Market Share Leadership--Does It Always Pay Off?

Is enlarging the market share the best strategy for maximizing profits

“…When the market shares of firms are less that the first threshold value, the relationship between market share and profit is negative; thus, firms looking to expand their market share cannot gain more profits if they do not consider their differentiation strategy. Firms can use their unique and core capability to create added value (Hamermesh et al, 1978;Woo, 1981;Woo andCooper, 1981, 1982). When the market shares of firms are more than the first threshold value and less than the second threshold value, the market share of the firms become large enough to have economies of scale, market power, and quality of management effect, indicating that the relationship between market share and profit is significantly positive (Shepherd, 1972;Shoefflern and Heany, 1974;Buzzell et al, 1975;Rumelt and Wensley, 1981;MacMillan et al, 1982;Smirlock, 1985).…”

“…Woo (1981) and Woo andCooper (1981, 1982) indicate that firms with a low market share have higher profits. Newton (1983) and Hergert (1984) and Shanklin (1988) find that there is no significant relationship between market share and profit.…”

A General Theory of Market Competition - M Theory

“…The regression results are shown in Table 4 above. They are all valid regressions, except (24). For (17) ~ (23), most constants are significant at 0.01 level; two constants are significant at 0.05 level; four interception constants are not significant at 0.05 level which do not affect the validity of the regressions for the main purpose of these regressions are to see if there are associations between the firms" return and market share and/or the yield proxies.…”

“…The other way is to present that there are firms with high market shares but making relatively less profit by Woo [24]. These views did not make in the context of the whole industry landscape or the overall industrial landscape in an economy to see the complete picture and situation of the industry.…”

“…Secondly, the view of existence of firms with low market shares making good profit and empirical evidences of the view by Woo andCooper in 1981 and1982 [25] [26]. The other way is to present that there are firms with high market shares but making relatively less profit by Woo [24].…”