Title: Changing corporate effects on US business performance since the 1970s

Authors: Paul M. Vaaler, Gerry McNamara

Addresses: Department of Strategic Management & Organization, Carlson School of Management, University of Minnesota, 3-424 CarlSMgmt, 321 19th Avenue South, Minneapolis, MN 55455, USA. ' Department of Management, Broad School of Management, The Michigan State University, N475 North Business Complex, East Lansing, MI 48824, USA

Abstract: A simmering debate in strategic management pits two conflicting views on the impact of corporate-level factors on affiliated business units. |Mainstream| proponents hold that corporate effects on business performance are substantial, while |revisionist| proponents hold that corporate effects are insubstantial compared to the impact of industry-related and macroeconomic factors shaping business performance. We provide a basis for reconciling these opposing views. With a broad sample of operating returns for US firms, we estimate corporate and other variance components of business performance in 17 successive four-year moving windows from 1979 to 1997. Corporate variance components of business performance shift from modest (5%) in the early-1980s as proposed by revisionists to quite substantial (33%) by the mid-1990s as proposed by mainstream proponents. We conjecture that new theoretical insights on and practices developing the strategic capabilities of corporations through more focused diversification have promoted this evolution and reinvigorated the corporate strategy field.

Keywords: corporate strategy; business performance; USA; United States; diversification; governance; corporate variance components; strategic management.

DOI: 10.1504/IJSCM.2009.031412

International Journal of Strategic Change Management, 2009 Vol.1 No.4, pp.377 - 400

Published online: 02 Feb 2010 *

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