Like milk or wine: Does firm performance improve with age?

Our empirical literature review shows that little is known about how firm performance changes with age, presumably because of the paucity of data on firm age. For Spanish manufacturing firms, we analyse the firm performance related to firm age between 1998 and 2006. We find evidence that firms improve with age, because ageing firms are observed to have steadily increasing levels of productivity, higher profits, larger size, lower debt ratios, and higher equity ratios. Furthermore, older firms are better able to convert sales growth into subsequent growth of profits and productivity. On the other hand, we also found evidence that firm performance deteriorates with age. Older firms have lower expected growth rates of sales, profits and productivity, they have lower profitability levels (when other variables such as size are controlled for), and also that they appear to be less capable to convert employment growth into growth of sales, profits and productivity. Keywords: firm age, firm growth, LAD, financial structure, vector autoregression JEL CODES: L25, L20

Water Management Performance in the NIHPSS Summary Report (PDF 635 KB)

Summary Report September 1996

Performance on a Virtual Reality Angled Laparoscope Task Correlates with Spatial Ability of Trainees

The aim of the present study was to investigate whether trainees' performance on a virtual reality angled laparoscope navigation task correlates with scores obtained on a validated conventional test of spatial ability. 56 participants of a surgery workshop performed an angled laparoscope navigation task on the Xitact LS 500 virtual reality Simulator. Performance parameters were correlated with the score of a validated paper-and-pencil test of spatial ability. Performance at the conventional spatial ability test significantly correlated with performance at the virtual reality task for overall task score (p < 0.001), task completion time (p < 0.001) and economy of movement (p = 0.035), not for endoscope travel speed (p = 0.947). In conclusion, trainees' performance in a standardized virtual reality camera navigation task correlates with their innate spatial ability. This VR session holds potential to serve as an assessment tool for trainees.

Organizational form and business performance

This project deals with the generation of profitability and the distribution of its benefits. Inspired by Davis (1947, 1955), we define profitability as the ratio of revenue to cost. Profitability is not as popular a measure of business financial performance as profit, the difference between revenue and cost. Regardless of its popularity, however, profitability is surely a useful financial performance measure. Our primary objective in this project is to identify the factors that generate change in profitability. One set of factors, which we refer to as sources, consists of changes in quantities and prices of outputs and inputs. Individual quantity changes aggregate to the overall impact of quantity change on profitability change, which we call productivity change. Individual price changes aggregate to the overall impact of price change on profitability change, which we call price recovery change. In this framework profitability change consists exclusively of productivity change and price recovery change. A second set of factors, which we refer to as drivers, consists of phenomena such as technical change, change in the efficiency of resource allocation, and the impact of economies of scale. The ability of management to harness these factors drives productivity change, which is one component of profitability change. Thus the term sources refers to quantities and prices of individual outputs and inputs, whose changes influence productivity change or price recovery change, either of which influences profitability change. The term drivers refers to phenomena related to technology and management that influence productivity change (but not price recovery change), and hence profitability change.