Abstract
A long-standing debate has focused on the extent to which different
levels of analysis shape firm performance. The strategic group level
has been largely excluded from this inquiry, despite evidence that
group membership matters. In this study, we use hierarchical linear
modeling to simultaneously estimate firm-, strategic group-, and
industry-level influences on short-term and long-term measures of
performance. We assess the three levels' explanatory power using
a sample of 1,165 firms in 12 industries with data from a 7-year
period. To enhance comparability to previous research, we also estimate
the effects using the variance components and ANOVA methods relied
on in past studies. To assess the robustness of strategic group effects,
we examine both deductively and inductively defined groups. We found
that all three levels are significantly associated with performance.
The firm effect is the strongest, while the strategic group effect
rivals and for some measures outweighs the industry effect. We also
found that the levels have varying effects in relation to different
performance measures, suggesting more complex relationships than
depicted in previous studies. Copyright © 2007 John Wiley & Sons,
Ltd.
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