Chicago Booth Review blog:
The market power of `superstar? companies is growing
26 October 2017
The standard metric of monopoly power is the concentration ratio, or the share of the market accruing to the top four (or 20) firms. In a 2017 paper, MIT’s David Autor, Christina Patterson, and John Van Reenen, along with University of Zurich’s David Dorn and Harvard’s Lawrence F. Katz, compute the four- and 20-firm concentration ratios for six sectors of the US economy: manufacturing, wholesale trade, retail trade, services, finance, and utilities and transportation, for 1982–2012. Together, the six sectors account for 676 industries, nearly 4 million companies, and 80 percent of total private-sector employment. … In 2010, the US Census Bureau conducted its first Management and Organizational Practices Survey. Nearly 40,000 manufacturing establishments participated in MOPS, which used 36 multiple-choice questions to poll businesses on their management practices (processes for setting targets, monitoring performance, and providing incentives), organizational practices (structure, span of control, and the use of information), and basic characteristics (the number of managers and nonmanagers, educational attainment of managers, and union participation). Stanford’s Nicholas Bloom, MIT’s Erik Brynjolfsson and Van Reenen, Lucia Foster and Ron Jarmin of the US Census Bureau, and Tel Aviv University’s Itay Saporta-Eksten analyzed this data set by constructing an aggregate score for each manufacturer’s answer to the 36 questions (normalized to a 0–1 scale). As their results demonstrate, there is enormous dispersion in the quality of management and organizational practices across US firms.