Changes in persistence of performance over time

Abstract

Research Summary I revisit a research tradition laying out trends in persistence of performance, to create shared facts to inform theory development. I build on prior work in Strategy by: (a) bringing together two distinct measures of persistence of performance and explaining how they complement each other and help distinguish theories, (b) extending the time series from those prior studies and applying modern statistical improvements to demonstrate new patterns. Specifically, while I find ordinal persistence increased monotonically since the 1980s, autocorrelation of performance was not monotonic and is now approaching lows from the mid‐1990s. These patterns are inconsistent with mechanisms raised in the debate about declining competition. I suggest that these facts can inspire Strategy theory, which would contribute to that debate. Managerial Summary A central concern of managers is how precarious is their position, or for new ventures, whether they will be able to displace current leading firms. Even within the same year, management writing and the media might claim that it is both: a) a time of faster‐than‐ever turnover, b) or that large firms have become unassailable. This manuscript tracks two measures of performance persistence over time. I find that persistence of rank has increased roughly steadily since the 1980s. How associated are performance measures year‐to‐year was actually at its peak in the mid 1980s, potentially explaining the debate. The final patterns are consistent with top firms separating from followers in performance so much that increasing volatility in their performance does not lead to changes in rank.

Macroeconomics and Market Power: Context, Implications, and Open Questions

“…I hope in this article to pull the two bodies of work somewhat closer together. 1 To preview my conclusion, I believe the macro market literature has established and collected an important and provocative set of facts, some developed by this literature and some built closely upon previous work. The literature has done a service by drawing plausible connections among these facts and showing how they might be tied to increases in the average level of market power.…”

The Race between Man and Machine: Implications of Technology for Growth, Factor Shares, and Employment

“…On the other hand, the creation of new tasks always increases employment: new tasks raise wages more than aggregate output, increasing the labor supply. Although these exact results rely on the balanced growth preferences in equation (4), similar forces operate in general and create a tendency for automation to reduce employment and for new tasks to increase it. Figure 3 illustrates the comparative statics: automation moves us along the relative labor demand curve in the technology-constrained case shown in panel A (and has no impact in panel B), while the creation of new tasks shifts out the relative labor demand curve in both cases.…”

“…In neither case does rapid automation necessarily bring about the demise of labor. 4 We also consider three extensions of our model. First, we introduce heterogeneity in skills, and assume that skilled labor has a comparative advantage in new tasks, which we view as a natural assumption.…”

Advanced Technologies Adoption and Use by U.S. Firms: Evidence from the Annual Business Survey

“…Acemoglu and Autor (2011),,Brynjolfsson and Mitchell (2017a),Restrepo (2019), andAgrawal, Gans, and all provide excellent reviews of current and future research issues pertaining to the diffusion of various advanced technologies.6 While high cross-sectional heterogeneity in firm performance is long-established (e.g.,Syverson 2004Syverson & 2011 Hopenhayn 2014), recent studies point to increasing firm heterogeneity along a number of economically important dimensions(Andrews et al 2015;Van Reenen 2018;Song et al 2019;Decker et al 2020;Autor et al 2020;Bennett 2020a), some of which has been linked empirically to IT use(Barth et al 2020; Lashkari et al 2020).…”