Fit and Misfit of Plural Sourcing Strategies and IT-Enabled Process Integration Capabilities: Consequences of Firm Performance in the U.S. Electric Utility Industry

We also evaluated our hypotheses using two additional firm performance measures: Tobin’s Q, which is the total dollar amount market value divided by the total dollar amount replacement value of a firm in a given year) and operating revenue/total assets, which is the total dollar amount of revenue divided by total dollar amount of assets of a firm in a given year. We selected these measures because Tobin’s Q provides a forward-looking market measure and operating revenue/total assets provides an operating efficiency assessment (Bharadwaj 2000; Bharadwaj et al. 1999). For the Tobin’s Q and operating revenue/total assets models, we employed the Breusch and Pagan Lagrangian multiplier test against the null hypothesis that the coefficients estimated by the RE estimator are not systematically different than those of the OLS estimator (Bruesch and Pagan 1980). The test failed to reject the null hypothesis for the operating revenues/total assetst+1 model, supporting pooled OLS estimation over RE, and rejected the null hypothesis for the Tobin’s Qt+1 model (χ2 = 2.784, p < 0.01), supporting RE estimation over OLS