Firm, Strategic Group, and Industry

Strategic Management Journal
Strat. Mgmt. J., 28: 147167 (2007) Published online in Wiley InterScience (www.interscience.wiley.com) DOI: 10.1002/smj.574 Received 9 January 2003; Final revision received 23 June 2006
FIRM, STRATEGIC GROUP, AND INDUSTRY INFLUENCES ON PERFORMANCE

JEREMY C. SHORT,1 DAVID J. KETCHEN, JR.,2 * TIMOTHY B. PALMER3 and G. TOMAS M. HULT4
1 Rawls College of Business Administration, Texas Tech University, Lubbock, Texas, U.S.A. 2 College of Business, Auburn University, Auburn, Alabama, U.S.A. 3 Haworth College of Business, Western Michigan University, Kalamazoo, Michigan, U.S.A. 4 Eli Broad Graduate School of Management, Michigan State University, East Lansing, Michigan, U.S.A.
A long-standing debate has focused on the extent to which different levels of analysis shape rm performance. The strategic group level has been largely excluded from this inquiry, despite evidence that group membership matters. In this study, we use hierarchical linear modeling to simultaneously estimate rm-, strategic group-, and industry-level inuences on short-term and long-term measures of performance. We assess the three levels explanatory power using a sample of 1,165 rms in 12 industries with data from a 7-year period. To enhance comparability to previous research, we also estimate the effects using the variance components and ANOVA methods relied on in past studies. To assess the robustness of strategic group effects, we examine both deductively and inductively dened groups. We found that all three levels are signicantly associated with performance. The rm effect is the strongest, while the strategic group effect rivals and for some measures outweighs the industry effect. We also found that the levels have varying effects in relation to different performance measures, suggesting more complex relationships than depicted in previous studies. Copyright 2007 John Wiley & Sons, Ltd.
The determinants of rm performance have long been of central interest to strategic management researchers (Rumelt, Schendel, and Teece, 1994). Viewed collectively, research focused on explaining performance has emphasized determinants at three primary levels of analysis: (1) rm; (2) strategic group; and (3) industry (McGee and Thomas, 1986; Short, Palmer, and Ketchen 2003a). Research at the rm level focuses on how key
Keywords: rm performance; variance decomposition; strategic groups; rm effects; industry
*Correspondence to: David J. Ketchen, Jr., College of Business, Auburn University, 415 W. Magnolia, Suite 401, Auburn, AL 36849-5244, U.S.A. E-mail: ketchda@auburn.edu
within-organization features shape outcomes. Perhaps the most popular perspective guiding this work is the resource-based view of the rm, which argues that a rms bundle of assets and capabilities drives its performance (e.g., Wernerfelt, 1984). Strategic groups researchers argue that rms coalesce around a limited array of competitive approaches, and that some approaches offer better performance than others (e.g., Fiegenbaum and Thomas, 1990; Hunt, 1972; Porter, 1979). Drawing on economic inquiry, others have examined the extent to which the industries where companies compete shape their performance (e.g., Rumelt, 1991; Schmalensee, 1985).
Copyright 2007 John Wiley & Sons, Ltd.
148
J. C. Short et al.
understanding why some rms succeed while others fail requires diagnosis of the systems component parts (Ashmos and Huber, 1987). Thus, if a study includes only one or two of the levels, the resulting portrayal of the interwoven elements that collectively shape rm outcomes is incomplete. Incorporating the strategic group level of analysis also adds additional information about the existence and importance of strategic groupstwo issues that have long vexed strategic groups research (Barney and Hoskisson, 1990). The exclusion of one or two levels within a given study also creates empirical problems. For example, if groups and industries do in fact inuence performance, a study focusing only on rm-level antecedents violates the assumption of independence of observations that underlies traditional statistical techniques. Studies that focus solely on higher levels (such as the industry) overlook potentially meaningful lower-level variance. Several studies have moved beyond single levels (e.g., Chang and Singh, 2000; Mauri and Michaels, 1998; McGahan and Porter, 1997; Rumelt, 1991; Schmalensee, 1985), but most have ignored the strategic group level. This is unfortunate, because a meta-analysis found that group membership accounts for a signicant portion of performance variance (Ketchen et al., 1997). Thus, there is a need to further examine all three levels in order to pursue the strategy elds goal of diagnosing performance antecedents (Dranove, Peteraf, and Shanley, 1998). Accordingly, this studys purpose is to determine how much performance variance the three levels account for, thereby providing evidence about how much each matters (cf. Rumelt, 1991). Specically, building on systems theory, we develop and test hypotheses about the levels roles and their ties to different performance measures. Our overall expectation was that all three levels would explain signicant variance in performance, but that each levels effect would vary across performance measures (cf. Ashmos and Huber, 1987). Using data on 1,165 non-diversied rms from 12 industries across 7 years, we clustered rms into strategic groups using both deductive methods (i.e., where a priori expectations exist about the specic nature of groups) and inductive methods (i.e., where there are no such expectations) (cf. Bantel, 1998; Ketchen, Thomas, and Snow, 1993). Next, we used hierarchical linear modeling (HLM) to assess the variance accounted for
Strat. Mgmt. J., 28: 147167 (2007) DOI: 10.1002/smj
A sizable literature examines the relative roles of the industry and rm levels in shaping performance (e.g., McGahan and Porter, 1997; Rumelt, 1991). When such studies do not integrate the strategic group level, this limits the ability to understand performance (Short et al., 2003a). Fox, Srinivasan and Vaaler (1997) were the rst to test rm, strategic group, and industry levels of analysis using a random effects model. Using FTC line of business data from 1974 to 1977, these authors tested stable and unstable industry and strategic group effects, corporate effects, stable rm effects and unstable economy-wide (year) effects. They relied on simulated annealing to rst randomly assign and then iteratively determine group membership. They found that stable and unstable group effects accounted for approximately 40 percent of the variance in rm performance. In addition to these supportive results, the strategic group level is important because managers understandings of groups serve as strategic reference points (Fiegenbaum, Hart, and Schendel, 1996; Fiegenbaum and Thomas, 1995) as well as shaping managers interpretations of the environment in which they operate (Reger and Palmer, 1996). In terms of theory, much of the study of rms has proceeded from a systems theory perspective, where rms are viewed as structured collectivities that are embedded in and dependent upon the broader systems in which they operate (Scott, 1998). Systems theory provides a useful foundation for practical strategic questions that extend beyond the organization and tend to involve a wide empirical net (Hendry and Seidl, 2003). For example, systems theory has been used to study the importance of resource constraints in the evolution of organizational populations (Lomi, Larsen, and Freemen, 2005), product modularity within organizations (Schilling, 2000), and the application of complex adaptive models to strategic management (Anderson, 1999). Additionally, scholars have called for the incorporation of systems theory to examine complex phenomena such as the hierarchical systems involving organizations within larger contexts (Morel and Ramanujam, 1999; Schilling, 2000). From a systems theory perspective, focusing narrowly on individual components (such as rms or strategic groups) of a performance-shaping system in isolation is much less valuable than simultaneous examination of key components. Indeed,
Firm, Strategic Group, and Industry Inuences

by the rm,1 strategic group, and industry levels across three different performance measures. As Hofmann (1997) describes, HLMs nesting of lower levels within higher levels makes it well suited to assess hierarchically ordered systems such as those addressed by systems theory. While HLM is our main analytical technique, we also performed our tests using the variance components techniques used in past studies. This was done to enhance comparability with previous studies and to address the possibility of alternative explanations of the results. In summary, this study offers three key departures from past studies: inclusion of the strategic group level using deductively and inductively dened groups, a reliance on systems theory to guide the inquiry, and the use of hierarchical linear modeling as a powerful methodology to address the multiple levels hypotheses.
149
THEORETICAL BACKGROUND AND HYPOTHESES

