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Plant scale in entry decisions: a comparison of start-ups and established firm entrants

Author

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  • Sam Hariharan

    (Marshall School of Business, University of Southern California, Los Angeles, CA 90089-1421, USA)

  • Thomas H. Brush

    (Purdue University, West Lafayette, IN 47906, USA)

Abstract

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.

Suggested Citation

  • Sam Hariharan & Thomas H. Brush, 1999. "Plant scale in entry decisions: a comparison of start-ups and established firm entrants," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 20(7), pages 353-364.
    • Handle: RePEc:wly:mgtdec:v:20:y:1999:i:7:p:353-364
    DOI: 10.1002/1099-1468(199911)20:7<353::AID-MDE954>3.0.CO;2-M
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    References listed on IDEAS

    as
    1. Howard H. Hines, 1957. "Effectiveness of "Entry" by Already Established Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 71(1), pages 132-150.
    2. Caves, Richard E & Khalilzadeh-Shirazi, J & Porter, M E, 1975. "Scale Economies in Statistical Analyses of Market Power," The Review of Economics and Statistics, MIT Press, vol. 57(2), pages 133-140, May.
    3. Ingemar Dierickx & Karel Cool, 1989. "Asset Stock Accumulation and Sustainability of Competitive Advantage," Management Science, INFORMS, vol. 35(12), pages 1504-1511, December.
    4. Teece, David J., 1980. "Economies of scope and the scope of the enterprise," Journal of Economic Behavior & Organization, Elsevier, vol. 1(3), pages 223-247, September.
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    Cited by:

    1. Kostas Tsekouras & Dimitris Skuras & Irene Daskalopoulou, 2008. "The role of productive efficiency on entry and post-entry performance under different strategic orientation: the case of the Greek plastics and rubber industry," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 29(1), pages 37-55.
    2. Fan, Terence Ping Ching & Tan, Alex Tai Loong & Geng, Xuesong, 2014. "Rapid capacity expansions and failure: A trap for new airline entrants?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 61(C), pages 176-191.

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