Inferring Superior Capabilities from Sustained Superior Performance: A Bayesian Analysis

Denrell, Jerker, Fang, Christina and Zhao, Zhenyuan (2013) Inferring Superior Capabilities from Sustained Superior Performance: A Bayesian Analysis. Strategic Management Journal, 34 (2). pp. 182-196.

Abstract

To what extent can one infer that superior capabilities are driving sustained superior performance? Modeling performance as some combination of differences in capabilities and processes of cumulative advantage, we argue that a Bayesian framework in which decision makers take into account the differences in cumulative advantage provides for a correct inference. We show, using both simulated and real performance data, that the Bayesian method gives rise to estimates relevant for the inference problem. The estimates also illustrate why a firm with superior performance during a longer period can be less likely to possess superior capabilities than a firm with superior performance during a shorter period. Our work has implications for the origins of competitive advantages and for organization learning in strategy research.

Item Type: Article
Keywords: Superior Performance, Competitive Advantage, RBV, Bayesian Analysis
Subject(s): Strategy; Entrepreneurship & Global business
Centre: Faculty of Strategy, Entrepreneurship and International Business
Date Deposited: 28 Nov 2011 14:53
Last Modified: 23 Oct 2015 14:06
URI: http://eureka.sbs.ox.ac.uk/id/eprint/1268

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