Custom service: Application and tests of resource-partitioning theory among Dutch auditing firms from 1896 to 1992

This article examines resource-partitioning theory in organizational ecolog y in the context of the Dutch auditing industry. The theory predicts that u nder certain conditions, specialist organizations will proliferate as the o verall industry concentrates and becomes dominated by large generalist firm s. Although Dutch auditing shows long-term trends towards market concentrat ion and a burgeoning specialist sector, the professional service orientatio n of the industry presents some challenges for applying the theory. Accordi ngly, we first reconsider the theory in this new context. Using data on the life histories of (almost) all auditing firms ever to operate in the Nethe rlands, we also test the implications of the theory for exit rates of audit or organizations. Although we find substantial support for the basic theory , it is also apparent that resource-partitioning processes interact with re gulatory changes in the institutional environment in interesting ways.