Initial Price Strategies of Polish Micro and Small Enterprises: An Application of Game Theory for Industrial Organization of the SME Sector

Initial Price Strategies of Polish Micro and Small Enterprises: An Application of Game Theory for Industrial Organization of the SME Sector

Mariusz Maciejczak (Warsaw University of Life Sciences (SGGW), Poland) and Adrian Słodki (Warsaw University of Life Sciences (SGGW), Poland)
Copyright: © 2017 |Pages: 18
DOI: 10.4018/978-1-5225-1949-2.ch007
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Abstract

The sector of micro, small and medium size enterprises is important for any economy. It is important also for Poland. Analyzing the industrial organization of this sector it was confirmed that the owners and managers of such companies are applying strategies, which are rational from their point of view, but not from the perspective of real market conditions. It is argued therefore that the game theory is for them a solution in enhancing competences and performance of their organizations. Based on randomized sample of Polish micro and small companies the paper aimed to find out if the managers apply the game theory rationales when choosing price strategy when enter the market. It was confirmed that they do not and that they don't play Nash equilibrium in the strategic interaction when it comes to the price level. There was applied maxmin strategy, which maximises the worst - case scenario from the game. Thus there is a real chance that if entrepreneurs would analyze the situation with respect of game theory, their strategies would be more accurate and provide better outcomes.
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Data And Methods

Apart from an in-depth critical literature review the author has applied a primary research on Polish micro and small companies, which were analysed by the game theory assumptions. For the purpose of the study there were 153 Polish entrepreneurs questioned through in depth interviews executed in 2013 and 2014. The sample was selected randomly. All researched companies operated locally in the Mazovia province of Poland. The selection of the companies was limited by two main restrictions: number of employees (not more than 50 workers in the company) and time of presence on the market (at least one year of activity).

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