Resource Distributions and Market Partitioning: Dutch Daily Newspapers, 1968 to 1994 Author(s): Christophe Boone, Arjen van

Witteloostuijn, Glenn R. Carroll Source: American Sociological Review, Vol. 67, No. 3 (Jun., 2002), pp. 408-431 Published by: American Sociological Association Stable URL: http://www.jstor.org/stable/3088964 Accessed: 06/10/2010 12:12
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RESOURCE DISTRIBUTIONS AND MARKET PARTITIONING: DUTCH DAILY NEWSPAPERS,

1968

TO 1994
GLENN R. CARROLL Stanford University

CHRISTOPHE BOONE University of Antwerpen, Belgium ARJEN VAN WITTELOOSTUIJN University of Groningen, the Netherlands

Resource-partitioning theory explains how, in heavily concentrated populations, specialist organizations arise and proliferate. The theory also addresses the process of market concentration itself although far less attention has been devoted to the theoretical claims in this area. In this analysis, the theory is used to explain generalist concentration through the distribution of environmental (market) resources. It is argued that the higher the homogeneity and concentration of relevant environmental resources, the higher the concentration of large generalist organizations competing on the basis of scale. Using data on the Dutch daily newspaper industry from 1968 to 1994, statistical analyses show that concentration among generalist (national) newspapers occurs more fully in province-level markets where the readership base consists of relatively homogeneous sets of individuals in terms of age, religion, politics, and education. At the same time, these concentrated markets prove to be fertile areas for the operation of specialist papers, at least when resources are not fully homogenized. The analysis thus provides a more complete model of the resourcepartitioning process among organizations in a population.

have long been intersted in economic or market concentration and its consequences for society. Although technological, political, cultural, and class-based theories have all been offered to explain concentration, most explanations cannot account for the emergence of small
S

OCIOLOGISTS

Direct all correspondence to Christophe Boone, University of Antwerpen, Faculty of Applied Economics, Prinsstraat 13, 2000 Antwerpen, Belgium (christophe.boone@ua. ac.be). This research was supported by the Institute of Industrial Relations, University of California, Berkeley, the Warwick Business School, United Kingdom, and the Dutch Science Foundation. We appreciate helpful comments from William P. Barnett, Bert De Brabander,Stanislav Dobrev, Michael T. Hannan, Anand Swaminathan, and the ASR's editors and referees. We thank Walter Hendriks for his assistance in data collection and management.
408

specialist organizations in certain highly concentrated industries (e.g., banking, airline passenger service, and film production). In fact, most theories of concentration deny the possibility of such a development (Sutton 199 1). By contrast, resource-partitioning theory uses spatial imagery to explain the simultaneous occurrence of both market concentration and specialist organization proliferation (Carroll 1985). Specifically, in markets with strong scale advantages, the theory assumes that large organizations aim to maximize demand for their products or services. To do so, they target the areas of the market with the greatest number of consumer resources. Given a particular distribution of resources in the market, such targeting leads these organizations to adopt generalist market postures, that is, they offer products designed to appeal to many different types of consumVOL. 67 (JUNE:408-43 1)

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ers. Scale competition among such large generalist organizations in this type of resource space leads to concentration of these organizations in the market. Almost paradoxically, increased concentration also enhances the opportunities for specialist organizations. Because the few surviving generalists are squarely positioned in the center of the resource space, specialists can find newly opened peripheral space, given there is sufficient heterogeneity (Carroll and Hannan 1995, 2000). Resource-partitioning theory, therefore, contains two components: The first deals with the behavior of generalist organizations (competition for those areas of resource space with the greatest numbers of consumers), and the second deals with the implications of the structural outcome of the first part (i.e., concentration of generalists) on the life chances of specialist organizations. Organizational sociologists report substantial empirical support for the second component of the theory. Studies of a wide variety of populations show that as generalist concentration increases, the founding rates of specialist organizations rise and/or their mortality rates decline. The forms of organizations examined so far include newspaper publishing (Carroll 1985; Dobrev 2000), automobile manufacturing (Dobrev, Kim, and Hannan 2001; Torres 1995), beer brewing (Carroll and Swaminathan 2000), film production (Mezias and Mezias 2000), microprocessor manufacturing(Wade 1996), early telephone companies (Barnett and Carroll 1987), medical diagnostic imaging producers (Mitchell 1995), and winemaking (Swaminathan 1995), as well as services of banking (Freeman and Lomi 1994; Li forthcoming), airline passenger travel (Seidel 1997), investment banking (Park and Podolny 2000), legal counsel (Jaffee 2000), and financial auditing (Boone, Brocheler, and Carroll 2000). More generally, the rise and proliferation of specialists often spurs innovation and increases product diversity and consumer choice (Carroll and Swaminathan 2000; Peterson and Berger 1975). The first component of resource-partitioning theory, the part dealing directly with competition among large generalists, has been neglected in empirical research (but see Carroll and Swaminathan 2000). So a core

part of the theory still requires testing. Equally important, this neglect occasionally causes confusion about how the theory works. In particular, analysts sometimes do not see that the predictions about the effects of the concentration variable on the vital rates of specialist organizations rest on a conflation of ideas about (1) the shape of resource distributions and (2) the behavior of generalists. Although this conflation often proves helpful in conducting empirical research on specialist viability, it does shove into the recesses of assumption (implicitly and often wittingly) the central role of environmental resource distributions. Our main goal here is to test the first component of the theory. We do so by modeling how the distribution of environmental resources (in the present case, the distribution of customer tastes) drives concentration among generalists. Specifically, we predict that the competitive struggle among generalists for the center of the market's resource space will be most pronounced when environmentalresources are highly (but not completely) concentrated. To our knowledge, no prior study in the ecological tradition investigates the relationshipbetween environmental resources and generalist concentration. Moreover, we believe that this type of resource-based analysis might be widely applicable to the study of concentration in markets and other contexts. Following the second component of the theory, we predict that specialist organizational forms will flourish when market concentration increases. We expect the specialists to benefit even when the underlying resource distribution does not change, provided it initially contained sufficient heterogeneity. A unique aspect of our study pertains to the specialist outcomes. While most prior tests of resource partitioning analyze the founding or mortality of individual (particularly specialist) organizations, we examine here: (1) a well-established business performance measure (i.e., the combined market share for specialist forms of organization), and (2) a more conventional ecological measure (i.e., growth of organizational mass for the specialist form). Our empirical analysis examines, at the province level, Dutch daily newspapers from 1968 to 1994, an attractive context for sev-

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eral reasons. First, we can identify and measure the major contours of the resource space within which these organizations operate. Specifically, Dutch papers competitively position themselves along dimensions of place (national or local) as well as dimensions of age, education, religion, and political preference. Second, despite the presence of national newspapers (and thus a national market), the province-level (local) marketsin the Netherlands are relatively distinct. Roughly comparable with respect to many resource dimensions, the provinces also have clear and distinguishable local identities. For instance, some provinces are predominantly Protestant,while others are mainly Catholic. In addition, provinces also vary in their rates and types of resource realignment over the study period. This variability gives us considerable research leverage because we can study the impact of multiple (11 to be exact) environmental resource distributions. Third, there are substantial differences in the level of newspaper market concentration across the provinces, the initial dependent variable. We focus on a single profit-oriented organizational form for research design reasons, not because the theory is limited in this way. The many prior tests of the second component of resource-partitioning theory make it obvious that the theory applies to a variety of for-profit organizational forms. More broadly, we believe that if the appropriate conditions exist, resource-partitioning ideas are potentially applicable to many nonprofit organizational contexts, including political parties (Peli 2001), voluntary associations (Popielarz and McPherson 1995), sport clubs (Fort and Quirk 1995), religious bodies, and social movements. Beyond organizations, it has been suggested that (parts of) the theory applies to product designs (Wade 1996) and web sites on the Internet (Peli and Nooteboom 1999). What seems generally common across these disparate applications is that the units involved (organizations, products, parties, etc.) compete over resources (consumers, members, ideas, etc.) in large part through their locations and niche widths (broad or narrow) in a space defined by characteristics of the resources. We develop theoretical arguments in two steps, first general and then specific. In the next section, we explain and develop re-

source-partitioning theory, focusing on the role of resource distributions. We advance several general theoretical propositions. The following section then applies these propositions to the Dutch daily newspaper industry. It formulates specific testable hypotheses. The next section discusses our research design, measures, and estimation models. Finally, we present the empirical findings, discuss them and suggest some directions for future research. RESOURCE-PARTITIONING THEORY Resource-partitioning theory characterizes organizations in terms of their niche width. A generalist organization targets a broad range of consumer tastes in the market by making products or services with a broad appeal; a specialist organization targets a small range of very specific customer tastes (Hannan and Freeman 1977). Broadly speaking, the theory explains the simultaneous occurrence of two organizational trends within a market:generalist concentrationand specialist proliferation.It does so by positing a specific process of scale competition that drives generalist concentration, and another (related) process of niche discovery that drives specialist proliferation. Owing to scale competition, large generalist organizations come to dominate the market. This occurs because some aspect of product or service delivery in the marketpossesses a scale advantage,meaning that it is less costly or less difficult (on a per unit basis) to produce on a large scale. Owing to niche discovery, empty spots in the resource space defining the market become populated by new or mobile organizations, implying that the resource space is saturatedor tightly packed.
GENERALIST CONSOLIDATION

