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Is Structure-Conduct-Performance a case of structure–performance?: Structural Equation Modelling of Indian industries

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  • C. Srinivas
  • Sushil Kumar

Abstract

Based on Bain's work, a theoretical model for the Structure-Conduct-Performance (SCP) paradigm is conceptualised. Two basic hypotheses are tested. The first hypothesis is that structure affects performance mediated through conduct of firms in an industry. The second hypothesis is exactly the same but with opposite causal direction. Six additional variants of these two basic models are also tested. The results indicate that direct and total effects of industry structure on firms' profitability are positive and significant while the indirect effects (mediated through the conduct variables) are insignificant. It is observed that in the presence of entry barriers, industry concentration has no significant effect on firms' profitability.

Suggested Citation

  • C. Srinivas & Sushil Kumar, 2010. "Is Structure-Conduct-Performance a case of structure–performance?: Structural Equation Modelling of Indian industries," International Journal of Business and Emerging Markets, Inderscience Enterprises Ltd, vol. 2(1), pages 3-22.
    • Handle: RePEc:ids:ijbema:v:2:y:2010:i:1:p:3-22
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