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Plant scale in entry decisions: a comparison of start‐ups and established firm entrants
Author(s) -
Hariharan Sam,
Brush Thomas H.
Publication year - 1999
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/1099-1468(199911)20:7<353::aid-mde954>3.0.co;2-m
Subject(s) - scale (ratio) , industrial organization , economies of scale , competitive advantage , business , returns to scale , start up , economics , microeconomics , marketing , production (economics) , business administration , physics , quantum mechanics
This paper examines the competitive advantage enjoyed by established firms over start‐up firms in their choice of plant scale when entering industries. We hypothesize that established firms will enter at smaller scale because they have the opportunity to substitute other resources and advantages for the cost disadvantages that result from small scale. We find that established firms enter with lower scale plants which suggests that they have access to resources that allow them to be competitive at lower scales. Copyright © 1999 John Wiley & Sons, Ltd.