Like much organizational sociology, resource-partitioningtheory assumes a market consisting of a finite set of heterogeneous resources. For generalist consolidation, a key issue concerns the resource distribution. To clarify, suppose that there are n salient environmentalresource dimensions. In some contexts, these might be thought of as dimensions of customer taste preferences (Peli

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and Nooteboom 1999). Let the joint distribution of these n dimensions be unimodal and well behaved.1 In other words, a single peak characterizes (roughly) the joint resource distribution, representing the place at which most resources accumulate. We call this peak the market center. An organization in this space attempting to maximize its size would find the area near the peak attractive because of its resource abundance. However, effective operation in the marketcenter requires a particulargeneralist posture: This firm must develop and maintain appeal at the highest point of each of the dimensions simultaneously. Yet the generalist organizationthat does secure a toehold in the dense center may obtain an advantage over other competitors. This is because the higher scale of activities sustainable in this location leads to lower per-unit costs, which can be passed along to customers in the form of lower prices or better products or services. So, in a unimodal resource space, generalism and scale go hand in hand. Accordingly, competition among generalist organizations in the center often triggers an escalating scale-driven war for resources. Consider the level of dispersion around the peak. Imagine two hypothetical spaces, one with resources tightly dispersed around the peak, and a second one with resources broadly dispersed. It seems clear that in the
1 The originalniche-width theoryof Hannan and Freeman(1977) assumesthat organizations face a single resourceconditionat any point in time. Intertemporally, environmental resources and conditionsare assumedto be disjointedor highly dissimilar(Peli 1997). So, in this theory, face environmenorganizations highlydissimilar tal resourcestates that alternateover time. Be-

first case, a generalist positioned near the center need not cover as wide a range of space along the various dimensions to achieve the same potential scale as would a generalist in the second case. In the narrowly dispersed resource space, a generalist can gain, and possibly protect, a large quantity of resources by staying within the narrow peaked area. In the widely dispersed resource distribution, a generalist would have to cover much more resource space in order to gain the same scale. Much organizational theory suggests that this second generalist faces a much more daunting task. The market appeal it makes must be broader;the associated tensions and costs will likely be higher, making its return lower. It also confronts a greater number of places where challenging competitors might take hold. So a more homogeneous or concentrated resource base creates the conditions for a generalist to accumulate even stronger advantages and thereby begets concentration, which gives: Proposition 1: Given a unimodal distribution of environmental resources, the higher the homogeneity and concentration of resources, the higher the concentration of generalist organizations competing on the basis of scale. Anecdotal evidence suggests that in newspaper markets satisfying the conditions specified in Proposition 1, generalist behavior often conforms to the expected patterns. For example, in the American local newspaper industry, most cities evolved over the post-World War II period into one-newspaper industries, where the paper gaining an early size advantage was able to ride it to eventual dominance (Rosse 1980). This trend coincides with an increased homogenization in cultural tastes (Peterson and Kom 1996). And in modem-day Miami, a city among the more ethnically diverse, an opposing trend has recently appeared:The dominant Miami Herald has experienced problems due in large partto the difficulty of adequately serving its diverse potential readershipbase.2 As Swartz (1999) explains:
2 It is noteworthy that other large ethnically diverse cities still have major competing dailies (e.g., New York and Chicago), or did until recent

cause of the dissimilarity in environmental conditions, a generalist organization straddling two different resource pockets or conditions pays a price in terms of overhead or excess capacity. As discussed here, resource-partitioningtheory uses a different assumption about environmental resources. In this theory, organizations confront several resource conditions at the same point in time, and these conditions are not assumed to be dissimilar. When environments are not so dissimilar, generalists may not be burdened by the straddle-across-resource conditions, as in original niche-width theory. In fact, they may actually benefit from participation in more than one environmental resource location, as we argue here.

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It is generally believed that over the last decade the Herald ... has lost both its national stature and much of its influence in the local community. Circulation has droppedby over a hundredthousand.... [T]he Herald's biggest problem was a lack of creativity and vision, which was most obvious in the paper's attempts to engage Miami's immigrant population, the largest of any American city. (P. 37) SPECIALIST PROLIFERATION

Specialist organizations emerge largely as a byproduct of generalist consolidation. In competing for the abundant center, large generalists eventually outdo their smaller competitors because of the primacy of scale advantages. When the smaller generalists fail, their target markets become free resources. Generalists occupying adjacent regions hold the best positions for securing these newly available areas, and they typically do so. The surviving generalists thus become larger in size and more general in scope as time passes. However, because of the ever-widening range of the surviving generalist's target area, it becomes increasingly difficult to secure the entire free area. This is because doing so involves uncertainty, might prove very difficult or more costly than it is worth, or might entail the loss of some of the organization's existing target area because its identity or capabilities would be undermined.3 These developments seem especially likely in mature populations where generalists become very large, possessing extremely broad target areas, and the free resource space is thin and located on extreme values. So, as the competitive struggle among generalists proceeds to its eventual small-number equilibrium, the organizational size and target breadth of the survivors increase, but the combined resources held by all generalist organizations declines somewhat (Carroll 1985; Carroll and Hannan 1995, 2000).
decades (e.g., Los Angeles). 3 An economist might characterize this situation as involving no economies of scope, or possibly even "diseconomies" of scope, between the activities producing success in the center of the market and those producing success in the peripheries.

A central prediction comes from comparing the amount of space available for discovery and population by specialists when overall concentration rises. Because concentration derives exclusively from generalist consolidation (i.e., there are no large specialists in this resource space), this comparison can be made by measuring the total resource area outside generalist targets under different stages of the generalist competition scenario. As explained, this area (total combined space outside generalist targets) comprises more space when concentration is high (fewer and larger generalists), ceteris paribus. The theory holds that as this space increases, the viability of specialist organizations also increases. That is, the concentration process among generalists creates the conditions for the emergence and spread of specialists even when the underlying resource distribution remains unchanged. So the rise of specialist organizations involves entrepreneursdiscovering and populating the "residual"resource space that lies outside the generalist target areas. It is here, away from the intense competitive pressure of the dominant large generalists, that specialist organizationscan find viable locations (Carroll 1985). And because resources tend to be thin in these regions, the specialists located there are typically small. Small highly specialized locations are also less likely to be invaded by the ever-encroaching generalists than are broaderlocations, and they tend to be more defensible if they are invaded (because of the generalist limitations of inertia, identity, and scope). This basic prediction can be specified with respect to either founding rates or mortalityrates (the specialist segment can expand as a result of changes in either or both rates). In either case, however, the empirical implication is an interaction effect between organizational form (specialist-generalist status) and concentration on a vital rate. This implies: Proposition 2: Under conditions for resource partitioning, as generalist concentration rises, the mean viability of specialist organizations increases and the mean viability of generalist organizations decreases.4
4 For the generalists, the proposition appears to some as tautological, even when it concerns

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PARTITIONING

4A13

The (necessary but not sufficient) conditions for the operation of resource-partitioning processes include: (1) a finite and heterogeneous resource environment; (2) a scale-based process of competition among generalist organizations; and (3) the presence of inertial forces operating on the target ranges of generalists and specialists, thereby limiting adaptability. In the current analysis, we focus on testing the first condition, which can be stated as: Scope Condition 1: The positive impact of generalist concentrationon specialist viability (Proposition 2) occurs only if the resource space is sufficiently heterogeneous.

