Industrial Organization Economics Research Articles

A Formalization and Test of the Religious Economies Model

The religious economies argument maintains that religious pluralism promotes religious participation. Although this theory has been much debated by sociologists of religion, evaluation has been hindered by the lack of a formal model. This paper offers a formalization that builds on the product-differentiation framework from industrial-organization economics. The model suggests a new measure of religious competition and a new empirical test. One religious market may be regarded as more competitive than another religious market if the set of denominations present in the first contains the set of denominations present in the second. Given this partial order on the set of religious markets, the model predicts that more competitive markets will have higher religious participation. This prediction is examined for two data sets previously considered in the literature-New York towns in 1865 and U.S. counties in 1990. Although the analysis highlights an important theoretical ambiguity (regarding the strategic interdependence of denominational effort choices) and reports a negative empirical finding (that more competitive U.S. counties tend to have lower religious participation), the paper proceeds constructively, attempting to identify viable directions for future research within the religious economies paradigm

A Formalization and Test of the Religious Economies Model

The religious economies argument maintains that religious pluralism promotes religious participation. Although this theory has been much debated by sociologists of religion, evaluation has been hindered by the lack of a formal model. This paper offers a formalization that builds on the product-differentiation framework from industrial-organization economics. The model suggests a new measure of religious competition and a new empirical test. One religious market may be regarded as more competitive than another religious market if the set of denominations present in the first contains the set of denominations present in the second. Given this partial order on the set of religious markets, the model predicts that more competitive markets will have higher religious participation. This prediction is examined for two data sets previously considered in the literature—New York towns in 1865 and U.S. counties in 1990. Although the analysis highlights an important theoretical ambiguity (regarding the strategic interdependence of denominational effort choices) and reports a negative empirical finding (that more competitive U.S. counties tend to have lower religious participation), the paper proceeds constructively, attempting to identify viable directions for future research within the religious economies paradigm.

Re-evaluating Diversity Measures: Calibrating for Scope to Capture the Distribution Effect

This paper has practical implications in three areas of application in corporate management: strategy research corporate planning governmental regulation. The authors' review of the literature reveals a trend toward an increased use of the uncalibrated Herfindahl Index by regulators and of the uncalibrated Entropy measure by researchers. This trend involves considerable risks if it continues unabated into the new century. In the latter domain, the lack of discrimination power of current indices of concentration or diversification is becoming a major problem in that limit values specified by regulations are based on biased indicators. These are compounded when the Herfindahl Index becomes the sole anti-trust instrument for industry regulation as has been codified in the US by the guidelines jointly issued in 1992 by the Federal Trade Commission and the US Department of justice. Complementing the empirical investigations published in the research literature over the last ten years, this paper examines the existing measures of industry concentra- tion or product-line diversity on theoretical grounds and found them wanting in certain respects: There is a lack of calibration with respect to the effect of the number of product lines or scope variable n. Diversification studies are distorted by the fact that these diversity measures of firms with several product lines become unreliable and biased toward the high end of their range. There is a lack of sensitivity with respect to capturing intermediate load distributions Sbetween the two extreme cases of a single firm (or product) or of a very large number of them. This article presents clear criteria for designing diversity indices and gauging them. Industrial Organization (IO) economists appear to have been suspicious of these problems for a number of years, yet very little has been done to warn regulatory agencies and strategy researchers of the problems inherent in their increasing use of the uncalibrated indices. In contrast, this article develops two intrinsically calibrated indices, A1 and A2, for use by researchers, strategic planners, and industry regulators. An ideal composite measure should incorporate both the effect of cardinality or scope and the effect of shape or distribution. The existing indices bundle these two effects; the objective of this research is to ‘unbundle’ them. Most large North-American firms tend to be multi-product corporations for which the measurement of product-line diversity as well as social diversity will be affected by the above considerations. Chances are that the same holds true in the Indian context. However, this is partly an empirical question that could be further investigated by follow-up studies on databases such as Capital-Line and Prowess, leading to some useful information for strategic and legal considerations.

