Table A1 Variable definitions...

Table A1

Variable definitions
Performance
roa	$= \frac{n e t i n c o m e + i n t e r e s t e x p e n s e * (1 - t a x r a t e)}{a v e r a g e o f l a s t y e a r' s a n d c u r r e n t y e a r' s t o t a l a s s e t s} * 100 (W C 08326),$ winsorized at 1st and 99st percentiles.
roe	$= \frac{n e t i n c o m e - p r e f e r r e d d i v i d e n d r e q u i r e m e n t}{a v e r a g e o f l a s t y e a r' s a n d c u r r e n t y e a r' s c o m m o n e q u i t y} * 100 (W C 08301),$ winsorized at 1st and 99st percentiles.
tobinsq	$= \frac{m a r k e t v a l u e o f e q u i t y (W C 08001) + t o t a l a s s e t s (W C 02999) - b o o k v a l u e o f e q u i t y (W C 03501)}{t o t a l a s s e t s (W C 02999)},$ winsorized at 1st and 99st percentiles.
markettobook	$= \frac{m a r k e t v a l u e o f e q u i t y (W C 08001)}{b o o k v a l u e o f e q u i t y (W C 03501)},$ winsorized at 1st and 99st percentiles.
assetgrowth	is firm's one-year growth rate of total assets (WC08621)
salesgrowth	is firm's one-year growth rate of sales (WC08631)
Strategy
differentiation	is the transformed principal component score on PC1, where higher values indicate a greater focus on differentiation. See section 3.2 for a detailed description
efficiency	is the transformed principal component score on PC2, where higher values indicate a greater focus on efficiency. See section 3.2 for a detailed description
sgasales	$= \frac{s e l l i n g, g e n e r a l & a d m i n i s t r a t i v e e x p e n s e (W C 01101)}{n e t s a l e s o r r e v e n u e s (W C 01001)} .$
wagesales	$= \frac{s a l a r i e s a n d b e n e f i t e x p e n s e s (W C 01084)}{n e t s a l e s o r r e v e n u e s (W C 01001)} .$
rdsales	$= \frac{r e s e a r c h a n d d e v e l o p m e n t e x p e n s e (W C 01201)}{n e t s a l e s o r r e v e n u e s (W C 01001)},$ Missing values are set to zero
cogssales	$= \frac{c o s t o f g o o d s s o l d e x c l u d i n g d e p r e c i a t i o n (W C 01051)}{n e t s a l e s o r r e v e n u e s (W C 01001)} .$
capacityutilization	$= \frac{p r o p e r t y, p l a n t a n d e q u i p m e n t (n e t) (W C 02501)}{n e t s a l e s o r r e v e n u e s (W C 01001)} .$
capexsales	$= \frac{c a p i t a l e x p e n d i t u r e s (W C 04601)}{n e t s a l e s o r r e v e n u e s (W C 01001)} .$
Controls
log_assets	$= \log o f t o t a l a s s e t s (W C 02999)$
forsales	$= \frac{i n t e r n a t i o n a l s a l e s (W C 07101)}{n e t s a l e s o r r e v e n u e s (W C 01001)}$
diversified	is a binary variable that takes a value of 1 when the firm is diversified (i.e. reports segments from different industries using Fama and French's 12 industry classification). Non-classifiable segments with SIC code 9999 (WC19506-WC19596) are not considered
leverage	$= \frac{l o n g t e r m d e b t (W C 03251)}{t o t a l a s s e t s (W C 02999)}$
marketgrowth	is the one-year growth rate of net sales or revenues (WC01001) in a given industry
concentration	is the Herfindahl index based on net sales or revenues (WC01001) calculated by industry-year
lag_performance	is firm's performance in t

Variable definitions
Performance
roa	$= \frac{n e t i n c o m e + i n t e r e s t e x p e n s e * (1 - t a x r a t e)}{a v e r a g e o f l a s t y e a r' s a n d c u r r e n t y e a r' s t o t a l a s s e t s} * 100 (W C 08326),$ winsorized at 1st and 99st percentiles.
roe	$= \frac{n e t i n c o m e - p r e f e r r e d d i v i d e n d r e q u i r e m e n t}{a v e r a g e o f l a s t y e a r' s a n d c u r r e n t y e a r' s c o m m o n e q u i t y} * 100 (W C 08301),$ winsorized at 1st and 99st percentiles.
tobinsq	$= \frac{m a r k e t v a l u e o f e q u i t y (W C 08001) + t o t a l a s s e t s (W C 02999) - b o o k v a l u e o f e q u i t y (W C 03501)}{t o t a l a s s e t s (W C 02999)},$ winsorized at 1st and 99st percentiles.
markettobook	$= \frac{m a r k e t v a l u e o f e q u i t y (W C 08001)}{b o o k v a l u e o f e q u i t y (W C 03501)},$ winsorized at 1st and 99st percentiles.
assetgrowth	is firm's one-year growth rate of total assets (WC08621)
salesgrowth	is firm's one-year growth rate of sales (WC08631)
Strategy
differentiation	is the transformed principal component score on PC1, where higher values indicate a greater focus on differentiation. See section 3.2 for a detailed description
efficiency	is the transformed principal component score on PC2, where higher values indicate a greater focus on efficiency. See section 3.2 for a detailed description
sgasales	$= \frac{s e l l i n g, g e n e r a l & a d m i n i s t r a t i v e e x p e n s e (W C 01101)}{n e t s a l e s o r r e v e n u e s (W C 01001)} .$
wagesales	$= \frac{s a l a r i e s a n d b e n e f i t e x p e n s e s (W C 01084)}{n e t s a l e s o r r e v e n u e s (W C 01001)} .$
rdsales	$= \frac{r e s e a r c h a n d d e v e l o p m e n t e x p e n s e (W C 01201)}{n e t s a l e s o r r e v e n u e s (W C 01001)},$ Missing values are set to zero
cogssales	$= \frac{c o s t o f g o o d s s o l d e x c l u d i n g d e p r e c i a t i o n (W C 01051)}{n e t s a l e s o r r e v e n u e s (W C 01001)} .$
capacityutilization	$= \frac{p r o p e r t y, p l a n t a n d e q u i p m e n t (n e t) (W C 02501)}{n e t s a l e s o r r e v e n u e s (W C 01001)} .$
capexsales	$= \frac{c a p i t a l e x p e n d i t u r e s (W C 04601)}{n e t s a l e s o r r e v e n u e s (W C 01001)} .$
Controls
log_assets	$= \log o f t o t a l a s s e t s (W C 02999)$
forsales	$= \frac{i n t e r n a t i o n a l s a l e s (W C 07101)}{n e t s a l e s o r r e v e n u e s (W C 01001)}$
diversified	is a binary variable that takes a value of 1 when the firm is diversified (i.e. reports segments from different industries using Fama and French's 12 industry classification). Non-classifiable segments with SIC code 9999 (WC19506-WC19596) are not considered
leverage	$= \frac{l o n g t e r m d e b t (W C 03251)}{t o t a l a s s e t s (W C 02999)}$
marketgrowth	is the one-year growth rate of net sales or revenues (WC01001) in a given industry
concentration	is the Herfindahl index based on net sales or revenues (WC01001) calculated by industry-year
lag_performance	is firm's performance in t

Source(s): Authors' own creation

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