Location, Industry Competition and Profitability

Esmail Tavakolnia, Seyed Vali Mostafavi Makrani

Abstract


The construction of one or more plants in optimum sites and in the best possible situation, not only improves materials circulation and customer services, but also puts the company in a desirable situation. Decisions associated with the selection and acquisition of features of a center’s site selection can have a great impact on the ability to gain and maintain competitive advantages. This study tests the impact of distance from population centers on the profitability for the first time. The sample which has been used in the food products industry, includes 21 firms listed in Tehran Stock Exchange during 2009 to 2014, and panel data regression methods were used to process and test the hypotheses. The results showed that product market competition enhances the negative impact of corporate distance from Tehran and big cities on the basic earnings power (earnings before tax). However, the relative power of the firm in a competitive environment weakens the negative impact of corporate distance from Tehran and big cities on the basic earnings power (earnings before tax).


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DOI: https://doi.org/10.5296/ajfa.v8i2.9632

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