How Much Do Industry, Corporation, and Business Matter, Really? A Meta-Analysis

Vanneste, Bart

doi:10.1287/stsc.2017.0029

Cited by 32 publications

(34 citation statements)

References 52 publications

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“…Performance. We measure performance in two ways: return on assets (ROA) and return on sales (ROS) (Vanneste 2017). We use earnings before interest and taxes for returns, total assets for assets, and operating revenue for sales.…”

Section: Variablesmentioning

confidence: 99%

Generalized Trust, External Sourcing, and Firm Performance in Economic Downturns

Vanneste

Gulati

2022

Organization Science

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Going beyond prior research that has focused on dyadic, party-specific trust, this study investigates the importance of generalized trust, which is not specific to a counterparty and originates from a broader context. We analyze how generalized trust at the regional level affects the extent to which a firm relies on external suppliers and the performance effects of doing so. Furthermore, we assess how these relationships are impacted by an economic downturn. We exploit differences in generalized trust across 145 regions in 12 European countries and use data on more than a million small- and medium-sized enterprises (SMEs) before and during the Great Financial Crisis (from 2008 to 2010). Control variables are selected via a double-selection procedure based on machine learning. We find that firms in high generalized trust regions, compared with those in low generalized trust regions, source more externally (but do not reduce external sourcing less in an economic downturn) and benefit more from external sourcing during an economic downturn.

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Section: Variablesmentioning

confidence: 99%

Generalized Trust, External Sourcing, and Firm Performance in Economic Downturns

Vanneste

Gulati

2022

Organization Science

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“…However, issues of definitions, data and statistical methods (McNamara et al , 2005; Stavropoulos et al , 2015; Vanneste, 2017) have affected results and findings of variance decomposition of firm performance. Although the impact of statistical techniques has received the most attention in the literature, issues of performance measures and the definition of industry, samples and effects, complicate direct and inter-study comparisons of effects.…”

Section: The Literature Review: Main Findingsmentioning

confidence: 99%

“…Despite the foundational importance of these studies to strategic management, and the insights it has provided on sources of firm performance variance, there has been no comprehensive review. Stavropoulos et al (2015) and Vanneste (2017) conducted meta-analyzes of a few studies to highlight the influence of statistical methods on results. However, what do we really know about the sources of differential firm performance?…”

Section: Introductionmentioning

confidence: 99%

Variance decomposition of firm performance: past, present and future

Esho

Verhoef

2020

MRR

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Purpose The purpose of this paper is to present a review of variance decomposition studies of firm performance and the theoretical foundations that served as the antecedents and promptings for this stream of research. Known collectively as “variance decomposition literature,” these studies use variance decomposition techniques to partition firm performance into various classes of effects in a bid to unveil the relative importance of factors responsible for firm performance variance. Design/methodology/approach A review of papers published in SCOPUS and institute for scientific information indexed journals was conducted. Findings The study found that firm, industry, corporate, business group and country effects are the major effects included in most extant studies. However, of all effects, firm effects remain the dominant and most important impact on firm performance. The effects that affect firm performance are also interdependent. Practical implications Consequently, the decisions of managers in firms are still the most important element in helping the firm to navigate industry and contextual factors, especially during periods of recession. Originality/value From the review, research gaps were identified and suggestions for future research provided. There is still much to learn from variance decomposition literature in an age of new business models, unprecedented start-up firms and from developing and emerging market countries.

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“…Such differences could, for instance, be tested using variance decomposition of performance, which includes a firm‐specific effect (Rumelt, 1991). In fact, there is evidence of significant differences in the size firm‐specific effects across markets, geographies and studies (McGahan & Porter, 1997; Vanneste, 2017). Some studies have started to explore the sources of these differences, for instance due to macro‐economic factors (Bamiatzi, Bozos, Cavusgil, & Hult, 2016).…”

Section: Discussionmentioning

confidence: 99%

The role of competitive amplification in explaining sustained performance heterogeneity

Wibbens

2021

Strategic Management Journal

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Research Summary This article introduces a formal model of long‐term resource dynamics under uncertainty. The model demonstrates the importance of competitive amplification for the emergence of sustained performance heterogeneity. In some markets, small differences in resource positions tend to amplify over time into large performance differences. The model predicts that this amplification and the resulting performance heterogeneity are largest in markets where firms compete for critical resources that are highly scalable, carry high sunk cost, depreciate rapidly and exhibit strong time‐compression diseconomies. Amplification emerges because in these markets an advantaged firm tends to have a stronger incentive to invest than a follower. Prior theories had paid little attention to the critical role of such competitive interactions in shaping long‐term resource dynamics. Managerial Summary In some markets, performance differences between competitors are much larger than in others. For instance, in high‐tech markets just one or a few firms tend to generate a large share of profits, while in utilities many different firms can exhibit similar performance levels. The mathematical model in this article suggests that the characteristics of the critical resources in a market play an important role in whether firms in that market will have similar versus very different performance levels. For instance, competition for resources that are not capacity‐constrained and depreciate rapidly—such as innovative technologies—tend to induce advantaged firms to extend their leads, which over time causes any small differences in resource positions to amplify into large performance differences. Conversely, capacity‐constrained and long‐lived resources—such as industrial plants—tend to induce attenuation of performance differences.

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How Much Do Industry, Corporation, and Business Matter, Really? A Meta-Analysis

Cited by 32 publications

References 52 publications

Generalized Trust, External Sourcing, and Firm Performance in Economic Downturns

Generalized Trust, External Sourcing, and Firm Performance in Economic Downturns

Variance decomposition of firm performance: past, present and future

The role of competitive amplification in explaining sustained performance heterogeneity

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