General Electric Performance over a Half Century

INTERNATIONAL JOURNAL OF BUSINESS, 12(1), 2007

ISSN: 1083−4346

General Electric Performance over a Half Century:
Evaluation of Effects of Leadership and Other
Strategic Factors by Quantitative Case Analysis
Richard H. Frankea, Anthony J. Mentob, Steve M. Prumoc, and
Timothy W. Edlundd abc Department of Management and International Business, The Sellinger School,
Loyola College; 4501 North Charles St., Baltimore, MD 21210 [e-mail], [e-mail], [e-mail] d Morgan State University; 720 West 34th St., Baltimore, MD 21211-2604 [e-mail] ABSTRACT
We conducted quantitative case analysis of inflation-adjusted profitability and relative market value at General Electric over a half-century, to examine the influence of Jack
Welch and others as CEO and of various strategic and environmental factors. Over the first decade of Welch's leadership, there was no improvement in GE's real ROE.
However, there was market value increase, and later there were improvements in both measures due to declining competition. Over 90% of variances in real profitability and comparative market value were explained using measures often considered in strategy-changes in competitive environment, leadership and corporate culture, labor relations and plant closings, and economic and financial environments. It appears that systematic appraisal of corporations can aid understanding of factors that determine profitability and market value.
JEL Classification:

Keywords:

C32, C53, C81, D21, D23, D24, D43, E31, E51, J24, J52, K42,
L13, L21, L22, L25, L26, M12, M14, O30.

Quantitative Case Analysis (QCA); Profitability; Real ROE; Market value; Capital intensity; Corporate management; Leadership; Corporate culture; Achievement motivation; Power motivation; Competition; Money supply; Inflation; Oil shocks; Labor relations; Downsizing.

* An earlier version of this paper was presented to the 23rd Annual International

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