| The Performance of U.S. Corporations: 1981-1994 |
| | McGahan, Anita M. | Harvard U. | amcgahan@hbs.edu | (617)-495-6896 |
| | This study breaks down the performance of firms traded on U.S. stock-market exchanges between 1981 and 1994 into year, industry, corporate-focus and firm effects. Performance is measured in several economically important ways, including Tobin's q, accounting profitability, and the return on the replacement value of assets. The results show that firm effects were more important to performance than industry effects, although industry effects had a large permanent component. Corporate-focus effects were not important. The stylized facts suggest tht competitive advantages--that is, differences between direct competitors in the same industry--were at least as important as industry influences on performance. Industry influences were more predictable and sustainable than competitive advantages, however. |
| | Keywords: strategy; industry; competition |
| Equifinality, Strategic Configurations, and Organizational Performance |
| | Marlin, Dan | U. of Texas, San Antonio | dmarlin@lonestar.utsa.edu | (210)-458-5380 |
| | Ketchen, Jr., David J. | Louisiana State U. | mgketch@lsuvm.sncc.lsu.edu | 504-388-6140 |
| | The strategy-performance relationship has long been a central focus of strategic management research. To date, the results of
studies examining this link are, viewed collectively, equivocal. The present study considers the possibility that a key assumption
adopted throughout extant inquiry may help explain these equivocal results. Whereas most strategic management studies assume
that a best performing strategy exists for any given context, this study considers the possibility that the strategy-performance
relationship may be characterized by equifinality. Specifically, multiple strategic paths may lead to the same level of outcomes.
Building on ideas offered by Gresov and Drazin (1997), this possibility is tested using data on hospitals in Florida. The results
support predictions grounded in equifinality, suggesting that strategy research would benefit from acknowledging the possible role
of equifinality in the strategy-performance relationship, as well as in other linkages between important variables. |
| | Keywords: Equifinality; Strategic Configurations; Performance |
| An Objective Configurational Approach Using Market Power and Efficiency: A Longitudinal Analysis of Information Technology on Firm Performance |
| | Pett, Timothy L. | Wichita State U. | pett@twsuvm.uc.twsu.edu | (316) 978-7114 |
| | Dibrell, Charles Clay | U. of Memphis | cdibrell@memphis.edu | (901)-678-5399 |
| | There has been a growing importance and discussion for more research on how firms compete given the changing complexity of today's environment. One type of competition by an organization has been through the use of information technology to gain competitive advantages. However, this form of competition has been studied primarily on a firm to firm level and not at an industry level which would provide greater insight into the relationship between information technology and firm performance. This paper attempts to fill this gap through an examination of how information technology impacts the competitive dynamic of an industry using a configuration approach. To remedy some of the criticisms associated with the subjective statistical approaches involved in categorizing strategic groups (Barney & Hoskisson, 1990; Wiggins & Ruefli, 1995), an alternative, more objective approach based upon industry reference points or configurations is utilized. The findings are based on a longitudinal design which suggests that the influence of information technology on an industry structure results in firms (which place greater emphasis on information technology) gaining competitive positioning on firms (which place lessor emphasis on information technology) over time. However, the use of information technology did not provide firms, which placed greater emphasis on information technology, the ability to circumvent or gain competitive ground over other groups. Instead, information technology allowed members to follow a hypothesized path in their migration toward greater performance as suggested through strategic configuration theory. |
| | Keywords: Information Technology; Configuration; Strategy |
| Reassessing the Link Between Corporate Social Responsibility and Firm Performance |
| | Siegel, Donald | Arizona State U., West | siegel@asuvm.inre.asu.edu | (602)-543-6217 |
| | McWilliams, Abagail | Arizona State U., West | abby@asu.edu | (602)-543-6228 |
| | Guerard, John B. | Vantage Global Advisors | jguer4375@aol.com | (602)-543-6217 |
| | The nature of the relationship between corporate social responsibility (CSR) and firm performance is controversial. Researchers have reported positive, negative, and neutral financial impacts associated with the provision of CSR. We provide a fremawork for assessing the efficient allocation of resources to CSR by examining CSR from the perspective of the threory of the firm. Based on this model, we generate testable hypotheses regarding firm heterogeneity in levels of investment in CSR.
Evidence from the capital market supports one of our hypotheses - that there will be no significant difference in the performance of CSR and non-CSR firms. We also demonstrate that existing econometric studies of the relation between CSR and financial performance are flawed. These studies estimate the effect of CSR by regressing firm performance on corporate social performance, size and risk. This equation is misspecified, because it does not control for a firm's level of R&D expenditure and industry characteristics. This misspecification results in estimates of the financial impact of CSR that are upwardly biased.
The primary managerial implication of our study is that, for publicly traded firms, CSR should be treated as a form of investment. That is, managers should conduct cost/benefit analysis, taking into account all relevant stakeholders. For privately held firms, other criteria may prevail.
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| | Keywords: corporate; social; responsibility |