Systems theory and multilevel inuences on performance Systems theory seeks to understand scientic phenomena by considering the interdependence of networks of entities within a larger system (Scott, 1998). The theory strives to explain relationships by using a level of generality that may not always be prevalent in particular sciences (Boulding, 1956). Some systems are characterized by their predictable patterns (e.g., the rotation of the moon around the earth), while others involve adjustments to environmental stimuli (e.g., thermostats that adjust between the actual temperature and a desired level of heating or cooling). Organizational theorists have used systems theory to describe the prevalence of open systems wherein environmental inuences (e.g., industry norms, government regulation) affect and
1 We follow Mauri and Michaels (1998) in using the term rm to represent members of our sample of single-business rms that compete in only one industry. As an anonymous reviewer pointed out, however, the term business unit is much more prominent in the literature. To facilitate comparison of our results with those of previous studies of multilevel inuence on performance, we note that our rm effect captures all explanatory power originating within our rms. In this sense, our rm effect approximates the combined roles of business unit and corporate effects studied among diversied rms (e.g., McGahan and Porter, 1997; Rumelt, 1991).
are affected by rms and their leaders (Scott, 1998). Our contention is that systems theory offers a valuable vantage-point for understanding rm performance, particularly as it applies to rm, strategic group-, and industry-level effects. An application of systems theory emphasizes that the decisions managers make in an effort to lead their rm toward prosperity take place within a complicated milieu (Ashmos and Huber, 1987). Contextual factors such as strategic groups and industry trends place certain constraints on the rm (cf. Rousseau and Fried, 2001). In turn, however, the rms actions may reshape these external factors (Porter, 1980). For example, price slashing by one rm may force direct competitors to match the lower prices, resulting in prot margins being driven down across the industry. Through adjusting to other rms and the other levels (strategic group and industry), managers can shepherd their rms toward enhanced success or toward ruin. Overall, a systems theory view of performance suggests that rms, strategic groups, and industries are interdependent parts of a complex system that collectively inuences rms fates. Only by examining each level in the context of the others can each levels role be diagnosed. Systems theory provides a conceptual basis for tests of multiple levels of analysis, an area about which past researchers have expressed concern (Klein, Dansereau, and Hall, 1994; Rousseau, 1985). This has led to calls for the adoption of a meso paradigm that thoughtfully integrates phenomena at multiple levels (Hofmann, 1997; House, Rousseau, and Thomas-Hunt, 1995). A careful focus on levels of analysis is needed when incorporating an additional level, because not all perspectives provide effective bridges across levels (Rousseau, 1985). Because strategic groups research shares the same industrial organization economics heritage as research on rm and industry determinants, integrating them does not confront such conceptual barriers (Michael, 2003). Indeed, scholars have noted that the use of a meso perspective would provide a much-needed integration to test the inuences of the rm and strategic group levels (Joyce, 2003; Short, Palmer, and Ketchen, 2003b). Below, we present arguments detailing why rms, strategic groups, and industries are important drivers of performance.
150
J. C. Short et al.
important element of the system shaping rm performance. Stated formally: Hypothesis 1: Performance within strategic groups varies systematically with differences in rm-level characteristics. Strategic group effects on performance Strategic groups are naturally occurring subsets of rms that are more homogeneous in actions than is found across industry incumbents in general (Cool and Schendel, 1988). Hunt (1972) coined the term strategic group, and since the 1970s there has been extensive research that has examined whether these industry substructures exist, and, if they do, what their implications are for rm performance (e.g., Cool and Schendel, 1987; Fiegenbaum and Thomas, 1990). While some rms more closely match a group prole than do others (Reger and Huff, 1993), group structure has been found to be fairly stable and predictable over modest periods of time (Fiegenbaum and Thomas, 1990). As described next, some of the key issues surrounding the strategic groups concept include mobility barriers, the role of strategic groups as reference points, and methodological controversy. The logic supporting an expectation that strategic groups vary in performance hinges on the concept of mobility barriers. Because opportunities are not evenly distributed across an industry, some industry segments offer better prot potential than others. Firms occupying one niche may be tempted to expand or to change strategies in order to exploit opportunities as they arise in other areas of the industry. However, mobility barriers restrict such opportunism. Specically, shifting to a different strategic group can be risky because the necessary investment in developing the needed skills and products may be substantial, while the perceived opportunities may be short-lived. Thus, rms generally choose not to change groups because of the risk that the enhancements gained will be less than the costs incurred (Mascarenhas and Aaker, 1989). As a result, strategic groups occupying lucrative industry segments should outperform those in less fertile areas. Likewise, members of less lucrative groups are reticent to enter more attractive groups because the very decision to enter a group adds output to group demand with a likely reduction
Firm effects on performance The idea that a rms attributes, possessions, and actions are driving forces behind performance has long been central to the strategy eld (Rumelt et al., 1994). The resource-based view of the rm (RBV) is a prominent reection of this idea. A central tenet of the RBV is that resources help explain important outcomes (cf. Barney, 1991; Wernerfelt, 1984). The products/services that can arise from any rms unique set of resources are likewise unique (Wernerfelt, 2005). Meanwhile, customers prefer certain products/services to others. If possible, each rm would rush to match customers desires, but each rm is limited by its resource set to providing a nite set of potential outputs. As a result, between-rm differences in outcomes emerge. If the resources that provide advantages are valuable, rare, non-substitutable, and inimitable, the duration of these performance differences can be lengthy (Barney, 1991). Some resources that give rise to rm success are intangible, creating measurement hurdles (Godfrey and Hill, 1995). Despite this challenge, attempts to validate the RBV are increasing (Barney and Mackey, 2005). For example, scholars have investigated the role of knowledge-based resources (Miller and Shamsie, 1996), brand name reputation (Combs and Ketchen, 1999), and qualities of top management teams (Smith et al., 1994) in performance enhancement. Hence, a body of theoretical and empirical research attests to the prot potential that is attributable to the rm. A systems perspective can add to our understanding of the role of the rm level in shaping rm performance. For example, researchers have argued that to fully assess the impact of rm resources, rm effects should be isolated from strategic group effects (Nair and Kotha, 2001; Rouse and Daellenbach, 1999). This suggests that a complete understanding of rm effects can only occur within the appreciation of group inuences. Others have advocated testing the RBV using large-scale databases in a multi-industry context (Levitas and Chi, 2002), noting that ultimately, the RBV will stand or fall not on the basis of whether its key constructs can be veried, but upon whether its predictions correspond to reality observed for populations of rms (Godfrey and Hill, 1995: 530; emphasis in original). Thus, multiple perspectives expect that the rm level is an

in group price and expected returns.2 Given this logic and extant results linking strategic groups and performance, an examination of the multilevel determinants of performance that excludes the strategic group level cannot provide an accurate depiction of what drives performance. Such a model would be conceptually underspecied and empirically incomplete. As strategic groups research has advanced, scholars have focused their interest on the strategic group as a level of analysis that is as important for its inuence on organizational actions and understandings as it is for its direct linkage to performance (Short et al., 2003a). Strategic groups are important in and of themselves because managers cognitions are often based upon membership within the context of a strategic group (Reger and Huff, 1993). Thus, understanding of group membership can also act as an indirect link to performance because strategic actions are often based on conceptual maps of the competitive environment that involve group structure (Reger and Palmer, 1996). Managers understanding of their rms membership in a strategic group serves as reference points when interpreting and responding to their rms performance (Fiegenbaum et al., 1996; Fiegenbaum and Thomas, 1995) and can also shape a rms identity (Peteraf and Shanley, 1997). Recent studies have noted that strategic group membership is also important because of its inuence on competitive rivalry (Mas-Ruiz, NicolauGonzalbez, and Ruiz-Moreno, 2005; McNamara, Deephouse, and Luce, 2003; Nair and Filer, 2003). One source of controversy in the strategic groups literature is that considerable variance can be found in the methods used to assess strategic group membership. Porter (1979) used the relative size of a rm as a proxy for membership. Subsequent studies identied groups via the application of clustering algorithms (e.g., Cool and Schendel, 1988). The use of cluster analysis has been criticized because researchers choices have often been less than ideal when implementing the technique (Ketchen and Shook, 1996). Such concerns have led some researchers to examine strategic groups without relying on cluster analysis (Wiggins and
151
2 It is still possible that the returns could be higher than the existing group but entering is, per se, adding to competition and reducing protability of the participants in the group. We thank an anonymous reviewer for pointing this out.
Ruei, 1995). Others have applied simulation techniques that randomly assign rms into groups and then iteratively alter group structure to maximize variance (Fox et al., 1997). Two recent tests have focused on integrated mills vs. mini-mills as two naturally occurring groups within the Japanese steel industry (Nair and Filer, 2003; Nair and Kotha, 2001). We agree with the view that despite the problems associated with its past use, cluster analysis provides a valuable and important tool for discerning strategic groups of rms (Ketchen and Shook, 1996: 455). Cluster analysis enables examination of groups dened both deductively (i.e., where there are a priori expectations about the specic nature of groups) and inductively (i.e., where there are no such expectations), allowing the incorporation of the group construct from a number of theoretical positions (Ketchen et al., 1993). Ketchen et al.s (1997) meta-analytic review found that 8 percent of the variance in rm performance is attributed to group membership, and that this result holds for both deductively and inductively dened groups. Despite these indications of strategic groups importance, examination of the relative role of the strategic group level vs. the rm and industry levels has been limited, and researchers have called for more robust tests using clustering mechanisms (Fox et al., 1997). Tests of deductively and inductively dened strategic groups provide an important contribution to the literature for several reasons. Empirically, researchers have noted that future studies can maximize the value of cluster analysis techniques by relying on triangulation of multiple methods for dening groups (Ketchen and Shook, 1996). For example, Nath and Gruca (1997) used clustering techniques to nd convergence between competitive structures using archival measures, perceptual data, and direct measures of competitors. Osborne, Stubbart, and Ramaprasad (2001) relied on cluster analysis of strategic intentions found in presidents letters to shareholders to establish linkages between strategic groups, mental models, and rm performance. Although theory testing is usually associated with deduction and theory generation linked to induction, both methods are useful for generating theory and most studies, in reality, involve both (Seth and Zinkhan, 1991). Likewise, managers strategy creation processes are a function of inductive and deductive thinking (Regner, 2003). Thus, the application of inductive and
152
J. C. Short et al.
Industry effects on performance Several theoretical perspectives recognize the importance of industry membership for rm performance. Economists have long theorized that rm performance is inuenced by market structure (e.g., Schmalensee, 1985) as well as by changes in other structural elements such as industry concentration, growth, and uctuation of mobility barriers height (Bain, 1956). Similarly, environmentally based perspectives such as organizational ecology emphasize the power of environments over organizations (Hannan and Freeman, 1977). These theories suggest that one must analyze environments to understand rm performance. Strategy researchers also acknowledge the inuence of industry characteristics. Indirectly, industry membership affects performance through strategic perspectives (Sutcliffe and Huber, 1998) and actions (Slevin and Covin, 1997). More directly, performance appears to be impacted by industry traits such as complexity (Zajac and Bazerman, 1991), rivalry (Wiseman and Bromiley, 1996), and regulatory changes (Reger, Duhaime, and Stimpert, 1992). A key development in the strategic management eld was the incorporation of an open systems approach that examined strategic processes beyond a single rm and allowed for stronger empirical testing and greater generalization (Hoskisson et al., 1999). Subsequent to this shift, a series of studies have tested the inuence of the rm and industry levels and have concluded that industry effects play an important role in shaping rm performance (Chang and Singh, 2000; Mauri and Michaels, 1998; McGahan and Porter, 1997; Rumelt, 1991). Recent studies have found that, even after controlling for outliers, approximately 10 percent of the variance in rm performance is attributable to industry effects (McNamara, Aime, and Vaaler, 2005). Thus, considerable theory and evidence support the notion that industry membership helps shape performance. This leads us to expect that the industry level is an important element of the system shaping rm performance. Stated as a formal hypothesis:
deductive clustering techniques to examine strategic groups allows the consideration of group membership from a variety of statistical, theoretical, epistemological, and practical perspectives. Systems theory provides a theoretical foundation for the inclusion of strategic groups in a multilevel context. This inclusion builds on the strategic management elds historical incorporation of an open systems approach and movement towards the addition of developments from the industrial organization economics literature (Hoskisson et al., 1999). Scholars have called for the inclusion of systems theories with such historical roots when examining the complexity of modern organizations (Anderson, 1999; Burns, 2004). Additionally, scholars have used systems theory to examine strategic change (Hendry and Seidl, 2003), organizational transformation (Lemak, Henderson, and Wenger, 2004), technology assessment (Rousseau, 1979), models of technology and structure (Rousseau and Cook, 1984), and total quality management (Manz and Stewart, 1997), and to examine the role of dynamic resource constraints in the evolution of organizational populations (Lomi et al., 2005). Based on previous ndings and theory about strategic groups, we expect that the strategic group level is an important element of the system shaping rm performance. Formally, we predict that: Hypothesis 2: Performance within industries varies systematically with differences in strategic group characteristics. Testing this hypothesis allows us to shed light on an important, long-running controversy: whether performance differences exist between strategic groups (Barney and Hoskisson, 1990). Recently, researchers have called for the use of state-of-theart methods to assess the strategic groupsperformance relationship (Ketchen, Snow, and Hoover, 2004). Statistically, the addition of the group level to random coefcient modeling software programs such as hierarchical linear modeling allows for a direct test of the existence of performance differences among strategic group members. If the strategic group level is found to play a signicant role vis-` -vis performance, this demonstrates that a groups differed in their performance.3
We thank an anonymous reviewer for recognizing this valueadded aspect of our study.
3
Hypothesis 3: Performance varies systematically with differences in industry-level characteristics.


