Performance usually means financial performance, measured most often as return on assets (ROA) or less often as return on sales (ROS) , return on invested capital (ROIC) , or market share. Formally, we can write the performance ( pict ) of a business in industry i, corporation c ,  and year t as:Rumelt, R. (1991). How much does industry matter? Strategic Management Journal, 12(3): 167–185. URL Here m is the mean performance of all businesses across all years. Ii is the industry effect for industry i (the performance difference between industry i and the mean); Cc is the corporate effect for corporation c (the performance difference between corporation c and the mean); Bic is the business effect for a business in industry i and corporation c (the performance difference between that business and the mean); Yt is the year effect for year t (the performance difference between year t and the mean); and eict is an error term (the performance difference between a business and the mean that is not accounted for by industry, corporate, business, and year effects). Other performance effects include CEO and geographical region or country.
Performance usually means financial performance, measured most often as return on assets or less often as return on sales , return on invested capital , or market share. Formally, the performance ( ) of a business in industry , corporation , and year can be written as:Rumelt, R. (1991). How much does industry matter? Strategic Management Journal, 12(3): 167–185. URL Here is the mean performance of all businesses across all years. is the industry effect for industry (the performance difference between industry and the mean); is the corporate effect for corporation (the performance difference between corporation and the mean); is the business effect for a business in industry and corporation (the performance difference between that business and the mean); is the year effect for year (the performance difference between year and the mean); and is an error term (the performance difference between a business and the mean that is not accounted for by industry, corporate, business, and year effects). Other performance effects include the chief executive officer and geographical region or country.
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