How much does industry matter?
Article Abstract:
A variance components analysis of the Federal Trade Commission's (FTC) Line of Business (LB) data was conducted. The study attempted to correct the weaknesses in Richard Schmalensee's research by analyzing data from 1974 until 1977 instead of using just one year's worth of data. The variance in the rate of return on assets among the FTC's LB reporting units was partitioned into industry factors, time factors, parent company factors, and business-specific factors. The results indicated that corporate effects were negligible, industry effects were small, and business unit effects were very large. The findings suggest that business-specific sources of economic rents are the most important sources, while industry membership and corporate parentage are much less important.
Publication Name: Strategic Management Journal
Subject: Business
ISSN: 0143-2095
Year: 1991
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PIMS and the FTC line-of-business data: a comparison
Article Abstract:
An analysis of the Profit Impact of Market Strategy (PIMS) data base and the Federal Trade Commission Line of Business (LB) data base was conducted to test the validity and reliability of the data sets used in PIMS and LB. The analysis process consisted of comparing descriptive statistics with the results generated from a non-complex regression model of profitability. Sample data examined for each database consisted of data sets of manufacturing observations for the years 1974-1977. Research results indicate that the data bases generate highly comparable relational and descriptive results. However, various disagreements were found which were linked to idiosyncratic sources instead of systematic limitations.
Publication Name: Strategic Management Journal
Subject: Business
ISSN: 0143-2095
Year: 1990
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