Proceedings of the 11th International Applied Business and Engineering Conference, ABEC 2023, September 21st, 2023, Bengkalis, Riau, Indonesia

Research Article

Firm Innovation, Managerial Ability, Size and Leverage: Impact on Firm Performance

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  • @INPROCEEDINGS{10.4108/eai.21-9-2023.2342899,
        author={Variyetmi  Wira and Niki  Lukviarman and Rida  Rahim and Efa  Yonnedi},
        title={Firm Innovation, Managerial Ability, Size and Leverage: Impact on Firm Performance},
        proceedings={Proceedings of the 11th International Applied Business and Engineering Conference, ABEC 2023, September 21st, 2023, Bengkalis, Riau, Indonesia},
        publisher={EAI},
        proceedings_a={ABEC},
        year={2024},
        month={2},
        keywords={firm performance firm innovation managerial ability resources-based view},
        doi={10.4108/eai.21-9-2023.2342899}
    }
    
  • Variyetmi Wira
    Niki Lukviarman
    Rida Rahim
    Efa Yonnedi
    Year: 2024
    Firm Innovation, Managerial Ability, Size and Leverage: Impact on Firm Performance
    ABEC
    EAI
    DOI: 10.4108/eai.21-9-2023.2342899
Variyetmi Wira1,*, Niki Lukviarman2, Rida Rahim2, Efa Yonnedi2
  • 1: Politeknik Negeri Padang
  • 2: Universitas Andalas
*Contact email: variyetmi@pnp.ac.id

Abstract

Competitive superiority is a way for companies to sustain business performance. RBV theory states that unique resources provide a competing advantage. This study looks at the impact of different factors, including firm innovation, management skill, size, and leverage, on the firm's financial performance as assessed by ROA, ROE, and NPM. The quantitative approach was used to utilize the population of firms listed on the Indonesia Stock Exchange from 2012 to 2022. Both the www.idx.co.id website and datastream were used to obtain the data. There were 87 samples of qualified companies for further investigation. The results showed that managerial ability, size, and leverage variables significantly affected firm performance (ROA and ROE). On the other hand, the firm innovation variable did not affect either ROA or ROE. In model 3 for NPM testing, only size and leverage variables could influence NPM. In contrast, firm innovation and managerial ability variables had no significant impact on NPM. Overall, the average research variables used were only able to influence firm performance (measured by ROA, ROE, and NPM) by 2%-5%.