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A way to quantify industry dynamism so that benchmark metrics have more context

The drivers of legal costs are many, but certainly one of them is the pace of change and growth of an industry segment. I would hypothesize that an industry’s pace correlates well with total legal spending. How might research quantify that ferment fomented?

An article on corporate governance published in the Acad. Mgt. Rev., Feb. 2012 at 140, uses a measure for “industry dynamism.” The researcher created the variable by “regressing industry sales over time for the prior five years and using the standard error of the resulting regression coefficient.” I have written the author to find out more about the math and the robustness of this method. It does seem eminently reasonable that the more an industry grew during the five years before a given year, the more “dynamic” it should be deemed. Benchmark metrics on legal spend should rise and fall with industrial dynamism.

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