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Introduction
Scholars and practitioners agree that a sound business definition is important. By explicitly considering their business domain, firms may improve their competitor analysis and streamline their competitor intelligence. Furthermore, significant threats and opportunities will be detected on a more timely basis, and the formulation of appropriate short-term tactics and longterm strategy will have a better foundation (Sidhu, 2004). Delineating market boundaries is also a prerequisite for determining a firm's market share (Curran and Goodfellow, 1989). Business definition can affect the perception of strategic choices or options, and ultimately the bottom line.
Despite its importance, only a few studies discuss how firms determine their business domain and the performance implications of that (implicit or explicit) choice. One purpose of this paper is to help fill that gap. The first section elaborates on the concepts of business domain and business definition. The second summarizes prior research and how thin it appears to be. The third section describes the Belgian electrical wholesale sector. A fourth section presents the analytical framework, and the final section presents research results and some conclusions. The paper is written mainly from the viewpoint of a single business firm or a business unit within a multi-business company.
The Conceptual Framework
Though many companies define their competitive arena rather by accident than design (Weinstein, 1994), we may - from an outsider research viewpoint - measure the competitive positioning of a firm objectively with hard data (cf. infra). A firm's competitive arena is determined at first by the borders of the industry itself. Drawing industry boundaries is always a matter of degree. In fact, in the case of the Belgian electrical wholesale sector, this paper's research setting, we accepted the comprehensive list of firms provided by the union of Belgian electrical wholesalers. This "long list" is in fact a classification based on product similarity: all wholesalers selling "electronic material" in Belgium are included. The degree to which these firms are direct competitors or not depends on the types of products they sell (e.g., cables or lighting material, etc.), and also on the customer types they target, the geographic reach or location, and their degree of vertical integration. So, at the level of the industry ("the long list"), there is still a lot of heterogeneity. Further...