Interfirm segregation

Date and country of first publication

1995
None

Definition

At its current state, this definition has been generated by a Large Language Model (LLM) so far without review by an independent researcher or a member of the curating team of segregation experts that keep the Segregation Wiki online. While we strive for accuracy, we cannot guarantee its reliability, completeness and timeliness. Please use this content with caution and verify information as needed. Also, feel free to improve on the definition as you see fit, including the use of references and other informational resources. We value your input in enhancing the quality and accuracy of the definitions of segregation forms collectively offered in the Segregation Wiki ©.

Interfirm segregation refers to the separation and division of firms based on various factors such as industry, market segment, or geographic location. It is a phenomenon where firms with similar characteristics tend to cluster together.

There are several reasons why interfirm segregation occurs. One reason is the need for collaboration and knowledge sharing within the same industry. Firms that operate in the same industry tend to face similar challenges and can benefit from sharing information and resources.

Another reason for interfirm segregation is market differentiation. Firms may specialize in specific market segments or target different customer groups, leading to segregation based on their target markets.

Geographic location is also a factor contributing to interfirm segregation. Firms often cluster together in specific regions or cities due to factors such as proximity to suppliers or customers, access to skilled labor, or regional industry specialization.

Interfirm segregation can have both positive and negative consequences. On the positive side, it can foster collaboration and innovation within the industry, promote competition, and create economies of scale. On the negative side, it can lead to information asymmetry, limited access to resources for firms outside the cluster, and reduced competition in the local market.

To overcome the negative effects of interfirm segregation, policymakers and industry stakeholders can promote cross-industry collaboration, encourage knowledge sharing and networking among firms, and provide support to firms located outside major clusters.

Further reading

Carrington W.J.; Troske K.R. (1995) "Gender segregation in small firms", Journal of Human Resources, 30(3), pp. 503-533. . DOI: [htttp://doi.org/10.2307/146033 10.2307/146033]

Carrington W.J.; Troske K.R. (1998) "Interfirm segregation and the black/white wage gap", Journal of Labor Economics, 16(2), pp. 231-260. University of Chicago Press. DOI: [htttp://doi.org/10.1086/209888 10.1086/209888]

Müller T.; Ramirez J. (2009) "Wage inequality and segregation between native and immigrant workers in Switzerland: Evidence using matched employee employer data", Research on Economic Inequality, 17(), pp. 205-243. . DOI: [htttp://doi.org/10.1108/S1049-2585(2009)0000017014 10.1108/S1049-2585(2009)0000017014]