Competence or flexibility? Survival and growth implications of competitive strategy preferences among small US businesses
Abstract
Purpose
Research in strategic management has provided a wealth of contributions to the study of competition between firms, yet most strategic management theories were developed and refined for large firm contexts. This suggests the assumed theoretical relationships between strategy preference and performance may break down in the small business setting.
Design/methodology/approach
The paper uses a data set from the National Federation of Independent Businesses to test hypotheses relating the strategy preferences of 754 small firms with the performance outcomes of survival and expected growth.
Findings
Small businesses can focus on both survival and growth when they pursue competency-based strategies, but they risk their very survival when pursuing flexibility-based strategies. Virtually all small firms pursue strategies to compete, but some of the strategies they follow to pursue growth endanger their survival.
Research limitations/implications
Because of life-cycle and resource endowment factors, researchers should carefully parse differences between large and small firms when studying the relationship between strategy preferences and organizational performance.
Practical implications
Small business owners should be aware that their choices of strategies to pursue growth may lead to unintended consequences, such as the demise of their firms.
Originality/value
The paper demonstrates to researchers and practitioners how strategic preferences that presumably allow larger firms both to survive and grow do not have the same effects for smaller firms. The paper establishes boundary conditions for the effectiveness of flexibility strategies on performance in terms of firm size.
Keywords
Acknowledgements
The author gratefully acknowledges comments from Paul Drnevich, Rich Makadok, and Jeffrey Martin on an early version of this manuscript. The author is also grateful to the National Federation of Independent Businesses for sharing their data set on competitive strategies in small US firms.
Citation
E. Armstrong, C. (2013), "Competence or flexibility? Survival and growth implications of competitive strategy preferences among small US businesses", Journal of Strategy and Management, Vol. 6 No. 4, pp. 377-398. https://doi.org/10.1108/JSMA-06-2012-0034
Publisher
:Emerald Group Publishing Limited
Copyright © 2013, Emerald Group Publishing Limited