Repsponding to Industry Consolidation in Fragmented Industries: The Role of Capabilities in Small Business Survival


  • Jeffery E. McGee University of Texas at Arlington
  • Christopher L. Shook University of Texas at Arlington


Driven  by the competitive pressures  that  accompany  industry consolidation  in fragmented industries,  small  business  owners  and managers  are searching for  new  ways to gain  and sustain competitive advantage.  This paper reports the results of a study designed to examine which capabilities  help small  business  managers  react  to the  intensified competition  that accompanies industry consolidation.   Profiles of capability bundles used by managers in a fragmented   industry  undergoing  industry  consolidation,  specifically  the  neighborhood drugstore, are developed and differences in performance among the drugstores are examined Our results suggest  that developing capabilities  is important to responding effectively to industry consolidation.  Further, firms that focus on developing a broad range of capabilities significantly outperform those firms that develop only a narrow range of capabilities.



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