Investigating the Effect of Financial Crisis Severity on the Relationship between Competitiveness and Profitability in the Product Market

This paper aims to examine the effect of financial crisis severity on the relationship between profitability and competitiveness of the market in the listed firms on Tehran Stock Exchange. For this purpose, competitiveness is evaluated in the market with special emphasis on the market share and financial crisis severity, as a continuous variable of the financial crisis and economic instability in the country, is assessed with special emphasis on the inflation rate. The study sample consists of 137 firms from 2013-2017. Regression model is used for testing the hypotheses. Results showed that the effect of profitability and the financial crisis severity on the firms' competitiveness is significant and negative. Thus, at 0.95% confidence level, financial crisis severity significantly affects the relationship between firm profitability and its competitiveness in the market.