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Appropriate business strategy for leaders and laggards -super-†

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  • Alex Coad

Abstract

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. Copyright 2011 The Author 2011. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

Suggested Citation

  • Alex Coad, 2011. "Appropriate business strategy for leaders and laggards -super-†," Industrial and Corporate Change, Oxford University Press, vol. 20(4), pages 1049-1079, August.
  • Handle: RePEc:oup:indcch:v:20:y:2011:i:4:p:1049-1079
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    File URL: http://hdl.handle.net/10.1093/icc/dtr012
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    Cited by:

    1. Leonardo Andrade Rocha & Ahmad Saeed Khan & Patrícia Verônica Pinheiro Sales Lima & Maria Ester Dal Poz & Fernando Porfirio Soares De Oliveira, 2016. "Corrupção, Burocracia E Outras Falhas Institucionais: O “Câncer” Da Inovação E Do Desenvolvimento," Anais do XLIII Encontro Nacional de Economia [Proceedings of the 43rd Brazilian Economics Meeting] 090, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    2. Fontana, Roberto & Vezzulli, Andrea, 2016. "Technological leadership and persistence in product innovation in the Local Area Network industry 1990–1999," Research Policy, Elsevier, vol. 45(8), pages 1604-1619.

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