Concentration, competition policy and the role of small and medium‐sized enterprises in South Africa's industrial development

It is widely recognised that the prospects of small and medium‐sized enterprises (SMEs) are affected by the degree of industrial concentration. Invariably concentration measures are determined for an industry (market structure) to assess whether this affects market behaviour and hence the market performance of different sized firms. The analysis of the South African furniture industry shows that intra‐industry concentration plays little role in explaining the poor performance of SMEs. Instead, it is concentration in the furniture retailing industry ‐ which is perhaps in itself a function of concentration in the financial sector — which primarily affects their relatively adverse performance.