The purpose of this paper is to identify the sources of variation in firm performance. This is one of the cornerstones of strategy research, i.e. the relative importance of industry and firm-level effects on firm performance. Multilevel analysis is well suited to analyze variance in performance...

The debate about the drivers of firm performance is central to the fields of strategic management and industrial organization. Much of this debate has focused on determining the relative importance of firm versus industry effects. In contrast, the measurement of the relative importance of...