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How do industry and country impact firm performance? A national and supranational analysis

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Abstract

We contribute to the literature of the country, industry and firm effects on performance by developing an autoregressive cross-classified mixed-effect linear model that examines heterogeneity in the profitability of corporations in emerging and developed economies, as well as corporations located in different supranational regions. To this purpose, we simultaneously decompose abnormal returns into permanent and transitory components at the firm, industry, country and industry–country levels. We find that firms in emerging countries have significantly higher rates of performance persistence and different sources of persistence compared to firms located in developed countries. These differences are also evident between different supranational regions and countries at different levels of institutional development.

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Acknowledgements

Earlier versions of this manuscript were presented at at the Academy of Management Conference 2014, Strategic Management Society Annual Conference 2014, and seminars at IAE Business School, Universidad Austral. We are grateful for comments and suggestions from three anonymous at the Academy of Management Annual meeting and Strategic Management Society Annual Meeting. We acknowledge financial support from NĂşcleo Milenio Research Center in Entrepreneurial Strategy Under Uncertainty (NS130028) and Fondecyt (Grant N1160048).

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Authors and Affiliations

  1. IAE – Universidad Austral, 1629, Pilar, Buenos Aires, Argentina

    Hernan Etiennot, Roberto Vassolo & Francisco Diaz Hermelo

  2. University of Toronto, Toronto, ON, Canada

    Anita McGahan

  3. Pontificia Universidad CatĂłlica de Chile, Santiago, Chile

    Roberto Vassolo

Authors
  1. Hernan Etiennot
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  2. Roberto Vassolo
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  3. Francisco Diaz Hermelo
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  4. Anita McGahan
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Correspondence to Roberto Vassolo.

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Etiennot, H., Vassolo, R., Diaz Hermelo, F. et al. How do industry and country impact firm performance? A national and supranational analysis. Rev Manag Sci 13, 791–821 (2019). https://doi.org/10.1007/s11846-017-0260-1

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  • DOI: https://doi.org/10.1007/s11846-017-0260-1

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