Antitrust Economics and Marketing

6' arketing is a social and managerial process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products of value with others (Kotler 1997, p. 9). By that definition, economics is the study of marketing. A close relationship exists between some of the issues addressed in marketing, microeconomics, and industrial organization economics. However, the emphases and often the approaches are markedly different. Marketing is about creating, maintaining, and shifting the demand curve. Its focus is the determination of the price on the demand curve and, in recent years, on the analysis of strategies by which disadvantaging rivals can shift one competitor's demand curve (Salop and Scheffman 1983). In other words, marketing is fundamentally about market and wealth creation, whereas antitrust economics is fundamentally about profits and wealth extraction by producers. The analysis of competition in economics focuses primarily on the status quo, that is, competition among existing products. But a company is not its existing products. A well-known maxim in marketing is that products may have life cycles, but well managed brands (and companies) should not. Existing products change or are replaced by new products. Companies in most industries realize that survive they must successfully introduce new products and services. Many companies track the proportion of their sales accounted for by new products and services introduced in preceding years. In other words, competition is increasingly about new products and services, which suggests a need for economics shift more focus there rather than on profits and wealth extraction for existing products and services. Marketing, as well as other business disciplines, such as accounting, operations management, and organizational behavior, is grounded in the core application-oriented issues: How do it? How do better? As an academic discipline, the concerns of marketing are broader than this application focus, but much of marketing literature is in some way relevant these basic questions. Microeconomics provides knowledge and analyses that can be applied in a variety of settings, including marketing. Microeconomics is usually a core course requirement in an MBA program, and microeconomic concepts permeate most other business disciplines. Microeconomics provides powerful tools and analyses, but it does not provide much guidance on to other than simple rules mostly on not to (e.g., vertically integrating capture downstream margin generally will not make sense). In other words, the focus of marketing is how to, whereas the focus of microeconomics is basic analytical principles (constrained optimization and equilibrium) of why things are as they are and their implications. For example, Industrial Organization: A Strategic Approach by Church and Ware (2000) sets out the three basic questions of industrial organization: (1) Why are firms and markets organized or structured the way they are'? (2) How does the manner in which markets are organized affect the way firms behave and markets perform? and (3) How does the behavior of firms influence the structure or organization of markets and the performance of markets? These questions are related to issues for business disciplines, including marketing, but are mostly at the very basic level (e.g., the concepts of opportunity cost, transactions costs, and analyses such as constrained optimization and equilibrium) or the 30,000-foot level (e.g., implications of transactions costs analysis for the organization of firms and industries).

George J. Stigler (1911–1991): Scholar, Father, Dissertation Advisor, Referee, Textbook Writer and Policy Analyst

