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Appropriate business strategy for leaders and laggards

journal contribution
posted on 2023-06-08, 11:56 authored by Alex Coad
We develop a series of hypotheses that predict that the appropriateness of different business strategies is conditional on the firm's relative performance, or distance to the “industry frontier.” We use data on three 2-digit high-tech manufacturing industries in the United States over the period 1972–1999, and apply semi-parametric quantile regressions to investigate the contribution of firm behavior to market value at various points of the conditional distribution of Tobin's q. Among our results, we observe that innovative activity, measured in terms of R&D expenditure or patents, has a strong positive association with market value at the upper quantiles (corresponding to the leader firms), whereas the innovative efforts of laggard firms are valued significantly less. Laggard firms, we suggest, should instead achieve productivity growth through efficient exploitation of existing technologies and imitation of industry leaders. Employment growth in leader firms is encouraged, whereas growth of backward firms is not as well received on the stock market.

History

Publication status

  • Published

Journal

Industrial and Corporate Change

ISSN

0960-6491

Publisher

Oxford University Press

Issue

4

Volume

20

Page range

1049-1079

Department affiliated with

  • SPRU - Science Policy Research Unit Publications

Full text available

  • No

Peer reviewed?

  • Yes

Legacy Posted Date

2012-07-03

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