PREFACE

I. WHAT DETERMINES CORPORATE FINANCIAL PERFORMANCE?

I.1 The Mission of This Book: Integration

I.2 The Three Core Approaches

I.3 Why Do We Need Integration?

I.3.1 The Three Reasons That Integration Is Needed

I.3.2 An Example: Two Alternative Explanations for Superior Financial Performance

I.4 What Do We Mean by an Integrative or Holistic Explanation of Performance?

I.4.1 An Example: A Holistic Explanation of Innovation Performance

I.4.2 Implications of Holistic Explanations

I.5 The Plan of the Book

II. WHAT WE KNOW (OR THINK WE KNOW) ABOUT THE CAUSES OF SUPERIOR FINANCIAL PERFORMANCE

II.1 What People Expect: Theoretical Perspectives on Financial Performance

II.1.1 A Framework for Classifying Various Theoretical Perspectives on Financial Performance

II.2 Trends of Integration among Theoretical Perspectives on Financial Performance

II.2.1 Factors That Might Work (or Might Only Work) Together: Simple Contingencies

II.2.2 Complex Contingency Approaches

II.2.3 Developments in Integrating Industrial Organization and Strategic Choice

II.2.4 Developments Involving More Comprehensive Integrative Theory

II.2.5 Long-Term Organizational Evolution

II.2.6 Summary

II.3 What We Know Empirically about Firm Financial Performance

II.3.1 The Financial Performance Measures

II.3.2 The Long List of Causal Factors

II.3.3 The Causal Factors Most Studied

II.3.4 ANCOVA Tests and Publication Bias

II.3.5 Summary of the Meta-Analysis

II.4 Major Studies: Summary and Replication

II.4.1 The 1980-1985 "Top 50"

II.4.2 Our 1984-1993 "Top 50 Plus" Strategy Studies

II.4.3 We See a Limited Trend toward Integration

II.5 Summary

III. AN EMPIRICAL EXAMINATION OF FINANCIAL PERFORMANCE: DISTILLING THE ESSENTIAL CAUSAL FACTORS

III.1 The Performance Function: A Framework for Integration

III.1.1 Characteristics of the Firm Under the Performance Function

III.2 Measuring Financial Performance

III.3 What Correlates with Financial Performance? Empirical Characteristics of "Good" Performing Firms

III.3.1 Grouping Firms by Financial Performance

III.3.2 General Patterns of Relationship to Financial Performance

III.3.3 Specific Relationships to Financial Performance

III.3.4 Summary

III.4 Summary of the Causal Factors: From Variables to Scales

III.4.1 Scales as Summary Measures

III.4.2 How the Scales Relate to Financial Performance

III.4.3 The Best, the Worst and the Survivors

III.5 Integrating with the Performance Function

III.5.1 Forming Summary Measures of Causal Factors from the Individual Scales

III.5.2 How the Two Sets of Summary Measures of Causal Factors Correlate with Financial Performance

III.5.3 Fitting the Performance Function to the Summary Measures

III.5.4 The Overall Findings Can be Represented in a Simplified How to Process Model

III.5.5 Good Performance Persists over Time

III.6 Using an Abbreviated Form of the Performance Function and Estimated Scales to Predict and Track Performance of a Firm

III.6.1 Constructing Scale Analogues

III.6.2 Tracking Performance with Key Variables

III.6.3 The Performance Function Is Flexible and Predictive in Exploratory Tests

III.7 Profiles of Firms Based on the Causal Factors: A Performance Exploration

III.7.1 An Overview of the Profiles

III.7.2 Details on the Financial Performance of the Six Groups

III.7.3 Profiles of the Six Groups

III.7.4 General Patterns of Causal Factors in the Six Firm Clusters

III.8 Summary

III.8.1 Should Performance Research Be Theory-Driven or Data-Driven?

