Concentrated industries are likely to lose market

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concentrated industries are likely to lose market share over time / grow less rapidly 6. DISCUSSION RQ answer: internet is associated with decreased industry competition sector heterogeneity analysis answer: effect of Internet use on competition is stronger in manufacturing and wholesale sectors than in retail and service sectors 6.1 THEORETICAL IMPLICATIONS • contrary result to widely held belief that Internet increases competition • important to examine competition change using economic measures (HHI + industry profitability) • making internet work more effectively than competitors is strategic challenge because of resource and labour costs larger companies have more resources + network externality effects amplify their competitive advantage = squeeze market space of small competitors 6.2 POLICY IMPLICATIONS • firms need to re-think, re-examine, re-evaluate their business strategic focus/direction & future developments in terms of competitive advantages • operational effectiveness remains important competitive advantage, especially with Internet use 6.3 LIMITATIONS & FURTHER RESEARCH • first study to test relationship between Internet use & competition needs further confirmation • does not capture information on industry competition dynamics • further research to understand and confirm the sector heterogeneity 7. CONCLUSION Internet: industry average firm inlink counts IHHI: initial level in 1997 IProfit: initial industry profitability Size: total industry sales in 1997 Growth: industry growth rate over period of study Ad: industry advertising intensity in 1997 Rd: R&D intensity in 1997
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Zoe Zwiebelmann Maastricht University IM Session 2 • Internet is associated with decreased industry competition + differential effect across sectors • results contradict popular view on Internet’s effect on competition (which is that it increases)
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