Rank Friction: An Ordinal Approach to Persistent Profitability

Powell, Thomas and Reinhardt, Ingo (2010) Rank Friction: An Ordinal Approach to Persistent Profitability. Strategic Management Journal, 31 (11). pp. 1244-1255.

Abstract

We present an ordinal method for studying persistence in firm profitability. The method is based on the degree of stability in a ranked performance distribution over time. The method gives a numerical index of rank friction (Rf) that can be applied to any ranked data over any period of time. Rf is nonparametric and can be used to test theoretical assumptions in strategic management. We illustrate the method in an empirical study of 40 years of profit data in 12 industries.

Item Type: Article
Keywords: Ranks; Ordinal; Persistent profitability; Competition; Performance
Subject(s): Strategy; Entrepreneurship & Global business
Centre: Faculty of Strategy, Entrepreneurship and International Business
Date Deposited: 22 Jan 2012 16:34
Last Modified: 23 Oct 2015 14:06
URI: http://eureka.sbs.ox.ac.uk/id/eprint/1929

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