General Electric Performance Over a Half Century: Evaluation of Effects of Leadership and Other Strategic Factors by Quantitative Case Analysis

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.