Performance and strategy: simultaneous equations analysis of long-lived firms

Bernadette Power, Gavin C. Reid

Research output: Contribution to journalArticle

3 Citations (Scopus)
37 Downloads (Pure)

Abstract

A simultaneous equations model of performance, strategy and size is tested using fieldwork evidence on long-lived firms in Scotland. Estimation is by I3SLS, with correction for sample selection bias. The contributions of this paper are that it: (a) grounds estimation on fieldwork evidence; (b) calibrates performance and competitive strategy; (c) tests and models endogeneity; and (d) computes robust trade-off elasticities between firm size and performance. It shows how this trade-off provides the entrepreneur with two strong incentives: (i) to seek greater efficiency typically by an increase in the human capital of the ‘core’ workforce; (ii) to achieve higher levels of performance by adopting more diverse competitive strategies.
Original languageEnglish
Pages (from-to)345-377
Number of pages33
JournalInternational Journal of the Economics of Business
Volume22
Issue number3
Early online date18 Aug 2015
DOIs
Publication statusPublished - 2015

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Simultaneous equations
Trade-offs
Competitive strategy
Firm performance
Elasticity
Endogeneity
Scotland
Entrepreneurs
Workforce
Sample selection bias
Simultaneous equations model
Firm size
Incentives
Human capital

Cite this

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Performance and strategy : simultaneous equations analysis of long-lived firms. / Power, Bernadette; Reid, Gavin C.

In: International Journal of the Economics of Business, Vol. 22, No. 3, 2015, p. 345-377.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Performance and strategy

T2 - simultaneous equations analysis of long-lived firms

AU - Power, Bernadette

AU - Reid, Gavin C.

PY - 2015

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DO - 10.1080/13571516.2015.1051751

M3 - Article

VL - 22

SP - 345

EP - 377

JO - International Journal of the Economics of Business

JF - International Journal of the Economics of Business

SN - 1357-1516

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