The three levels and different measures of performance One key issue in testing the antecedents to performance is dening performance in a manner that is meaningful across levels. Many multilevel performance studies have relied on return on assets (ROA) as the sole outcome. Recently, Hawawini, Subramanian, and Verdin (2003) questioned this reliance on accounting measures, noting that such measures fail to reect rms relative skill with sustained value creation. This critique highlights the potential value of including longer-term outcomes. Thus, to capture the multidimensional nature of rm performance, we examine a shortterm accounting measure (ROA), a market measure (Tobins Q), and a measure of default risk or bankruptcy propensity (Altmans Z). The latter measure warrants further explanation. The concept of risk has been emphasized as an important theoretical consideration within the strategic groups literature (e.g., Fiegenbaum, McGee, and Thomas, 1987). Firms belonging to the same strategic group have been found to have similar risk positions yet exhibit differences in performance (Cool and Schendel, 1988). Measures incorporating risk have been used in the strategic groups literature as key dependent variables as well as measures of resource commitments (Fiegenbaum and Thomas, 1990, 1993, 1995). When examining risk at the organizational level, the likelihood of bankruptcy is an especially salient measure (Eberhart, Altman, and Aggarwal, 1999) that is of interest in a variety of country settings (Altman, Resti, and Sironi, 2004). As managers begin to rely more and more on bankruptcy as a strategic alternative and a dependent variable of interest, we agree with strategy scholars who advocate researchers rely on Altmans Z as an established measure of credit default risk (Miller and Reuer, 1996). Extant theory and evidence suggest that the three levels may not have uniform roles in shaping each performance measure. Specically, the rm level may have a stronger role with long-term measures than short-term measures, while the opposite holds true for the strategic group and industry levels. For example, research grounded in upper echelons theory suggests that although externalities are factors in bankruptcies (DAveni and MacMillan, 1990; Hambrick and DAveni, 1988), rm-level factors such as patterns of strategic actions and
153
the characteristics of the top management group play a greater role (DAveni, 1990; Hambrick and DAveni, 1988). Thus, bankruptcy is largely (albeit not exclusively) a function of bad managers and/or bad strategy within the rm. Firmlevel issues are also central to market measures. Although the nature of a rms competitive context is certainly reected in a rms stock price, this price fundamentally represents the stock markets expectations about a rms ability to deliver future returns (Lubatkin and Shrieves, 1986). If management appears competent and is seen as serving shareholders goals, stock price is enhanced. In contrast, the presence of self-serving, incompetent executives depresses stock price (Combs and Skill, 2003). Based on extant theory and evidence, as well as our expectation that the rm level may have a stronger role with long-term measures than short-term measures, we predict that: Hypothesis 4: The rm level is associated with greater variance in Tobins Q and Altmans Z than it is with return on assets. The strategic group level is likely to have its greatest link with prots. For example, high barriers to entering the industry and relatively genteel competition within and between strategic groups have helped pharmaceutical rms enjoy strong profits for decades (e.g., Cool and Schendel, 1987; McGrath and Nerkar, 2004). Cool and Schendels (1988) nding that groups of rms in the pharmaceutical industry constitute homogeneous risk classes also suggests that groups are likely to be associated with greater variance for protability than risk measures. Other tests of the strategic groupsperformance relationship have found stronger relationships for protability than for market measures (e.g., Mehra, 1996), or risk measures (Veliyath and Ferris, 1997). Based on extant theory and evidence, as well as our expectation that the strategic group level may have a stronger role with short-term measures than long-term measures, we predict that: Hypothesis 5: The strategic group level is associated with greater variance in return on assets than it is with Tobins Q and Altmans Z. The industry level is also more likely to have its greatest links with prots. From the perspective of industrial/organization economics (e.g., Bain,
154
J. C. Short et al.
In addition to the single-business requirement, we restricted the sample to industries with a minimum of 45 rms to provide the statistical power needed to detect a medium strategic group effect (Ferguson and Ketchen, 1999). There were 12 four-digit SIC industries that met our selection criteria with sufcient data on the variables used in our analysis: pharmaceutical preparations (SIC = 2834), in vitro/in vivo diagnostics (SIC = 2835), biological products (SIC = 2836), special industry machinery (SIC = 3559), computer communication equipment (SIC = 3576), computer periphery equipment (SIC = 3577), television and telegraph apparatus (SIC = 3661), radio, television broadcasting, and communication equipment (SIC = 3663), semiconductor-related devices (SIC = 3674), surgical, medical equipment and apparatus (SIC = 3841), electromedical apparatus (SIC = 3845), and prepackaged software (SIC = 7372). Our carefully selected sample was composed of 1,165 rms. Diagnostic tests A lagged structure was used to improve the ability to make causal inferences (cf. Palmer and Wiseman, 1999). Strategic group traits were measured with data from years 199195. For each industry, we performed ANOVAs along several variables (R&D intensity, capital intensity, sales, current ratio, and percentage of domestic sales) with year as the factor variable. None of these tests were statistically signicant, suggesting that 199195 was a stable strategic time period for our industries; thus, examining strategic group traits across the period was reasonable (cf. Fiegenbaum and Thomas, 1990; Fiegenbaum, Sudharshan, and Thomas, 1987). Performance was measured from 1993 to 1997. Five years of performance data are necessary to provide a stable measure of rm performance (cf. Keats and Hitt, 1988). Three years of data overlap were chosen because some attributes may have an immediate performance effect, while others may require a number of years (cf. Palmer and Wiseman, 1999). To assess the degree of differences between our sample and the samples used in previous studies, we drew on Short, Ketchen, and Palmers (2002) suggestions and compared our sample with available data from the COMPUSTAT database during the time of our study along two variables.
1956), as well as Porters (1980) related view, industry structure is a key underlying determinant of the amount of prot potential a rm can exploit. Dening industry attractiveness by protability alone, however, has been problematic because characteristics that create industry protability may lead to contrary implications for any given industry member (Wernerfelt and Montgomery, 1986). As a consequence, multilevel studies that dene the importance of industry effects via protability measures may conclude that industry has a stronger effect on performance than other importance organizational outcomes (Hawawini et al., 2003). Based on extant theory and evidence, as well as our expectation that the industry level may have a stronger role with short-term measures than long-term measures, we predict that: Hypothesis 6: The industry level is associated with greater variance in return on assets than it is with Tobins Q and Altmans Z.
METHOD
Sample Our sample was drawn from the COMPUSTAT database. COMPUSTAT includes data on over 7,000 companies in more than 300 industries. In constructing our sample, we addressed two dilemmas encountered in previous studies using the database as described by Chang and Singh (2000). First, variance decomposition techniques results vary based on sample characteristics; specically, they noted that previous studies have failed to capture adequate variance in size. Second, COMPUSTAT reporting methods lead to restrictions in the reporting of diversied rms. In response, we purposively sampled from manufacturing industries dominated by single-business rms. Our samples rms have considerable variance in size and include both large and small rms (i.e., rms with less than 1% market share) (cf. Chang and Singh, 2000). By focusing on single-business rms, COMPUSTATs reporting limitations (which are problematic in diversied rms) are not an issue. Using single-business rms also avoids statistical noise that would occur if rms operating in multiple industries were included (Mauri and Michaels, 1998), and avoids confounding that might occur if diversied rms were placed into strategic groups.