I Moss on Stigler as a Historical Subject GEORGE JOSEPH STIGLER is an obvious subject target for historians of 20th-century economic thought. His Theory of Competitive Price (1942) helped shape development of microeconomics after World War II and his remarkable topics for analysis produced seminal contributions to important and rapidly growing fields such as economics of industrial organization, economics of regulation, public choice economics and economics of information. He was recognized for his contributions to economics, economics of information, by award of Nobel Prize in economics in 1982. Since Nobel Prize there has been an abundance of biographical and historical material about Stigler, including his own brief autobiography, Memoirs of an Unregulated Economist (Stigler 1988a) and entry in Blaug's Who's Who in Economics (Blaug 1986). A useful bibliography of Stigler's writings has been prepared by Ms. Vicky M. Longawa and published in Journal of Political Economy (Longawa 1993). In this article we shall not try to reproduce all of this information. Also, we shall not try to touch on all aspects of his life and intellectual contribution. We must cover just a few of biographer's subject areas, hopefully in a novel way. Still, something extra does need to be introduced into any conversation about Stigler and his legacy. In 1989, Professor D. N. McCloskey recalled a conversation with Stigler that was especially eye opening to an associate professor [who was] beginning at last in 1978 to doubt epistemological claims of (McCloskey 2001:160). McCloskey (the colleague) recalled incident as follows: George was holding forth on merits of behaviorist theories of voting in which people are said to vote their pocketbooks. His younger colleague, who had just read Brian Barry's devastating attack on such models [1978] and for ten had been teaching first-year graduate students about small man in large market, following George's exposition in The Theory of Price, noted that people would be irrational to go to polls in any case. Since people were nuts to begin with, it would be strange if they voted their pocketbooks when they got inside booth. The argument struck a nerve, and Stigler became as was his custom abusively positivistic, declaring loudly that all that mattered were observable implications. (McCloskey 2001:160). As a result of this encounter and others with school economists in residence circa 1980, McCloskey concluded that Chicago's version of positivism had become a negative element in economics. Stigler was catalyst in purging McCloskey of his Chicago school methodology (McCloskey 2001). The McCloskey anecdote is a disturbing one and image it portrays of a stern, humorless taskmaster is not memory many others have of Stigler. I suppose some of material in this article can be said to set record straight and offer a more balanced and nuanced portrait of Stigler. Still, Warren Samuels recalls a Stigler who was the principal, but by no means sole, author of absolutist formulations of neoclassical doctrine (see below, section VIII). The collaborators on this piece include a family member, a Ph.D. candidate who wrote under Stigler, colleagues, co-authors and several of younger generation of historians of economic thought who offer appraisals of Stigler's influence both on profession and professional literature. But purpose of this article is not hagiography but to offer evidence for deeper interpretation and understanding. What emerges here is a much more interesting portrait of a justly famous economist. This is not to deny McCloskey's perception of a dogmatic school headed by a closed-minded Stigler, but against this perception we have Claire Friedland's recollection that in his later years Stigler began to consider possibility of legitimacy of gains obtained by special interest group legislation. …

Would Privatization of K-12 Schooling Lead to Competition and Thereby Improve Education? An Industrial Organization Analysis

Some scholars have argued that to improve K-12 education, we should eliminate public schools and let private schools compete for students. Missing from such proposals is analysis of K-12 schooling to determine its propensity for competition. In this article, the author develops a working definition of the K-12 education industry, presents characteristics of other industries that industrial organization economists have determined undermine the operation of a competitive marketplace, and considers whether these characteristics apply to K-12 schooling. Some conditions—ease of entry into the market, product differentiation, and availability of resources—support competition. However, large economies of scale in a local market and relative price inelasticity of demand imply monopolies and trusts. Also, inadequate information and probable external costs suggest considerable regulation would be needed. The author tentatively concludes that the industry will not be competitive but emphasizes the potential of industrial organization analysis rather than the author’s conclusion.

Product Choice and Oligopoly Market Structure

Ip ropose an empirical model to analyze product differentiation and oligopoly market structure. The model endogenizes firms’ product-type decisions, measures how effects of competitors differ depending on their product types, and can incorporate alternative specifications for the product choice game. I estimate using data from oligopoly motel markets along U.S. interstate highways; motel establishments are characterized by their quality choice. The results demonstrate a strong incentive for firms to differentiate. The effects of demand characteristics on product choice are also significant. Game specification is of minor importance, although differences in the games analyzed do affect equilibrium market structure predictions in some cases. Understanding the causes and consequences of concentrated industry structure continues to pose a formidable challenge for industrial organization economists. Markets in which firms can differentiate their products are especially complex, as each individual firm’s product choice affects its own profitability, and the extent of product differentiation influences the intensity of competition for all market participants. This article addresses one particularly difficult question: What drives the product-type decisions of firms in oligopoly markets? The empirical model estimated here endogenizes firm product choice and can be used to evaluate competing explanations for the patterns of product differentiation observed in markets. Numerous game-theoretic models have addressed firms’ product-type choices and made equilibrium predictions about the extent of product differentiation in markets. The framework introduced in Hotelling’s (1929) classic article sets up the underlying tradeoff firms face: competition among firms may be less intense if they offer products that consumers find less substitutable, but firms may have an opposing incentive to select an undifferentiated product for which demand is strong. Subsequent models have experimented with various factors that can influence this tradeoff and the resulting array of product types offered by firms in equilibrium. For example, players may choose their product types simultaneously or in some sequence. They may be committed to their choice or have the option to change in response to the decisions of other firms. In each

