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Performance forecasts in uncertain environments: Examining the predictive power of the VRIO-framework

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  • Powalla, Christian
  • Bresser, Rudi K. F.

Abstract

Strategy tools are widely used in the practice of strategic management to yield a good solution with an acceptable problem-solving effort. This paper presents results of an experimental research project that assesses the practical effectiveness of a theory-based decision-making tool, the VRIO-Framework, in predicting the stock-market performance of different companies. The VRIO's predictive power is compared to the predictions derived from Analyst Ratings that are a widespread and commonly used tool in the decision-making context of this study. Our results suggest that the VRIO-Framework is a particularly effective forecasting tool whereas the power of Analyst Ratings is disputable. The results also provide support for the practical usefulness of resource-based theory.

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  • Powalla, Christian & Bresser, Rudi K. F., 2010. "Performance forecasts in uncertain environments: Examining the predictive power of the VRIO-framework," Discussion Papers 2010/22, Free University Berlin, School of Business & Economics.
    • Handle: RePEc:zbw:fubsbe:201022
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