How smaller firms can outperform their peers

Abstract

Purpose

This paper aims to study the performance of small- and medium-sized enterprises (SMEs) within the French hospitality sector and to determine what firm characteristics (particularly entrepreneurship orientation and strategic initiatives) explain differences in performance. The study is based on data from hotels and differentiates between high- and low-performing businesses. The study examines performance differences relating to entrepreneurial orientation and strategic initiatives. The conclusions indicate that there are differences between high- and low-performing groups, and overall, it seems that there is a relationship between high performance and entrepreneurial, well-planned strategic initiatives.

Design/methodology/approach

This study uses a structured telephone interview procedure to solicit respondents from owner/operators of the hotels throughout the region. The process for gathering data resulted in 66 hotels providing complete responses during interview sessions.

Findings

The primary intent of this study was to examine the relationships between entrepreneurial orientation and strategic initiatives with SME performance. The findings suggest that differences exists. Interestingly, we found that better performing group used more people and tended to see business environment much more favorable compared to low-performing group.

Originality/value

Entrepreneurial orientation research suggest that SMEs firms operate distinct from other ones given different patterns used. These differences come from how SMEs leverage the proactiveness, risk-taking and innovativeness dimensions of entrepreneurial orientation in a firm. Waal and his colleagues suggested that activities associated with creating a high-performing organization using strategic initiatives will lead to subsequent high financial performance. The research found here would also support such an assertion. However, care should be taken in interpreting the generalizability of these results given the limited number of hotels participating in this study; more work is still needed.

Citation

Pett, T.L., Errami, Y. and Sié, L. (2019), "How smaller firms can outperform their peers", Journal of Business Strategy, Vol. 40 No. 2, pp. 42-49. https://doi.org/10.1108/JBS-12-2017-0178