An industrial organization economic supply chain approach for the construction industry: a review

Understanding industries in terms of the concepts of chains, clusters and networks is becoming increasingly important in economies around the world. Supply chain management for an individual organization is an emerging field of research in the construction management discipline, but less attention has been devoted to investigating the nature of the construction supply chains and their industrial organizational economic environment. This selected review of construction and mainstream management supply chain literature is organized around four themes; distribution, production, strategic procurement management and industrial organization economics, and highlights the need to develop an industrial organization economic supply chain framework for construction. The merging of the supply chain concept with the industrial organization model as a methodology for understanding firm conduct and industry structure and performance is an important contribution to both construction supply chain and construction economic theory. Much of the industrial organization supply chain literature has tended to focus upon manufacturing industries, where typically firms are permanent organizations. This raises issues as to the differences between industries founded upon temporary compared with permanent organizations. There is potential for the development of an industrial organization methodology applicable to the project based industry. Ultimately industrial organization research seeks to have direct implications for industry performance and government policies.

A resource-based theory of sustainable rents

This paper summarizes and comments on Conner (1991) that contributes to the strategic management area by providing an historical comparison of resource-based theory and five schools of thought within industrial organization economics. Conner (1991) argues that the fundamental distinction between resource-based theory and transaction costs theory is that resource-based theory focuses on the deployment and combination of specific inputs while transaction costs theory focuses on the avoidance of opportunism. I offer three responses to this claim. First, Conner’s distinction was not central to the resource-based literature at the time the article was published. Second, I raise concerns about building a resource-based theory of the firm that assumes away the problems of opportunistic behavior. Third, I offer an alternative view of the fundamental similarities and differences between resource-based theory and transaction costs theory.

A resource-based theory of sustainable rents

This paper summarizes and comments on Conner (1991) that contributes to the strategic management area by providing an historical comparison of resource-based theory and five schools of thought within industrial organization economics. Conner (1991) argues that the fundamental distinction between resource-based theory and transaction costs theory is that resource-based theory focuses on the deployment and combination of specific inputs while transaction costs theory focuses on the avoidance of opportunism. I offer three responses to this claim. First, Conner’s distinction was not central to the resource-based literature at the time the article was published. Second, I raise concerns about building a resource-based theory of the firm that assumes away the problems of opportunistic behavior. Third, I offer an alternative view of the fundamental similarities and differences between resource-based theory and transaction costs theory.

Market selection and procurement decisions in B2B markets

Market selection in business‐to‐business (B2B) market transactions is more complex than the one‐step market segmentation decision in consumer markets. This article models market selection and procurement decision‐making in B2B markets as a five‐step procedure involving choice of vertical and horizontal markets. Vertical market choice decisions are shown to encompass choice of output markets, value adding that the organization will perform internally (the “make” decision), and input markets (the “buy” decision). Horizontal market choice decisions are shown to encompass choice of macro segments in the output market and micro segments within each of the macro segments selected. Explores how we can draw on theoretical developments in industrial organization economics to help make these strategic decisions. The article suggests how to set the boundaries of the organization and determine what markets to serve, what to make, and what to buy with the help of transaction cost and market structure analysis.

Do American and European Industrial Organization Economists Differ

This paper compares results from two surveys among American and European industrial organisation (IO) economists on various IO and broader economic issues. Although differences between the two groups are generally rather small, some systematic differences seem to exist. These differences are more pronounced when judgments about the efficacy of government policies and the workings of the market are concerned than when judgments about methodology and the present and future state of the IO field are concerned. American IO economists tend to exhibit more confidence in the market's capability to allocate resources than their European counterparts.

