Practice Makes Profit: Business Practices and Firm Success

Which business practices set successful firms apart from others? We address this question using data from an official survey of almost 3,000 New Zealand firms. Questions cover: leadership, planning practices, customer and supplier focus, employee practices, quality and process monitoring, benchmarking, community and social responsibility, innovation, IT use, business structure and the competitive environment. Some of these are internal practices reflecting a firm’s resources and capabilities; some are characteristics of the external environment. We find that capital investment choices, R&D practices, market research and a range of employee practices are positively associated with firm success; industry structure is also a key determinant of success. The association between specific business practices and firm success is mostly independent of firm size, age and industrial sector, other than for export marketing.