Abstract:

This study aims at verifying the existence of a mutual effect between industrial concentration and profitability in the Jordanian manufacturing sector and at finding out the direction and size of this effect, if there is any. Due to the lack of data pertinent to the overall manufacturing sector, the data of the industrial companies listed on the Amman Stock Exchange was relied upon. To achieve the objective of the study, the analysis was carried out through the use of a combination of cross-sectional data and time series (Panel Data Analysis) for the period (2010-2017) at the level of 7 subsectors. The results showed a positive and significant impact of industrial concentration represented by the Herfendail Index on profitability represented by the two indicators of gross profit margin and net profit before interest and tax to sales. However, there was no significant effect of concentration on profitability represented by the Net Profit Margin Index. The results also confirmed the existence of a significant and positive influence of profitability represented by the two indicators aforementioned (i.e. gross profit margin, net profit before interest and tax to sales) on industrial concentration. On other hand, there was no significant effect of profitability represented by the net profit margin index on industrial concentration.