III.8.2 Limitations of the Empirical Study

III.8.3 A Brief Overview of the Results of the Empirical Study

IV. IMPROVING FINANCIAL PERFORMANCE: SUMMARY AND RESEARCH AGENDA

IV.1 What We've Done in Context of Research on Firm Performance

IV.1.1 Our Conceptual Development Is Broad

IV.1.2 Our Approach--The Natural Experiment

IV.1.3 Empirical Literature of Financial Performance: Much Study, Little Integration

IV.1.4 Our Empirical Study of Financial Performance

IV.2 Our General Perspective Regarding Empirical Studies of Firm Performance: Good Performance Is a Complex Matter Requiring a Comprehensive Approach to Both Analysis and Measurement

IV.2.1 All Classic Areas of the Study of Management Have Elements That Relate to Good Performance

IV.2.2 A Handful of Causal Factors Stand Out

IV.2.3 Good Performance May Occur in Several Ways, but a Common Core of Causal Factors Is Still at Work

IV.3 A Research Agenda for the Study of Corporate Financial Performance

IV.3.1 Integrating Diverse Fields of Management Study: A Must First Step

IV.3.2 An Integrating Process Model of Corporate Financial Performance

IV.3.3 Issues for Empirical Studies of Financial Performance

IV.3.4 Several Ways to Improve Empirical Study of Financial Performance

IV.3.5 Specific Research Needs within Our Building Blocks of Explanatory Variables

IV.4 To the Manager

APPENDICES

I. A SHORT SELECTED BACKGROUND TO THE BUILDING BLOCKS

AI.1 Environment

AI.2 Strategy

AI.3 Organization Structure

AI.4 Organizational Climate

II. A BRIEF DESCRIPTION OF THE EMPIRICAL STUDY OF 113 MAJOR U.S. MANUFACTURING FIRMS

AII.1 Study Design

AII.2 Data Collection

III. AN EMPIRICAL TEST OF IN SEARCH OF EXCELLENCE

AIII.1 Methodology

AIII.1.1 Strategy and Performance Measures

AIII.1.2 Measures of the Eight Peters and Waterman Principles

AIII.2 Results

AIII.2.1 Peters and Waterman Dimensions

AIII.2.2 Strategic Dimensions

AIII.3 Caveats

IV. CONDUCTING THE META-ANALYSIS

AIV.1 Methodology

AIV.1.1 Counting Methodology

AIV.1.2 ANCOVA Methodology

AIV.2 The Financial Performance Literature

AIV.2.1 Empirical Methodology in the Literature

AIV.2.2 Levels of Analysis

AIV.3 Results

AIV.3.1 Counting Methodology

AIV.3.2 ANCOVA Results

AIV.4 Publication Bias

V. DETAILED RESULTS OF THE PARTIAL REPLICATION OF THE "TOP 100 PLUS" STUDIES

VI. SURVIVAL IN OUR SAMPLE OF FORTUNE 500 FIRMS

VII. DEVELOPING THE SCALES THAT SUMMARIZE ENVIRONMENT, STRATEGY AND ORGANIZATION

AVII.1 Categorization of Resource Inputs into Subsystems

AVII.1.1 Classification Procedure

AVII.1.2 Results of the Classification Procedure

AVII.2 Forming the Scales

VIII. DETAILED STATISTICAL RESULTS ON HOW THE SCALES RELATE TO FINANCIAL PERFORMANCE

IX. TECHNICAL CHARACTERISTICS OF THE TRANSLOG PERFORMANCE FUNCTION

AIX.1 The Performance Function

AIX.2 Specific Characteristics of the Firm

AIX.3 Specific Functional Form

AIX.3.1 Technical Characteristics

AIX.3.2 Choice of Form

X. TOWARD ESTIMATING SCALE VALUES FROM PUBLICLY AVAILABLE DATA

AX.1 Gathering and Assessing the Data

AX.2 Assembling the Data

AX.2.1 Environmental Scales

AX.2.2 Strategy Scales

AX.2.3 Organization Structure Scales

AX.2.4 Organizational Climate Scales

AX.2.5 "Other Performance" Scales

AX.3 Using the Data

XI. DEVELOPING FIRM PROFILES BY CLUSTER ANALYSIS

XII. AUTHORS WHO HAVE STUDIED THE UNDERLYING CONCEPTS SUMMARIZED IN OUR 34 SCALES

REFERENCES

1. General References

2. References for Hambrick's 1980-1985 "Top 50" Strategy Studies

3. References for Our 1984-1993 "Top 50 Plus" Strategy Studies

4. References for the Meta-Analysis of Financial Performance Literature

INDEX