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 enterp rises (SMEs) are affected by the degree of industrial concentration. Invari ably concentration measures are determined for an industry (market structur e) to assess whether this affects market behaviour and hence the market per formance of different sized firms. The analysis of the South African furnit ure industry shows that intra-industry concentration plays little role in e xplaining the poor performance of SMEs. Instead, it is concentration in the furniture retailing industry - which is perhaps in itself a function of co ncentration in the financial sector - which primarily affects their relativ ely adverse performance.