Resource partitioning theory maintains that in markets in which anti-mass-production cultural sentiments make producer identity relevant, there should be no direct competition between generalists and specialists. Nevertheless, anecdotal evidence suggests that after initial partitioning, such competition, and hence de-partitioning, is in some cases possible. We refine received insights of resource partitioning theory regarding the stability of niche markets, particularly those driven by identity movements, by introducing the notion that partitioning is a dynamic and even reversible process. Previous research has offered an answer to the question of why identity movements create partitioning: because they increase the dimensionality of the resource space and engender sanctioning of visible violations of the specialists’ organizational form identity. In contrast, we offer an answer to the question of how and when markets may partition in a stable way: by generating sharply defined specialist form identities whose definitional code includes limits to organizational growth. Identity movements are underpinned with mechanisms that can facilitate or inhibit market partitioning, depending on their ability to generate sharp specialist form identities. We illustrate our argument through the case of organic farming in the United States, with reference to prior work on micro-brews and micro-radio, and discuss implications for resource partitioning theory.
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