Abstract

http://ssrn.com/abstract=2323578
 
 

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Applying Random Coefficient Models to Strategy Research: Testing for Firm Heterogeneity, Predicting Firm-Specific Coefficients, and Estimating Strategy Trade-Offs


Juan Alcacer


Harvard University - Strategy Unit

Wilbur Chung


University of Maryland - Robert H. Smith School of Business

Ashton Hawk


Ohio State University (OSU) - Fisher College of Business

Gonçalo Pacheco-de-Almeida


HEC Paris - Strategy & Business Policy

August 30, 2013

Harvard Business School Strategy Unit Working Paper No. 14-022
Robert H. Smith School Research Paper

Abstract:     
Although Strategy research aims to understand how firm actions have differential effects on performance, most empirical research estimates the average effects of these actions across firms. This paper promotes Random Coefficients Models (RCMs) as an ideal empirical methodology to study firm heterogeneity in Strategy research. Specifically, we highlight and illustrate three main benefits that RCMs offer to Strategy researchers — testing firm heterogeneity, predicting firm-specific effects, and estimating trade-offs in strategy — using both synthetic and actual data-sets. These examples showcase the potential uses of RCMs to test and build theory in Strategy, as well as to perform exploratory and definitive analyses of firm heterogeneity.

Number of Pages in PDF File: 49

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Date posted: September 10, 2013  

Suggested Citation

Alcacer, Juan and Chung, Wilbur and Hawk, Ashton and Pacheco-de-Almeida, Gonçalo, Applying Random Coefficient Models to Strategy Research: Testing for Firm Heterogeneity, Predicting Firm-Specific Coefficients, and Estimating Strategy Trade-Offs (August 30, 2013). Harvard Business School Strategy Unit Working Paper No. 14-022; Robert H. Smith School Research Paper. Available at SSRN: http://ssrn.com/abstract=2323578 or http://dx.doi.org/10.2139/ssrn.2323578

Contact Information

Juan Alcacer (Contact Author)
Harvard University - Strategy Unit ( email )
Harvard Business School
Soldiers Field Road
Boston, MA 02163
United States
617 495-6338 (Phone)
617 495-0355 (Fax)
Wilbur C. Chung
University of Maryland - Robert H. Smith School of Business ( email )
College Park, MD 20742-1815
United States
HOME PAGE: http://www.rhsmith.umd.edu/faculty/wchung/
Ashton Hawk
Ohio State University (OSU) - Fisher College of Business ( email )
2100 Neil Avenue
Columbus, OH 43210-1144
United States
Gonçalo Pacheco-de-Almeida
HEC Paris (Groupe HEC) - Strategy & Business Policy ( email )
Jouy-en-Josas Cedex, 78351
France
(+33) (0)1 39 67 97 62 (Phone)
HOME PAGE: http://www.hec.edu/Faculty-Research/Faculty-Directory/PACHECO-DE-ALMEIDA-Goncalo
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References:  23

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