APPLICATION TO THE DUTCH NEWSPAPER INDUSTRY

ORGANIZATIONAL NICHE WIDTH

The population size of the Dutch newspaper marketcompares closely with the metropolitan area of New York: In 2001, the Netherlands' population totaled approximately 16 million inhabitants. A number of regions with clear and distinguishable identities make up the Netherlands, however. By and large, regional identity is reflected in the 11 provinces, each of which has its own administration and history. As Stinchcombe (1990:136) notes, "socially organized market segments carry different information," and the organizational structures that develop to serve them typically reflect these differences. Daily newspapers in the Netherlands can be meaningfully classified into two very difaverage viability. However, in empirical research this problem can be avoided by using a measure for concentration that does not cover the entire generalist population. It is also important to recognize that the process of scale-driven competition theorized actually implies different effects for generalists depending on where they sit within the size distribution-large generalists benefit while smaller ones suffer. Carroll and Swaminathan (2000) show that it is possible to model the process of generalist scale competition more precisely when certain types of data are available. For our present purposes, these issues do not come into play in a central way.

ferent organizational forms. On one hand, a limited number of national newspapers operate in every province. These papers seek to attractreadersfrom Maastrichtto Den Helder (from the extreme southeast of the country to the extreme northwest) and from Groningen to Vlissingen (extreme northeastand extreme southwest, respectively). That is, the national newspapers target the whole Dutch readership audience. These papers are generally known for their quality and their political and religious positions (or explicit lack thereof), even if they have been broadened and softened over time. On the other hand, a large numberof regional newspapers restrict their potential reading audiences to local residential populations. Regional newspapers focus on preselected communities that lie within or across provinces such as De Achterhoek (a region within the province of Gelderland), Brabant (a Roman Catholic province), Friesland (a province with a non-Dutch language [Frisian]) or Twente (a region within Overijssel). The two types of newspapers display different news profiles: National papers publish general national and international news, whereas the regional papers emphasize the coverage of specific local news. So, national newspapers can be seen as generalists because they try to maximize their appeal to the potential readership all over the Netherlands; their niches include every province (potentially providing strong scale advantages). Provincial or regional newspapers can be considered specialists in that they target smaller resource areas (i.e., the smaller provinces or regional communities). They differentiate themselves from national papers by focusing on (local) news not provided by the nationals. The appeal of these specialists outside their target region is extremely low. So a Dutch daily newspaper's geographical breadth-national in orientation or confined to a single province-is a good way to define its basic niche width.5
5 Of course, a regional newspaper adopting, for instance, extreme positions on other resource dimensions, such as religion and politics, would be even more highly specialized. The fact of the matter is, however, that it is unusual to find such a paper, as it would suffer serious disadvantages in competition against either a general locally oriented newspaper (e.g., agnostic to politics and

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Using data obtained from an annual industry survey of the Dutch Newspaper Association (NDP), we found empirical support for this classification scheme in evidence pertaining to scale economies.6 On a voluntary basis, newspapers provided information about their cost structure. Simple analysis allowed us to look for scale economies in an importantcost area: press costs.7 Press costs include all the costs of collecting news, and they make up a high proportionof total newspaper costs. Journalists and editors are the key competitive assets of any newspaperday after day, they provide a newspaper's contents and press costs. These data (available upon request) show that the average press cost systematically declines as a function of circulation size, thus strongly suggesting economies of scale. This is true for both national and regional dailies-but average press cost tends to be higher among the provincial (specialist) newspapers. Therefore, the data reveal that the national (generalist) papers possess stronger scale advantages, as resource-partitioning theory assumes.
RESOURCE DIMENSIONS OF THE PROVINCE-LEVEL MARKETS

What are the relevant environmental resource dimensions for Dutch daily newspapers?8 First, at the most basic level, people differ by age in terms of their ability and propensity to read a daily newspaper.At least at the extremes of the very young and the very old (Bogart 1981), the number of potential daily newspaper readers in a geographical area depends on its age distribution. Areas with disproportionately high numbers of
religion) or a political or religious newspaper with a geographically broader base (i.e., national). 6 Although analysts widely accept scale economies in newspaper publishing as fact (e.g., Rosse 1980), actual demonstration of their existence is rare because of the difficulty of obtaining such cost data. 7 Given the limited time period and much missing data, sophisticated statistical analyses could not be conducted. 8 Peli and Nooteboom (1999) have demonstrated that the more such dimensions are salient, the more space there is for specialists.

children will have fewer potential readers than areas with a similar population size but with fewer young persons. In addition, those areas with age distributions skewed in one direction or another are likely to supportpapers with slightly different contents: Readers' content preferences vary with age (Bogart 198 1). Newspaper readers in the Netherlands commonly choose papers based on their political preferences. Some papers are known for their right-wing political postures, while others have leftist or centrist reputations. The choices made by subscribers undoubtedly reflect a wish to keep informed about particular political positions (and parties). However, the broader contents of papers suggest also that the motivation may reflect a wish to view larger events from within these particular perspectives. In any event, the choice often involves an act of (at least implicit) solidarity or endorsement, even though this is not the only reason for reading a paper. Religious orientation represents another major preference dimension for newspaper readers in the Netherlands. Although the Dutch are known for Calvinism, millions of Dutch citizens belong to the Roman Catholic Church. In fact, religious preference in the Netherlands follows, by and large, a geographic pattern. Protestantism dominates in the northernprovinces (though with Roman Catholic enclaves), while Catholicism dominates in the southern provinces that border Belgium (i.e., Brabant and Limburg). Religion constitutes a main component of one's social identity, thus, many papers endorse a particularfaith. Finally, newspapers often target readership bases with different education levels. This is particularly clear in the case of "high-brow" versus "low-brow" papers. In many countries, low-quality tabloids target a less educated readership with spicy "human interest"issues, which vary from celebrity gossip to sports stories and crime events. Although British-style tabloids are not active in the Dutch newspaper market, some dailies clearly are tailored to a less educated readership.Othernewspapers maintainhighquality profiles by emphasizing background information about, for example, high-brow cultural events and political arguments.In so

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41 5

doing, these dailies attracta highly educated readership. Hence, our analysis includes the province-level distribution of different education categories as a relevant resource dimension. Envision the joint distribution of the four types of environmental resources (age, politics, religion, and education) in a province. The surface of this distribution can be conceptualized in five dimensions, with resource "density" as the fifth dimension. The densest spot in the distributionhas the greatest number of potential readers-it is here that the strongest scale advantage might arise. Our data show that this distribution is roughly unimodal in a typical province. Given such a distribution, those newspapers that position themselves to cover the peak are best situated with respect to scale potential from the environment, implying that their products appeal to readers in the largest combined category of the four resource dimensions. Moreover, a newspaper operating in only one province can tailor its products to this distribution regardless of where the peak is located. These are specialists as we have defined them here. It is easy to see why they might show evidence of economies of scale in this context: Bigger papers are likely to sit on, or to be closer to, higher peaks.9 By our definition, a generalist daily newspaper operates in all the provinces simultaneously. If these areas display radically different resource distributions,then generalists would likely need to produce a very different paper for each province. In this case, generalists would not have much potential advantage over specialists and might even suffer a disadvantage. Rather, the potential scale advantage for a generalist arises when the resource distributions in at least some of the provinces display peaks at roughly similar points: The similarity across markets allows for common appeals to a larger readership base. Despite differences with respect to the local identities of the provinces, this is indeed the case for Dutch dailies; our data
9 Of course, in many contexts, we would not expect specialists to show economies of scale. The pattern here results from our focus on the daily newspaper market and our restriction to specialist dailies.

show that the peaks of province-level markets do possess rough similarities, on average. It occurs among lower-educated (education dimension), nonreligious (religion dimension), politically centrist (political dimension) persons between ages 18 and 64 (age dimension). Dispersion aroundthe resource peaks also matters greatly. Suppose all provinces have very narrowly dispersed resource distributions. Then a generalist positioned near the peak need not cover a wide range of space along the various dimensions in order to achieve scale advantage. Instead, it can gain, and readily protect, a very large readership by keeping its target within the narrow peaked area. Compare this with the situation in which provinces have widely dispersed resource distributions. Here generalists have much more resource space to cover in order to gain the same scale. This is undoubtedly difficult for a single organizationto do, as its marketappeal must be broaderand the places where competitors might take hold are more numerous. In general, the less concentrated the resource distributions in the provinces, the fewer readers who can be served effectively with such an approach and the less likely the market will concentrate down to a small numberof large players. Conversely, a homogenous resource base sets the stage for a generalist to accumulate even stronger advantages and thereby begets concentration.
HYPOTHESES

We specify hypotheses in terms of newspaper structureand behavior in a province (the level at which we conduct our empirical analyses). Exploring the province level allows us to examine the relationship between national (generalist) and regional (specialist) papers in environments that vary in their resource dispersal. Based on the reasoning above, we expect that: Hypothesis 1: Increased resource homogeneity along any dimension of age (la), religious background (lb), political preference (1c), or educational level (Id) of the province's population is associated with increased national (generalist) newspapers' concentration at the province level.

