Strategic management of small firms in hostile and benign environments

Abstract

This paper reports the results of a study designed to investigate the effective strategic responses to environmental hostility among small manufacturing firms. Data on environmental hostility, organization structure, strategic posture, competitive tactics, and financial performance were collected from 161 small manufacturers. Findings indicate that performance among small firms in hostile environments was positively related to an organic structure, an entrepreneurial strategic posture, and a competitive profile characterized by a long‐term orientation, high product prices, and a concern for predicting industry trends. In benign environments, on the other hand, performance was positively related to a mechanistic structure, a conservative strategic posture, and a competitive profile characterized by conservative financial management and a short‐term financial orientation, an emphasis on product refinement, and a willingness to rely heavily on single customers.

Tweaking the entrepreneurial orientation–performance relationship in family firms: the effect of control mechanisms and family-related goals

“…We conducted factor analyses to extract the respective dimensions of the multidimensional EO construct (Homburg and Giering 1996). These factor analyses confirmed all three items of Innovativeness (I1 to I3; Covin and Slevin 1989) (Kallmuenzer and Peters 2017) proved to be helpful to retain this EO dimension for further analysis. The factor loadings and Cronbach's Alpha reached satisfying levels for Innovativeness (factor loadings ranging from .75 to .85; a = .72), Proactiveness (factor loadings ranging from .73 to .85; a = .70), RiskTaking (factor loadings ranging from .85 to .88; a = .84), Autonomy (factor loadings ranging from .66 to .87; a = .64) and Competitive Aggressiveness (factor loading .86; a = .63).…”

“…Covin and Slevin 1989), constituting a unidimensional construct where all dimensions have to be present for an EO to exist, or of the five dimensions, adding Autonomy and Competitive Aggressiveness (Lumpkin and Dess 1996), constituting a multidimensional construct where not all dimensions have to be present simultaneously for an EO to exist. This multidimensional EO construct is characterized by ''a propensity to act autonomously, a willingness to innovate and take risks, and a tendency to be aggressive toward competitors and proactive relative to marketplace opportunities'' (Lumpkin and Dess 1996, p. 137).…”

“…The scales to evaluate the EO dimensions (see Table 2) were measured on a sevenpoint semantic differential of two opposed statements, which are based on prior literature (Covin and Slevin 1989;Lumpkin and Dess 2001;Lumpkin et al 2009; Kallmuenzer and Peters 2017), which aimed at capturing ''aspects of the subconstructs that were not included in the previously used scales'' (Lumpkin and Dess 2001, p. 439). This additional item measures the attitude of family firms in competition and addresses previous discussions on the less aggressive competitive behavior of family firms (Deephouse and Jaskiewicz 2013;Gómez-Mejía et al 2007).…”

Entrepreneurial Cognition

“…In fact, some have described these resource-rich industries as producing a tide that raises all boats (Wasserman et al 2001). Less munificent environments (i.e., industries with less environmental capacity) (Dess and Beard 1984), on the other hand, are characterized by intense competition (Aldrich 1979), few exploitable opportunities (Covin and Slevin 1989), and hostility (Khandwalla 1976(Khandwalla , 1977. Consequently, these resource-poor industries are more "selective," and decision makers' choices have a stronger influence on performance outcomes than in more munificent industries (Covin and Slevin 1989;Tushman 1977;Zahra and Covin 1995).…”

Assembling Frameworks for Strategic Innovation Enactment: Enhancing Transformational Agility through Situational Scanning

“…), or other influences (Doz and Kosonen 2008). Competitive advantage comes from obtaining valuable industry foresight (Hamel and Prahalad 1994); however, environmental hostility, in the form of intense competition, overwhelming climates, market commonality, resource similarity, and a lack of exploitable opportunities, threatens an organization's ability to achieve their desired business outcomes (Covin and Slevin 1989;D'Aveni et al 2010). An organization's competitive attitude and capability within its environments should be understood (Alvesson and Lindkvist 1993;Brown and Starkey 1994;Deming 1986;Peters and Waterman 1982;Rousseau 1990;Senge 1990).…”