A model for testing the relationship between company’s size and performance: a cross country analysis

The purpose of the research is to verify whether the company’s size (in terms of production value) could be considered as a relevant factor in impacting company performance, taking into consideration the country variable. To reach this purpose, Italian and German companies have been compared. Thanks to an empirical evidence on a sample composed of 41,344 Italian companies and 12,219 German companies operating in different sectors, it emerged that the country factor (considering its structural and economic characteristics that are different from the company’s size) has a primary importance in determining the differences of performance between German and Italian companies. On the contrary, there is a weak relationship between the companies’ performance (measured in terms of: profitability, growth and debt repayment capacity) and their size. It means that the size factor is not one of the main factors that explain why the performance of the German companies is better than Italian ones. It follows that the global differences between the two countries are mainly due to the structural and economic characteristics of each country and, in residual form, due to different size of the companies operating in those two countries. The research is characterised by several theoretical and practical implications, especially for top management and investors