Journal of Management and Governance

, Volume 7, Issue 1, pp 57–85

Corporate Management, Industry Competition and the Sustainability of Firm Abnormal Profitability

  • Moses Acquaah
Article

Abstract

This paper models the sustainability of firmabnormal profitability and uses theeffectiveness of corporate managementcapabilities as a test to examine its impact onthe sustainability of firm abnormalprofitability. The role of industry competitionas a moderator between the effectiveness ofcorporate management capabilities and thesustainability of firm abnormal profitabilityis also examined. Consistent with theresource-based view of the firm, we found thatthe effectiveness of corporate managementcapabilities positively influence thesustainability of firm abnormal profitability.This implies that corporate managementcapabilities are important contributors to theentire bundle of firm-specific resources andcapabilities which enable some firms togenerate competitive advantages that aresustainable. The effectiveness of corporatemanagement capabilities has a larger influenceon the sustainability of firm abnormalprofitability for firms in lowly competitive ormonopolistic industries than firms in highlycompetitive industries. The findings supportthe notion that not only do firm capabilitiesyield sustainable competitive advantages andabnormal profitability, but also industrycompetition reinforces the impact of firmcapabilities in yielding sustainable abnormalprofitability.

corporate management firm industry competition profitability sustainability 

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Copyright information

© Kluwer Academic Publishers 2003

Authors and Affiliations

  • Moses Acquaah
    • 1
  1. 1.Bryan School of Business and EconomicsThe University of North Carolina at GreensboroGreensboroUSA

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