The strategic management paradigm and the wood building products industry: A model of strategies and firm profitability

A model of strategies and firm profitability was developed and tested for the North American wood building products industry. Five strategic variables (adoption of process technology, grade sector focus, investment intensity, forward integration, relative market share) were used to predict firm profitability as measured by return on sales for the largest producers of wood building products in North America. Adoption of process technologies, grade sector focus (i.e., product quality), and investment intensity all had significant positive impacts on return on sales. From a managerial perspective, this research shows no advantage in larger market share beyond a minimal efficient scale. However, superior firm profitability was linked to the application of new process technologies, investment intensity, and the production of higher grade products.