Bigger, Better, or Burdened? Evidence from Firm Size–Performance

Abstract

Firm performance is an important indicator of a firm's ability to create economic value and sustain its business, while firm size remains a widely studied determinant with inconsistent empirical findings. This study aims to synthesize empirical evidence on the relationship between firm size and firm performance through a Systematic Literature Review (SLR) based on the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA 2020). Searches of Scopus, Web of Science, Google Scholar, and Garuda/SINTA identified 214 initial records. Following screening and eligibility assessment, 30 articles published between 2021 and 2026 met the inclusion criteria. The synthesis shows an inconsistent relationship between firm size and firm performance, with 11 articles (37%) reporting a positive relationship, 9 articles (30%) reporting a negative relationship, and 10 articles (33%) reporting no significant relationship. These variations can be interpreted through the perspectives of Resource-Based Theory, Economies of Scale Theory, Agency Theory, and Dynamic Capability Theory. The synthesis indicates that firm size represents potential capacity rather than an automatic guarantee of improved firm performance, as its benefits depend on effective resource management, corporate governance, operational efficiency, and adaptive capabilities. Practically, increasing firm size should be accompanied by stronger governance and operational efficiency to support consistent performance improvement.