Linking growth to performance: Insights from shipping line groups
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Linking growth to performance: Insights from shipping line groups G i o v a n n i S a t t a a, F r a n c e s c o P a r o l a b, C l a u d i o F e r r a r i c a n d Luca Persicoc a
Department of Economics and Business Studies, CIELI - Italian Centre of Excellence for Integrated Logistics, University of Genoa, Via Vivaldi 5, 16126 Genoa (Italy). E-mail: [email protected] b Department of Business Studies, University of Naples ‘Parthenope’, Via Generale Parisi 13, 80132 Naples (Italy). E-mail: [email protected] c Department of Economics and Business Studies, University of Genoa, Via Vivaldi 5, 16126 Genoa (Italy). E-mails: [email protected]; [email protected]
A b s t r a c t 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 multidimensionality of variables affecting firm performance, provides a pioneering and exploratory contribution on a topic that has received little attention in the literature. Maritime Economics & Logistics (2013) 15, 349–373. doi:10.1057/mel.2013.9
Keywords: shipping lines; growth strategies; economic and financial performances; corporate strategy
© 2013 Macmillan Publishers Ltd. 1479-2931 Maritime Economics & Logistics www.palgrave-journals.com/mel/
Vol. 15, 3, 349–373
Satta et al
Introduction: Linking Growth to Performance Over the last 20 years, the liner shipping sector has experienced considerable growth (Cariou, 2008; Notteboom et al, 2010). This has generated strong competition among leading ocean carriers in their contest to attract additional traffic flows and enter emerging markets. To exploit market opportunities, most shipowning groups have implemented aggressive growth strategies by ordering new vessels, taking over other players and joining cooperative agreements. Moreover, some major shipping lines have also pursued extensive vertical integration strategies with ports and logistics. At the same time, some carrier groups have also diversified horizontally their maritime operations into various sectors of the shipping business (that is, bulk,
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