How Much Does Industry Matter, Really?

Abstract

In this paper, we examine the importance of year, industry, corporate‐parent, and business‐specific effects on the profitability of U.S. public corporations within specific 4‐digit SIC categories. Our results indicate that year, industry, corporate‐parent, and business‐specific effects account for 2 percent, 19 percent, 4 percent, and 32 percent, respectively, of the aggregate variance in profitability. We also find that the importance of the effects differs substantially across broad economic sectors. Industry effects account for a smaller portion of profit variance in manufacturing but a larger portion in lodging/entertainment, services, wholesale/retail trade, and transportation. Across all sectors we find a negative covariance between corporate‐parent and industry effects. A detailed analysis suggests that industry, corporate‐parent, and business‐specific effects are related in complex ways. © 1997 by John Wiley & Sons, Ltd.

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

“…Firstly, the industry and firm factors are estimated across the sample countries using the existing models (for example Rumelt, 1991;McGahan and Porter, 1997;Bmsh, Bromiley and Hendrickx, 1999). Roll (1992) and Heston and Rouwenhorst (1994) find that differences in industry structures across countries have an influence on firm profitability.…”

“…We extend the descriptive model seen in Schmalensee, 1985;Rumelt, 1991;McGahan andPorter, 1997 andHawawini, Subramanian andVerdin, 2000 to examine the effects of home country on firm performance. These models specify for four major sources of variation in performance consisting of stable and transient effects of a firm's industry, the firm's competencies, and the effects of the particular year for all firms.?…”

“…These models specify for four major sources of variation in performance consisting of stable and transient effects of a firm's industry, the firm's competencies, and the effects of the particular year for all firms.? Following the arguments outlined earlier on the influence of home country on a firm's competitive success, we extend the performance determinants models of strategic management (Schmalensee, 1985, Rumelt, 1991, McGahan and Porter, 1997and Hawawini et el., 2000 by including three types of country effects -a stable and time-invariant country effect, a time-variant country effect and a country-industry interaction effect. 7 Obviously, as these were one-country models, the year effect is a common effect for all firms in a given country for a particular year.…”

“…In strategic management research, several studies have modeled the determinants of firm performance using a descriptive approach (Rumelt, 1991;McGahan and Porter, 1997).…”

O efeito país sobre o desempenho da firma: uma abordagem multinível

“…Ao trabalho de Rumelt (1991) seguiu-se uma série de outros, utilizando amostras mais abrangentes e aprimoramentos metodológicos, que analisaram os efeitos fi rma, corporação, indústria e ano (Roquebert, Phillips e Westfall, 1996; McGahan e Porter, 1997;Brush e Bromiley, 1997;Brush, Bromiley e Hendrickx, 1999;Bowman e Helfat, 2001).…”