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Article: Is performance driven by industry-or firm-specific factors? A new look at the evidence

TitleIs performance driven by industry-or firm-specific factors? A new look at the evidence
Authors
KeywordsIndustry and firm effects
Value leaders
Losers and average firms
Issue Date2003
PublisherJohn Wiley & Sons Ltd. The Journal's web site is located at http://www.interscience.wiley.com/jpages/0143-2095
Citation
Strategic Management Journal, 2003, v. 24 n. 1, p. 1-16 How to Cite?
AbstractIn this study we revisit the question of whether firms' performance is driven primarily by industry or firm factors, extending past studies in two major ways. Firstly, in a departure from past research, we use value-based measures of performance (economic profit or residual income and market-to-book value) instead of accounting ratios (such as return on assets). We also use a new data set and a different statistical approach for testing the significance of the independent effects. Secondly, we examine whether the findings of past research can be generalized across all firms in an industry or whether they apply to a particular class of firms within the same industry. We find that a significant proportion of the absolute estimates of the variance of firm factors is due to the presence of a few exceptional firms in any given industry. In other words, only for a few dominant value creators (leaders) and destroyers (losers) do firm-specific assets seem to matter significantly more than industry factors. For most other firms, i.e., for those that are not notable leaders or losers in their industry, however, the industry effect turns out to be more important for performance than firm-specific factors. Copyright © 2002 John Wiley & Sons, Ltd.
Persistent Identifierhttp://hdl.handle.net/10722/85809
ISSN
2015 Impact Factor: 3.38
2015 SCImago Journal Rankings: 6.278

 

DC FieldValueLanguage
dc.contributor.authorHawawini, Gen_HK
dc.contributor.authorSubramanian, Ven_HK
dc.contributor.authorVerdin, Pen_HK
dc.date.accessioned2010-09-06T09:09:29Z-
dc.date.available2010-09-06T09:09:29Z-
dc.date.issued2003en_HK
dc.identifier.citationStrategic Management Journal, 2003, v. 24 n. 1, p. 1-16en_HK
dc.identifier.issn0143-2095en_HK
dc.identifier.urihttp://hdl.handle.net/10722/85809-
dc.description.abstractIn this study we revisit the question of whether firms' performance is driven primarily by industry or firm factors, extending past studies in two major ways. Firstly, in a departure from past research, we use value-based measures of performance (economic profit or residual income and market-to-book value) instead of accounting ratios (such as return on assets). We also use a new data set and a different statistical approach for testing the significance of the independent effects. Secondly, we examine whether the findings of past research can be generalized across all firms in an industry or whether they apply to a particular class of firms within the same industry. We find that a significant proportion of the absolute estimates of the variance of firm factors is due to the presence of a few exceptional firms in any given industry. In other words, only for a few dominant value creators (leaders) and destroyers (losers) do firm-specific assets seem to matter significantly more than industry factors. For most other firms, i.e., for those that are not notable leaders or losers in their industry, however, the industry effect turns out to be more important for performance than firm-specific factors. Copyright © 2002 John Wiley & Sons, Ltd.-
dc.languageengen_HK
dc.publisherJohn Wiley & Sons Ltd. The Journal's web site is located at http://www.interscience.wiley.com/jpages/0143-2095en_HK
dc.relation.ispartofStrategic Management Journalen_HK
dc.rightsStrategic Management Journal. Copyright © John Wiley & Sons Ltd.en_HK
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.subjectIndustry and firm effects-
dc.subjectValue leaders-
dc.subjectLosers and average firms-
dc.titleIs performance driven by industry-or firm-specific factors? A new look at the evidenceen_HK
dc.typeArticleen_HK
dc.identifier.openurlhttp://library.hku.hk:4550/resserv?sid=HKU:IR&issn=0143-2095&volume= 24&issue=1&spage=pp.1&epage=16&date=2003&atitle=Is+performance+driven+by+industry-or+firm-specific+factors?+A+new+look+at+the+evidenceen_HK
dc.identifier.emailSubramanian, V: vsubrama@business.hku.hken_HK
dc.identifier.authoritySubramanian, V=rp01103en_HK
dc.description.naturepreprint-
dc.identifier.doi10.1002/smj.278-
dc.identifier.scopuseid_2-s2.0-0037227162-
dc.identifier.hkuros94116en_HK
dc.identifier.volume24-
dc.identifier.issue1-
dc.identifier.spage1-
dc.identifier.epage16-

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