First, we found no statistically signicant difference between the two sets in terms of return on assets (F7893 = 0.25). Our second variable is sales, a measure of size. We used the natural log of sales because the variable was not normally distributed. Our sample rms were smaller than the rms in the COMPUSTAT database as a whole (mean ln sales = 2.23 for our rms; mean ln sales = 4.15 for the COMPUSTAT database; F7020 = 545.08, p < 0.01). Thus, our rms appear to be smaller than publicly held rms in general. This is not surprising because we examined single-business rms and COMPUSTAT includes a mix of single business and diversied rms. One implication is that interpretation of the ndings should be done with caution for larger rms (and in particular diversied rms); at the same time, replication of our ndings with larger rms would be valuable. Performance As explained above, we used several measures to capture the multifaceted nature of performance. First, we used return on assets (ROA) to indicate accounting-based (i.e., nancial) performance. Other accounting measures such as return on equity are available, but using ROA enhances our studys comparability with the many previous variance decomposition studies that have used ROA. This short-term measure was augmented by measures that reect longer-term concerns. Market-based performance was assessed via Tobins Q. Tobins Q is the sum of the market value of equity, the book value of debt, and deferred taxes divided by the book value of total assets minus intangible assets (Thomas and Waring, 1999: 739). Finally, we relied on Altmans Z, a measure of bankruptcy propensity, to capture prospects for rm survival (Altman et al., 1981). Strategic group measures and clustering procedures The evolution of strategic group analysis has produced two distinct approaches (Bantel, 1998). The inductive approach focuses on empirically derived groups that often vary considerably across industries. In contrast, the deductive approach is a theory-driven approach that can be applied to a
155
wide variety of industry contexts (Ketchen et al., 1993). We test both approaches. Deductively dened strategic groups We rely on the deductive approach pioneered by Bantel (1998) and Ketchen et al. (1993). This approach relies on two theoretical perspectives at the heart of organizational analysis: strategic choice and organizational ecology. The basic premise is that rms strategies vary across two dimensions emphasized in both theories (Zammuto, 1988). The rst dimension relates to a rms method of developing competitive advantage; rms are expected to emphasize either being rst to market or exploiting previously existing opportunities. The second dimension focuses on breadth of operations (i.e., narrow vs. broad). Combining these two dimensions results in four quadrants that overlap in part with the Miles and Snow (1978) typology. The rst quadrant is represented by defenders/K-specialists, who focus on existing opportunities in a narrow domain. Entrepreneurs/r-specialists pursue new opportunities in a narrow domain. Analyzers/K-generalists efciently exploit existing opportunities in a broad domain. Finally, prospectors/r-generalists pursue new opportunities in a broad domain. We used one measure of each of the two competitive dimensions as the basis for nding strategic groups via cluster analysis (cf. Bantel, 1998; Ketchen et al., 1993). To measure the method of developing competitive advantage, we used research and development (R&D) intensity (cf. Bantel, 1998). A rm that makes a signicant, consistent investment in R&D has the capability to innovate or be an early follower. Thus, we suggest that high R&D denotes the pursuit of new opportunities, while small investments are indicative of a focus on existing opportunities. We measured R&D intensity as the average R&D expenditure divided by sales for the years 199195 (Bierly and Chakrabarti, 1996). To measure breadth of operations, we used the number of trademarks the rm holds. Trademarks proxy for breadth of operations because rms with many trademarks are likely to be involved in the production of numerous products, services, or devices (Hall, 1992). Conversely, rms that hold few trademarks are more likely to focus their operations on a narrow niche market. Thus, trademarks offer a reasonable reection
156
J. C. Short et al.
Additionally, capital investment is a reection of strategy that has been shown to have a strong relationship with rm performance across studies (e.g., Capon, Farley, and Hoenig, 1990). Liquidity ratios are commonly used to identify a rms availability of nancial resources (Chatterjee and Wernerfelt, 1991). Available nancial resources provide the means for achieving strategic exibility that can enhance organizational performance (Greenley and Oktemgil, 1998). Following Chatterjee and Wernerfelt (1991), we used the current ratio to measure nancial resources. The current ratio is calculated by dividing current assets by current liabilities and represents a rms liquidity, or the ability to pay bills and other immediate debts. Finally, organizational size is another variable that is expected to be an indicator of relative scope of operations (Ferguson et al., 2000) as well as a measure of resource commitments (Cool and Schendel, 1988). To measure size, we used the natural log of total sales (Cool and Schendel, 1988). Clustering procedures For each approach, a two-stage clustering procedure was used to group rms. A two-stage process is valuable because it increases the validity of cluster solutions (Ketchen and Shook, 1996). For the inductive approach, we used hierarchical clustering (i.e., Wards method) to determine both the number of groups and their cluster centroids. We used the largest percentage change in the agglomeration coefcient to suggest the optimal number of groups in each industry (Hair et al., 1998). For our deductively dened groups, we again relied on Wards method to nd cluster centroids, but we relied on our a priori theoretical framework and imposed a four-group solution in each industry. For both approaches, the cluster centroids identied in the rst step were used as the starting point for a nonhierarchical clustering procedure (i.e., K-means). Criterion validity was assessed through MANOVA signicance tests with our performance variables (Ketchen and Shook, 1996). Hierarchical linear modeling (HLM) analysis We relied on HLM as the primary technique to test the hypotheses. HLM was introduced to the strategy literature by McNamara et al.s (2003) investigation of variance within and between strategic
of competitive scope across the 12 industries and 1,165 rms examined. Inductively dened strategic groups Strategic group analysis has traditionally based membership on proles and characteristics that inuence competitive advantage (McGee and Thomas, 1986). One popular approach focuses on two main competitive traits: scope of operations and resource deployment methods (Cool and Schendel, 1987; Ferguson, Deephouse, and Ferguson, 2000; Mehra, 1996). The choice of grouping variables was informed by prior strategic group studies. Also, given our multi-industry sample, we focused on variables that are available and relevant across the settings included in our sample. Scope of operations denes the number of niches in which the rm operates and degrees to which an organization sells products offered by the industry (Ferguson et al., 2000). We measured two aspects of operations scope that are common to the industries in our sample. To capture geographic scope we used the percentage of domestic sales divided by total sales (cf. Cool and Schendel, 1988). A company with a high percentage of domestic sales is less likely to have global operations, and more likely to focus on domestic customers and suppliers of raw materials. The number of product types has been used as a measure of competitive scope in previous strategic groups studies (e.g., Houthoofd and Heene, 1997). To provide a proxy for number of product types across multiple industries we used the number of patents granted to the rm between 1991 and 1995, available from the CASSIS database from the Patent and Trademark Ofce of the U.S. Department of Commerce (PennerHahn, 1998). Because patent protection provides the owner with exclusive rights to make, use, and sell the patented invention for more than a decade, a patent represents the ability of a rm to achieve a sustained competitive advantage through product scope (Hall, 1992). We examined three resource deployment variables. Physical resources encompass the rms physical technology, plant and equipment, geographic location, and access to raw materials (Barney, 1991). To measure physical resources we used capital intensity, dened as capital expenditures divided by sales. A rm that makes a consistent commitment to capital expenditures is continually building their property, plant and equipment.

groups. The use of HLM provides for simultaneous partitioning of variancecovariance components (Bryk and Raudenbush, 1992). Like other variance decomposition techniques, HLM variance components analysis allows for estimation of multilevel inuences without direct measurement of variables associated with each level. Specically, rm characteristics are modeled as latent factors, while strategic group and industry attributes are captured using common latent variables shared by members of the same strategic group or industry. The use of HLM offers certain advantages. First, HLMs mathematics recognize that the members of the lower level within a higher-level system (e.g., rms within a strategic group) may not be independent from each other (Hofmann, 1997). This accurately reects systems theorys contention that components interact in important ways. Also, at levels 1 and 2 (rm and strategic group in our study), HLM relies on a Bayesian estimation approach that improves the precision of estimates relative to traditional approaches (Hofmann, 1997). To model the effects of rm, strategic group, and industry levels on performance we used a three-level HLM technique offered in the HLM 5 software package (Raudenbush et al., 2000). Specically, a three-level HLM model was used to test the effects of rms (level 1) nested within strategic groups (level 2) nested within industries (level 3). This model represents how variation is allocated across the different levels. The level 1 model represents the performance of each rm as a function of a strategic group mean plus random error using the following equation: Performance ij k = 0j k + eij k where Performance ij k is the average performance for a single dependent variable (e.g., return on assets) of rm i in strategic group j and industry k; 0j k is the mean performance of strategic group j in industry k; eij k is a random rm effect that measures the deviation of rm ijk s score from the strategic group mean. These effects are assumed to be normally distributed with a mean of zero and variance 2 . The subscripts i, j , and k denote rms, strategic groups, and industries where there are i = 1, 2, . . . , nj k rms within strategic group j in industry k; j = 1, 2, . . . , Jk strategic groups within industry k; and k = 1, 2, . . . , K industries. The level 2 model examines each strategic group mean, 0j k , as an outcome varying randomly
157
around an industry mean using the following formula: 0j k = 00k + r0j k , where 00k is the mean strategic group performance in industry k; r0j k is a random strategic group effect, that is, the deviation of strategic group jk s mean from the industry mean. These effects are assumed to be normally distributed with a mean of zero and variance . The level 3 model represents the variability among industries. The industry mean, 00k , varies randomly around a grand mean as presented in the following formula: 00k = 000 + u00k , where 000 is the grand mean; u00k is the random industry effect, that is, the deviation of industry ks mean from the grand mean. These effects are assumed to be normally distributed with a mean of zero and variance . This simple three-level model partitions the total variability in the outcome Performanceij k into its three components: (level 1) among rms within strategic groups, 2 ; (level 2) among strategic groups within industries, ; and (level 3) among industries, . This partitioning allows for estimates of the proportion of variation that lies within strategic groups, among strategic groups within industries, and among industries. Specically, 2 /( 2 + + ) is the proportion of variance within strategic groups (i.e., rm differences); /( 2 + + ) is the proportion of variance among strategic groups within industries; and /( 2 + + ) is the proportion of variance among industries. This fully unconditional model allows for an estimation of the variability associated with each of the three levels (i.e., rms, strategic groups, industries).
RESULTS
The inductive approach to strategic groups found an average of 3.75 groups. The median number of groups was four, which was found in ve industries. Two groups were found in three industries, three groups were found in one industry, ve groups were detected in three industries, and six groups were detected in one industry. As described above, a four-group solution was imposed on each industry for the deductive approach based on a priori theory. Following verication procedures recommended by Ketchen and Shook (1996), results of MANOVA signicance tests using rm performance measures support the validity of cluster solutions. As shown in Table 1, the F -tests from Wilkss lambda, provided by the MANOVA, show
158
J. C. Short et al.
Table 1. A comparison of deductive and inductive strategic groups Industry SIC code Number of rms Deductive analysis Number of groups 4 4 4 4 4 4 4 4 MANOVA F -tests with performance 18.38 8.48 14.59 8.48 6.01 3.57 6.34 7.00 Inductive analysis Number of groups 2 5 4 2 4 3 5 4 MANOVA F -tests with performance 40.83 6.02 18.21 17.47 4.27 4.90 4.84 9.84
Pharmaceutical preparations In vitro/in vivo diagnostics Biological products Special industry machinery Computer communication equipment Computer periphery equipment Television and telegraph apparatus Radio, television broadcasting, and communication equipment Semiconductor-related devices Surgical, medical equipment and apparatus Electromedical apparatus Pre-packaged software
2834 2845 2836 3559 3576 3577 3661 3663
127 65 97 46 67 64 77 71
3674 3841 3845 7372
98 54 95 304
4 4 4 4
11.79 9.98 8.61 23.99
2 4 4 6
20.95 6.03 7.32 15.69
p < 0.01
signicant differences in performance based on group membership for all industries in the sample for both deductively and inductively dened techniques (p < 0.01). Table 2 displays the results that include the deductively dened strategic groups using HLM. For ROA, 65.82 percent of the variance was accounted for by the rm level, 14.95 percent of the variance was at the strategic groups level of analysis, and 19.23 percent of the variance was found between industries. For Tobins Q, 91.08 percent of the variance was associated with the rm level, 2.44 percent was between groups, and 6.48 percent was between industries. For Altmans Z, rm effects were associated with 96.08 percent of the variance, while 2.59 percent was between groups, and 1.33 percent was between industries. Overall, signicant variance was detected at each level across all performance measures. Even the smallest effect (1.33%) was statistically signicant (p < 0.05). Table 3 displays the results involving the inductively dened strategic groups using HLM. Overall, the pattern of ndings was consistent with the
pattern relying on the deductive groups. For ROA, 78.97 percent of the variance was associated with rm-level factors, 6.35 percent of the variance was at the strategic groups level, and 14.68 percent of the variance was between industries. For both Tobins Q and Altmans Z, the rm level was associated with over 90 percent of the variance. Signicant variance was detected at the strategic group level across all performance measures. Signicant variance was found at the industry level for ROA and Tobins Q, but the 0.98 percent of variance in Altmans Z was not signicant. In sum, the results strongly support the predictions that the rm level (Hypothesis 1) and the strategic group level (Hypothesis 2) are associated with signicant variance in performance. In ve of six tests, the industry level was signicant as well, offering support for Hypothesis 3. Hypothesis 4 predicted that the rm level of analysis was associated with greater variance in Tobins Q and Altmans Z than it is with return on assets. In support, both analyses found that over 90 percent of the variance in long-term measures was associated with the rm level of analysis, while

