Good to great: lessons for managers

Abstract

PurposeJim Collins' Good to Great is but one of many popular press books on management. In his book, Collins discusses the keys to success for today's corporations. Many managers flocked to bookstores to discover what they might be missing in making their organization great. This paper aims to use methodologies more commonly found in the finance literature to validate the results of Collins' study.Design/methodology/approachThis paper uses methodologies more commonly found in finance literature (e.g. event study methodology, Fama‐French three‐factor model with momentum, buy‐and‐hold abnormal returns) to validate the results of Collins' study.FindingsThe results show that the Good to Great firms had unexceptional performance when compared to other benchmark lists of firms, on an ex‐ante or ex‐post basis.Practical implicationsFrom a management perspective, the advice that one might obtain from Good to Great should be carefully examined by managers before they implement it, only to find that great is not really so great.Originality/valueThe paper is original in its methodological design and is valuable to managers who are seeking advice for opportunities that enhance shareholder wealth.