Firm factors, industry structure and performance variation: New empirical evidence to a classic debate

Jeremy Galbreath, Peter Galvin

Research output: Contribution to journalArticlepeer-review

117 Citations (Scopus)

Abstract

The quest to understand the determinants of performance has created a bifurcated view. On one side of the debate are the structural characteristics of industries. On the other side of the debate are firm-specific resources. However, in recent years, the nature of competition and the shifting of economic conditions have led to increased challenges of the assumptions upon which industry structure theories have been built. In today's business environment, arguments suggest that structural characteristics of industries are becoming less relevant determinants of performance while firm resources are becoming the basis upon which firms compete. Through studying 285 Australian firms, this research explores the relative importance of distinct resources and industry structure variables in explaining firm-level performance variation. Across the aggregated sample, the results demonstrate that resources are more important than industry structure. In service firms, resources are found to be much more important to explaining performance variation than in manufacturing firms. Lastly, in both manufacturing and services firms, intangible assets and capabilities explain performance variation while, as hypothesized, tangible resources do not.
Original languageEnglish
Pages (from-to)109-117
JournalJournal of Business Research
Volume61
Issue number2
DOIs
Publication statusPublished - 2008

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