Effect of Market Share and Production Experience on Company Profitability

Abstract

The effect of market share and production experience on company profitability was studied using data from 94 firms of a computer-assisted business gaming simulation that had advanced through 338 periods. Strong correlations are observed between market share and profitability. Somewhat weaker correlations are observed between production experience and profitability. Both market share and production experience are of strategic importance, but market share has a stronger effect because it is more direct. The results validate both strategy theory and business simulations.