Entrepreneurial Privatization Strategies: Order of Entry and Local Partner Collaboration as Sources of Competitive Advantage

Firm-level responses to privatization have not been widely studied. Drawing from industrial organization economics, the resource-based view, and interorganizational cooperative strategy, I develop an integrated theory to show how privatization encourages early entry: how delayed market liberalization reinforces first mover benefits; and how firms with specialized resources, an entrepreneurial orientation, and local partner collaborations gain postprivatization competitive advantage. I construct a model and provide case illustrations to support the theoretical development, discuss implications of the research, propose methods to test the model, and make suggestions for future inquiry.

Edith Penrose, economics and strategic management

Edith Penrose's work on is often seen as a classic in strategic management and a precursor of today's resource-based view of the firm. However, it is argued in this paper that this is, at best, imprecise and rather a misrepresentation of Penrose: her interest was not in whether there can be rents in equilibrium, but in firm growth as a disequilibrium phenomenon. Moreover, her basic vision of the competitive process is very different from that which animates modern economic approaches to strategy, such as the resource-based approach and new industrial organisation economics. This paper briefly discusses some implications for modern strategic thinking of Penrose's vision.

Regional Economic Performance and Sunk Costs

MELACHROINOS K. A. and SPENCE N. (1999) Regional economic performance and sunk costs, Reg. Studies 33 , 843-855. In industrial organization economics sunk costs, defined as unretrievable costs in the case of market exit, are assumed to determine market structure, firm entry and exit, enterprise investment and pricing strategies. Sunk costs in economic geography have been considered as an ingredient of firm behaviour, an analytical device linking 'spatial fixity' and 'spatial plasticity' and a source of industrial rigidity. It is significant that geographical research to date on sunk costs focuses mainly on their operation in theory. An alternative view is developed here where 'sunkness' derives from firms' inability to realize in the market the full value of their product and the residual value of capital investment. The parallel examination of value-added, labour cost and capital depreciation facilitates such a measure of 'cost recovery' for each region. Differential cost recovery then becomes both a cause and an effect of differential regional economic performance. Manufacturing in the regions of Greece during the 1980s provides the context. MELACHROINOS K. A. et SPENCE N. (1999) La performance économique régionale et les coûts irrécupérables, Reg. Studies 33 , 843-855. Dans l'économie de l'organisation industrielle on suppose que les coûts irrécupérables, autrement dit les sommes qu'il sera difficile de récupérer en cas de sortie du marché, déterminent la structure du marché, l'entrée et la sortie des entreprises, l'investissement en faveur de l'entreprise et les politiques des prix. Dans l'économie géographique on considère les coûts irrécupérables comme un élément du comportement des entreprises, un outil analytique qui relie 'la fixité géographique' et 'la plasticité géographique', et une source de rigidité industrielle. Il est significatif que jusqu'ici la recherche géographique sur les coûts irrécupérables porte pour la plupart sur leur exploitation théorique. On cherche ici à développer un autre point de vue où l'importance des coûts irrécupérables provient de l'incapacité des entreprises à réaliser dans le marché la valeur maximale de leur produit et la valeur résiduelle de l'investissement en capital. L'examen en parallèle de la valeur ajoutée, du coût de la main-d'oeuvre et de l'amortissement permettent une telle mesure du recouvrement des dépenses pour chaque région. Par la suite, l'écart du recouvrement des dépenses devient à la fois une cause et un effet de l'écart des performances économiques régionales. L'industrie régionale grecque dans les années 80 fournit le contexte. MELACHROINOS K. A. und SPENCE N. (1999) Regionale Wirtschaftsleistung und verlorene Unkosten, Reg. Studies 33 , 843-855. In dem Zweig der Wirtschaftswissenschaft, die sich mit industrieller Organisation befaßt, nimmt man von verlorenen Unkosten, die im Fall des Marktausgangs als nicht wieder rückwinnbar definiert werden, an, daß sie Marktstruktur, Firmeneröffnung und-schließung, Unternehmensinvestierungen und Preisstrategien bestimmen. Vom Standpunkt der Wirtschaftsgeographie aus gesehen sind verlorene Unkosten als Bestandteil des Verhaltens einer Firma betrachtet worden, als ein analytischer Kunstgriff, der 'räumliches Festhalten' und 'räumliche Plastizität' verbindet, und als eine Quelle industrieller Festgefahrenheit. Es ist bedeutsam, daß die geographische Forschung über verlorene Unkosten sich bisher hauptsächlich auf ihr Funktionieren in der Theorie konzentriert hat. Hier wird eine alternative Ansicht entwickelt, in der 'Verlust' sich aus der Unfähigkeit von Firmen ergibt, auf dem Markt den vollen Wert ihres Produkts und den Rückstandswert der Kapitalinvestierung einzubringen. Die parallel laufende Untersuchung des Mehrwerts, der Arbeitskosten und der Kapitalabschreibung ermöglicht solch eine Maßnahme der 'Unkostenrückgewinnung' für jede Region. Unterschiedliche Kostenrückgewinnung wird dann sowohl zur Ursache wie zur Wirkung unterschiedlicher regionaler Wirtschaftsleistung. Produktion in den Regionen Griechenlands während der achtziger Jahre sorgt für Zusammenhang.

