Is performance driven by industry

[yafet]

Is performance driven by industry- or firm-specific factors? A new look at the evidence
Gabriel Hawawini, Venkat Subramanian, Paul Verdin. Strategic Management Journal. Chichester: Jan 2003. Vol. 24, Iss. 1; pg. 1


Abstract (Summary)
This study revisits the question of whether firms' performance is driven primarily by industry or firm factors, extending past studies in 2 major ways. Firstly, in a departure from past research, a value-based measure of performance is used instead of accounting ratios. It also uses a new data set and a different statistical approach for testing the significance of the independent effects. Secondly, it examines whether the findings of past research can be generalized across all firms in an industry or whether they apply to a particular class of firms within the same industry. It finds that a significant portion of the absolute estimates of the variance of firm factors is due to the presence of a few exceptional firms in any given industry. In other words, only for a few dominant value creators and destroyers do firm-specific assets seem to matter significantly more than industry factors.