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We also expect further concentration by the generalists when the multidimensional joint resource distribution is concentrated as well. This implies: Hypothesis 2: Increased resource homogeneity in terms of the joint distribution of age, religious background, political preference, and educational level of the province's population is associated with increased national (generalist) newspapers' concentrationat the province level. The familiar resource-partitioning argument of Proposition 2 also should hold here. It implies effects of market concentration on a variety of specialist outcome variables related to viability. Because, in the period we study, few daily papers start and fail, we examine conventional business outcomes related to short-termperformance.We predict: Hypothesis 3: At the province level, increased national (generalist) newspapers' concentration is associated with increased regional marketshare (3a) and circulation growth (3b) of the population of regional (specialist) newspapers. Taken together, the hypotheses suggest a process whereby increased resource homogeneity leads to generalist consolidation, which in turn begets specialist viability. Of course, the process may be more complex, yet still operate according to the hypotheses. In the limit case of a fully homogeneous environment, generalist concentration cannot go hand in hand with the success of specialist organizations because some minimal resource heterogeneity is required to sustain the specialists (Proposition 2 and Scope Condition 1). So, somewhat paradoxically, although resource homogeneity drives generalist concentration, at the same time it might hamperthe proliferationof specialists. To investigate this issue, we distinguish between the "Randstad"and the rest of the country. The Randstad is the large horseshoe-shaped densely urban city chain of Amsterdam-the Hague-Rotterdam-Utrecht in the West, covering the provinces of NorthHolland, South-Holland, and Utrecht. The rest of the country consists of two distinct regions: (1) the predominantly Protestant East and North, which include the provinces of Drenthe, Friesland, Gelderland,

Groningen, and Overijssel; and (2) the predominantly Catholic South, which consists of the provinces of Brabant, Limburg, and Zeeland. The Randstad is the political and cultural center of the Netherlands; the headquarters of all national newspapers are also located there. So, in terms of identities, there is less of an operative distinction between "national" and "regional" in the Randstad than there is in the rest of the country. In other words, what is national is in fact often also local in the Randstad.The main political and cultural events of the nation often occur in this region, and the papers that report these events are locally staffed and published. So a national paper in the Randstad also has considerable local appeal, unlike papers in the rest of the country. Of course, there are also events of purely local interest within the Randstad, and there are provincial papers that focus on them. But the blurred distinction in this locality between national and regional identity means that on this critical (defining) dimension, resource heterogeneity is actually lower in the Randstad. This difference is reflected in the national newspapers' contents, which devote more attention to local Randstad news than to local news from other provinces. There is also less difference within the Randstad than elsewhere in the readership profiles (in terms of the welfare of the readers) between national and regional newspapers. Table 1 uses data from the newspaperlevel readershipprofile surveys of the industry statistical office (Central Bureau for Newspaper Publicity of the Dutch Newspaper Industry[CEBUCO]); surveys have been conducted on a regular basis since 1965. Table 1 shows the average percentage of newspaperreadersin each of the welfare categories. It also shows the absolute differences from the average profile of nationals for regional papers appearinginside and outside the Randstad, respectively. Analyses of variance of these profile differences (controlling for the year to which the differences pertain) clearly reveal that the profile distance is significantly smaller inside the Randstad than in the rest of the country. These observations suggest strongly that national papers are more likely to compete head-on with the regional newspapers in the

MARKET PARTITIONING Table 1. Percentage Distribution, Absolute Differences, and Analysis of Variance Comparing Regional and National Newspapers by Reader Welfare: Netherlands, 1968 to 1994 ReaderWelfare Measure Average Percentage of Readersa Regional newspapersappearing outside the Randstad Regional newspapersappearing inside the Randstad National newspaperreference groupb AverageAbsoluteDifferencec Regional newspapersappearing outside the Randstad Regional newspapersappearing inside the Randstad Relatively Lower Middle Higher Relatively Poor Class Middle Class Wealthy 12.51 (4.21) 11.00 (4.48) 7.86 (1.67) 4.86 (3.04) 3.61 (3.27) 43.21 (5.45) 39.89 (7.65) 31.73 (3.47) 11.33 (4.93) 8.81 (6.3) 34.95 (8.10) 35.84 (8.25) 40.42 (6.38) 6.57 (4.31) 5.06 (5.25) 9.32 (5.47) 13.27 (7.11) 19.99 (6.64) 10.13 (3.19) 7.64 (4.47) 17.19* 61.70* .44*
-

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Number of Cases 223 148 371

223 148

Analysis-of-Varianceon Difference Scoresfor Each WelfareCategory F-value of factor for year 4.80* 5.60* 4.64* F-value of factor outside versus 17.61* 14.94* 5.26* inside the Randstad R2 .18* .21* .17*

Source:CentralBureaufor NewspaperPublicityof the Dutch NewspaperIndustry(CEBUCO). Note: Numbersin parenthesesare standard deviations.The resultspertainto 371 regionalnewspaper-year observationsfor which welfare profile data are available. a Rows total to 100 percent. b Average profile of nationalnewspaperswhen welfare profile datafor regional newspapersare available. c Difference is between the welfare profile of a regional newspaperin year t and the average welfare profile of nationalnewspapersin year t. *p< .05 (one-tailedtests)

Randstad, even as the market concentrates. Outside the Randstad such competition is less direct, as regional newspapers emphasize unique local (i.e., non-Randstad and nonnational) news. Thus, resource-partitioning processes should operate more forcefully outside the Randstad than within it: Hypothesis 4: Hypothesis 3 is more likely to hold outside the Randstad than within the Randstad where the national-regional identity distinction is less sharp. DATA AND METHODS
OBSERVATION PLAN

as independent if an independent editorial board produced it. Thus, a newspaper consisting of several chain newspapers but produced by the same editorial board was regarded as one organization. As described above, we also made a distinction between national and regional newspapers. Statistical analyses were conducted at the province level, using data for every year from 1968 to 1994. Observations are thus structured as pooled cross-sections and time-series. Because there are 11 provinces in the Netherlands, the resulting database consists of 297 province-year observations (27 years and 11 provinces).
MODEL SPECIFICATION AND ESTIMATION

Our study includes every independent daily newspaper that operated during the period 1968 to 1994 in (any subset of) the 11 Dutch provinces. We classified a daily newspaper

To test the hypotheses, we used a simple recursive system of two equations:

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Pit = f(Cit, Zit, Uit),

(2)

where Citis a variable measuring generalist concentration in province i at time t, Ritis a vector of environmental resource variables, Zit is a vector of control variables, Pitis a measure of specialist segment performance, and eit and uit are disturbance terms. Obviously, the first equation models the behavior of the national newspapers in terms of generalist concentration; it tests Hypotheses 1 and 2. The second equation models the combined specialist performance; it tests Hypotheses 3 and 4.
DEPENDENT VARIABLES

circulation/lagged regional circulation, denoted by growth). We do not treat regionals' circulation growth and regionals' market share as separate outcome measures of specialist viability. Specifically, we attempt to model their interrelationship, as we assume that there is an upper bound to circulation growth at high market share.
INDEPENDENT RESOURCE VARIABLES VARIABLES.

DISTRIBUTION

GENERALIST CONCENTRATION. We measure national newspaper concentration by the four-firm concentration ratio (generally indicated as C4), which is calculated as the sum of the circulation of the four largest national newspapers in a province divided by the total circulation size of the national newspapers in the province.10 To construct this and other market-size-based variables, we relied on annual newspaper circulation information obtained from the yearly publications of the industry's statistical office CEBUCO (various years). Unfortunately,for the years 1969 and 1971 circulation size was missing for most of the newspapers. So estimates of circulation in these two years were obtained by interpolation. SPECIALIST PERFORMANCE. We use two specialist performance measures: (1) market share of the regionals (calculated as the sum of the circulation of the regional newspapers in the province divided by the total circulation of all newspapers in the province) and (2) growth of regional circulation (regional
10 It is important to stress that the concentration variable for the national papers (Ci,) uses only the circulation data of national papers; it measures the extent of concentration among only those papers classified as national. The regional market share and circulation growth variables measure the extent to which regional papers have penetrated the full market. The two types of measures are not inherently interdependent: Whatever market share the national papers hold might be evenly distributed across many papers or concentrated in one or a few.

