Luck and Performance under Rare Events
Prof. Shige MAKINO
Professor, Graduate School of Economics
Faculty of Economics
Kyoto University
Date: 12 March 2026 (Thursday)
Time: 10:30-12:00
Venue: E22-G008
Host: Prof. Jacky HONG, Professor in Management
Abstract
Strategy research has traditionally emphasized explainable drivers of firm performance—such as firm resources, industry structure, and country environments—while paying limited attention to randomness. This study examines how rare events expand the scope of luck in business outcomes. Our core argument is that rare events amplify the influence of random shocks, thereby widening the range of performance variation that cannot be attributed to systematic factors. Empirically, we control for firm, industry, and country effects and interpret the remaining unexplained variance as the residual upper bound on luck. Using variance-component analysis on a firm-quarter panel from 2017Q1 to 2023Q3 covering more than 70,000 global firms, we decompose ROA, ROCE, and ROS into firm, industry, country, and residual components. In normal periods, the residual share accounts for approximately 15–35 percent of total variance. During the COVID-19 shock, it increases by 3–5 percentage points and subsequently declines by 4–5 percentage points in the following year as conditions stabilize. This pattern suggests that rare events temporarily widen the role of luck in firm performance.
Speaker
Prof. Shige Makino is currently a Professor of Economics in Graduate School of Economics, Kyoto University and an Emeritus Professor in the Department of Management at CUHK Business School. Prof. Makino received his LLB and MBA from Keio University and PhD from the Ivey Business School at Western University (University of Western Ontario). His current research focuses on strategy and performance of multinational corporations. His research has appeared in a number of leading journals, including Academy of Management Journal, Journal of International Business Studies, Journal of Management Studies, Organization Science, and Strategic Management Journal. He is a Fellow of the Academy of International Business (AIB Fellow) and served as a Secretary-Treasurer of the AIB Fellows in 2014-2017, a Vice President of the Academy of International Business in 2010-2012, and a President of the Association of Japanese Business Studies in 2007-2009. He has been serving as an associate editor of Global Strategy Journal and editorial board member of multiple international journals. He has received many research awards and recognitions, most recently, the Journal of International Business Studies (JIBS) Gold Medal from the Academy of International Business.
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