The home country in the age of globalization: how much does it matter for firm performance?

Hawawini, Gabriel; Subramanian, Venkata Subban; Verdin, Paul

doi:10.1016/j.jwb.2003.08.012

Cited by 83 publications

(83 citation statements)

References 42 publications

(50 reference statements)

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“…Previous research on the determinants of firms' performance suggests the contrary. Hawawini et al (2004) decompose firm-level, industry, and country effects on firms' performance in six developed countries and find that the country effect is small-smaller than the country-effect documented in this study. Using a broader set of 37 countries, Burstein Goldszmidt et al (2011) find similar levels of country-effects as documented in our study and the authors argue that the country-level effect on firm performance is larger in emerging economies than in developed economies.…”

Section: Resultscontrasting

confidence: 57%

“…Still, the estimated ρ are rather low suggesting a low country-level dependency. As suggested by Hawawini et al (2004) one possibility is that country-effects are less pronounced because markets are to some extent economically and politically integrated. Despite the relative low intraclass correlation, the LR test statistics computed for the random-intercept models described above are all significant at p < 0.01 and therefore are in favour of analysis including a country effect component.…”

mentioning

confidence: 99%

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Determinants of firms’ investment behaviour: a multilevel approach

Farla

2014

Applied Economics

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Section: Resultscontrasting

confidence: 57%

mentioning

confidence: 99%

Determinants of firms’ investment behaviour: a multilevel approach

Farla

2014

Applied Economics

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“…Schmalensee, 1985;Rumelt, 1991;McGahan and Porter, 1997;Hawawini et al, 2004;Schumacher and Boland, 2005; 14 Szyma ski et al, 2007) by singling out significant effect classes using ANOVA, and estimating their size with COV.…”

Section: Model Estimation and Datamentioning

confidence: 99%

“…Industry-country interactions have mostly been treated as comparative advantages and were thus assumed to support the importance of trade theory in explaining performance differences (e.g. Hawawini et al, 2004). However, if borders isolate nations from international competition to a certain degree, large industry-country interactions may also originate from substantial differences in (national) industry structure and thus support the IV.…”

Section: Model Estimation and Datamentioning

confidence: 99%

The Determinants of Firm Profitability Differences in EU Food Processing

Hirsch¹,

Schiefer²,

Gschwandtner³

et al. 2014

J Agricultural Economics

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1 Industry, firm, year, and country effects on profitability in EU food processing This paper decomposes the variance in food industry return-on-assets into year, country, industry, and firm effects. Besides these main effects, we include several interactions and discuss their theoretical foundations. After determining effect significance in a nested ANOVA with a rotating pattern of effect introduction, we estimate effect magnitude using components of variance in a large sample of corporations. The results show that firm characteristics are more important than industry structure in determining food industry profitability in Europe. Main effects and interactions of year and country membership are weak, indicating that performance differentials can poorly be explained by macroeconomic and trade theory. Key words: ROA, decomposition, variance components, MBV, RBV.Running head: Industry, firm, year, and country effects on profitability JEL: L00, C22 Introduction 'There are many theories because each is based on different assumptions about the world; it is theirrelevance rather than their logic which is in dispute. ' (Cook, 1958: 16).In a perfectly competitive market, firm performance that deviates from the average should not exist in the long run. However, such deviations are not an exception to the rule but in fact the norm, especially in industries characterized by high sunk costs or other impediments to competition as the food sector seems to be. The ability of firms to 2 earn returns persistently above the norm has been widely analyzed.1 While the so-called 'market-based view', which draws heavily on Industrial Organization (IO) theory, mainly attributes such 'abnormal' profits to industry characteristics, proponents of the 'resource-based view' assume that performance differentials can be better explained by firm properties. 2 In order to resolve this debate, a series of contributions following Schmalensee's (1985) seminal paper has used components-of variance analysis (COV) and nested (i.e. hierarchical) analysis of variance (ANOVA) techniques to decompose the variation in firm profitability into firm and industry specific effects. Subsequent papers have also looked at the impact of year and, more recently, of country effects on firm profitability. While the influence of country and country-industry interactions on the variation in profitability can be explained by models developed in trade theory, the aforementioned body of literature has paid little attention to the theoretical foundations 1 (e.g. Barney 1991, Bowman and Helfat 2001, Brush, Bromiley and Hendrickx 1991, Geroski and Jaquemin 1988, Gschwandtner 2005, Goddard and Wilson 1999, Mahoney 1995, McGahan and Porter 1997, 1999, 2003, Mueller 1977, 1990, Odagiri and Maruyama 2002, Roquebert, Phillips and Westfall 1996, Rumelt 1991, Schmalensee 1985, Teece, Pesano and Shen 1997, Waring 1996, Werenfelt 1984.2 Examples for studies that support the 'market-based view' are: Caves and Porter (1977), McGahan and Porter (1999), Schmalensee (1985), Slat...

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“…For example, the industry effect regarding the return on assets (ROA) ranges from less than 1% (Chen & Lin, 2006) to 29% (McGahan, 1999), whereas the country effect varies from 2% (Hawawini, Subramanian, & Verdin, 2004) to 22% (McGahan & Victer, 2010). This naturally raises the question as to why there is such a range of magnitude in which the highest industry and country effects are more than 10 times the size of the lowest values.…”

Section: Introductionmentioning

confidence: 99%

Data Sparseness and Variance in Accounting Profitability

2015

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Dimitris SkurasDepartment of Economics, University of Patras, 26504 Rio, Greece. E-mail: skuras@econ.upatras.gr Forthcoming in Organizational Research Methods AbstractA central question in strategic management is why some firms perform better than others. One approach to addressing this question empirically is to decompose the variance in firm-level profitability into firm, industry, location, and year components. Although it is well established that data sparseness in variance decomposition studies can lead to overestimating particular variance components, little attention has been paid to sample size requirements in strategic management studies that have examined the nature of differences in firm profitability. We conduct a meta-regression and variance decomposition study and conclude that the variation in the results from previous studies is driven-to a considerable extent-by the number of observations per group within a component. Based on these findings, we draw conclusions regarding the validity and reliability of previous variance decomposition studies and provide implications for current debates in the strategic management literature.

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The home country in the age of globalization: how much does it matter for firm performance?

Cited by 83 publications

References 42 publications

Determinants of firms’ investment behaviour: a multilevel approach

Determinants of firms’ investment behaviour: a multilevel approach

The Determinants of Firm Profitability Differences in EU Food Processing

Data Sparseness and Variance in Accounting Profitability

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