Theory and research in strategic management: Swings of a pendulum

The development of the field of strategic management within the last two decades has been dramatic. While its roots have been in a more applied area, often referred to as business policy, the current field of strategic management is strongly theory based, with substantial empirical research, and is eclectic in nature. This review of the development of the field and its current position examines the field’s early development and the primary theoretical and methodological bases through its history. Early developments include Chandler’s (1962) Strategy and Structure and Ansoff’s (1965) Corporate Strategy. These early works took on a contingency perspective (fit between strategy and structure) and a resource-based framework emphasizing internal strengths and weaknesses. Perhaps, one of the more significant contributions to the development of strategic management came from industrial organization (IO) economics, specifically the work of Michael Porter. The structure-conduct-performance framework and the notion of strategic groups, as well as providing a foundation for research on competitive dynamics, are flourishing currently. The IO paradigm also brought econometric tools to the research on strategic management. Building on the IO economics framework, the organizational economics perspective contributed transaction costs economics and agency theory to strategic management. More recent theoretical contributions focus on the resource-based view of the firm. While it has its roots in Edith Penrose’s work in the late 1950s, the resource-based view was largely introduced to the field of strategic management in the 1980s and became a dominant framework in the 1990s. Based on the resource-based view or developing concurrently were research on strategic leadership, strategic decision theory (process research) and knowledge-based view of the firm. The research methodologies are becoming increasingly sophisticated and now frequently combine both quantitative and qualitative approaches and unique and new statistical tools. Finally, this review examines the future directions, both in terms of theory and methodologies, as the study of strategic management evolves.

Estimating Multiple-Discrete Choice Models: An Application to Computerization Returns

