This paper provides the first review of recent work that uses cooperative game theory to deepen our understanding of persistent performance heterogeneity among firms. Since its initiation in 1996, this stream has grown considerably. The work it contains is notable on several dimensions, including its mathematical foundation, its aggregate cohesion, its interplay between theory and empirical work, the subtlety of its insights, and its potential for idea migration from strategy to other disciplines. Here, we: provide a careful discussion of the theory; review the key theoretical findings; highlight a number of insights that both challenge and clarify the conventional wisdom; spotlight the associated, recently emerging empirical work; and provide some thoughts on the challenges that lie ahead.
Available at: http://works.bepress.com/michael_ryall/21/