Should We Be Impressed with High Performance?

Denrell, Jerker (2005) Should We Be Impressed with High Performance? Journal of Management Inquiry, 14 (3). pp. 292-298.


Popular discourse as well as several recent academic theories view high performance as a signal of capability. Although it is reasonable to believe that more capable firms will achieve higher performance, several other factors influence firm performance, including luck. As a result, high performance is, at best, a very noisy signal of capabilities. Moreover, because it is a rare event, high performance is more likely for firms that engage in practices that produce high variability in outcomes. If such practices lead to lower average performance, exceptionally high performance will in fact be a signal of incompetence rather than competence.

Item Type: Article
Keywords: performance; capabilities; luck
Subject(s): Strategy; Entrepreneurship & Global business
Centre: Faculty of Strategy, Entrepreneurship and International Business
Date Deposited: 28 Nov 2011 14:23
Last Modified: 23 Oct 2015 14:06

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