| Abstract: | Empirical tests using the PIMS data base reveal a significant correlation between a firm's performance and strategic position and the rate at which it grows as measured by additions to capital stock. To the extent that the results are valid, then public policy measures to encourage capital investment will not be firm netural. The cost of capital will be lowered for all, but they will further stimulate investment in firms whose strategic position they improve. This may have an outcome detrimental to other firms better placed to contribute to the overall economy. |
