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On corporate structure, strategy, and performance: a study with directed acyclic graphs and PC algorithm
Author(s) -
Chong Hogun,
Zey Mary,
Bessler David A.
Publication year - 2010
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.1475
Subject(s) - directed acyclic graph , diversification (marketing strategy) , hierarchy , return on assets , debt , directed graph , computer science , econometrics , economics , business , algorithm , marketing , finance , profitability index , market economy
This paper reconsiders empirical evidence on relationships among variables related to corporate strategy, structure, and performance. Causal relationships among variables are modeled as directed acyclic graphs using PC‐algorithm. Return on Assets appears to be determined by Advertising Intensity, Unrelated Diversification, R&D Intensity, and Organizational Ownership Hierarchy. Debt Structure and Investor Characteristics do not cause (either directly or indirectly) return on assets. These latter two variables appear to be effects of return on assets, not causes. Results offer mixed support of the theory that structure causes strategy, which in turn causes performance. Copyright © 2009 John Wiley & Sons, Ltd.