The logic of organizational markets: Thinking through resource partitioning theory

Resource partitioning theory claims that “Increasing concentration enhances the life chances of specialist organizations. ” We systemati-cally think through this theory, specify implicit background assump-tions, sharpen concepts, and rigorously check the theory’s logic. As a result, we increase the theory’s explanatory power, and claim— contrary to received opinion—that under certain general conditions, “resource partitioning ” and the proliferation of specialists can take place independently of organizational mass and relative size effects, size localized competition, diversifying consumer tastes, increasing number of dimensions of the resource space, and changing niche widths. Our analysis makes furthermore clear that specialist and generalist strategies are asymmetric, and shows that not concentration enhances the life chances of specialists but economies of scale instead. Under the conditions explicated, we argue that if scale economies come to dominate, the number of organizations in the population increases, regardless of the incumbents ’ sizes. Key words: theory reconstruction; resource partitioning; competition; market concentration; economies of scale; niche; specialization; organizational ecology; logical formalization; applied logic. ∗We are grateful to Jaap Kamps, Michael Masuch, Patricia Thornton, and Jelka Hop-ster for their helpful comments on an earlier version, and to Glenn Carroll, Gábor Péli, Arjen van Witteloostuijn and Christophe Boone for discussions about resource partition-ing. 1