Argilés-Bosch, Josep Maria García-Blandón, Josep Ravenda, Diego Valencia-Silva, Maika M. Somoza, Antonio D.
[Journal:] Estudios de Economía [ISSN:] 0718-5286 [Volume:] 44 [Year:] 2017 [Issue:] 1 [Pages:] 81-104
This study analyses cost stickiness under the dilemma between current profitability and future sales increase. When activity decreases firms are faced to keep profitability adjusting resources, while they should also consider long term consequences and keep slack resources which allow building firms capacities to adapt to external challenges and take advantage of future opportunities. We find empirical evidence that changes in current firm profitability and one year ahead sales increase significantly influence resource adjustment in periods when sales decrease. We find a significant moderating effect of changes in profitability, as well as a significant stressing effect of one year ahead sales increase, on cost stickiness.
Cost stickiness profitability increases in sales slack resource adjustment