Business Risk And Performance: An Examination Of Industry Effects

Both business risk and industry sales volatility decreased across the computing equipment manufacturing, airline and pharmaceutical industries. Earnings performance and industry environmental munificence were both the highest among airlines. High volatility, while posing greater business risks, also offered the opportunity for improved risk-performance payoffs in the computer industry. Individual firms in the computer and pharmaceutical industries successfully reduced business risk while simultaneously increasing earnings performance (i.e., negative within-firm correlations), indicating idiosyncratic firm-specific effects