Effect of firm size on firm profits. Case study: Arua Municipal, Onzivu Market

Abstract

The main objective of this study was to examine the effect of firm size on firm profits in Onzivu Market. Firm size has been measured by total assets, total sales and number of employees. The study was conducted within Arua municipality. A cross-section of registered and unregistered firms within the municipality especially service, whole/retail trading, mobile phone shops were selected for the study. The study was conducted within the frame work of evaluating how firm size affects firm profits in their pursuit of growth. Samples of 72 firms were selected for the entire study comprising of 72 questionnaires administered to the firms. Data was analyzed using STATA .correlation, ANOVA and regression analysis were used to analyze the data. The study found out that though some independent variables like total assets, total sales and numbers of employees as measures of firm size were found to be statistically significant with their probability value less than significance level (0.05), while firms age as a control variable was significant in predicting the firms’ profits, gender of ownership of a firm was insignificant in predicting the profits. Generally, the study found out that firm size positively affects the profit, therefore the larger the firm size, the higher the profits. Basing on the findings of the research, the researcher recommended among other things more investment in firms, advertisement, employing more labor