Covering the four basic dimensions of newspapers' resource bases, the environmental distribution variables describe a province's age structure,political preferences, religious backgrounds, and education profile. We summarize the age distribution by the percentage of persons in each of three categories: those younger than 19, between 20 and 64, and older than 64.11 These data are
1 Note that for each resource dimension we focus on the relative distribution of the population over the different categories (i.e., the percentage of people in each of the resource categories) rather than on the magnitude of the resources in each category. We do so because the theory is about the consequences for the fate of generalists and specialists of different environmental resource distributions, conditional upon environmental (center and periphery) munificence. That is, we ask, provided that the different resource spaces are large enough, how do the distributive features of the key environmental resources influence (1) the industry's structure (in terms of concentration and density) and (2) the generalists' and specialists' performance? The magnitude argument adds this threshold condition explicitly. That is, a market niche must be sufficiently large to offer opportunities for viable newspaper operation, both in the industry's center and in the market's periphery. In the Dutch context, all provinces are beyond this threshold level of carrying capacity, implying that viable regional niches are in place throughout the data set. So the analyses can safely focus on resourcepartitioning theory's key hypotheses as to the dynamic generalist-specialist interaction in sufficiently munificent resource spaces. To summarize, the theory is about the effect of different resource distributions, given a certain environmental carrying capacity. We can show empirically that the concentration models do not work well when the magnitude of these differentiated resources are used as the independent variables (i.e., the number of people in each category in-

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taken from the Regionaal Statistisch Zakboek (CentraalBureau voor de Statistiek [Central Bureau of Statistics, CBS], various years). The market "center"of this distribution falls-not very surprisingly-in the age category from 20 to 64.12 The second and third resource dimensions-political and religious preferencesare represented by variables based on voting behavior. We obtained the distribution of votes for different parties at national elections from Statistiek der Verkiezingen(CBS, various years). These elections normally occur every four years (i.e., when the government is not forced to resign earlier). As voting behavior typically changes incrementally, we deemed it appropriateto interpolate the voting behavior for the intermediate periods without elections. We use two sets of categorical distinctions for the political and religious resource distributions. The first variable describes the distribution of votes across the political orientation of the parties in the election, measuring the percentage of votes for parties in each of the following five categories: extreme left, left wing, center, right wing, and extreme right. The second variable describes the distribution of votes across four categories of religious orientation for the parties participating in the election: Roman Catholic, Protestant, Christian (i.e., targeting Catholics and Protestants alike),13 and nonreligious. Then, we calculate the percentage of people voting for parties in each of these four groups. Note that the center of the market on these two distributions lies within the nonreligious and center-partycategories, respectively.14
stead of the percentage). Note that we control for the impact of carrying capacity by including a province-level measure of carrying capacity (i.e., number of inhabitants). 12 For each resource dimension, we define the center as the category with the highest observed maximum during the period under study. 13 A Christian party is more general than its Catholic or Protestantcounterpartsbecause it targets Christian voters regardless of whether they are Catholic or Protestant (cf. the Dutch Christian Democratic Appel [CDA], which has a profile similar to the German Christian Democratic Union [CDU]). 14 The classification of parties by political ideology likely relates to their identities in terms of

The fourth resource dimension-education-summarizes the distribution of the highest educational level achieved by the employed population in the province: low (primary school), low-medium (lower secondary school), medium (higher secondary school), and high (higher education-e.g., university). These data were collected form several sources: Volkstelling (CBS 1960, 1971), Arbeidskrachtentelling (CBS 1977, 1979, 1981, 1983, 1985), and Enquete Beroepsbevolking (CBS 1990, 1991, 1992, 1993, 1994). Estimates of the percentages in the four education categories were obtained by linear interpolationfor years for which no data are available. The center of the market on this distribution lies within the low education category. We summarize the four environmental resource distributionswith Herfindahlindices. These indices are calculated by summing the square of the proportionof cases falling into each category of the focal distribution. A high score indicates that the resource distribution is concentrated into one category (maximum score = 1.0). When the score is low (minimum = 1/n, where n = the number of categories), concentration is low, implying that the diversity of resources in the province is high. The data on the resource dimensions cannot be broken down into cross-classified categories. Regrettably,we cannot find source documents to provide numbersof persons by age by religion by politics by education (or even by any two of the dimensions). So, although we cannot construct a definitive measure of the joint distribution of resources, we do analyze the effects of overall resource concentration, using an index calculated by averaging the four Herfindahl indices (labeled resource-concentration index in the remainderof the paper).15' 16
religion. For instance, relatively fundamentalist religious parties are likely to belong to the right wing. Conversely, leftist parties probably do not stress any religion at all. Indeed, the correlations between the categories of the political and religious orientation of the parties reveal these tendencies. For instance, Protestant and extreme right (r = .88, p < .05, and N = 297) are strongly related as are nonreligious and left wing (r = .77,
p < .05, and N = 297).
15 Although the lack of cross-classified data means that we cannot observe potential cleav-

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vARIABLES. The first pair of come from a variety of sources. The data on CONTROL economic conditions at the province level control variables in the models describes general social and economic conditions of (unemployment) were obtained from Regionale Gegevens overArbeid (CBS, varithe province. We controlled for the province's newspaper carrying capacity by meaous years). Unemployment information was not available for the years 1968, 1969, and suring the province-level population in millions. We expect that larger carrying capac1970. These gaps were closed by linear exity facilitates the resource-partitioning protrapolation. The Regionaal Statistisch Zakboek (CBS, various years) was used to cess because the sustainability of specialization between regional and national papers (in obtain the number of inhabitants per provterms of Adam Smith's division of "labor") ince. The second pair of control variables peris likely to be limited by the size of the market. So a large carrying capacity might fatains to province-level densities of national cilitate both concentrationof the nationals as and regional newspapers. It is important to well as performance of the regionals. The have a C4 measure that is independent of the number of generalists because resource pareconomic condition of the province was controlled by including the number of provincetitioning requires assessing the distribution level unemployed inhabitants (in 100,OOOs). of market shares over generalist newspapers This variable is an important indicator of given a constant number of nationals. Obviwelfare. When times are hard, one might exously, we expect the effect of the provincelevel density of national newspapers on C4 pect the circulation of regional papers to fall as people cut back on expenses. Similarly, to be negative. The province-level density of regional newspapers might hamper the congeneralist newspapers, less sensitive to the cutting back of newspaper consumption, centration of national papers because it might become dominant in hard times, inprobably increases the competitive pressure creasing generalist concentration.These data of the regionals on the nationals (over and above the intense competition among the na-

ages, this may not be problematic for three reasons. First, the resource-concentration index either over- or underestimates the actual concentration of the joint or multidimensional resource distribution. As we explain below, however, in each case, the over- or underestimation of resource concentration works against our hypotheses, thus making our tests conservative. Note that by simply averaging the four Herfindahl indices, we implicitly assume that the distribution of cases over categories in one resource dimension is constant over the different categories in another dimension. This is, of course, not realistic. When minority groups on one dimension are overrepresented on another dimension, the average index will, as a result, overestimate resource concentration. In that case, the "true" multidimensional resource distribution will have a smaller center (and might even be polymodal), which hampers concentration of the generalists (at relatively high overestimated levels of resource concentration). Conversely, we underestimate resource concentration when the center on one dimension is overrepresented on another dimension. In that case, the "true" multidimensional resource distribution will have a larger center, facilitating concentration of generalists (at relatively underestimated levels of resource concentration). Taken together, in both cases our estimates of the effect of resource concentration

on concentration of the generalists are in all likelihood conservative. Second, if the dimensions line up (which we cannot observe), the types of cleavage are likely to be similar over different provinces and time periods (e.g., it is likely that people over age 64 are overrepresented in the "right-wing" voting category and that this is the case for each province throughoutthe sample period). As a result, if the concentration index is less reliable because of the absence of cross-classified data, it tends to be so in a systematic way, making comparisons between provinces and over time possible. Third, we show estimates based on the resource-concentrationindices for illustrative (not definitive) purposes, as well as to check the robustness of our findings. 16 Because the theoretical value of the Herfindahl indices depends not only on the distribution of the proportions but also on the number of categories, we computed a weighted average of the four Herfindahl indices to obtain an overall resource-concentration index weighted for differences in the number of categories. The correlation between the weighted and unweighted average is very high (r = .99, N = 297). As it does not matterfor the findings which average we use, we report results only on the unweighted resource-concentration index.

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tionals). High between-group competition might make it more difficult for a few national newspapers to become dominant. In the specialist performancemodels, high national newspaper density in the province is likely to increase competitive pressure on the regional papers and as a result might reduce the growth of circulation and market share of the regionals. Similarly, the presence of many national papers in the province might reduce the numberof untappedniches available for regional newspapers, thereby reducing the performance of regional newspapers. However, high density of national papers might also increase within-group competition among the nationals and facilitate the performanceof regional newspapers. When assessing specialist performance, it is again important to predict regional market share and circulation growth given a constant numberof regional papers appearingin the province. The presence of many regional papers suggests a fragmented market, making it difficult for the regionals to become dominant as a group. Conversely, high regional newspaper density might also reduce the relative competitive pressure from the nationals and as a result facilitate the performance of regional papers. To summarize, the ultimate effect (positive or negative) of both national and regional newspaper density on specialist performanceis difficult to predict. This is because high relative density of a focal organizational form might indirectly reduce the competitive pressure of other forms (i.e., between-group competition) while at the same time causing more competition between members of the same focal form (i.e., within-group competition). The third cluster of control variables captures three specific firm-level events. The first two events have to do with the dates when two relatively large national newspapers formally announced their decision to stop nationwide distribution after a long uphill battle associated with an incremental process of step-by-step change. These events happened in 1972 and in 1982. To model these shifts, we used two from-national-toregional dummy variables. In 1972 a national newspaper (Het Vrije Volk)decided to withdraw from nationwide circulation to become a regional newspaper in the Randstad (South Holland, in the area of Rotterdam).