Table 2. Source Variance decomposition using deductively dened strategic groups Return on assets Variance component Percent of total Tobins Q Variance component 3.15 0.08 0.22 3.45 3.16 0.09 0.21 3.46 3.16 0.08 0.20 3.44 Percent of total 91.08 2.44 6.48 100.00 91.33 2.60 6.07 100.00 91.86 2.33 5.81 100.00 Altmans Z Variance component 73.19 1.98 1.01 76.18 73.05 2.02 1.01 76.08 72.85 1.96 1.36 76.17
159
Percent of total 96.08 2.59 1.33 100.00 96.02 2.65 1.33 100.00 95.64 2.57 1.79 100.00
Hierarchical linear modeling results Firm 747.71 65.82 Strategic group 169.83 14.95 Industry 218.51 19.23 Total 1136.05 100.00 Variance components (maximum likelihood) results Firm 747.04 65.80 Strategic group 169.81 14.95 Industry 218.52 19.25 Total 1135.37 100.00 ANOVA results Firm 743.10 71.77 Strategic group 117.31 11.33 Industry 174.96 16.90 Total 1035.37 100.00
N = 1,165 at the rm level for ROA and Altmans Z, and 614 for Tobins Q. Samples sizes at the strategic group and industry levels are 48 and 12, respectively, for all dependent variables.
Table 3. Source
Variance decomposition using inductively dened strategic groups Return on assets Variance component Percent of total Tobins Q Variance component 3.21 0.20 0.13 3.54 3.15 0.11 0.14 3.40 3.25 0.00 0.26 3.51 Percent of Total 90.68 5.65 3.67 100.00 92.65 3.23 4.12 100.00 92.59 0.00 7.41 100.00 Altmans Z Variance component 70.79 5.04 0.75 76.58 70.79 5.06 0.74 76.59 71.12 5.39 0.00 76.51 Percent of total 92.44 6.58 0.98 100.00 92.42 6.61 0.97 100.00 92.96 7.04 0.00 100.00
Hierarchical linear modeling results Firm 787.53 78.97 Strategic group 63.31 6.35 Industry 146.36 14.68 Total 997.20 100.00 Variance components (maximum likelihood) results Firm 787.69 78.98 Strategic group 63.29 6.35 Industry 146.30 14.67 Total 997.28 100.00 ANOVA results Firm 789.81 76.28 Strategic group 49.80 4.81 Industry 195.76 18.91 Total 1035.37 100.00
N = 1,165 at the rm level for ROA and Altmans Z, and 614 for Tobins Q. Samples sizes at the strategic group and industry levels are 45 and 12, respectively, for all dependent variables.
65.8278.97 percent of the variance in ROA was found at the rm level.4 Hypothesis 5 predicted
4 We consulted several methodological experts (including at the software company that provides HLM) in a search for a signicance test for comparing the variance explained across
different outcomes by one level (e.g., the rm levels share of ROA vs. its share of the other measures). They were unable to identify such a test; thus our ndings for Hypotheses 46 should be considered preliminary; additional testing using new samples and/or more sophisticated techniques that may be developed in the future is needed to verify the results.
160
J. C. Short et al.
and 56.9% of ROA across 5 years for rm, industry, and error, respectively). However, our results for Tobins Q and Altmans Z support the same conclusion as Mauri and Michaels modelsthe majority of the variance is due to year-to-year variation (i.e., error), rm effects account for the next largest amount, followed by industry effects. Thus, this post hoc analysis provides at least some evidence that our model specication offers parallels to previous specications.
that the strategic group level was associated with greater variance in ROA than the variance associated with Tobins Q and Altmans Z. The deductive analysis supported this hypothesis (14.95% vs. 2.44% and 2.59%), while the inductive did not (6.35% vs. 5.65% and 6.58%). Finally, Hypothesis 6s prediction that the industry level is associated with greater variance in ROA than the variance associated with Tobins Q and Altmans Z was supported by both analyses (19.23% vs. 6.48% and 1.33% for the deductive; 14.68% vs. 3.67% and 0.98% for the inductive). Supplemental analysis In addition to the strengths listed above, HLM has some limitations. HLM treats variables as random (i.e., not researcher-driven), but our deductive groups were xed. HLM assumes multivariate normalityan assumption that is often violated in organizational research. These issues highlight the value of analyzing our data with alternative techniques. To facilitate comparisons with previous studies that have tested multilevel inuences on rm performance, we tested our sample using two techniques prevalent in this line of research: variance components (e.g., Mauri and Michaels, 1998) and ANOVA (e.g., Rumelt, 1991). These results are presented alongside our HLM analysis for ROA, Tobins Q, and Altmans Z in Tables 2 and 3. The pattern of results parallels those obtained using HLM (e.g., the rm level consistently accounts for over 90% of Tobins Q and Altmans Z regardless of the analytical technique used), providing evidence that our ndings were not driven by our use of HLM. To compare our specication to previous specications, we also tested our sample using a three-level HLM analysis without the strategic group level of analysis (i.e., rm, industry, and error). This test most closely parallels Mauri and Michaels (1998) study of 264 companies in 69 four-digit SIC industries that also tests rm and industry effects of single-business rms (i.e., corporate level effects are excluded). Our results were consistent across the three sets of analyses (HLM, variance components, and ANOVA). In terms of ROA, the rm level accounts for 48.1552.31 percent of the variance, industry accounts for 9.4910.50 percent, and error accounts for 38.20 41.86 percent. Our results vary a bit from those of Mauri and Michaels (they found 36.9%, 6.2%,
DISCUSSION
There is a 20-year tradition of examining the multilevel determinants of performance dating back to Schmalensees (1985) pioneering efforts. Our study contributes to this research stream in three ways: the inclusion of the strategic group level, a reliance on systems theory, and the use of hierarchical linear modeling. Below, we discuss the implications of our ndings for researchers and for managers as well as the limitations of the study. Implications for researchers In Thomas Kuhns (1970) classic work, The Structure of Scientic Revolutions, he argues that new theories often replace old ones rather than building upon them. This tendency can lead to the abandonment of valuable ideas. Strategy scholars should recognize the existence and the risks of this tendency relative to the theories surrounding our three levels. Research examining the resourcebased view of the rm has grown at an astounding rate since the publication of Barneys (1991) seminal article. Indeed, according to the Web of Science, well over 2,000 articles have cited Barney (1991) as of this writing. At roughly the same time, strategic groups research was criticized on a number of fronts, and some proposed abandoning the concept (Barney and Hoskisson, 1990). Research integrating these levels has been relatively rare (see Fox et al., 1997; Nair and Filer, 2003; Nair and Kotha, 2001, for exceptions) but is necessary to advance our knowledge of the determinants of performance from a systems perspective. Our study provides responses to two of the harshest criticisms of strategic groups research. Scholars have been critical of the strategic groups concept because research has relied largely on differences in performance at the group level of

