Wal-Marts hurt certain local businesses but not the overall small-business sector, researchers say

The coming of a Wal-Mart or one of the company's Supercenters may spell doom for some local businesses, but the company has had no overall impact on the small-business sector of the U.S. economy, researchers at West Virginia University have concluded after what they say is the first study of its kind.

“Contrary to popular belief, our results suggest that the process of creative destruction unleashed by Wal-Mart has had no statistically significant long-run impact on the overall size and profitability of the small-business sector in the United States,” write economists Russell S. Sobel and Andrea M. Dean. “There is no question that certain specific small businesses fail because of the entry of a Wal-Mart store, and that Wal-Mart has negative impacts on other major retailers like Kmart.”

Sobel and Dean say previous studies, based on county-by-county comparisons of retail businesses, failed to capture the full breadth of the small-business sector. “If a new Wal-Mart store opens, for example, and it causes a local hardware store to fail, and subsequently a new art gallery opens in its place, only the failure of the hardware store is counted by previous studies,” they write. “One business was substituted for another, but this effect would not be reflected in the data because expansions in sectors that do not directly compete with Wal-Mart are, by definition, excluded.”