As a result, this dummy variable (1 = after 1972; 0 otherwise) is likely to have a positive effect on both generalist concentration and specialist performance (the latter especially in the Randstad). In 1982, another national newspaper (Courant Nieuws van de Dag) decided to withdraw from nationwide circulation and to focus on North Holland (region Amsterdam). Again, we expect a positive effect of this dummy variable (1 = after 1982; 0 otherwise) on both generalist concentration and specialist performance (the latter again especially in the Randstad). The third event is a from-national-to-regional transformation. An independent national newspaper (Het Algemeen Dagblad) also produced two regional editions in the province of Drenthe (from 1968 to 1973). These editions were chain papers and were not independent newspapers. These chain papers became an independent regional newspaper in Drenthe in 1974 (Drentse Courant). This change caused a huge jump in the market share of the regional newspapers and a decrease in the C4 of the nationals in that province. So we expect this dummy variable (1 = for 1968 through 1973; 0 otherwise in Drenthe) to be positive in the generalist concentration models and negative in the specialist performance models.'7' 18
17 A methodological issue and a theoretical issue have been raised about the use of these period dummy variables. On methodological grounds, one might claim that these dummy variables are not necessary because the effects of these changes act directly via measured variables. Nevertheless, detailed analyses of the errors of the estimated equations reveal that inclusion of these dummy variables is essential for econometric reasons because dropping them causes huge outliers in the errors. This is especially the case when the Drenthe dummy is excluded in the specialist performance equations: The average erroris three times as high when the dummy variables are dropped. Analyses of the errors clearly show that these shifts are not captured by the other independent variables, making it necessary to include a dummy variable to control for this "measurementerror."The other two events also lead to smaller sudden shifts in the data that we controlled for in order to increase precision of estimation. The theoretical complaint is that the three events indicate adaptive behavior of individual newspapers and therefore contradict an assump-

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Table 2. Descriptive Statistics for ProvinceLevel Variables: Netherlands, 1968 to 1994 Variable Concentration of national newspapers (C4) in the province Mean .84 (S.D.) (.07)

Table 2 gives descriptive statistics for the variables. It shows considerable variation across provinces in the level of national paper concentration as well as in specialist viability.
ESTIMATION

Age
0 to 19 20 to 64 >64 30.96 57.20 11.83 5.27 9.24 23.35 60.77 5.28 37.18 32.16 15.76 8.26 25.48 32.22 28.39 13.91 .44 .48 .29 .31 .38 7.36 8.92 1.27 .26 .02 .85 .48 .64 .64 1.02 (4.47) (3.50) (1.80) (11.36) (9.20) (14.14) (8.67) (2.62) (6.79) (8.76) (4.13) (5.54) (13.39) (5.67) (12.97) (5.57) (.02) (.06) (.04) (.03) (.02) (3.38) (1.08) (.86) (.25) (.14) (.36) (.50) (.16) (.16) (.10)

For estimation, we used the Feasible Generalized Least Squares (FGLS) estimatorin the statistical package STATAwith the assumptions of first-order autocorrelation(common to all panels) and heteroscedasticity among panels. We assumed no cross-sectional correlation. These assumptions were justified in model-fit comparisons with estimates of both smaller (less complex) and larger models. Because with FGLS coefficients are estimated by applying ordinary least squares (OLS) regression on data corrected for
tion of inertia. However, organizational ecology does not argue that organizations never try to adapt and change. The argument is that adaptation of core features is extremely difficult because of uncertainty and inertia, and therefore is likely to decrease subsequent performance (Carroll and Hannan 2000). The difficulties associated with core changes seem to apply to the transformations from national to regional of Het Vrije Volk and Courant Nieuws van de Dag. Both cases can be typified as permanently failing organizations, and the changes did not revitalize them. Before Het Vrije Volk decided to become regional, its circulation dropped from 283,276 in 1968 to 219,108 in 1971. The year of the core change, circulation dropped further to 163,999 and never recovered. In fact, it steadily decreased to a low of 76,410 when the paper finally disappeared in 1991. The same story goes for Courant Nieuws van de Dag. In 1972, its circulation reached a peak (183,765), declining to 138,139 the year before the core change. In 1982, its circulation was only 97,750. Again the core change was not successful, as circulation gradually dropped to 49,757 in 1994. Apart from noting that these core changes did not ameliorate the fate of the papers, such events were the exception and not the rule, which is also consistent with the inertia argument. 18 Another control variable that would be an obvious candidate to include is the price of the newspapers. However, in the Dutch newspaper industry, price competition is impotent as a result of (legal) cartel-like price agreements that basically fix the price differences between all the dailies, locally and nationally.

Religious Preferencea
Roman Catholic Protestant Christian Nonreligious

Political Preferencea
Extreme left party Left party Center party Right party Extreme rightparty

Education
Low Low-medium Medium High Age concentration index Religion concentration index Political concentration index Education concentration index Resource-concentration index Density of regional newspapers in the province Density of national newspapers in the province Population (in millions) Unemployment (in l00,OOOs) Dummy variable for Drenthe Dummy variable for "after 1972" Dummy variable for "after 1982" Market share of regional newspapers (t) in the province Market share of regional newspapers (t- 1) in the province Circulation growth of regional newspapers in the province

Sources: Data sources described in the text on pages 418 to 422. Note: Numbers in parentheses are standard deviations; N = 297.
a

Measured by voting behavior.

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autocorrelation and heteroscedasticity, Rsquares cannot be reliably interpreted (Kmenta 1986). Instead, we used and report Wald chi-square statistics, which compare the goodness of fit of the specific model with a model containing only a constant. Because we expected the control variables to be important in explaining both generalist concentration as well as specialist performance, we used the same control variables in both equations. FINDINGS Table 3 presents the FGLS estimates of the concentration of the national newspapers as a function of resources in the province. Model 1 uses the noncenter categories of each resource distribution as the focal independent variables (thus omitting the center categories); Model 2 highlights the market center categories (omitting the categories on the tails). The estimates agree with expectations:The sign for every noncentercategory is negative, whereas every center category has a positive sign. In addition, most estimated coefficients for both Models 1 and 2 are statistically significant. In the case of the political preference and education variables, this is true for both center and noncenter categories, suggesting that these variables are very important in driving concentration. In the other cases, the nonsignificant effects are confined to only two categories, implying thatthe joint effect of the full set of distinctions of each variable suggests that inclusion is warranted. So the age, the religious background,the political preferences, and the educational level distributionsof a province's population seem to influence the concentrationof the national newspapers at the province level.19
19As mentioned above, the political and religious orientations of the parties are correlated. To explore the consequences of this relationship, we reran the concentration models with the religious categories while dropping the political categories, and vice versa. It turns out that the coefficients for the religious categories change appreciably when the political categories are dropped. Thus, the religious resource variables only contribute to explaining concentration in the expected direction net of the effects of the political resource variable. If we drop the religious cat-

To analyze the robustness of the findings, we reestimated the equation using single concentrationmeasures of each resource distribution rather than the categorical variables. That is, we used Herfindahl indices of age demography, voting behavior, religious background, and educational level distributions to measure resource concentration within a province. The estimates are presented in Model 3 in Table 3. Consistent with the results of Models 1 and 2, the coefficients of the concentration measures of the age, political, and educational distributions are positive, as expected (although not significant for the education variable). The effect of religion concentration is, however, negative (and not significant), which contradicts the pattern of results from Models 1 and 2. Apparently, the Herfindahl indices in Model 3 are only positive when the center categories of the resource distributions are positive and significant. Thus, focusing on robust findings only, we conclude that diversity within a province in terms of age demographics, political orientation, and educational level reduces the extent of market concentration among the national newspapers within a province. Note that the fit of the models using Herfindahlindices is lower than for Models 1 and 2 (as shown by Wald chi-square goodness-of-fit measures). This is, however, not surprising because the category variables contain more relevant resource distribution information than do the compressed indices. In addition, this drop in goodness of fit is in our view not theoretiegories, however, the findings related to the political categories remain virtually the same. We also reran a model to test for the effect of the average of the four center categories of Model 2. The coefficient of this average is close to zero and not significant. Generally, these additional analyses show that the models are most convincing when the categories of each of the four distributions are included simultaneously. Based on these findings, we conclude that: (1) The more detailed and rich the description of the resource distribution, the better the prediction of the generalist concentration level; (2) it is the unique contribution of each of the resource dimensions that makes the difference; and (3) the political resource dimension seems to be primaryin its effect, suggesting it is the stronger organizing principle.

