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Paper short abstract:

This paper considers a relevant and alternative framework to explain the behaviour of large corporations in South Africa today. Domestic competition will be put in the broader context of global cities research.

Paper long abstract:

Two paradigms are dominant in economic explanations of the competitive behaviour of firms in South Africa. One extreme is rooted in the structure-conduct-performance (SCP) framework, emphasising the ability of corporations to persistently charge 'excessive' mark-ups relative to their peers (cf. Aghion, Braun and Fedderke, 2008). Clegg (2006) suggests that the explanatory power of SCP is debatable, and Zalk (2014) describes the specific approach taken in the case of South Africa as logically flawed. The other extreme is in a Structuralist tradition, focusing on the historical and contextual factors explaining the specificity of competition in the broader context of the development of South Africa.

More recent studies in the industrial organisation tradition are more nuanced, but the scope remains narrow. Similarly, the mineral-energy complex approach has evolved to take account of financialisation. This explains historic types of behaviour extensively, but since MEC is empirically based, the explanation is not as comprehensive for more recent types, raising the question of its applicability today.

First, this paper uses the case of Bell Equipment to explore the problems inherent in characterising competition in this polarised way. Second, it tries to understand whether the problem itself is still the same since key empirical features of companies' behaviour lie outside the scope of either framework. Third, the paper asks about the relevant framework to explain the behaviour of corporations in South Africa, considering domestic competition in the broader context of global cities research. Fourth, an alternative is proposed and new insights and limits are discussed.