From Michael E. Porter’s classic Competitive Strategy: Techniques for Analyzing Industries and Competitors:
Overcoming fragmentation can be a very significant strategic opportunity. The payoff to consolidating a fragmented industry can be high because the costs of entry into it are by definition low, and there tend to be small and relatively weak competitors who offer little threat of retaliation… If [any] fundamental block to consolidation can be somehow overcome, this often triggers a process by which the entire structure of the industry changes.
One of the great travesties of the modern US economy has been the pursuit of profitable mediocrity through consolidation. We have fewer companies with bigger market caps to be sure, the biggest in the whole world, but I’m not convinced that’s where American greatness resides or how we will ensure its continued success.
Porter’s formulation is correct, of course, and yet this conception disregards the distinction between generating simple profit and creating shared value. Healthcare is an easy example where this trend has been disastrous.