A Multigroup Structural Equation Approach: A Demonstration by Testing Variation of Firm Profitability Across EU Samples

Organizational Research Methods

Volumn 13, Issue 4, 2010, Pages 738-766

  Bou, Juan Carlos ^a   Satorra, Albert ^b  

^a UNIVERSITAT JAUME I   (Spain)

^b DEPARTMENT OF ECONOMICS AND BUSINESS   (Spain)

Author keywords

goodness of fit testing; ML estimation; multigroup analysis; persistence of profits; returns on assets; structural equation modeling

Indexed keywords

EID: 77956489399     PISSN: 10944281     EISSN: 15527425     Source Type: Journal    
DOI: 10.1177/1094428109340433     Document Type: Article

References (67)

1. Anderson, T.W., & Hsiao, C. (1982). Formulation and estimation of dynamic models using panel data. Journal of Econometrics, 18, 47-82.
2. Benston, G. (1985). The validity of profits-structure studies with particular reference to the FTC's line of business data. American Economic Review, 75, 37-67.
3. Blaine, M. (1994). Comparing the profitability of firms in Germany, Japan, and the United States. Management International Review, 34, 125-148.
4. Bou, J.C., & Satorra, A. (2007). The persistence of abnormal returns at industry and firm levels: Evidence from Spain. Strategic Management Journal, 28, 707-722.
5. Bowman, E.H., & Helfat, C. (2001). Does corporate strategy matter? Strategic Management Journal, 22, 1-23.
6. Brouthers, L.E. (1998). Explaining MNC profitability: Country-specific, industry-specific and country-industry interactive influences. Management International Review, 38, 345-361.
7. Brush, T.H., & Bromiley, P. (1997). What a small corporate effect mean? A variance components simulation of corporate and business effects. Strategic Management Journal, 18, 825-835.
8. Brush, T.H., Bromiley, P., & Hendrickx, M. (1999). The relative influence of industry and corporation on business segment performance: An alternative estimate. Strategic Management Journal, 20, 519-547.
9. Bureau Van Dijk. (2005). Amadeus. Amsterdam: Bureau van Dijk Electronic Publishing. Retrived Novenber 28, 2005, from http://www.bvdep.com/en/amadeus.html.
10. Canibano, L., & Mora, A. (2000). Evaluation the statistical significance of de facto accounting harmonization: A study of European global players. The European Accounting Review, 9, 349-369.
11. Chacar, A., & Vissa, G. (2005). Are emerging economies less efficient? Performance persistence and business group affiliation. Strategic Management Journal, 26, 933-946.
12. Chan, D. (1998). The conceptualization of change over time: An integrative approach incorporating longitudinal means and covariance structures analysis (LMACS) and multiple indicator latent growth modeling (MLGM). Organizational Research Methods, 1, 421-483.
13. Chang, S.J., & Hong, J. (2002). How much does the business group matters in Korea? Strategic Management Journal, 23, 265-274.
14. Chang, S.J., & Singh, H. (2000). Corporate and industry effects on business unit competitive position. Strategic Management Journal, 21, 739-752.
15. Cheung, G.W., & Rensvold, R.B. (1999). Testing factorial invariance across groups: A reconceptualization and proposed new method. Journal of Management, 25, 1-27.
16. Cheung, M.W.L. (2007a). Comparison of approaches to constructing confidence intervals for mediating effects using structural equation models. Structural Equation Modeling, 14, 227-246.
17. Cheung, M.W.L. (2007b). Comparison of methods of handling missing time-invariant covariates in latent growth models under the assumption of missing completely at random. Organizational Research Methods, 10, 609-634.
18. Choi, F.D., Hino, H., Min, S.K., Nam, S.O., Ujiie, J., & Stonehill, A.I. (1983). Analyzing foreign financial statements: The use and misuse of international ratio analysis. Journal of International Business Studies, 14, 113-131.