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Table 3. FGLS Coefficients Predicting Concentration of National Newspapers in the Province: Netherlands, 1968 to 1994 Model 1 Independent Variable Age 0 to 19 20 to 64 > 64 -.004 (.003) Coef. (S.E.). Model 2 Coef. (S.E.) Model 3 Coef. (S.E.) Model 4 Coef. (S.E.)

-.008*** (.002) .007***(.002)

Religious Preferencea
Roman Catholic Protestant Christian Nonreligious -.009***(.003) -.007***(.001) -.007***(.001) .001 (.001)

Political Preferencea
Extreme left party Left party Center party Right party Extreme right party -.008***(.001) -.007***(.001) -.013***(.002) -.011***(.001) .003***(.001)

Education
Low Low-medium Medium High Age concentration index Religion concentration index Political concentration index Education concentration index Resource concentration index Density of regional newspapers in the province Density of national newspapers in the province Population (in millions) Unemployment (in 100,000s) Dummy variable for Drenthe Dummy variable for "after 1972" Dummy variable for "after 1982" Constant Wald chi-square -.002** (.001) -.018*** (.003) -.008 .017 (.006) (.011) -.001* (.000) -.001 (.000) -.003***(.001) -.001***(.000) -.005*** (.001) .646** (.231) -.053 .090 (.042) .325***(.057) (.065) .368** (.124) -.001 (.001) .001* (.000)

-.020*** (.003) .008 (.006)

-.020*** (.003) .017** (.006) .026** (.011) .129***(.010) .028***(.005) .020***(.005) .579***(.110) 649.5***

-.022*** (.003) .018** (.006) .021* (.011) .123***(.010) .016***(.005) .016***(.005) .847***(.063) 585.8***

.029** (.011) .132***(.010) .024***(.005) .015** (.005) .369** (.133) 658.1***

.127***(.012) .046***(.006) .018** (.007) 2.393*** (.161) 889.0***

Sources: Data sources described in the text on pages 418 to 422. Note: Numbers in parentheses are standard errors; N = 297. a Measured by voting behavior. * * <.05 < .01 < .001 (one-tailed tests)

MARKET PARTITIONING Table 4. FGLS Coefficients Predicting Market Share of Regional Newspapers in the Province: Netherlands, 1968 to 1994 IndependentVariable of Concentration nationalnewspapers (C4) in the province Density of regional newspapers in the province Density of nationalnewspapers in the province Population(in millions) Unemployment(in 100,000s) Dummy variablefor Drenthe Dummy variablefor "after1972" Dummy variablefor "after1982" Constant Wald chi-square Numberof cases Model 1 Total Country -.078 (.064) .001 (.001) -.002 (.004) -.079*** (.010) .003 (.018) -.410*** (.013 .019** (.006) .003 (.006) .817*** (.075) 1,602.02*** 297 Model 2 RandstadOnly -.764*** (.235) .001 (.002) -.019 (.013) -.008 (.016) -.003 (.037) NAa .007 (.018) .036* (.018) 1.229*** (.269) 23.29*** 81

425

Model 3 OutsideRandstadOnly .243*** (.068) -.003** (.001) .002 (.004) .026** (.010) -.036* (.017) -.459*** (.014) -.000 (.006) -.008 (.006) .519*** (.072) 1,454.14*** 216

Sources: Data sources describedin the text on pages 418 to 422. Note: Numbersin parenthesesare standard errors. a "NA"indicates not applicable(Drenthelies outside the Randstad). ** < .01 *** < .001 (one-tailedtests) p <.05

cally problematic because the category variables provide the exact information we need to test resource-partitioningtheory. That is, given a certain carrying capacity, relatively big center niches facilitate concentration, whereas relatively large peripheral niches hamper it. Model 4 in Table 3 condenses these findings further.It reports estimates of an equation using only the overall resource-concentration index, which simply averages the four separate Herfindahl indices. This coefficient is positive and highly significant. Taken together, these results provide support for Hypothesis 1 as far as the age, political, and educational distributions are concerned (i.e., Hypothesis la, 1c, and ld) and strong support for Hypothesis 2.20
20 Note

Tables 4 and 5 present estimates for the specialist outcomes, testing Hypotheses 3 and 4. For both specialist performance measures, three regressions were run: one for the total sample (Model 1), and two for the subsamples inside and outside the Randstad (Models 2 and 3, respectively). From Tables 4 and 5, it follows that generalist concentration has the expected positive impact on specialist market share and
have as expected. That is, the density of both the regional and national newspapers reduces concentration of the nationals, whereas unemployment is positively associated with generalist concentration. The effect of the carrying capacity (population) is positive in the models where it reaches significance. Finally, the three dummy variables (for Drenthe, for "after 1972," and for "after 1982") all have positive significant effects, as expected.

that the control variables generally be-

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Table 5. FGLS Coefficients Predicting Circulation Growth of Regional Newspapers in the Province: Netherlands, 1968 to 1994 IndependentVariable of Concentration nationalnewspapers (C4) in the province Marketshareof regional newspapers (t- 1) in the province Density of regional newspapers in the province Density of nationalnewspapers in the province Population(in millions) Unemployment(in 100,000s) Dummy variablefor Drenthe Dummy variablefor "after 1972" Dummy variablefor "after1982" Constant Wald chi-square Numberof cases Model 1 Total Country .102 (.092) -.087 (.055) .001 (.001) .008 (.011) -.011 (.013) -.025 (.034) -.271 (.167) -.000 (.018) -.019 (.015) .929*** (.144) 25.57** 286 Model 2 RandstadOnly -.127 (.278) -.176* (.095) -.001 (.004) -.020 (.020 .005 (.016) -.035 (.050) NAa -.035 (.035) -.025 (.031) 1.427*** (.363) 11.16 78 Model 3 OutsideRandstadOnly 1.274*** (.187) -2.319*** (.136) -.019*** (.004) .046** (.017) .022 (.033) .035 (.064) -1.466*** (.082) -.004 (.027) -.084*** (.026) 1.386*** (.272) 420.06*** 208

Sources: Data sources describedin the text on pages 418 to 422. errors. Note: Numbersin parenthesesare standard a "NA"indicates not applicable(Drenthelies outside the Randstad). * <.05 *** < .001 (one-tailedtests) ** < .01

circulation growth outside the Randstadonly (see Model 3 of Tables 4 and 5). Inside the Randstad,where regional newspapers are assumed to be direct competitors of the nationals, concentration even has a negative effect on regionals' performance (significant in the case of market share; see Model 2 of Tables 4 and 5). Apparently, escalation of competition among the national newspapers in the Randstad occurs at the expense of the performance of their regional (direct) competitors. Given the opposite signs of C4 inside versus outside the Randstad,it is not surprising that the effect of generalist concentration is not significant in the total sample for both performancemeasures. Taken together, there is no evidence for a main effect of generalist concentration. Therefore, we reject the un-

qualified Hypothesis 3. Its qualified restatement in Hypothesis 4, however, is clearly confirmed as specialists benefit from generalist concentration, but only outside the Randstad. Interestingly, inside the Randstad the opposite effect of generalist concentration is observed.21
21 As for the control variables, Table 4 shows that they only have an impact on the market share of the regionals outside the Randstad. That is, density of the regionals as well as unemployment in the area reduces market share. Apparently, the number of regional papers in a province reduces their collective performance. The same is true when economic conditions are bad. A high carrying capacity (population), however, has a positive impact. Inside the Randstad, none of the control variables is significant (except for the

