Do Businesses Get Stuck in the Middle? The Peril of Intermediate Market Share

35 Pages Posted: 16 Dec 2019

See all articles by Can Uslay

Can Uslay

Rutgers Business School

Ekaterina Karniouchina

Mills College

Ayca Altintig

Claremont Colleges - Peter F. Drucker Graduate School of Management

Martin Reeves

Boston Consulting Group

Date Written: June 2, 2017

Abstract

The quest for stylized facts regarding market share and natural market structures is not new, however extant research has predominantly concentrated on share rank and distribution. Using a sample of 220K firm-year observations representative of the US economy over four decades, this study reexamines the relationship between market share and profitability. The results indicate that being ‘stuck in the middle’ is a prevalent and empirically generalizable phenomenon that persists decade after decade even as average industry profitability decreases. Businesses with roughly 3%-11% intermediate market share appear to be stuck in the middle between specialists and generalists and find themselves at significant financial performance disadvantages across industry groups. The relationship consistently follows a non-linear pattern which must be taken into account during research design and sampling.

Keywords: Market Share, Stuck in the Middle, Generalist, Specialist, Financial Performance, Industrial Organization, Empirical Generalization

JEL Classification: D01, D22, D4, L11, L16, L21, L22, L25, L26, L60, L70, L80, L90, M30

Suggested Citation

Uslay, Can and Karniouchina, Ekaterina and Altintig, Z. Ayca and Reeves, Martin, Do Businesses Get Stuck in the Middle? The Peril of Intermediate Market Share (June 2, 2017). Available at SSRN: https://ssrn.com/abstract=3043330 or http://dx.doi.org/10.2139/ssrn.3043330

Can Uslay (Contact Author)

Rutgers Business School ( email )

100 Rockafeller Road
Piscataway, NJ 08854-8054
United States

HOME PAGE: http://www.business.rutgers.edu/faculty-research/directory/uslay-can

Ekaterina Karniouchina

Mills College ( email )

5000 MacArthur Boulevard
Oakland, CA 94613-1301
United States

Z. Ayca Altintig

Claremont Colleges - Peter F. Drucker Graduate School of Management ( email )

The Drucker School of Management
1021 North Dartmouth Avenue
Claremont, CA 91711
United States

Martin Reeves

Boston Consulting Group ( email )

J.F. Kennedylaan 100
3741 EH Baarn
United States

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