19. Christmann, P., Gray, D., & Yip, G.S. (1999). The relative influence of country conditions, and business strategy on multinational corporation subsidiary performance. Journal of International Management, 5, 241-265.
20. Crawford, J.R. (2002). SBDIFF.EXE, computer program for Satorra-Bentler scaled difference chi-square. Retrieved November 30, 2008, from http://www.abdn.ac.uk/~psy086/dept/sbdiff.htm.
21. Davison, A.C., & Hinkley, D.V. (1997). Bootstrap methods and their application. UK Cambridge University Press.
22. Demsetz, H. (1979). Accounting for advertising as a barrier to entry. Journal of Business, 59, 345-360.
23. Fisher, F.M., & McGowan, J.J. (1983). On the misuse of accounting rates of return to infer monopoly profits. American Economic Review, 73, 82-97.
24. Geroski, P.A., & Jacquemin, A. (1988). The persistence of profits: A European comparison. The Economic Journal, 98, 375-389.
25. Glen, J., Lee, K., & Singh, A. (2001). Persistence of profitability and competition in emerging markets. Economic Letters, 72, 247-253.
26. Hawawini, G., Subramanian, V., & Verdin, P. (2003). Is performance driven by industry- or firm-specific factors? A new look at the evidence. Strategic Management Journal, 24, 1-16.
27. Hayduk, L.A. (1987). Structural equation modeling with LISREL: Essentials and advances. Baltimore: The Johns Hopkins University Press.
28. Hayduk, L.A. (1996). LISREL: Issues, debates, and strategies. Baltimore: The Johns Hopkins University Press.
29. Hough, R. (2006). Business segment performance redux: A multilevel approach. Strategic Management Journal, 27, 45-61.
30. Hult, G.T.M., Ketchen, D.J., Griffinth, D.A., Chabowski, B.R., Hamman, M.K., Dykes, B.J.,et al.(2008). An assessment of the measurement of performance in international business research. Journal of International Business Studies, 39, 1064-1080.
31. Jacobson, R. (1988). The persistence of abnormal returns. Strategic Management Journal, 9, 415-430.
32. Jacobson, R., & Hansen, G. (2001). Modeling the competitive process. Managerial and Decision Economics, 22, 251-263.
33. Jöreskog, K.J., & Sörbom, D. (1996). LISREL 8: Users reference guide. Chicago: SSI Scientific Software International, Inc.
34. Kenny, D., & Zautra, A. (1985). The trait-state-error model for multi-wave data. Journal of Consulting and Clinical Psychology, 63, 52-59.
35. Kenny, D., & Zautra, A. (2001). Trait-state models for longitudinal data. In L. M. Collins & A. G. Sayer (Eds.), New methods for the analysis of change (pp. 243-263). Washington: American Psychological Association.
36. Khanna, T., & Rivkin, J.W. (2001). Estimating the performance effects of business groups in emerging markets. Strategic Management Journal, 22, 45-74.
37. Krisement, V.M. (1997). An approach for measuring the degree of comparability of financial accounting information. The European Accounting Review, 6, 465-485.
38. Little, T.D. (1997). Mean and covariance structures (MACS) analyses of cross-cultural data: Practical and theoretical issues. Multivariate Behavioral Research, 32, 53-76.
39. Loehlin, J.C. (2004). Latent variable models: An introduction to factor, path, and structural equation analysis (see Appendix E, p. 256), London: Lawrence Erlbaum Associates.
40. Makino, S., Isobe, T., & Chan, C.M. (2004). Does country matter? Strategic Management Journal, 25, 1027-1043.
41. McArdle, J.J., & Hamagami, F. (1996). Multilevel models from a multiple group structural equation perspective. In G. A. Marcoulides & R. E. Schumacker (Eds.), Advanced structural equation modeling: Issues and techniques (pp. 89-124). Mahwah, NJ: Lawrence Erlbaum Associates.
42. McGahan, A.M., & Porter, M.E. (1997). How much does industry matter, really? Strategic Management Journal, 18, 15-30.
