This article shows that distributions of market shares in narrowly-defined product markets follow the same general pattern found in earlier studies of broad “industries” and in the economy as a whole. Typically, the structure of a market conforms to the semi-logarithmic distribution; this pattern is so pervasive as to suggest that it is a “natural” phenomenon. The nature of growth processes that lead to unequal distributions of size is explored, and evidence from the PIMS data base is used to test two key assumptions about business growth and its relationship to size.
Get full access to this article
View all access options for this article.
References
1.
BainJoe S. (1968), Industrial Organization, New York: John Wiley and Sons.
2.
Boston Consulting Group (1968), Perspectives on Experience, Boston: Boston Consulting Group.
3.
Boston Consulting Group (1970), “The Product Portfolio,” Perspectives, No. 66, Boston: Boston Consulting Group.
4.
Boston Consulting Group (1976), “The Rule of Three and Four,” Perspectives, No. 187, Boston: Boston Consulting Group.
5.
BryantE. C. (1960), Statistical Analysis, New York: McGraw-Hill.
6.
BuzzellRobert D., GaleBradley T., and SultanRalph G. M. (1975), “Market Share—A Key to Profitability,” Harvard Business Review, 53 (January-February), 97–106.
7.
BuzzellRobert D., and WiersemaF. D. (in press), “Modelling Changes in Market Share: A Cross-Sectional Analysis,” Strategic Management Journal.
8.
CoxWilliam E.Jr. (1977), “Product Portfolio Strategy, Market Structure and Performance,” in Strategy + Structure = Performance, ThorelliHans B., ed., Bloomington: Indiana University Press. (Summary of an unpublished working paper by Ernest F. Cooke and William E. Cox, Jr. (1975), “The Relationship Between Market Share and Rank as a Measure of Performance.”)
9.
HoferCharles and SchendelF. R. (1978), Strategy Formulation: Analytical Concepts, St. Paul, MN: West Publishing Co.
10.
IjiriYuji and SimonHerbert A. (1964), “Business Firm Growth and Size,” American Economic Review, 54 (March), 77–79.
11.
IjiriYuji and SimonHerbert A. (1974), “Interpretation of Departures from the Pareto Curve Firm-Size Distributions,” Journal of Political Economy, 82 (March-April), 314–31.
12.
NaslundBertil (1977), An Analysis of Economic Size Distributions, Lecture Notes in Economics and Mathematical Systems, Berlin: Springer Verlag.
13.
NelsonRichard R. and WinterSidney G. (1978), “Forces Generating and Limiting Concentration Under Schumpterian Competition,” The Bell Journal of Economics, 9 (Autumn), 524–48.
14.
QuandtRichard E. (1970), “On the Size Distributions of Firms,” American Economic Review, 56 (June), 416–32.
15.
SchererF. M. (1970), Industrial Market Structure and Performance, Chicago: Rand McNally.
16.
SimonHerbert A. (1955), “On a Class of Skew Distribution Functions,” Biometrika, 42 (December), 425–40.
17.
SimonHerbert A. and BoniniC. P. (1958), “The Size Distribution of Business Firms,” American Economic Review, 48 (September), 607–17.
