Abstract

GERMAN-SOTO, Vicente  and  MARINES LOPEZ, Alejandro. Modeling Business Growth and Profitability in the Coahuila Industry. Ens. Rev. econ. [online]. 2023, vol.42, n.1, pp.1-32.  Epub May 19, 2023. ISSN 2448-8402.  https://doi.org/10.29105/ensayos42.1-1.

The manufacturing business growth-profitability relationship is analyzed for Coahuila, Mexico, during 1993-2018. Business activity is one of the engines generating employment usually subordinate to the level of profitability. Entrepreneurial theories disagree on impact and causality: business growth promotes profitability (classical view), profitability generates business growth (evolutionary), or domains a negative link (managerial hypothesis) that can be bidirectional. Nonlinear dynamic panel methods and piecewise regressions estimate positive impacts ranging from profitability to business growth, but they diminish after to reach a threshold value. The analysis is delimited by the sectoral aggregation, but findings are intuitive and contribute to the understanding of the business dynamic. It is concluded that opportunities of gains create scale economies that stimulate the expansion of the productive plant, however, macroeconomic conditions are required to encourage the private investment and to reduce the market restrictions.

Keywords : profitability; business growth; manufacturing; dynamic panel data; C33; L25; L60; M21.

        · abstract in Spanish     · text in Spanish     · Spanish ( pdf )