Title: "Industries’ Potential For Interdependency And Profitability: A Panel Of 135 Industries, 1988-1996"
Abstract: An industry’s potential for interdependency among productive activities is one of the central concepts in strategic management. While theoretical models have clarified how and why industry average profitability should peak at moderate levels of interdependency, the empirical evidence so far has not supported the inverted-U-shaped relationship. By using a better measure that has less range restriction and varies with time, we find strong support that confirms the predicted relationship between interdependency and industry average profitability. We also find evidence supporting an inverted-U-shaped relationship between interdependency and firm profitability. Moreover, we show that both inverted-U-shaped relationships remain robust after correcting omitted variable biases, which pose concerns that weren’t raised in previous studies.
Publication Year: 2015
Publication Date: 2015-01-01
Language: en
Type: article
Indexed In: ['crossref']
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