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Past Issue • Oct-Dec 2015

What Does, What a Firm Says, Say About the Firm?

What explains firm performance? Although various metrics have been developed to measure firm performance, measuring firm strategy has remained a challenge. The authors suggest a novel manner of better understanding the effects of strategy on firm performance. They use an approach that innovatively combines three existing methods, viz bag-of-words text mining and analysis, latent space modelling, and conventional spatial econometrics, to arrive at conclusions.
What explains a firm performance?
"What explains firm performance?" has been one of the central questions in management research. A widely accepted perspective is that firm performance is some product of some characteristic factors internal to the firm (e.g., firm demographics, organisational structure, capital structure, etc.), and of environmental factors external to the firm (e.g., industry structure, regulatory controls, macroeconomic conditions, etc.), and of the firm strategy, which connects and reconciles the two. Although various metrics have been developed to measure a firm performance, internal factors, and external environment, measuring the complex, contextual and forever evolving multidimensional object called firm strategy has remained a challenge.

ABOUT THE AUTHORS

  • sudhir

    Sudhir Voleti

    Sudhir Voleti is Assistant Professor of Marketing at the Indian School of Business.
  • ashish

    Ashish Galande

    Ashish Galande is Doctoral Candidate in Marketing at the Indian School of Business.
  • prakash

    Prakash Satyavageeswaran

    Prakash Satyavageeswaran is Researcher & Doctoral Candidate at the Indian School of Business.
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