Premium
Strategy and environment as determinants of performance: Evidence from the Japanese machine tool industry
Author(s) -
Kotha Suresh,
Nair Anil
Publication year - 1995
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.4250160702
Subject(s) - profitability index , sample (material) , industrial organization , business , marketing , finance , chromatography , chemistry
Abstract This study examines the roles played by the environment and realized strategies on firm‐level performance in the Japanese machine tool industry. We examine the effect of environment and strategy on performance using longitudinal data on a sample of 25 Japanese machine tool firms over the period 1979‐92. Our results indicate that both firm strategies and the environment play significant roles in influencing profitability and growth. More specifically, whereas both strategy and environmental variables are significantly related to firm profitability, only environmental variables are associated with firm growth. Additionally, in contrast to U.S. based studies, we find that capital expenditures and technological change are not negatively associated with profitability. Rather technological change has a positive impact on firm growth. We discuss the implications of these results for strategic management and provide suggestions for future research.