A New Perspective on a Fundamental Debate: A Multilevel Approach to Industry, Corporate, and Business Unit Effects

Strategic Management Journal (Impact Factor: 3.78). 06/2006; 27(6):571 - 590. DOI: 10.1002/smj.530


We utilized a multilevel approach to both estimate the relative importance of industry, corporate, and business segment effects on firm performance, as well as to demonstrate how it enables the investigation of specific strategic factors within each class of effects. Our results confirmed previous findings suggesting that although business segment effects carry the most relative importance, industry and corporate effects are also important. Among the findings regarding specific factors, we found that industry concentration and munificence, as well as the resource environment provided by corporate parents, impact performance. These findings suggest that investigators should consider both industry and corporate environments when examining performance. Copyright © 2006 John Wiley & Sons, Ltd.

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    • "herein the order in which effects are entered into the model potentially influences the results ( Short et al . , 2006 ) . Multilevel analysis also allows us to capture and model the determinants of each firm ' s year - to - year growth in the separate components of CEO compensa - tion , thus capitalizing on utilizing time as a level of analysis ( Misangyi et al . , 2006 ) thereby allowing us to fully assess the effects of temporal influences . Finally , multilevel analy - sis permits moving beyond the mainly descriptive partitioning of variance to potentially identify cross - level re - lationships and examine causal relationships ( Hought , 2006 ) . Our study is able to contribute to the spirited deba"
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    • "RCM is a particularly useful technique to examine firm and industry effects over time (Misangyi et al., 2006; Short et al., 2006) and for studies examining "
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