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The Persistence of Superior Performance at Industry and Firm Levels: Evidence from the IT Industry in Taiwan

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  • Yi-Min Chen
  • Feng-Jyh Lin

Abstract

The industrial organization economics and the resource-based view of the firm have led to disagreements over the question as to which of firm performance at the industry and firm levels has persisted longer since the 1970s. Acknowledging that the IT industry in Taiwan has become very competitive and has demonstrated outstanding performance in the world since the 1990s, this study calculates the persistence in the incremental components of the effects on profitability, and tests hypotheses that conform to the above mainstream views of relative rates of persistence. A persistence partitioning model is fitted to a new data set, and the results show that the incremental effects of firms on profitability persist longer than the incremental effects of industry. In other words, the long-term competitive advantages of IT firms in Taiwan are more predictable and sustainable in regards to firm factors than for industry influences. These findings support the predictions of the resource-based view of the firm, and provide some implications for corporate strategy.

Suggested Citation

  • Yi-Min Chen & Feng-Jyh Lin, 2010. "The Persistence of Superior Performance at Industry and Firm Levels: Evidence from the IT Industry in Taiwan," Industry and Innovation, Taylor & Francis Journals, vol. 17(5), pages 469-486.
  • Handle: RePEc:taf:indinn:v:17:y:2010:i:5:p:469-486 DOI: 10.1080/13662716.2010.510000
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Chen, Yi-Min & Liu, Hsin-Hsien & Yang, Yung-Kai & Chen, Wei-Hua, 2016. "CEO succession in family firms: Stewardship perspective in the pre-succession context," Journal of Business Research, Elsevier, vol. 69(11), pages 5111-5116.
    2. Guan, Jian & Cai, Huaijun & Cao, Youqing, 2015. "Industry versus firm effects on the profit persistence in China," China Economic Review, Elsevier, vol. 34(C), pages 83-93.
    3. repec:eee:chieco:v:44:y:2017:i:c:p:125-137 is not listed on IDEAS
    4. Chen, Yi-Min & Yang, De-Hsin & Lin, Feng-Jyh, 2013. "Does technological diversification matter to firm performance? The moderating role of organizational slack," Journal of Business Research, Elsevier, vol. 66(10), pages 1970-1975.

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