UGF Lecture 5

Management > Global Firm > Oligopolies > Studies > Hypothesis testing > Conclusions

Conclusions

Knickerbocker and Flowers draw two general conclusions:

1. Entry patterns are not random but do involve bunching of entries, that is one major entry does not seem to provoke a group of prompt entries.
2. The strength of this responsive entry into Y (the size of the ECI) is positively related to the degree of concentration of the industry in X. As industries get more concentrated then ECI gets more clustered and numerous.

This is compatible with the presence of oligopolistic behaviour in the processes through which these firms expand internationally. However it was discovered that the positive relation between industrial concentration ended at very high levels of concentration.

It is argued that in this case, defensive competition stops between firms and collusion prevails to remove risk from the environment. International strategies can also then become less competitive, such as dividing new markets between firms, rather than competing for them.

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