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• Article | Strategy Science

  Applying Random Coefficient Models to Strategy Research: Identifying and Exploring Firm Heterogeneous Effects

  Juan Alcácer, Wilbur Chung, Ashton Hawk and Gonçalo Pacheco-de-Almeida

  Strategy aims at understanding the differential effects of firms’ actions on performance. However, standard regression models estimate only the average effects of these actions across firms. Our paper discusses how random coefficient models (RCMs) may generate new insights about firm heterogeneity and its effects on performance in empirical settings in strategy. RCMs allow testing for and predicting firm-specific coefficients, thereby distinguishing between effects that have a significant mean versus significant variance. RCMs may also be used to explore the sources of firm heterogeneous effects. We develop a simulation testbed using synthetic datasets to show that RCMs are more precise at allocating firm heterogeneous effects to model slopes and intercepts than standard regression models. We also discuss RCMs’ possible limitations due to sample size requirements, nonconvergence problems, and potentially restrictive assumptions. Overall, RCMs allow strategy researchers to test and build new theories at a more granular level.

  Keywords: Strategy; Research; Competitive Advantage; Competitive Strategy; Performance;

  Citation:

  Alcácer, Juan, Wilbur Chung, Ashton Hawk, and Gonçalo Pacheco-de-Almeida. "Applying Random Coefficient Models to Strategy Research: Identifying and Exploring Firm Heterogeneous Effects." Strategy Science 3, no. 3 (September 2018): 481–553.  View Details

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• Case | HBS Case Collection | September 2018

  From Beirut With Love (A)

  Christina R. Wing, Esel Y. Cekin and Samer Al-Rachedy

  This case describes how Robert Fadel, as CEO and chairman of ABC, one of Lebanon’s leading retail and real estate groups, professionalized the family business amid ongoing disputes with his siblings. Robert was the second son of Maurice Fadel, who had founded the business years before and who ran it single-handedly. Growing up with three brothers, Robert and his siblings were tested by their father before they were allowed to take on managerial positions at ABC, which created competition and tension between them. Their relationship was often contentious. To prevent the business from being affected by the rivalry between his sons after his death, Maurice set up a trust in 2002 that designated Robert as his successor. A month before he died, in 2009, Maurice revised the trust, granting Robert full control of the board as well.
  In June 2009, Maurice passed away, and according to the provisions of the trust, Robert became the chairman and CEO of ABC for a period of five years, with the possibility of extending his term by an additional three years—on condition that he had the support of one of his brothers. In his new role, Robert had two main goals. First, he wanted to turn ABC into a professionally managed organization at all levels. Second, he wanted to invest in long-term projects that would expand the business. Actualizing his vision was not an easy task. Robert had to deal with his brothers’ opposition, who focused on collecting dividends rather than making investments to grow the business. In spite of everything, Robert achieved both his goals by the end of his eighth year, in 2017, when he stepped down as ABC’s CEO. Should he appoint someone from outside the Fadel family as ABC’s new CEO? Should Robert Fadel step down from the chairmanship as well?

  Keywords: family business; family conflicts; sibling rivalry; second-generation; foundation; trust; governance; work-life balance; leadership; leading change; transformation; succession planning; management; organizational structure; corporate culture; shareholders; board of directors; retail; department store; shopping mall; real estate; Growth; Lebanon; Middle East; non-executive chairman; sustainability; Family Business; Conflict Management; Management Succession; Transformation; Leading Change; Organizational Structure; Management; Growth and Development; Retail Industry; Real Estate Industry; Lebanon; Middle East;

  Citation:

  Wing, Christina R., Esel Y. Cekin, and Samer Al-Rachedy. "From Beirut With Love (A)." Harvard Business School Case 619-024, September 2018.  View Details

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• Supplement | HBS Case Collection | September 2018

  From Beirut With Love (B): The Last Judgment

  Christina R. Wing, Esel Y. Cekin and Samer Al-Rachedy

  Keywords: family business; family conflicts; sibling rivalry; second-generation; foundation; trust; governance; work-life balance; leadership; leading change; transformation; succession planning; management; organizational structure; corporate culture; shareholder; board of directors; retail; real estate; shopping mall; department store; Growth; Lebanon; Middle East; non-executive chairman; sustainability;

  Citation:

  Wing, Christina R., Esel Y. Cekin, and Samer Al-Rachedy. "From Beirut With Love (B): The Last Judgment." Harvard Business School Supplement 619-027, September 2018.  View Details

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