Changes in Persistence of Performance Over Time

Research Summary I revisit a research tradition laying out trends in persistence of performance, to create shared facts to inform theory development. I build on prior work in Strategy by: (a) bringing together two distinct measures of persistence of performance and explaining how they complement each other and help distinguish theories, (b) extending the time series from those prior studies and applying modern statistical improvements to demonstrate new patterns. Specifically, while I find ordinal persistence increased monotonically since the 1980s, autocorrelation of performance was not monotonic and is now approaching lows from the mid‐1990s. These patterns are inconsistent with mechanisms raised in the debate about declining competition. I suggest that these facts can inspire Strategy theory, which would contribute to that debate. Managerial Summary A central concern of managers is how precarious is their position, or for new ventures, whether they will be able to displace current leading firms. Even within the same year, management writing and the media might claim that it is both: a) a time of faster‐than‐ever turnover, b) or that large firms have become unassailable. This manuscript tracks two measures of performance persistence over time. I find that persistence of rank has increased roughly steadily since the 1980s. How associated are performance measures year‐to‐year was actually at its peak in the mid 1980s, potentially explaining the debate. The final patterns are consistent with top firms separating from followers in performance so much that increasing volatility in their performance does not lead to changes in rank.