Efficiency, Profitability, and Firm Size as Determinants of Financial Performance: A Systematic Literature Review

Abstract

This study aims to analyze the relationship between profitability, operational efficiency, and firm size on financial performance using a systematic literature review approach. The review covers various scientific publications from the past five years to identify research trends, theoretical gaps, and conceptual linkages among the three variables. The analysis reveals that operational efficiency has a significant negative effect on profitability, where a lower efficiency ratio indicates better management of operating expenses. Meanwhile, firm size positively influences financial performance, though the effect varies across different industries. Larger companies generally possess greater adaptive capacity and resource advantages to withstand economic volatility. The combined analysis of profitability, efficiency, and firm size provides a comprehensive understanding of the determinants of financial performance. These variables complement each other in shaping a company’s effectiveness, stability, and competitiveness. Therefore, improving operational efficiency and optimizing organizational scale are crucial strategies for maintaining sustainable financial performance and ensuring resilience in an increasingly competitive global economic environment.