In describing firm's behaviour, theories of firms assume various relationships (positive, nil or negative correlation) between the most commonly used economic objectives, namely growth rate and profitability, but the universal and global validity of their assumptions is yet to be evidenced. Using data of some 900 firms listed on the Tokyo Stock Exchange through the period 1966-1983, this article demonstrates that the relationship between growth and profit varies not only by industry, but also dynamically according to the time period, and that in Japan at least, more industry sectors have come to show a positive correlation between the two measurements. Finally, strategic implications of the findings are discussed.
ASJC Scopus subject areas
- Strategy and Management
- Information Systems and Management
- Management Science and Operations Research