Toward a capabilities perspective of the small firm

Abstract

This paper attempts to explain the competitive advantages of the small firm in the capabilities perspective. It begins by identifying the kinds of strategic assets possessed by small firms. It argues that entrepreneurship and a simple capital structure are the sources of dynamism for small firms. The relationship between the small firm's resources and its capabilities are then critically examined. In particular, the analysis focuses on the influences of strategic assets on the organizational flexibility ± a significant source of competitive advantage enjoyed by small firms. The competitive attributes of small firms are further discussed in terms of firm's internal and external capabilities. Finally, the relationship between the small firm's capabilities and the choice of technology strategies is examined.

Balancing the management control package of small, rapidly growing firms in turbulent environments

“…Small businesses may be financially vulnerable (Peel et al, 2000) because their revenue stream is dependent on a thin customer base. In firms that are owned and operated independently, the owners are residual claimants of their own managerial performance and can rely on self-monitoring (e.g., Yu, 2001). Decision making is typically concentrated with the owner-manager or to a small team possibly consisting of family members, who tend to act primarily on the basis of intuition and personal experience (Pearson et al, 1990;Davig and Brown, 1992) and control operations informally by interacting closely with employees (e.g., Ekanem and Smallbone, 2007).…”

“…Decision making is typically concentrated with the owner-manager or to a small team possibly consisting of family members, who tend to act primarily on the basis of intuition and personal experience (Pearson et al, 1990;Davig and Brown, 1992) and control operations informally by interacting closely with employees (e.g., Ekanem and Smallbone, 2007). Human resources are by definition few, and strategic choices about the future of the firms depend on the vision and beliefs of the owner-managers (Sexton and VanAuken, 1982;Yu, 2001). The ability of entrepreneurs to process unstructured information usefully in an intuitive way is a distinctive intangible asset of small firms, often led by entrepreneurial founders (e.g., Bird, 1992;Feeser and Willard, 1989;Yu, 2001).…”

“…Human resources are by definition few, and strategic choices about the future of the firms depend on the vision and beliefs of the owner-managers (Sexton and VanAuken, 1982;Yu, 2001). The ability of entrepreneurs to process unstructured information usefully in an intuitive way is a distinctive intangible asset of small firms, often led by entrepreneurial founders (e.g., Bird, 1992;Feeser and Willard, 1989;Yu, 2001).…”

Factors affecting the adoption and implementation of ISO 14001/EMS in Oman: a study of SME sectors

“…In similar lines Anglada (2000) stated that large firm' also feels that to implement these guidelines, the amount of investment and reputation is too overpriced. The SMEs felt that the implementation as part of their "corporate social responsibility" is not a way of guaranteeing success or further enhancement of customer loyalty (Yu, 2001). …”

Employment Growth of New Firms

“…Most studies on dynamic capabilities have focused on large, established firms, despite the flexible, dynamic nature of many small, new firms (cf. Piore and Sabel, 1984;Yu, 2001). Thus far there have been no studies tracing how dynamic capabilities relate to the growth of new firms.…”