We focus on economic profit for firms and extend our analysis to cities and sectors of economic activityĪlthough a variety of definitions exist, we define superstar to mean a firm, sector, or city that has a substantially greater share of income than peers and is pulling away from those peers over time.įor firms, our metric is economic profit, a measure of a firm’s invested capital multiplied by its return above the cost of capital. We find a higher churn rate among superstar firms compared to cities, indicating higher levels of persistence among superstar cities. In addition to capturing a greater share of income and pulling away from peers, superstars exhibit relatively higher levels of digitization greater labor skill and innovation intensity more connections to global flows of trade, finance, and services and more intangible assets than do their peers. Relative to peers, superstars share several common characteristics. We find superstars exist not only among firms but among sectors and cities as well, although the trend is most evident among cities and firms. At the same time, we draw some preliminary implications for leaders. We also examine what characteristics, similarities, differences, and linkages can be observed across firms, sectors, and cities and what economic effects and questions they raise for further research. We assess the extent to which a superstar effect can be observed in the global economy in three arenas-firms, sectors, and cities-and inspect the dynamics, including churn and changing characteristics, in each of these arenas. Our research aims to fill some of the empirical and data gaps, take a global perspective, and examine the issue beyond just firms. Yet questions remain, and much of the evidence is still inconclusive as well as incomplete. This has been accompanied by a growing body of research examining various aspects and drivers of superstar effects in the economy. There is much discussion about “superstar” firms and “superstar effects” in reaction to the rapid growth of very large global companies.
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