Assessment of the Effects of Corporate Governance on the Competitiveness of Pharmaceutical Companies Through Improved Total Factor Productivity.

Background: Corporate governance, productivity, and competitiveness are widely recognized as key determinants of firm performance and long-term sustainability. Although each construct has been extensively studied individually, their interrelationships, particularly within the pharmaceutical industry of developing economies, remain insufficiently understood. This gap is especially relevant given the strategic and economic importance of the pharmaceutical sector. Objectives: This study aimed to assess the relationships among corporate governance, competitiveness, and productivity in Iranian pharmaceutical companies and to develop a model that better explains the interactions among these determinants. Methods: This cross-sectional study was conducted in three phases among Iranian pharmaceutical manufacturing companies. First, context-specific, validated questionnaires were developed to assess corporate governance, productivity, and competitiveness. Second, these instruments were administered to senior executives (Chief Executive Officers [CEOs], board members, Chief Financial Officers [CFOs], and Chief Commercial Officers [CCOs]) at 44 randomly selected companies. Finally, statistical analyses, including Pearson and partial correlations, independent t-tests, and bootstrapped mediation analysis, were performed to evaluate the relationships among the study variables. Results: A total of 151 completed questionnaires were analyzed (response rate: 85.8%). Productivity showed a strong positive correlation with competitiveness (r = 0.780, P < 0.001) and a moderate positive correlation with corporate governance (r = 0.419, P = 0.005). By contrast, no significant direct correlation was observed between corporate governance and competitiveness. Mediation analysis indicated that productivity mediated the relationship between corporate governance and competitiveness, indicating a substantial indirect effect. In addition, companies producing biological medicines had significantly higher productivity and competitiveness scores. Conclusions: The findings suggest a partially interdependent model in which corporate governance enhances competitiveness primarily through its positive effect on productivity rather than through a direct pathway. Strengthening governance structures to improve decision-making and resource utilization may therefore be an effective strategy for increasing productivity and, ultimately, competitiveness in the pharmaceutical industry.