analysis as evidence that strategic groups matter (Barney and Hoskisson, 1990; Hoskisson et al., 1999). In contrast, our study found that strategic groups were associated with rm-level performance across a number of measures. The HLM tests of bankruptcy risk (Altmans Z), specically, consistently found that the effects of group membership were stronger than industry effects. This nding is noteworthy because the risk of failure is a fundamental concern with wide applicability across borders (Altman, 1984), suggesting that strategic groups may be an important determinant of performance both in the United States as well as globally. Also, our inclusion of strategic groups within a systems theory viewpoint provides a response to assertions that the strategic groups concept lacks theoretical support for dening groups within industries (Hoskisson et al., 1999). Our incorporation of systems theory offers a conceptual base for research bridging micro and macro inquiry (House et al., 1995). The importance of context has seen increasing importance in contemporary organizational behavior (Rousseau and Fried, 2001). The eld of human resource management, specically, is one area with signicant opportunity for bridging levels (Wright and Boswell, 2002). For example, researchers have recently investigated the extent that industry matters for the relationship between human resource management and labor productivity (Datta, Guthrie, and Wright, 2005). Given that strategic groups are often dened in part by cost structures, the inclusion of the strategic group level of analysis represents a fruitful area for inquiry into how
Table 4. Source
161
context shapes human resource practices and outcomes. Our results have implications for a key theoretical issue in the organizational sciencesthe extent to which a rms fate is self-determined. We examined three outcome measures. ROA is a short-term performance measure and Tobins Q and Altmans Z are long-term measures. We found that the rm level was associated with the largest variance in short-term performance, but that the other two levels played major roles as well. For example, in the results for the deductive approach to deriving groups using HLM, the rm level accounted for approximately 66 percent of the variance, with 15 percent and 19 percent at the strategic group and industry levels, respectively. Brush and Bromiley (1997) note that when interpreting variance components their relative importance can be assessed by examining the square root of the variance at each level of analysis. In terms of ROA, the relative importance of the rm level of analysis is roughly equivalent to the importance of context (the importance of rm and industry levels combined).5 For the long-term measures, however, the rm level accounted for over 90 percent of the variance and was the largest in terms of importance (as shown in Table 4). This latter result
5 The square root of the 65.82 percent of the variance in the rm level of analysis is 0.81, the square root of the 14.95 percent of the variance in the strategic group level of analysis is 0.39, and the square root of the 19.23 percent of the variance in the industry level of analysis is 0.44. Dividing these numbers by the combined square root reveals that the 0.49 importance of the rm level of analysis is approximately the same as the 0.51 importance of strategic group and industry levels combined for return on assets. We appreciate a reviewer pointing this out to us.
Relative importance of rm, strategic group, and industry levels of analysis using HLM Return on assets Tobins Q Altmans Z
% of Square Relative % of Square Relative % of Square Relative variance root importance variance root importance variance root importance explained explained explained Deductively dened strategic groups Firm 65.82 0.81 Strategic group 14.95 0.39 Industry 19.23 0.44 Total 100.00 1.64 Inductively dened strategic groups Firm 78.97 0.89 Strategic group 6.35 0.25 Industry 14.68 0.38 Total 100.00 1.52
0.49 0.24 0.27 1.00 0.59 0.16 0.25 1.00
91.08 2.44 6.48 100.00 90.68 5.65 3.67 100.00
0.95 0.16 0.25 1.36 0.95 0.24 0.19 1.38
0.70 0.12 0.18 1.00 0.69 0.17 0.14 1.00
96.08 2.59 1.33 100.00 92.44 6.58 0.98 100.00
0.98 0.16 0.12 1.26 0.96 0.26 0.10 1.32
0.78 0.13 0.09 1.00 0.73 0.20 0.07 1.00
162
J. C. Short et al.
(Gomez-Mejia and Wiseman, 1997). CEO duality research also might benet from a multilevel perspective. The relationship between CEO duality and rm performance is equivocal (Dalton et al., 1998); however, the strategic group level of analysis has been absent from this research. Juxtaposing an organizational typology such as Miles and Snows (1978) might help reveal the efcacy of the CEO also chairing the board. Implications for practitioners Our study offers at least three useful insights for managers. First, there are currently two main schools of thought about what level of analysis drives performance that compete for managers attention. The industrial/organization economics school stresses the role of industry structure, while the resource-based view emphasizes the importance of rm attributes. For managers attempting to discern which is stronger, our results suggest an adherence to resource-based view logic. Specically, managers should focus their energy mainly on rm-level concerns. However, the signicant role played by industry suggests that industrial/organization economics logic cannot be ignored when forming strategy. Our second insight is that the strategic group level is worthy of managers attention. Although most managers have been exposed at length to various concepts involving the rm and the industry, the strategic group level is much less publicized. Yet, our study indicates this level plays a role in outcomes, especially prot. Our third insight is that the results support past calls for managers to move beyond nancial measures alone when evaluating their rms performance (e.g., Kaplan and Norton, 1996). Reliance simply on return on assets would suggest that rm attributes explain about two-thirds of the variance in performance. For the long-term measures, however, rm effects exceed 90 percent. The implication is that a focus on nancial measures will understate the importance of strategic execution for achieving sustained competitive advantage. Limitations and future research directions Our studys results should be viewed in light of its limitations. While HLM has unique strengths, one limitation is its need for levels to be nested within only one group. This limited our sample to
was very robustit was consistent across inductive and deductive derivations, and across HLM, variance components, and ANOVA (as shown in Tables 2 and 3), answering researchers calls to assess the robustness of different methods linking strategic group membership to differences in rm performance (Fox et al., 1997). One theoretical implication is that while the setting in which a rm competes has a signicant inuence on short-term performance (i.e., ROA in our study), a rms durability is based predominantly on features of the rm itself. Our nding that a rms survival is largely self-determined should reassure strategic management researchers that our elds contention that managers matter is well founded. Viewed broadly, the results have implications for the long-running discussion about strategic choice vs. organizational ecology as explanations of rms fates (e.g., Hrebiniak and Joyce, 1985). To the extent that rm characteristics are the products of managerial decisions, our results suggest that strategic choices generally offer greater explanatory power than ecology where survival is concerned. Prot, however, is a roughly equal product of a rm and its context (i.e., its strategic group and industry). The support we found for our predictions also suggests that systems theory is a valuable theory for viewing the multilevel drivers of performance. Perhaps the key implication here is that the critical issue of why some rms outperform others can be better understood when important components of organizational systems are added. Our study takes a signicant step in this direction by adding the strategic group level. Similarly, Makino, Isobe, and Chan (2004) took a signicant step by adding the country level to the research stream (they did not include the strategic group level, however). While the country level was beyond the scope of our investigation, this level as well as a geographic region level (e.g., Scandinavia, Latin America, Oceania) could be effectively included within a systems theory framework. More broadly, our study encourages researchers to consider how levels of analysis issues might inform other research streams. For example, the relationship between rm strategy and CEO pay is unclear. This link could be claried by including industry or other contextual characteristics

