Does Economic Literacy Matter for Firm Performance and Competitive Advantage: A Systematic Review

Abstract

Purpose: Economic literacy, the ability to comprehend and apply economic concepts for informed decision-making, plays a pivotal role in enhancing a firm's dynamic capability to navigate a volatile business environment and gain a competitive edge.

Methodology: The systematic review, following the PRISMA 2020 protocol, investigates the influence of economic literacy on firms' performance and competitive advantage. Utilizing specific keywords related to economic literacy, firm performance, and competitive advantage, a comprehensive search across relevant databases yielded 107 articles. Through systematic literature review techniques, 28 studies were included in the final analysis.

Results: The findings highlight a positive impact of economic literacy on firm performance, enabling organizations to set realistic goals, identify key performance indicators, and experience accelerated growth. Firms with higher degrees of economic literacy exhibit notably faster expansion rates.

Novelty and contribution: This review underscores the critical importance of economic literacy for firms striving to compete in an uncertain economic landscape. The research framework contributes to providing a deeper insight and understanding of how economic literacy serves as a strategic asset, empowering organizations to thrive amidst dynamic market conditions. The framework explicitly indicates the chain link and interplay among economic literacy on firms' performance and competitive advantage.