As emphasized by Barney (1986), any explanation of superior profitability must account for why the resources supporting such profitability could have been acquired for a price below their rent-generating capacity. Building upon the literature iti economics on coordination failures and incomplete...

Organizations learn from other organizations. However, the observations available to them are typically a biased sample. The organizations that can be observed at any point in lime are the survivors of a selective process that has eliminated a large fraction of the underlying population. In...

Individuals and social systems are often portrayed as risk averse and resistant to change. Such propensities are characteristically attributed to individual, organizational, and cultural traits such as risk aversion, uncertainty-avoidance, discounting, and an unwillingness to change. This paper...

A typical argument in Marxist and radical writings on economic organization is that prevailing practices, rather than being the most efficient, have been adopted in order to increase the share of the surplus of capitalists. Using an incomplete contract approach, this article develops a model...

To find the secrets of business success, what could be more natural than studying successful businesses? In fact, nothing could be more dangerous, warns this Stanford professor. Generalizing from the examples of successful companies is like generalizing about New England weather from data taken...

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...

As Bill Starbuck observes, measures of performance do not perform very well. They are compromised by measurement and data errors, which complicates statistical inferences. Nevertheless, performance measurements are needed and may be necessary for guiding organizational changes. Although the...

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...