Determinants of Firm Performance 403 ORGANIZATIONAL FACTORS (structure, systems, size, history FACTORS (sociological, political, FACTORS economic, technological) skills, personalities, age) ORGANIZATIONAL CLIMATE Decision Making Practices Communication Flow Leadershi rocesses INDIVIDUAL BEHAVIOR ORGanIzation PERFORMANCE Figure 1. A traditional model of organizational climate corporations in the United States. For a more assets as reported by Compustat. Because the detailed discussion of the sample and its character- availability of organizational survey data, dis- istics see Hansen(1987) cussed later, dictated the sample, not all the data are from a single year. In order to adjust profit for annual effects such as inflation, the risk-free Performance measure rate as determined by the T-bill ratewas The measure for firm-level performance(FIRM) subtracted from the Roa for each firm as was selected as the 5-year average return on prescribed by Shepherd(1970: 50-51). This multi-