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The role of product quality is examined to determine its applicability as a means of gaining a comparative advantage. The authors argue that only by (1) allowing for the possibility of feedback between quality and other strategic factors and (2) controlling for firm-specific effects can the role of quality and key hypotheses be evaluated. Making use of the PIMS data base, the authors detect feedback interactions between product quality and other strategic variables. The findings suggest the importance of product quality and that the successful implementation of a quality strategy can facilitate increased profitability in both a focus and a market share context.
Jacobson et al. (Thu,) studied this question.