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The Performance of US Corporations: 1981–1994
Author(s) -
McGahan Anita M.
Publication year - 1999
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/1467-6451.00105
Subject(s) - stylized fact , competitor analysis , profitability index , industrial organization , business , competitive advantage , focus (optics) , economics , marketing , finance , macroeconomics , physics , optics
This study decomposes the performance of US public firms between 1981 and 1994 into year, industry, corporate‐focus and firm effects. Performance is measured by Tobin’s q , accounting profitability, and a hybrid measure. The results show that firm effects were more important to performance than industry effects, although industry effects had a large permanent component. Corporate focus was not important. The stylized facts suggest that 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.