Volume 30, Issue 1, 2021
DOI: 10.24205/03276716.2020.2064
Industry Resources and Firm Performance: Does Strategy Moderating Effect Matter?
Abstract
Using financial data of US firms over 2000-2019 as research sample,to examine whether the industry resources influenced the firm performance, and what moderate effect does strategy show in this relationship.. Our results could be summarized as follow. The results show that industry resources have an impact on firm performance. Young firms, small-scale firms, high-opacity firms, and high-free-cash-flow firms are less influenced by industry resources. Old firms, big-scale firms, low-opacity firms and low-free-cash-flow firms are more influenced by industry resources. Strategy can help reduce the negative impact of industry resources on firm performance, but can only help increase the positive impact of industry resources on low-free-cash-flow firms’ performance. When adopting the prospecting strategy, high-opacity firms and high-free-cash-flow firms had better performance; when adopting a defend strategy, low-opacity firms ,and low-free-cash-flow firms had better performance.
This study s enriches the literature of studying the relationship among industry factors, firm performance, and strategy. Second, the study contributes to the literature by examining how the relationship showed over all industries. Third, this study clarifies the moderate effect of strategy on the relationship between industry resources and firm performance.
Keywords
Industry resources, Strategy, Firm performance, Business