Major Flaws Uncovered in Study Claiming Wal-Mart Has Not Harmed Small Business

Date: 1 Dec 2008 | posted in: Retail | 1 Facebooktwitterredditmail

“We can firmly conclude that there is no evidence that Wal-Mart has had a significant impact on the overall size, growth, or profitability of the U.S. small business sector,” asserts a new study published in the October issue of the academic journal Economic Inquiry. The authors of “Has Wal-Mart Buried Mom and Pop?” are Dr. Russell Sobel, chair of Entrepreneurial Studies at West Virginia University, and Andrea Dean, a Kendrick Fellow in WVU’s Economics Department.

The study’s sensational findings have attracted significant local and national media attention, including featured interviews with Dr. Sobel in U.S. News & World Report and on Fox television, and blog articles on the web sites of Business Week and the Wall Street Journal. A shorter version of the study ran as the cover story in Regulation, the quarterly magazine of the Cato Institute.

Wal-Mart has also leaped on the study, producing a fact sheet that highlights key findings and quotes from the study. The fact sheetis being distributed in communities where the company is proposing new supercenters.

A close inspection of the study by the Institute for Local Self-Reliance, however, found fatal flaws.  The study, for example, relies on the wrong US Census dataset.  Using the correct data, our analysis shows that the number of independent retailers fell as Walmart grew between 1982 and 2002.

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Stacy Mitchell

Stacy Mitchell is co-director of the Institute for Local Self-Reliance and directs its Independent Business Initiative, which produces research and designs policy to counter concentrated corporate power and strengthen local economies.