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We did additional analyses to check whether generalist concentration indeed mediates the relationshipbetween resource concentration and specialist performance outside the Randstad. First, we find that resource concentration (measured with the overall resource-concentrationindex) is significantly related to concentrationamong the nationals, both inside and outside the Randstad. Next, we estimated the effect of this resource-concentration index on the market share and circulation growth of the regionals, with and without the concentration level among the nationals included in the regression (and using the same control variables as in Tables 4 and 5; results available on request). As expected, outside the Randstad we find evidence that resource concentration has a positive impact on market share and circulation growth of the regionals via the concentration level among the nationals. Inside the Randstad, however, we find the opposite effect. That is, resource concentrationhas a strong negative effect on regional market share, partly because it increases concentration among the nationals. The findings are not significant for regional circulation growth inside the Randstad. Taken together, the supplementary results provide evidence, at least in part, for a mediation model outside the Randstad. Inside the Randstad, the findings support our conclusion that these markets tend to behave as predictedby industrialorganizationeconomdummyvariablefor "after1982,"which has the expected sign). Perhapsthis is because in the cannotbe conthe Randstad regionalnewspapers form" sideredto be a different"organizational with the nationals,makingit difficult compared For to modelperformance separately. instance,if an increasingcarryingcapacityis beneficialfor it the nationalsin the Randstad, indirectlyhas a negative impact on the share of the regionals. This mightexplainwhy the effect of population to switchesfrompositive (outsidethe Randstad) negative (inside the Randstad).The results in growth Table 5, in which regionals'circulation Some variis modeled,reveal a similarpattern. ables, however,lose significance(e.g., populaoutside the Randstad). tion and unemployment due This is probably to the inclusionof the market share of the regionalsat t - 1, which has a large negative impacton growth.As expected, there is an upperboundon regionalnewspaper share. growthat high market

ics: In homogeneous markets (with high resource concentration) with scale economies, a few generalists will eventually dominate, pushing specialists out of the market. DISCUSSION Although many studies of resource partitioning have appeared, these have usually not addressed a core part of the theory-the part dealing directly with competition among generalists. Under certain conditions, an expected outcome of this competition is high marketconcentration, an importantphenomenon of wide general interest to sociologists. So neglect of this part of the theory has limited its potential value. Our study was designed to investigate concentration in a market that is also undergoing segmentation. We developed a model of how the distribution of environmental resources drives concentrationamong generalists. Specifically, we hypothesized that the competitive struggle among generalists for the center of the market will be most pronounced in markets in which the environmental resources are concentrated. As is usual in studies of resource partitioning, we also hypothesized that specialist organizational forms will flourish when market concentration among generalists increases and the level of untapped environmental resources is high enough. We examined these theoretical claims by analyzing the Dutch daily newspaper industry from 1968 to 1994 at the province level. For each of the Netherlands' 11 provinces, we constructed distributional measures of the potential readership base along four dimensions that have been importantfor newspapers: age demography, religious background, political preferences, and educational level. The statistical analyses involved estimating equations that predict the behavior of Dutch daily papers by organizationalform (generalist or specialist) relative to variations in the four major environmental resource distributions, as well as to the population processes set in motion by them. The findings support the theoretical claims, at least for the dimensions of age, politics, and education. That is, greater homogeneity of persons within a province in terms of age demography, political orienta-

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tion, and educational level amplifies the extent of market concentration among the generalist (national) newspapers. Likewise, generalist market concentration leads to higher specialist viability, but only when specialists have ample opportunity to differentiate themselves from generalists (i.e., when specialists and generalists are not direct competitors). Our explanation is that without sufficient resource-space heterogeneity on the key dimension of identity, scaledriven competition produces a limited number of large generalist papers at the expense of the performance of specialist dailies. The findings underscore a fundamental claim in ecological theory: that "the number of distinct resources sets an upper bound on diversity in the system" (Hannan and Freeman 1977:944). The theory suggests a unidirectional process whereby specialists come to occupy the uninhabited resource space left over as a result of generalist competition. That is, the specialist followers occupy the residual space that the generalist leaders are not able or willing to fill. Less thought has been given to mechanisms flowing the other way. Although our recursive modeling approach is consistent with the spirit of the theory, future work might do well to explore whether some specialist outcomes influence generalist behavior and concentration levels.22 Additionally, future research may focus on yet another feedback loop-that from the organization to the environment. For example, generalists may, in their search for scale, homogenize consumer tastes, thus transforming the resource space itself (Boone and van Witteloostuijn 1995). In this context, advertising campaigns and lobbying activities are examples of generalist behavior that attempt to do precisely this. And vice versa, specialists may influence the taste space to their advantage, mobilizing latent demand for niche products,
22 We triedsimultaneous-equation modelingto test for feedbackeffects from specialistperformanceto generalist concentration. estimates The of the modelswe specifiedwerebroadlyconsistent with our findings here. Unfortunately, we were not able to find theoretically defensibleexogenous instrument variablesthat workedwell, whichcreatedproblems identification. of

which "heterogenizes" the resource environment. Unraveling these possible reciprocal causalities presents an interesting challenge for future research. What are the general implications of the ideas examined here and associated findings? We consider this question on two levels: first, concerning the theory, and second, concerning the general research approach. For resource-partitioning theory, it is instructive to note that some broadly similar models are actively used in other social science contexts. In economics, following Hotelling (1929), a literature has developed on the profit-maximizing location of firms in product space and the associated equilibrium market structure.Here, both the firms' profit-maximizing location and the market's equilibrium structure are determined by the distribution of demand, which in general is assumed to be distributed along a line or a circle (Thisse and Norman 1994). In Hotelling's benchmark case, with a flat demand distribution firms locate close to the market center. This result is known as the principle of minimum differentiation. Sutton's (1991) dual market structure theory provides an interesting comparison to resource partitioning. In this theory, the market center is populated by large productdifferentiation generalists, leaving the market periphery for small low-price specialists as a result of a peaked distribution of demand (i.e., a unimodal distribution implying concentrated resources). In political science, research on political parties also contains some broadly similar ideas. Following the seminal contributions of Downs (1957a, 1957b), a rapidly expanding literature is devoted to explaining political party location issues on the basis of the characteristics of the voter space (Enelow and Hinich 1984). The argument here is that where parties eventually locate depends on the shape of the distribution of voter preferences. In a two-party system with a unimodal-low-variance voter distribution, Hotelling's (1929) principle of minimum differentiation holds true. That is, parties locate in the center. However, in a multiparty system with a polymodal-highvariance voter distribution, each party tends to differentiate away from its rivals, which is the principle of maximum differentiation.

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What distinguishes the Hotellian economics of product differentiation from the Downsian literature about party differentiation is that the former assumes firm-level flexibility while the latter argues that political parties are ideologically immobile. The latter's assumption resembles organizational ecology's central notion of relative inertia (Carroll and Hannan 2000). Interestingly, although these theories originate in different disciplines, they all share a common theme-the shape of the resource distribution determines the rules of the competitive game and ultimately the structure of populations of social systems-and a common prediction-the concentration of resources triggers the escalation of competition for the center. The different outcomes predicted by these models and theories matter because the social consequences of organizational variety may be far-reaching. In many organizational populations, a diversity of organizational forms enhances societal welfare by increasing the range of options open to citizens (in their roles as consumers, voters, volunteers, etc.). This is also true in our context of daily newspapers, as newspaper diversity has long been associated in critics' minds with a politically healthy democracy (Bogart 1981). Generally speaking, entrepreneurial behavior by specialists may be a major vehicle for product innovation and technological progress (Schumpeter 1943). Concerning the general research approach used, we think it is instructive that our findings suggest that much of what happens at the level of competitive processes is triggered initially by the underlying features of the resource space. Different resource spaces produce very different market structures. Although organizations are invariably viewed as open systems, researchers do not commonly analyze the relationship between the features of the resource environment and their consequences on organizational behavior. Moreover, starting conceptually from the underlying resource-space features may be a way to start reconciling findings in many different literatures, from the sociology of social movements and the economics of product differentiation to the politics of party positioning and the partitioning of organizational populations.

The study also suggests that organizational diversity is at least in part an endogenous process driven by concentration among the large generalist players in the market. This goes against the widely accepted intuition that market concentration is some kind of an end state characterizedby a convergence in products, services, organizational structures, and strategies, ultimately reducing competition and consumer choice (e.g., the anti-globalization movement). However, the theory and findings examined here suggest that this view sometimes needs qualification. Although escalating competition among dominant companies may increase standardizationand reduce organizational variety in the short term, it may also sow the seeds for future diversity. In other words, consolidation may set in motion a process of specialization at the population level of analysis, making the coexistence of different forms (i.e., generalists and specialists) a sustainable and even likely outcome.
Christophe Boone is Professor of Organization Theory and Behavior at the Faculty of Applied Economics of the University of Antwerpen in Belgium. His current research spans different levels of analysis with a focus on individual differences and top management team composition and mobility, organizational performance and industry dynamics. He has published in journals such as Journal of Management Studies, Organization Studies, Journal of Economic Psychology and Strategic Management Journal. Glenn R. Carroll is the Laurence Lane Professor of Organizations in the Graduate School of Business and (by courtesy) Professor of Sociology at Stanford University. His most recent book is The Demography of Corporations and Industries, Princeton University Press, 2000 (coauthored with Michael T. Hannan). Arjen van Witteloostuijn is Professor of International Economics and Business at the University of Groningen in the Netherlands. He holds degrees in business, economics and psychology. He has published widely in such international journals as the Academy of Management Journal, Economica, Journal of Economic Behavior and Organization, Journal of Economic Psychology, Journal of Management Studies, Management Science, Organization Studies, and Strategic Management Journal. His current research interests cross-border macro-economics, industrial organization, organizational ecology and social psychology.

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