Strategic Management Review > Vol 3 > Issue 2

On the Matter of How Much Industry Matters

Haifeng Wang, Wisconsin School of Business, University of Wisconsin-Madison, USA, , Russell Coff, Wisconsin School of Business, University of Wisconsin-Madison, USA,
Suggested Citation
Haifeng Wang and Russell Coff (2022), "On the Matter of How Much Industry Matters", Strategic Management Review: Vol. 3: No. 2, pp 295-323.

Publication Date: 21 Jul 2022
© 2022 now Publishers, Inc.
Corporate strategy,  Organization and strategy,  Research methodology in strategic management
Variance component analysisfirm performanceindustry-, corporate- and business unit- effectIndustrial organization (IO) economicsresource-based viewstrategic management


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In this article:
Why Explore How Much Industry Matters? 
Methodological Issues and How they Affect Conclusions 
Theoretical Advancements Stemming from Rumelt's Study 
Conclusion and Discussion: What Matters Going Forward 


Richard Rumelt shook the strategy field with his variance decomposition study by concluding that industry and corporate effects on performance were surprisingly small. At the time, many scholars were focusing much of their effort on studying topics like corporate strategy and competitive dynamics. This spurred a flurry of replication studies that sought to tweak the methodological approach in multiple ways — perhaps seeking a markedly different answer to the question. At the same time, it fueled the nascent resource-based view by focusing more attention on business unit resources and capabilities as drivers of performance. This article explores both the theoretical and empirical innovation that resulted from the flood of inquiry. It then identifies subsequent opportunities that remain to be explored.



Strategic Management Review, Volume 3, Issue 2 Special Issue in Honor of Richard Rumelt
See the other articles that are part of this special issue.