Can Small Firms Find and Defend Strategic Niches? A Test of the Porter Hypothesis

Authors

Ralph M. Bradburd
David R. Ross, Bryn Mawr CollegeFollow

Document Type

Article

Version

Publisher's PDF

Publication Title

Review of Economics and Statistics

Volume

71

Publication Date

1989

Abstract

A number of studies have found a positive relation between market share and profitability. Michael Porter argues that this need not hold when small firms find strategic niches protected by mobility barriers. This paper examines that hypothesis by comparing the profitability of large and small lines of business when the activities of the two groups (proxied by the allocation of sales across submarkets) differ on average. We find that in heterogeneous product mix industries profits of large LBs are no longer significantly greater than profits of smaller rivals, except that market leaders maintain their advantage regardless of product mix.

Publisher's Statement

© 1989 MIT Press. Available on publisher's site at http://www.mitpressjournals.org/loi/rest.

Citation

Bradburd, Ralph M., and David R. Ross. "Can Small Firms Find and Defend Strategic Niches? A Test of the Porter Hypothesis." Review of Economics and Statistics 71 (1989): 258-262, doi: 10.2307/1926971.

DOI

10.2307/1926971