What Does A Small Corporate Effect Mean ? A Variance Components Simulation of Corporate and Business Effects  

Oleh:

Brush, Thomas H. ; Bromiley, Philip

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: Strategic Management Journal vol. 18 no. 10 (1997), page 825-835.
Topik: CORPORATE; corporate effects; business effects; corporate strategy; diversification; variance components

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: SS30.1 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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In a widely cited paper, Rumelt (1991) presents estimates of the relative influence of corporate, business unit, and other influences on business unit profitability and finds the corporations explains almost none of the variability in business unit profitability and finds the corporations explains almost none of the variability in business unit profitability. Using a monte carlo simulation, we examine the relation of variance component magnitudes to other indicators of the importance of a particular effect. Our results demostrate that variance components can be an extremely non linear indicator of importance. We also question whether Rumelt's corporate effect represent the possible contributions of corporate strategy to business unit performance. This addresses a puzzle raised by Rumelt (1991) concerning the small effect of corporations in explaining performance, and suggests that Rumelt's findings should not be seen as demostrating the insignificance of corporate strategy.

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