Competitive advantage is a key concept in strategic management research for a number of reasons--not the least of which is that an avowed consequence of its attainment is held to be superior economic performance. However, few prior empirical studies have directly and systematically documented the incidence or prevalence of persistent superior economic performance. The research reported here is based on empirical studies of a large number of industry samples for which longitudinal data were stratified by levels of performance using a new methodology and then analyzed in terms of their dynamics. This new stratification technique was used in lieu of autoregressive methods employed in prior studies of performance persistence to allow for a true outlier analysis because persistent superior economic performance both has been argued theoretically, and found empirically, to be rare. Detailed results from a sample of 6,772 firms in 40 industries over 25 years are presented to illustrate the findings that: (1) while some firms do exhibit superior economic performance, (2) only a very small minority do so, and (3) the phenomenon very rarely persists for long time frames. These results, while not providing direct support for a particular extant strategic management or economic theory concerning firm performance, are most consonant with the resource-based view of the firm and have implications for significant aspects of other received strategic management and economic theories.

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Sustained Competitive Advantage: Temporal Dynamics and the Incidence and Persistence of Superior Economic Performance

-This study considers the effect of unions on intangi- ble capital investment and profitability within the context of a market value rather than a more traditional accounting based approach. Theory is provided suggesting unions are able to affect profitability by sharing in the economic returns to firm- specific intangible capital. In support of this hypothesis, we find unionization reduces the returns to R &D, and produces a corresponding limiting influence on R& D investment at the firm level. I. Introduction A N extensive literature in economics has ex- amined the determinants of profitability, with much of the focus centering on the role of market structure. Only recently, however, have the effects of labor unions on profitability been analyzed. Ths is surprising since labor economists long have emphasized union influences on wages and productivity that in turn may affect profitabil- ity.' In recent studies, Freeman (1983) and Karier (1985) report a significant limiting influence of unions on price-cost margins in high concentra- tion manufacturing industries. Using firm-level data and the market-based Tobin's

Union Rent Seeking, Intangible Capital, and Market Value of the Firm

Methodological issues in the use of financial ratios

Technical efficiency and farm size: a conditional analysis

This study focuses on the prediction of the engagement of small- and medium-sized enterprises (SMEs) in environmental management practices, based on a random sample of 689 SMEs. The study finds that several endogenous factors, including tangibility of sector, firm size, innovative orientation, family influence and perceived financial benefits from energy conservation, predict an SME’s level of engagement in selected environmental management practices. For family influence, this effect is found only in interaction with the number of owners. In addition to empirical research on SMEs’ environmental behavior, this article draws on the ecological modernization literature as well as the theory of planned behavior.

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Beyond Size: Predicting Engagement in Environmental Management Practices of Dutch SMEs

T HE measurement of firm size plays a crucial role in applied microeconomics and industrial organization. Firm size has figured prominently in numerous studies of economies of scale in production, advertising, capital market, and cash balances, and in studies of concentration, diversification, profitability, regulation, technological change, and research and development. Even when firm size was not their main concern, many studies often found that size emerged as a robust empirical variable.' All these studies have based their findings on different alternative measures of firm size, often implying that great care in choosing between them is unnecessary since the measures are highly intercorrelated. In a note in this REVIEW, Smyth et al. (hereafter SBP) were the first to recognize that alternative measures of firm size are not interchangeable unless stricter conditions than correlation are met. They have further shown that empirical findings regarding economies of scale are not invariant with the size measure chosen, and that often different conclusions can be reached depending on the particular size measure used. The purpose of this paper is threefold: (I) to offer a general stochastic model that rigorously spells out the conditions for interchangeability among alternative measures of firm size, and of which SBP's deterministic model is a special case; (2) to conduct a statistical test of the interchangeability conditionis using a larger number of size measures, and a far larger sample than the one employed in SBP's empirical test; and (3) to empirically analyze the statistical properties of the most commonly used measures in order to help future investigators in selecting appropriate size measures suitable for their purposes. Section I reviews SBP's work, section II discusses the measurement problem, section III presents our theoretical model, and section IV concludes with some empirical evidence.

S. S. Shalit

Papers

The Measurement of Firm Size