Markets vs. management: What 'drives' profitability?

Jaime A. Roquebert, Robert L. Phillips, Peter A. Westfall

Research output: Contribution to journalArticle

208 Scopus citations

Abstract

This study addresses the issue of the relative degree of variance in ROA accounted for by industry, corporate, and SBU effects while controlling for the business cycle and the interaction between the business cycle and industry. Two key articles, Schmalensee (1985) and Rumelt (1991), are discussed in detail. Research results on a recent data base (COMPUSTAT), using variance components analysis (VARCOMP) are presented that not only confirm most of the Rumelt (1991) findings, but also suggest the existence of a corporate effect, heretofore undetected.

Original languageEnglish
Pages (from-to)653-664
Number of pages12
JournalStrategic Management Journal
Volume17
Issue number8
DOIs
StatePublished - Oct 1996

Keywords

  • Corporate effect
  • Industry effect
  • Profitability
  • ROA

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