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The Strategic Orientation of New Businesses

In: Three Decades of Enterprise Culture

Author

Listed:
  • Francis J. Greene
  • Kevin F. Mole
  • David J. Storey

Abstract

From the above quote, it might be thought that the concept of strategy is somewhat esoteric for smaller businesses. However, those who write on small business strategy suggest that everyone starting a new business has to choose ‘where’ and ‘how’ to compete (Hofer, 1975; MacDougall and Robinson, 1990; O’Gorman, 2000). Strategy is then two sets of decisions: first, the decision to compete in a particular industry (the where), and second, the decision concerning what aspects of the business to emphasise (the how). Rumelt (1991) compared the proportion of profits of large business accounted for from the industry structure compared with that from individual business. Although both factors were significant, the biggest contribution proportionately to the profitability of a particular business was from factors that were individual to the business rather than the contribution of the industry. Moreover, for writers on strategy there is an implicit belief in a positive and causative relationship between strategy and performance. The purpose of strategy is to confer competitive advantage so that greater profits accrue to the business with the ‘best’ strategy (Katz and Green, 2007).

Suggested Citation

  • Francis J. Greene & Kevin F. Mole & David J. Storey, 2008. "The Strategic Orientation of New Businesses," Palgrave Macmillan Books, in: Three Decades of Enterprise Culture, chapter 5, pages 106-120, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-28801-0_5
    DOI: 10.1057/9780230288010_5
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