Abstract: Firm performance is one of the most important concepts of business strategy. Regardless of its importance and ubiquitous use, there is no consensus about its precise definition and dimensionality limiting theory advance. Drawing on stakeholder theory, this paper investigated the dimensionality of firm performance, using a survey with 111 senior managers and board members. Different dimensional structures considering alternatives of first and second order factors were tested with Confirmatory Factor Analysis. Our results indicated six first-order dimensions and the existence of a financial performance as a second-order dimension.

Abstract: In this paper, we identify the strategies SMEs employ to grow in declining industries. We use inductive case study methodology to examine 25 firms from 22 sectors. In contrast with the dominant view of the literature suggesting large firms to pursue pure strategies, we show that SMEs seem to better shield themselves against declining markets when playing mixed strategies. In fact, all the over-performing firms in our sample follow a mix of cost leadership and differentiation strategy; when differentiating, they focus on innovation or quality. Finally, only a few firms pursue either a niche strategy or international diversification.

Abstract: In a recent paper, Goolsbee and Syverson (2006) show that airlines reduce prices in response to the threat of entry by Southwest Airlines. We extend this research to examine whether incumbent airlines improve their on-time performance in response to the threat of entry or actual entry by Southwest. Further, we examine whether incumbent characteristics moderate the effect of Southwest’s planned or actual entry on incumbent response. The threat posed by Southwest poses an ideal case study for assessing whether firms improve service quality in response to the threat of entry. Southwest has long been a leader in on-time performance. Our analysis contributes to our understanding of how firms use non-price strategic weapons to deter or respond to entry.

Abstract: Researchers have increasingly employed the resource based view of the firm (RBV) to explain performance differences. The dominant empirical approach has been to examine whether performance, broadly defined, has been affected by different levels of resources. Typically, researchers define and measure a set of resources, analyze them with regard to characteristics expected to have an impact on performance, and then to examine correlations or regressions with performance as the dependent variable and levels of the resources as the independent variables. Performance has been measured as financial performance. This paper makes two contributions to the research literature. We define and measure resource potential. Second, we contribute to the literature on corporate strategy and performance by examining the potential of the resource of information technology.

Abstract: We develop a formal model to analyze the effect of earnings pressure on the firm’s strategy and performance in strategic competition. We find that the effect of earnings pressure on strategic action is nonlinear in both strategic output and price competition. Moreover, we show that a rival’s reactions to changes in strategic action differ depending on the type of competition. It follows that the impact of earnings pressure on the firm’s performance also differs depending on the type of competition. We also examine boundary conditions of the theory by exploring how punishment in response to missed earnings targets and the benefits of strategic action moderate the effect of earnings pressure on the firm’s strategy and performance.

Abstract: This paper puts forward that we can reach a better understanding of the value of resources in the resource-based view by embracing the notion of resource functionality and considering that value is a subjective feature of a resource. It is argued that the value of a resource does not only derive from its application in product markets and that the value-price-cost model is too limited. It is then argued that the value of a resource depends on managers’ assessments of four generic types of functionality: the suitability, combinability, fecundity, and durability of a resource. The paper contributes by providing a generic typology of resource value that facilitates resource-based theorizing and that enables a systematic assessment of the value of resources in practice.