KRANNERT GRADUATE SCHOOL OF MANAGEMENT Purdue university West lafayette. Indiana Comparing alternative Methods to Estimate Corporate and Industry effects b Thomas h. brush Constance R James Philip bromiley Paper No. 1118 Date: 1998 Institute for Research in the Behavioral economic and Management sciences
KRANNERT GRADUATE SCHOOL OF MANAGEMENT Purdue University West Lafayette, Indiana Comparing Alternative Methods to Estimate Corporate and Industry Effects by Thomas H. Brush Constance R. James Philip Bromiley Paper No. 1118 Date: 1998 Institute for Research in the Behavioral, Economic, and Management Sciences
Under review at Strategic Management Journal COMPARING ALTERNATIVE METHODS TO ESTIMATE CORPORATE AND INDUSTRY EFFECTS Thomas h. Brush Krannert School of Management Purdue universi West Lafayette, Indiana 47906 (765)494444 (765)494-1526fax Constance R. James Pepperdine University Malibu. Califomia 90265 (310)317-7371 (310)456-0437fax Philip Bromiley Carlson School of management University of Minnesota Minneapolis, MN 55402 (612)624-5746 (612)626-1316fax
COMPARING ALTERNATIVE METHODS TO ESTIMATE CORPORATE AND INDUSTRY EFFECTS Abstract Recent studies of the relative size of corporate and industry effects have used ANOVA, Variance Components Analysis and Simultaneous Equations(Roquebert, Phillips and Westfall 1996 McGahan and Porter, 1997a; 1997b, Brush, Bromiley and Hendrikx, forthcoming ). This paper provides a comprehensive evaluation of the advantages and disadvantages of these techniques for evaluating the relative importance of effects. Using a Monte Carlo approach, we empirically compare these techniques. Based on bias and precision of estimation, the simultaneous equation estimates and particularly standardized beta provide the best estimates of effect size