Cultural niche dimensionality and small firm subsistence
Faculty of Applied Economics
Antwerp :UA, 2011
Research paper / UA, Faculty of Applied Economics ; 2011:005
University of Antwerp
In populations of human organizations (e.g. rms) that operate in cultural niches (markets), size dierences are usually large. As large organizations can in principle out-compete small ones, the actual pres- ence of many small organizations asks for an explanation. In ours, we focus on the dimensionality of cultural niches, that can change as a consequence of product innovations, preference elaboration, or insti- tutions. We show that increasing market dimensionality substantially enlarges the market periphery relative to the market center, which cre- ates new potential niches for small rms. Decreasing dimensionality, in contrast, preserves market positions for a portion of the incumbent small rms rather than forcing all of them to exit. We thereby provide a parsimonious explanation for small rm existence when dimension- ality changes, even in concentrated markets and net of other factors.