43. McGahan, A.M., & Porter, M.E. (1999). The persistence of shocks to profitability. Review of Economics and Statistics, 81, 143-153.
44. McGahan, A.M., & Porter, M.E. (2002). What do we know about variance in accounting profitability. Management Science, 48, 834-851.
45. Misangyi, V.F., Elms, H., Greckhamer, T., & Lepine, J.A. (2006). A new perspective on a fundamental debate: A multilevel approach to industry, corporate, and business unit effects. Strategic Management Journal, 27, 571-590.
46. Mueller, D.C. (1986). Profits in the long run. UK Cambridge University Press.
47. Mueller, D.C. (1990). The dynamics of company profits: An international comparison. UK Cambridge University Press.
48. Muthén, B.O., & Satorra, A. (1995). Complex sample data in structural equation modeling. Sociological Methodology, 25, 267-316.
49. Muthén, B.O., & Muthén, L.K. (2007). Mplus user's guide (5th ed.). Los Angeles: Muthén & Muthén.
50. Neale, M.C., Boker, S.M., Xie, G., & Maes, H.H. (2003). Mx: Statistical modeling (6th ed.). Richmond, VA: Department of Psychiatry.
51. Nobes, C., & Parker, R. (2006). Comparative international accounting. essex. UK Prentice Hall.
52. Ployhart, R.E., & Oswald, F.L. (2004). Applications of mean and covariance structure analysis: Integrating correlational and experimental approaches. Organizational Research Methods, 7, 27-65.
53. Rasbash, J., Steel, F., Browne, W., & Prosser, B. (2004). A user's guide to MLwiN. London: Centre for Multilevel Modelling, Institute of Education, University of London.
54. Rindskopf, D. (1984). Using phantom and imaginary latent variables to parameterize constraints in linear structural models. Psychometrika, 49, 37-47.
55. Roquebert, J.A., Phillips, R.L., & Westfall, P.A. (1996). Markets vs. management: What "drives" profitability? Strategic Management Journal, 17, 653-664.
56. Rubin, D.B. (1976). Inference and missing data. Biometrika, 63, 581-592.
57. Rumelt, R.P. (1991). How much does industry matter? Strategic Management Journal, 12, 167-185.
58. Satorra, A. (2002). Asymptotic robustness in multiple group linear-latent variable models. Econometric Theory, 18, 297-312.
59. Satorra, A., & Bentler, P.M. (1994). Corrections to test statistics and standard errors in covariance structure analysis. In A. von Eye & C. C. Clogg (Eds.), Latent variables analysis: Applications for developmental research (pp. 399-419). Thousand Oaks, CA: Sage.
60. Satorra, A., & Bentler, P.M. (2001). A scaled difference chi-square test statistic for moment structure analysis. Psychometrika, 66, 507-514.
61. Schmalensee, R. (1985). Do markets differ much? American Economic Review, 12, 341-351.
62. Short, J.C., Ketchen, D.J., Bennett, N., & du Toit, M. (2006). An examination of firm, industry, and time effects on performance using random coefficient modeling. Organizational Research Methods, 9, 259-284.
63. Short, J.C., Ketchen, D.J., Palmer, T.B., & Hult, T.M. (2007). Firm, strategic group, and industry influences on performance. Strategic Management Journal, 28, 147-167.
64. Vandenberg, R.J., & Lance, C.E. (2000). A review and synthesis of the measurement invariance literature: Suggestions, practices, and recommendations for organizational research. Organizational Research Methods, 3, 4-70.
65. Waring, G. (1996). Industry differences in the persistence of firm-specific returns. American Economic Review, 86, 1253-1265.
66. Wernerfelt, B., & Montgomery, C.A. (1988). Tobin's q and the importance of focus in firm performance. American Economic Review, 78, 246-250.
67. Wiggings, R., & Ruefli, T. (2002). Sustained competitive advantage: Temporal dynamics and the incidence and persistence of superior economic performance. Organization Science, 13, 82-105.