Unobservable effects in structural models of business performance
AbstractCritiques of the concept of key success factors have raised objections both conceptually and methodologically. From the latter perspective, common research practice is criticized for neglecting the influence of firm-specific, unobservable variables (e.g., management skills). To control for these effects a structural equation approach (LISREL) to the analysis of panel data is proposed. In an empirical study based on the PIMS annual data base the influence of unobservables on the direct and indirect effects of product quality on profitability is examined. It is shown, how a step by step extension of a basic simultaneous equation model sheds some light on the role unobservable variables play. Even after controlling for persistent unobservable effects product quality and market share remain significant determinants of profitability. --
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes in its series SFB 373 Discussion Papers with number 2002,22.
Date of creation: 2002
Date of revision:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Douglas Staiger & James H. Stock, 1994.
"Instrumental Variables Regression with Weak Instruments,"
NBER Technical Working Papers
0151, National Bureau of Economic Research, Inc.
- Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
- William Boulding & Richard Staelin, 1993. "A Look on the Cost Side: Market Share and the Competitive Environment," Marketing Science, INFORMS, vol. 12(2), pages 144-166.
- Paul W. Farris & Mark E. Parry & Kusum L. Ailawadi, 1992. "Structural Analysis of Models with Composite Dependent Variables," Marketing Science, INFORMS, vol. 11(1), pages 76-94.
- Lee A. Lillard & Robert J. Willis, 1976.
"Dynamic Aspects of Earnings Mobility,"
NBER Working Papers
0150, National Bureau of Economic Research, Inc.
- Noel Capon & John U. Farley & Scott Hoenig, 1990. "Determinants of Financial Performance: A Meta-Analysis," Management Science, INFORMS, vol. 36(10), pages 1143-1159, October.
- Robert D. Buzzell, 1990. "Commentary on “Unobservable Effects and Business Performance”," Marketing Science, INFORMS, vol. 9(1), pages 86-87.
- Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
- Griliches, Zvi, 1974. "Errors in Variables and Other Unobservables," Econometrica, Econometric Society, vol. 42(6), pages 971-98, November.
- Jay B. Barney, 1986. "Strategic Factor Markets: Expectations, Luck, and Business Strategy," Management Science, INFORMS, vol. 32(10), pages 1231-1241, October.
- Robert Jacobson, 1990. "Unobservable Effects and Business Performance," Marketing Science, INFORMS, vol. 9(1), pages 74-85.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.