The PIMS project was originally initiated by senior managers of General Electric who wanted to know why some of their business units were more profitable than others.
Under the direction of Sidney Schoeffler, an Economics professor hired by GE for the purpose, the PIMS project was launched in the 1960s as an internal empirical study.
Since GE was highly diversified at the time, key factors were sought that would have an impact on economic success regardless of the product.
Between 1970 and 1983, roughly 2600 strategic business units (SBUs) from around 200 companies took part in the surveys and provided key figures for the project.
The PIMS project analyses the data they had gathered to identify the options, problems, resources and opportunities faced by each SBU.
The PIMS databases currently comprise over 25,000 years of business experience at the SBU level (i.e. where the customer interface takes place and where marketing and investment decisions are made).
Each SBU is characterized by hundreds of factors over a period of 3+ years, including the market share of itself and its competitors, customer preference, relative prices, service quality, innovation rate, vertical integration, etc., as well as a number of market luring factors and fairly detailed income statement, balance sheet and employee data.
The most important of these are presented below: Characteristics of the business environment (market attractiveness): Competitive strength: Supply chain fitness: Dynamics of change Economic success factors (as variables to be explained): While most of the variables appear obvious, PIMS has the advantage of providing empirical data that defines quantitative relationships and attributes them to what some would consider reasonable.
Overall, the factors surveyed explain about 70 percent of the differences in profitability between successful and unsuccessful business areas in the PIMS database (measured as variance).
It has also been suggested that PIMS is too heavily biased towards traditional such as car manufacturing; this is perhaps not surprising, considering the era in which the majority of the surveys were carried out.
Mintzberg (1998) claims that because the database is dominated by large established firms, it is more suitable as a technique for assessing the state of "being there rather than getting there".
The remaining business units are suppliers of raw materials and semi-finished products, components or accessories for industry and commerce.
Backhaus et al. (2006), p.48 f. Within the framework of the PIMS studies, it was thus possible to determine causalities with the help of time series analyses due to the availability of data over longer periods.
Correlations in this sense, including in the PIMS program, initially give nothing other than a reason to investigate possible causalities substantiated and intensively.
This means that the "laws of the marketplace" differ across populations, directly contradicting one of the main presumptions of using the PIMS data base for analysis.