Using the Shapley value approach to variance decomposition in strategy research: diversification, internationalization, and corporate group effects on affiliate profitability
Accepted version
Peer-reviewed
Repository URI
Repository DOI
Change log
Authors
Abstract
Research Summary: Variance decomposition methods allow strategy scholars to identify key sources of heterogeneity in firm performance. However, most extant approaches produce estimates that depend on the order in which sources are considered, the ways they are nested, and which sources are treated as fixed or random effects. In this paper, we propose the use of an axiomatically justified, unique, and effective solution to this limitation: the “Shapley Value” approach. We show its effectiveness compared to extant methods using both simulated and real data, and use it to explore how the importance of business group effects varies with group diversification and internationalization in a large, representative sample of European firms. We thus demonstrate the method’s superior accuracy and its usefulness in asking and answering new questions.
Description
Keywords
Journal Title
Conference Name
Journal ISSN
1097-0266