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SME's perceptions regarding strategic and structural entry barriers

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  • Lutz, Clemens
  • Kemp, Ron
  • Dijkstra, S. Gerhard

    (Groningen University)

Abstract

Abstract Extant literature discusses a large number of different entry barriers that may hamper market efficiency or entrepreneurial activity. In practice several of these barriers cohere and stem from the same root. Factor analysis is used to identify the underlying dimensions of these barriers. 7 generic factors have been found that drive the system. In the literature a debate exists between scholars that stress the importance of structural and/or strategic barriers. This paper shows that in the perception of firms both types of barriers are important and argues that the effectiveness of strategic barriers depends on attributes of the market structure. Based on the seven generic factors, a conjoint analysis is carried out to identify the most important factors perceived by firms. The conjoint analysis shows that in particular the barriers rooted in three underlying dimensions require attention of market authorities as they may refrain new entrants from entry: finance, access to distribution channels and strategic action. Remarkably, government rules and regulations, product differentiation, R&D and advertising constitute a minor entry problem according to the firms.

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Paper provided by University of Groningen, Research Institute SOM (Systems, Organisations and Management) in its series Research Report with number 07009.

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Date of creation: 2007
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Handle: RePEc:dgr:rugsom:07009

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  1. Spence, A Michael, 1980. "Notes on Advertising, Economies of Scale, and Entry Barriers," The Quarterly Journal of Economics, MIT Press, vol. 95(3), pages 493-507, November.
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  3. Schmalensee, Richard, 1981. "Economies of Scale and Barriers to Entry," Journal of Political Economy, University of Chicago Press, vol. 89(6), pages 1228-38, December.
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  16. Davidsson, Per, 1991. "Continued entrepreneurship: Ability, need, and opportunity as determinants of small firm growth," Journal of Business Venturing, Elsevier, vol. 6(6), pages 405-429, November.
  17. Klemperer, P., 1992. "Competition when Consumers Have Switching Costs: An Overview," Economics Series Working Papers 99142, University of Oxford, Department of Economics.
  18. Lieberman, Marvin B, 1987. "Excess Capacity as a Barrier to Entry: An Empirical Appraisal," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 607-27, June.
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  22. Richard Schmalensee, 1978. "Entry Deterrence in the Ready-to-Eat Breakfast Cereal Industry," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 305-327, Autumn.
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