Factor and Regression Analysis, Power and Profits in Supply Chains

  • Karel Cool
  • James Henderson


The paper explains the iterative process i.e. the difficulties, problems and practical solutions, that researchers typically experience in arriving at a final version. The context of the paper concerns the importance of market power versus firm resources for firm profitability. Recent papers using descriptive variance components analysis on Federal Trade Commission Line of Business data have focused on the relative importance of industry effects versus firm effects regardless of their underlying causes. This study examines specific factors underlying industry effects, namely multiple buyer and supplier power concepts and uses a different methodology, factor and regression analyses, on an alternative sample from the Banque de France’s Sesame database. The results indicate that, in the sample, industry effects are more important than firm effects (as measured by relative market share) in explaining seller profitability and suggest that buyer power explains a much larger percentage of the variance in seller profitability than supplier power.


Market Share Market Power Firm Profitability Firm Effect Power Concept 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© Springer Science+Business Media Dordrecht 1997

Authors and Affiliations

  • Karel Cool
    • 1
  • James Henderson
    • 1
  1. 1.INSEADFrance

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