Market Partitioning and the Geometry of the Resource Space

Abstract

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A Resource-Based Theory of Market Structure and Organizational Form

“…Additionally, for the sake of simplicity, we restrict our discussion to unidimensional resource spaces (for multidimensional examples, see Pé li &Nooteboom, 1999, andvan Witteloostuijn, 2002). That is, for the sake of clarity, both resource space features are dichotomized into their discrete counterparts.…”

“…This typology of organizational forms is particularly interesting for the present resource-based theory, since it classifies organizations on the basis of the strategies they use regarding resource utilization and positioning in resource space. A specialist organization occupies a narrow niche in resource space by tailoring products or services to a small range of very specific customer tastes (Carroll, 1985;Hannan & Freeman, 1977;Pé li & Nooteboom, 1999). In IO, the typical firm in the product differentiation literature is a specialist (Thisse & Norman, 1994).…”

“…The reason is that reaping scale economies requires standardization, which is not feasible when the resources are heterogeneously distributed, without relatively large market pockets with similar tastes. Constraint 3 makes explicit that a market center-market periphery distinction only emerges if the resource space features a (single or multiple) peak-tail structure, implying an uneven distribution of resource mass (Pé li & Nooteboom, 1999).…”

“…The result is competition for sustainable positions by searching for local (quasi-)monopolies. This type of rivalry is related to monopolistic competition (Eaton & Lipsey, 1989), localized competition (Baum & Mezias, 1992), and niche packing (Pé li & Nooteboom, 1999), the market being occupied by tightly packed single-product specialists. In other words, the so-called biological compression hypothesis applies in rectangular resource spaces without scope economies.…”

The comparative analysis of organizational forms: Considering field and ecological approaches

“…In this model, mature industries are conceptualized as embedded in a dual resource-space. Part of the resources space consists of a resource-rich region (the ''market center'') conducive to large-scale production and economies of scale (Peli & Nooteboom, 1999). The market center is separated from a relatively less resource-rich region more conducive to small-scale production and the development of organizational forms that differ in identity, technology, and the routine arrangement of tasks from those that occupy the market center.…”