Buyers in many markets face multiple-discrete choices: they can purchase multiple-units as well as multiple-brands at the same time. This paper presents a multiple-discrete choice model for the analysis of differentiated products demand. Users maximize profits by choosing the number of units of each brand they purchase. I estimate the model using micro-level data on the demand for personal computers. I use the estimated demand structure to assess the welfare gains from and technological innovation in peripherals. The estimated return on investment in personal computers is 92%. Moreover, a 10% increase in the performance-to-price ratio of microprocessors leads to a 2.2% gain in the estimated user surplus. The personal computer (PC) market is of interest to industrial organization economists because of its size, the continual technological change, and above all, because of the farreaching implications of PCs on the economy as a whole. Several distinct features make PC demand difficult to model. PCs are a differentiated durable good in constant technological evolution. Moreover, buyers make multiple-discrete choices. Firms, according to our data, spread their purchases of PCs over different brands. At the same time they buy PCs in blocks, several units of each brand that they have chosen. The aim of the paper is to present a model that captures these features and to use this model to estimate the welfare gains from computerization. Classical discrete choice models allow one choice among mutually exclusive alternatives. In contrast, the proposed framework allows users to demand multiple units and multiple brands. The model can be applied to other cases of multiple-discrete choices. e.g. the composition of airline fleets, car holdings per household, the fields of the faculty in economics departments, household cereals consumption, or any other good consumed in more than one variety during a relevant time period. Although pervasive, multiple-discrete choice problems have received little attention because of their complexity. A central issue regarding the PC market is the current controversy in the economics literature about the computerization This puzzle stems from the empirical finding that has had no effect on firm productivity (Griliches and Siegel (1991) and Morrison and Berndt (1990)). Contrary to those results, Hendel (1994) and Lichtenberg (1995), using more disaggregate data than most previous studies, report excess returns to computerization. This indicates that data aggregation may have created the puzzle. In this paper, I present a model consistent with the basic

The Strategic Imperative and Sustainable Competitive Advantage: Public Policy Implications of Resource-Advantage Theory

Strategy theorists share (1) the view that the strategic imperative of a firm should be sustained, superior financial performance and (2) the belief that this goal can be achieved through a sustainable competitive advantage in the marketplace. Neoclassical perfect competition and traditional industrial organization economics, however, imply that the sustained performance goal advocated by strategy theorists is anticompetitive and its achievement presumptively detrimental to social welfare. This article addresses the strategy-is-anticompetitive thesis with the goal of grounding strategy in a theory of competition— resource-advantage theory—that does not imply that the strategic imperative and its achievement are presumptively anticompetitive and antisocial. As such, this article initiates a discussion of the public policy implications of resource-advantage theory.

Theory and research in strategic management: swings of a pendulum

The development of the field of strategic management within the last two decades has been dramatic. While its roots have been in a more applied area, often referred to as business policy, the current field of strategic management is strongly theory based, with substantial empirical research, and is eclectic in nature. This review of the development of the field and its current position examines the field’s early development and the primary theoretical and methodological bases through its history. Early developments include Chandler’s (1962) Strategy and Structure and Ansoff’s (1965) Corporate Strategy. These early works took on a contingency perspective (fit between strategy and structure) and a resource-based framework emphasizing internal strengths and weaknesses. Perhaps, one of the more significant contributions to the development of strategic management came from industrial organization (IO) economics, specifically the work of Michael Porter. The structure-conduct-performance framework and the notion of strategic groups, as well as providing a foundation for research on competitive dynamics, are flourishing currently. The IO paradigm also brought econometric tools to the research on strategic management. Building on the IO economics framework, the organizational economics perspective contributed transaction costs economics and agency theory to strategic management. More recent theoretical contributions focus on the resource-based view of the firm. While it has its roots in Edith Penrose’s work in the late 1950s, the resource-based view was largely introduced to the field of strategic management in the 1980s and became a dominant framework in the 1990s. Based on the resource-based view or developing concurrently were research on strategic leadership, strategic decision theory (process research) and knowledge-based view of the firm. The research methodologies are becoming increasingly sophisticated and now frequently combine both quantitative and qualitative approaches and unique and new statistical tools. Finally, this review examines the future directions, both in terms of theory and methodologies, as the study of strategic management evolves.

Breakfast cereals: The extreme food industry

By nearly all indicators employed by industrial-organization economists to measure market structure, company conduct, and social performance, the ready-to-eat cereals industry ranks at the extreme end of the range of food industries. As the quintessential shared monopoly, renewed attention by the antitrust agencies might yield economic benefits for consumers. [EconLit cites: L100, L410, L660] © 1999 John Wiley & Sons, Inc.