single-business rms, leaving us unable to measure corporate effects. Subsequent inquiry could examine corporations whose business units in different industries would be classied into strategic groups. Such a design would be very complex methodologically, but it might provide results that would be very revealing. Because our sample included only manufacturing rms in relatively high-tech industries and because our rms appear to be smaller than publicly held rms in general, our results may not generalize to other sectors. Thus, replication in other samples (e.g., service rms, larger rms) is needed. Because we examined a variety of industries, we needed to identify measures that were relevant in all settings. This created a trade-off in that these measures were less precise than would be possible with a narrower sample. Our relatively coarse approach was consistent with practice in the multilevel performance determinants literature. Looking to the future, researchers could enhance precision by developing industry-specic measures, perhaps through primary data sources such as interviews and surveys. Finally, a longer time frame than our 7-year focal period may have shed additional light on the hypotheses. Firms change strategies, industries mature and decline, and strategic group membership has been shown to shift; thus, one unexplored research issue is the degree to which the relative roles of rm, group, and industry membership may change over time.
163
ACKNOWLEDGEMENTS
The authors would like to thank Don Bergh, William Bloom, James Combs, and Bruce Lamont for their valuable suggestions.
REFERENCES
Altman EI. 1984. The success of business failure prediction models. Journal of Banking and Finance 8: 171198. Altman EI, Avery RB, Eisenbeis RA, Sinkey JF. 1981. Application of Classication Techniques in Business, Banking, and Finance. JAI Press: Greenwich, CT. Altman E, Resti A, Sironi A. 2004. Default recovery rates in credit risk modeling: a review of the literature and empirical evidence. Economic Notes 33: 183208. Anderson P. 1999. Complexity theory and organization science. Organization Science 10: 216232. Ashmos DP, Huber GP. 1987. The systems paradigm in organizational theory: correcting the record and suggesting the future. Academy of Management Review 12: 607621. Bain JS. 1956. Barriers to New Competition. Harvard University Press: Cambridge, MA. Bantel KA. 1998. Technology-based, adolescent rm congurations: strategy, identication, context, and performance. Journal of Business Venturing, 13: 205230. Barney JB. 1991. Firm resources and sustained competitive advantage. Journal of Management 17: 99120. Barney JB, Hoskisson RE. 1990. Strategic groups: untested assertions and research proposals. Managerial and Decision Economics 11: 187198. Barney JB, Mackey TB. 2005. Testing resource-based theory. In Research Methodology in Strategy and Management, Vol. 2, Ketchen DJ, Bergh DD (eds). Elsevier: New York; 113. Bierly P, Chakrabarti A. 1996. Generic knowledge strategies in the U.S. pharmaceutical industry. Strategic Management Journal , Special Winter Issue 17: 123136. Boulding KE. 1956. General systems theory: the skeleton of science. Management Science 2: 197208. Brush TH, Bromiley P. 1997. What does a small corporate effect mean? A variance components simulation of corporate and business effects. Strategic Management Journal 18(10): 825835. Bryk AS, Raudenbush SW. 1992. Hierarchical Linear Models: Applications and Data Analysis Methods. Sage: Newbury Park, CA. Burns B. 2004. Kurt Lewin and complexity theories: back to the future? Journal of Change Management 4: 309325. Capon N, Farley JU, Hoenig S. 1990. Determinants of nancial performance: a meta-analysis. Management Science 36: 11431159. Chang S-J, Singh H. 2000. Corporate and industry effects on business unit competitive position. Strategic Management Journal 21(7): 739752.
CONCLUSION
Predicting performance is a cornerstone of strategic management research. Two research streams focused on explaining performance (multilevel performance studies and strategic groups research) have developed independently. We found that, when examined together, the rm, strategic group, and industry levels each contribute signicantly to accounting for performance. This implies that if a study includes only one or two of the levels, the resulting portrayal of the interwoven systems that collectively shape rm outcomes is incomplete. For managers, our ndings suggest that achieving superior performance is tied primarily to rm characteristics, but it also depends on appropriate positioning within a strategic group and the industry.
164
J. C. Short et al.
strategy. International Studies of Management and Organization 18: 625. Fiegenbaum A, Sudharshan D, Thomas H. 1987. The concept of stable strategic time periods in strategic group research. Managerial and Decision Economics 8: 139148. Fiegenbaum A, Hart S, Schendel D. 1996. Strategic reference point theory. Strategic Management Journal 17(2): 219235. Fox I, Srinivasan S, Vaaler PM. 1997. A descriptive alternative to cluster analysis: understanding strategic group performance with simulated annealing. In Statistical Models for Strategic Management, Ghertman M (ed). Kluwer Academic: Boston, MA; 91111. Godfrey PC, Hill CW. 1995. The problem of unobservables in strategic management research. Strategic Management Journal 16(7): 519533. Gomez-Mejia L, Wiseman RM. 1997. Reframing executive compensation: an assessment and outlook. Journal of Management 23: 291374. Greenley GE, Oktemgil M. 1998. A comparison of slack resources in high and low performing British companies. Journal of Management Studies 35: 378398. Hair JF, Anderson RE, Tatham RL, Black WC. 1998. Multivariate Data Analysis. Prentice-Hall: Upper Saddle River, NJ. Hall R. 1992. The strategic analysis of intangible resources. Strategic Management Journal 13(2): 135144. Hambrick DC, DAveni RA. 1988. Large corporate failures as downward spirals. Administrative Science Quarterly 33: 123. Hannan M, Freeman J. 1977. Structural inertia and organizational change. American Sociological Review 49: 149164. Hawawini G, Subramanian V, Verdin P. 2003. Is performance driven by industry- or rm-specic factors? A new look at the evidence. Strategic Management Journal 24(1): 116. Hendry J, Seidl D. 2003. The structure and signicance of strategic episodes: social systems theory and the routine practices of strategic change. Journal of Management Studies 40: 175196. Hofmann DA. 1997. An overview of the logic and rationale of hierarchical linear models. Journal of Management 23: 723744. Hoskisson RE, Hitt MA, Wan WP, Yiu D. 1999. Theory and research in strategic management: swings of a pendulum. Journal of Management 25: 417456. House R, Rousseau DM, Thomas-Hunt M. 1995. The meso paradigm: a framework for the integration of micro and macro organizational behavior. In Research in Organizational Behavior, Vol. 17, Cummings LL, Staw BM (eds). JAI Press: Greenwich, CT; 71114. Houthoofd N, Heene A. 1997. Strategic groups as subsets of strategic scope groups in the Belgian brewing industry. Strategic Management Journal 18(8): 653666. Hrebiniak LG, Joyce WF. 1985. Organizational adaptation: strategic choice and environmental determinism. Administrative Science Quarterly 30: 336349.
Chatterjee S, Wernerfelt B. 1991. The link between resources and type of diversication: theory and evidence. Strategic Management Journal 12(1): 3348. Combs JG, Ketchen DJ. 1999. Explaining interrm cooperation and performance: toward a reconciliation of predictions from the resource-based view and organizational economics. Strategic Management Journal 20(9): 867888. Combs JG, Skill MS. 2003. Managerialist and human capital explanations for key executive pay premiums: a contingency perspective. Academy of Management Journal 46: 6373. Cool K, Schendel D. 1987. Strategic group formation and performance: the case of the U.S. pharmaceutical industry, 19631982. Management Science 33: 11021124. Cool K, Schendel D. 1988. Performance differences among strategic group members. Strategic Management Journal 9(3): 207223. Dalton DR, Daily CM, Ellstrand AE, Johnson JL. 1998. Meta-analytic reviews of board composition, leadership structure, and nancial performance. Strategic Management Journal 19(3): 269290. Datta DD, Guthrie JP, Wright PM. 2005. Human resource management and labor productivity: does industry matter? Academy of Management Journal 48: 135145. DAveni RA. 1990. Top managerial prestige and organizational bankruptcy. Organization Science 1: 121142. DAveni RA, MacMillan IC. 1990. Crisis and the content of managerial communications: a study of the focus of attention of top managers in surviving and failing rms. Administrative Science Quarterly, 35: 634657. Dranove D, Peteraf M, Shanley M. 1998. Do strategic groups exist? An economic framework for analysis. Strategic Management Journal 19(11): 10291044. Eberhart AC, Altman EI, Aggarwal R. 1999. The equity performance of rms emerging from bankruptcy. Journal of Finance 5: 18551868. Ferguson TD, Ketchen DJ. 1999. Organizational congurations and performance: the role of statistical power in extant research. Strategic Management Journal 20(4): 385395. Ferguson TD, Deephouse DD, Ferguson WL. 2000. Do strategic groups differ in reputation? Strategic Management Journal 21(12): 11951214. Fiegenbaum A, Thomas H. 1990. Strategic groups and performance: the U.S. insurance industry, 197084. Strategic Management Journal 11(3): 197215. Fiegenbaum A, Thomas H. 1993. Industry and strategic group dynamics: competitive strategy in the insurance industry, 197084. Journal of Management Studies 30: 69105. Fiegenbaum A, Thomas H. 1995. Strategic groups as reference groups: theory, modeling and empirical examination of industry and competitive strategy. Strategic Management Journal 16(6): 461476. Fiegenbaum A, McGee J, Thomas H. 1987. Exploring the linkage between strategic groups and competitive

