARI, CLAUDIO;PERSICO, LUCA
2013-01-01
Abstract
Despite the interest shown by many authors in ocean carriers’ strategies and operations, only a few contributions have tried to evaluate the impact of growth strategies on firms’ performance and profitability. This article, adopting a holistic approach, measures the impact of growth strategies on economic and financial performances that ultimately lead to value creation for shipping lines and their stakeholders. The sampled ocean carriers, controlling over 55 per cent of the overall fleet capacity, belong to 16 listed shipowning groups. The study has been carried out by performing correlation and regression analysis. Empirical outcomes reveal an inverted U-shaped relationship between the amount of resources invested in assets and firm profitability, measured by return on assets (ROA). In fact, after a certain threshold of increasing asset (book) value, the positive returns decline. The multiple regression model also shows ROA to be positively correlated with vessel size, both in average and growth rate terms. The article, by addressing the complexity and ultidimensionality of variables affecting firm performance, provides a pioneering and exploratory contribution on a topic that has received little attention in the literature.
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