Navigating Success: Unveiling the Key Predictors for Firm Growth and Operational Excellence

Rholé Coetzee; Elda du Toit; John Henry Hall

doi:10.25159/1998-8125/19036

Authors

Rholé Coetzee University of Pretoria https://orcid.org/0000-0003-1735-6778
Elda du Toit University of Pretoria
John Henry Hall University of Pretoria https://orcid.org/0000-0003-4471-1034

DOI:

https://doi.org/10.25159/1998-8125/19036

Keywords:

business value, growth opportunities, operational efficiency, innovation, efficient market hypothesis, financial sustainability, non-financial stability

Abstract

Purpose: This study examines the key predictors of firm performance concerning growth opportunities and operational efficiency, both of which are crucial aspects of financial sustainability.

Design/methodology/approach: Using a dataset of 184 firms listed on the Johannesburg Stock Exchange (JSE) from 2011 to 2021, this study employs multiple linear regression modelling, part and partial correlation analysis, and percentage variance contribution analysis to identify the most significant predictors of firm performance.

Findings: The results indicate that the market-to-book value of equity is the strongest predictor of firm performance concerning growth opportunities, while return on equity is the most significant predictor of operational efficiency. These findings suggest that firms seeking to enhance financial sustainability should prioritise these metrics in strategic decision-making.

Research limitations/implications: This study focuses on JSE-listed firms, limiting the generalisability of the findings to firms in other regions or those that are not publicly listed. Future research could explore industry-specific variations and broader geographical contexts.

Practical implications: The findings offer valuable insights for corporate managers and investors. Firms can improve financial sustainability by focusing on strategies that enhance their market-to-book value of equity for growth and optimising return on equity to improve operational efficiency.

Originality/value: This study contributes to the existing literature by systematically identifying and validating the strongest predictors of financial sustainability through rigorous statistical techniques. The results provide practical guidance for firms aiming to enhance growth and achieve operational excellence.

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