Organizational processes of resource partitioning

By the logic of many theories of organization, the dominance of large firms in an industry should hinder the emergence and operation of small specialist firms. Yet, in modern economies, a variety of industries display simultaneous trends of increased concentration and specialist proliferation. Within the perspective of organizational ecology, the theory fragment known as resource partitioning views these two trends as interdependent. The theory holds that under certain environmental and organizational conditions, the increased dominance of large firms in an industry will enhance the life chances of specialist organizations. Here, we examine this theory and the evidence that has been offered in its support. We discuss four different mechanisms that produce resource partitioning: location, customization, anti-mass-production cultural sentiment, and conspicuous status consumption. We also explore empirical issues involved in investigating these mechanisms. Finally, we describe some interesting and little investigated problems of the theory.