An Instrumental Variables Approach To Measuring The Effect Of External Competitive Forces On Industry Attractiveness: Evidence From The Turkish White Goods Industry Distribution Network

This study explores the role of industry forces in determining attractiveness of a particular industry. Consistent with the industry structure approach, the study argues that industry attractiveness is likely to be high with the decreasing threat of the central competitive force (known as rivalry among existing competitors). After verifying the inconsistency of the least-squares estimator, the research model was estimated via 2SLS procedure when the competitive rivalry is treated as endogenous variable and instrumented by the bargaining power of customers and the threat of substitute products. The data obtained from the Turkish white goods industry showed that the dealership business has mid-potential in generating reasonable sales and profits. This study, examining the causal link between competitive rivalry and industry attractiveness, contributes to the literature by applying instrumental variables regression model to test the endogeneity of the competitive rivalry.