Empirical research shows that proportion of inter-firm differences in profitability that industry factors explain is:
A)More than 75%
B)About half
C)Less than 25%
D)The question is unanswerable because "industry" is a meaningless concept.

Question

Quizplus · Accepted Answer

Empirical research, particularly the study by Rumelt (1991), found that industry factors explain less than 20% of the variance in firm profitability, indicating that the majority of the differences in profitability among firms are due to firm-specific factors rather than industry-wide factors.

Empirical Research Shows That Proportion of Inter-Firm Differences in Profitability