Hunt MS. 1972. Competition in the major home appliance industry 19601970. Doctoral dissertation, Harvard University. Joyce WF. 2003. Integrating the resource-based and strategic groups inuences on rm performance: extending a meso perspective. In Research in MultiLevel Issues, Vol. 2, Dansereau F, Yammarino FJ (eds). JAI Press: Greenwich, CT; 189197. Kaplan RS, Norton DP. 1996. Using the balanced scorecard as a strategic management system. Harvard Business Review 74(1): 7585. Keats BW, Hitt MA. 1988. A causal model of linkages among environmental dimensions, macro organizational characteristics, and performance. Academy of Management Journal 31: 570598. Ketchen DJ, Shook CL. 1996. The application of cluster analysis in strategic management research: an analysis and critique. Strategic Management Journal 17(6): 441458. Ketchen DJ, Thomas JB, Snow CC. 1993. Organizational congurations and performance: a comparison of theoretical approaches. Academy of Management Journal 36: 12781313. Ketchen DJ, Combs JG, Russell CJ, Shook C, Dean MA, Runge J, Lohrke FT, Naumann SE, Haptonstahl DE, Baker R, Beckstein BA, Handler C, Honig H, Lamoureux S. 1997. Organizational congurations and performance: a meta-analysis. Academy of Management Journal 40: 222240. Ketchen DJ, Snow CC, Hoover VL. 2004. Research on competitive dynamics: recent accomplishments and future challenges. Journal of Management 30: 779804. Klein KJ, Dansereau F, Hall RJ. 1994. Levels issues in theory development, data collection, and analysis. Academy of Management Review 19: 195229. Kuhn TS. 1970. The Structure of Scientic Revolutions (2nd edn). University of Chicago Press: Chicago, IL. Lemak DJ, Henderson PW, Wenger MS. 2004. A new look at organizational transformation using systems theory: an application to federal contractors. Journal of Business and Management 9: 407423. Levitas E, Chi T. 2002. Rethinking Rouse and Daellenbachs rethinking: isolating vs. testing for sources of sustainable competitive advantage. Strategic Management Journal 23(10): 957962. Lomi A, Larsen ER, Freeman JH. 2005. Things change: dynamic resource constraints and system-dependent selection in the evolution of organizational populations. Management Science 51: 882903. Lubatkin M, Shrieves RE. 1986. Towards reconciliation of market performance measures to strategic management research. Academy of Management Review 11: 497512. Makino S, Isobe T, Chan CM. 2004. Does country matter? Strategic Management Journal 25(10): 10271043. Manz CC, Stewart GL. 1997. Attaining exible stability by integrating total quality management and sociotechnical systems theory. Organization Science 8: 5970.
165
Mascarenhas B, Aaker DA. 1989. Mobility barriers and strategic groups. Strategic Management Journal 10(5): 475485. Mas-Ruiz FJ, Nicolau-Gonzalbez JL, Ruiz-Moreno F. 2005. Asymmetric rivalry between strategic groups: response, speed and response and ex-ante versus ex-post competitive interaction in the Spanish bank deposit market. Strategic Management Journal 26(8): 713745. Mauri AJ, Michaels MP. 1998. Firm and industry effects within strategic management: an empirical examination. Strategic Management Journal 19(3): 211219. McGahan AM, Porter ME. 1997. How much does industry matter, really? Strategic Management Journal , Summer Special Issue 18: 1530. McGee J, Thomas H. 1986. Strategic groups: theory, research, and taxonomy. Strategic Management Journal 7(2): 141160. McGrath RG, Nerkar A. 2004. Real options reasoning and a new look at the R&D investment strategies of pharmaceutical rms. Strategic Management Journal 25(1): 121. McNamara G, Deephouse DL, Luce RA. 2003. Competitive positioning within and across a strategic group structure: the performance of core, secondary, and solitary rms. Strategic Management Journal 24(2): 161181. McNamara G, Aime F, Vaaler PM. 2005. Is performance driven by industry- or rm-specic factors? A response to Hawawini, Subramanian, and Verdin. Strategic Management Journal 26(11): 10751081. Mehra A. 1996. Resource and market based determinants of performance in the U.S. banking industry. Strategic Management Journal 17(4): 307322. Michael SC. 2003. Two faces of strategic group theory. In Research in Multi-Level Issues, Vol. 2, Dansereau F, Yammarino FJ (eds). JAI Press: Greenwich, CT; 199209. Miles RE, Snow CC. 1978. Organizational Strategy, Structure, and Process. McGraw-Hill: New York. Miller KD, Reuer JJ. 1996. Measuring organizational downside risk. Strategic Management Journal 17(9): 671691. Miller D, Shamsie J. 1996. The resource-based view of the rm in two environments: the Hollywood lm studios from 19361965. Academy of Management Journal 39: 519543. Morel B, Ramanujam R. 1999. Through the looking glass of complexity: the dynamics of organizations as adaptive and evolving systems. Organization Science 10: 278293. Nair A, Filer L. 2003. Cointegration of rm strategies within groups: a long run analysis of rm behavior in the Japanese steel industry. Strategic Management Journal 24(2): 145159. Nair A, Kotha S. 2001. Does group membership matter? Evidence from the Japanese steel industry. Strategic Management Journal 22(3): 221235. Nath D, Gruca TS. 1997. Convergence across alternative methods for forming strategic groups. Strategic Management Journal 18(9): 745760.
166
J. C. Short et al.
modularity. Academy of Management Review 25: 312334. Schmalensee R. 1985. Do markets differ much? American Economic Review 75: 341351. Scott WR. 1998. Organizations: Rational, Natural and Open Systems. Prentice-Hall: Englewood Cliffs, NJ. Seth A, Zinkhan G. 1991. Strategy and the research process: a comment. Strategic Management Journal 12: 7582. Short JC, Ketchen DJ, Palmer TB. 2002. The role of sampling in strategic management research on performance: a two-study analysis. Journal of Management 28: 363385. Short JC, Palmer TB, Ketchen DJ. 2003a. Multilevel inuences on rm performance: insights from the resource-based view and strategic groups research. In Research in Multi-Level Issues, Vol. 2, Dansereau F, Yammarino FJ (eds). JAI Press: Greenwich, CT; 155187. Short JC, Palmer TB, Ketchen DJ. 2003b. Facing up to a meso perspective: research issues for testing rm and strategic group inuences on performance. In Research in Multi-Level Issues, Vol. 2, Dansereau F, Yammarino FJ (eds). JAI Press: Greenwich, CT; 211218. Slevin DP, Covin JG. 1997. Strategy formation patterns, performance, and the signicance of context. Journal of Management 23: 189209. Smith KG, Smith KA, Olian JD, Sims HP, OBannon DP, Scully JA. 1994. Top management demography and process: the role of social integration and communication. Administrative Science Quarterly 39: 412438. Sutcliffe KM, Huber GP. 1998. Firm and industry determinants of executive perceptions of the environment. Strategic Management Journal 19(8): 793807. Thomas LG, Waring G. 1999. Competing capitalisms: capital investment in American, German and Japanese Firms. Strategic Management Journal 20(8): 729748. Veliyath R, Ferris SP. 1997. Agency inuences on risk reduction and operating performance: an empirical investigation among strategic groups. Journal of Business Research 39: 219230. Wernerfelt B. 1984. A resource-based view of the rm. Strategic Management Journal 5(2): 171180. Wernerfelt B. 2005. Product development resources and the scope of the rm. Journal of Marketing 69(2): 1523. Wernerfelt B, Montgomery CA. 1986. What is an attractive industry? Management Science 32: 12231230. Wiggins RR, Ruei TW. 1995. Necessary conditions for the predictive validity of strategic groups: analysis without reliance on clustering techniques. Academy of Management Journal 38: 16351656. Wiseman RM, Bromiley P. 1996. Toward a model of risk in declining organizations: an empirical examination of risk, performance and decline. Organization Science 7: 524543. Wright PM, Boswell WR. 2002. Desegregating HRM: a review and synthesis of micro and macro
Osborne JD, Stubbart CI, Ramaprasad A. 2001. Strategic groups and competitive enactment: a study of dynamic relationships between mental models and performance. Strategic Management Journal 22(5): 435454. Palmer TB, Wiseman RM. 1999. Decoupling risk taking from income stream uncertainty: a holistic model of risk. Strategic Management Journal 20(11): 10371062. Penner-Hahn JD. 1998. Firm and environmental inuences on the mode and sequence of foreign research and development activities. Strategic Management Journal 19(2): 149168. Peteraf M, Shanley M. 1997. Getting to know you: a theory of strategic group identity. Strategic Management Journal , Summer Special Issue 18: 165186. Porter ME. 1979. The structure within industries and companies performance. Review of Economics and Statistics 61(2): 214227. Porter ME. 1980. Competitive Strategy. Free Press: New York. Raudenbush S, Bryk A, Cheong YF, Congdon R. 2000. HLM 5: Hierarchical Linear and Nonlinear Modeling. Scientic Software International: Chicago, IL. Reger RK, Huff AS. 1993. Strategic groups: a cognitive perspective. Strategic Management Journal 14(2): 103123. Reger RK, Palmer TB. 1996. Managerial categorization of competitors: using old maps to navigate new environments. Organization Science 7: 2239. Reger RK, Duhaime IM, Stimpert JL. 1992. Deregulation, strategic choice, risk and nancial performance. Strategic Management Journal 13(3): 189204. Regner P. 2003. Strategy creation in the periphery: inductive versus deductive strategy making. Journal of Management Studies 40: 5782. Rouse MJ, Daellenbach US. 1999. Rethinking research methods for the resource-based perspective: isolating sources of sustainable competitive advantage. Strategic Management Journal , 20(5): 487494. Rousseau DM. 1979. Assessment of technology in organizations: closed versus open systems approaches. Academy of Management Review 4: 531542. Rousseau DM. 1985. Issues of level in organizational research: multilevel and cross-level perspectives. In Research in Organizational Behavior , Vol. 7, Cummings LL, Staw BM (eds). JAI Press: Greenwich, CT; 137. Rousseau DM, Cook RA. 1984. Technology and structure: the concrete, abstract, and activity systems of organizations. Journal of Management 10: 345361. Rousseau DM, Fried Y. 2001. Location, location, location: contextualizing organizational research. Journal of Organizational Behavior 22: 113. Rumelt R. 1991. How much does industry matter? Strategic Management Journal 12(3): 167185. Rumelt RP, Schendel DE, Teece DJ. 1994. Fundamental Issues in Strategy. Harvard Business School Press: Boston, MA. Schilling MA. 2000. Toward a general modular systems theory and its application to interrm product

human resource management research. Journal of Management 28: 247276. Zajac EJ, Bazerman MH. 1991. Blind spots in industry and competitor analysis: implications of interrm (mis)perceptions for strategic decisions. Academy of Management Review 16: 3756.
167
Zammuto RF. 1988. Organizational adaptation: some implications of organizational ecology for strategic choice. Journal of Management Studies 25: 105120.

Firm, Strategic Group, and Industry

Hochgeladen von

Dokumentinformationen

Originalbeschreibung:

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Firm, Strategic Group, and Industry

Hochgeladen von

Copyright:

Verfügbare Formate

Strategic Management Journal

FIRM, STRATEGIC GROUP, AND INDUSTRY INFLUENCES ON PERFORMANCE

Copyright 2007 John Wiley & Sons, Ltd.

Firm, Strategic Group, and Industry Inuences

THEORETICAL BACKGROUND AND HYPOTHESES

Copyright 2007 John Wiley & Sons, Ltd.

Firm, Strategic Group, and Industry Inuences

Copyright 2007 John Wiley & Sons, Ltd.

Hypothesis 3: Performance varies systematically with differences in industry-level characteristics.

Firm, Strategic Group, and Industry Inuences

Firm, Strategic Group, and Industry Inuences

Firm, Strategic Group, and Industry Inuences

2834 2845 2836 3559 3576 3577 3661 3663

3674 3841 3845 7372

11.79 9.98 8.61 23.99

20.95 6.03 7.32 15.69

Firm, Strategic Group, and Industry Inuences

Copyright 2007 John Wiley & Sons, Ltd.

Firm, Strategic Group, and Industry Inuences

0.49 0.24 0.27 1.00 0.59 0.16 0.25 1.00

91.08 2.44 6.48 100.00 90.68 5.65 3.67 100.00

0.95 0.16 0.25 1.36 0.95 0.24 0.19 1.38

0.70 0.12 0.18 1.00 0.69 0.17 0.14 1.00

96.08 2.59 1.33 100.00 92.44 6.58 0.98 100.00

0.98 0.16 0.12 1.26 0.96 0.26 0.10 1.32

0.78 0.13 0.09 1.00 0.73 0.20 0.07 1.00

Strat. Mgmt. J., 28: 147167 (2007) DOI: 10.1002/smj

Firm, Strategic Group, and Industry Inuences

Firm, Strategic Group, and Industry Inuences

Firm, Strategic Group, and Industry Inuences

Copyright 2007 John Wiley & Sons, Ltd.

Strat. Mgmt. J., 28: 147167 (2007) DOI: 10.1002/smj

Das könnte Ihnen auch gefallen