Structure-Conduct-Performance Paradigm of Strategy
Structure-Conduct-Performance
Definition:
The Structure-Conduct-Performance (S-C-P) paradigm of strategy assumes market structure would determine firm conduct which would determine performance.
Structure: The term structure in this model refers to industry structure, measured by such factors as the number of competitors in an industry, the heterogeneity of products, and the cost of entry and exit.
Conduct: Conduct refers to specific firm actions in an industry, including price taking, product differentiation, tacit collusion, and exploitation of market power
Performance: Performance in the S-C-P model has two meanings: the performance of individual firms and the performance of the economy as a whole. According to the structure-conduct-performance paradigm, the market environment have a direct, short term impact on the market structure. The market structure then has a direct influence on the firm's economic conduct which in turn affects its market performance. Therein, feedback effects occur such that market performance may impact conduct and structure or conduct may affect on the market structure.
Extra note on S-C-P model
The Structure-Conduct-Performance (SCP) paradigm is considered to be an important tool of contemporary industrial economics. It states that market performance depends on various elements of market structure, such as entry conditions, market concentration, and number and size of firms, as well as different forms of firm conduct and strategic behavior, such as capacity utilization, advertising and collusion. This study elucidates the basic ideas of SCP theory and reviews important studies pertaining to both developed and developing economies that are based on the SCP paradigm, while exploring the relevance of the SCP paradigm to the Indian industry. The relationship between market concentration and market performance in the Indian industry is discussed in depth, as is the
Definition:
The Structure-Conduct-Performance (S-C-P) paradigm of strategy assumes market structure would determine firm conduct which would determine performance.
Structure: The term structure in this model refers to industry structure, measured by such factors as the number of competitors in an industry, the heterogeneity of products, and the cost of entry and exit.
Conduct: Conduct refers to specific firm actions in an industry, including price taking, product differentiation, tacit collusion, and exploitation of market power
Performance: Performance in the S-C-P model has two meanings: the performance of individual firms and the performance of the economy as a whole. According to the structure-conduct-performance paradigm, the market environment have a direct, short term impact on the market structure. The market structure then has a direct influence on the firm's economic conduct which in turn affects its market performance. Therein, feedback effects occur such that market performance may impact conduct and structure or conduct may affect on the market structure.
Extra note on S-C-P model
The Structure-Conduct-Performance (SCP) paradigm is considered to be an important tool of contemporary industrial economics. It states that market performance depends on various elements of market structure, such as entry conditions, market concentration, and number and size of firms, as well as different forms of firm conduct and strategic behavior, such as capacity utilization, advertising and collusion. This study elucidates the basic ideas of SCP theory and reviews important studies pertaining to both developed and developing economies that are based on the SCP paradigm, while exploring the relevance of the SCP paradigm to the Indian industry. The relationship between market concentration and market performance in the Indian industry is discussed in depth, as is the