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Strategy and small firm performance

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  • Ron Kemp
  • Petra Gibcus

Abstract

The objective of this study is to contribute to the debate on the relationship between strategy and firm performance, especially for SMEs. The research questions are: Can different strategic groups of SMEs be identified and to what extent does the selected strategy influence the firm performance of SMEs?For the empirical analysis, data from the SME panel of EIM is used. The analysis shows that four distinct groups of companies can be identified: service differentiators, stuck-in-the-middle companies, innovation and marketing differentiators and process differentiators. Companies in the first two groups are relatively small and are less active with strategic issues like planning etc. Companies in the last two groups are relatively large and deal with strategy in a more professional way (written-down strategy, regular updates et cetera). If controlled for size, there are no significant differences in terms of turnover and profit.

Suggested Citation

  • Ron Kemp & Petra Gibcus, 2003. "Strategy and small firm performance," Scales Research Reports H200208, EIM Business and Policy Research.
    • Handle: RePEc:eim:papers:h200208
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    File URL: http://www.entrepreneurship-sme.eu/pdf-ez/H200208.pdf
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    Cited by:

    1. Noori, Javad & Bagheri Nasrabadi, Mahdi & Yazdi, Najmoddin & Babakhan, Ali Reza, 2017. "Innovative performance of Iranian knowledge-based firms: Large firms or SMEs?," Technological Forecasting and Social Change, Elsevier, vol. 122(C), pages 179-185.
    2. Anthony Abiodun Eniola & Harry Entebang, 2015. "Government Policy and Performance of Small and Medium Business Management," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 5(2), pages 237-248, February.
    3. Aysegül DÜZGÜN, 2020. "İşletme Üst Düzey Yöneticilerinin Stratejik Liderlik Algılarının Değerlendirilmesi Üzerine Nitel Bir Çalışma," Istanbul Management Journal, Istanbul University Business School, vol. 0(88), pages 169-200, June.
    4. Jeffrey, Stephen & Diller, Heike & Fiedler, Marina, 2016. "Closing the strategy-performance gap: The role of communication fit and distraction," Passauer Diskussionspapiere, Betriebswirtschaftliche Reihe B-25-16, University of Passau, Faculty of Business and Economics.
    5. Khorshed Alam & Adewuyi A. Adeyinka, 2021. "Does innovation stimulate performance? The case of small and medium enterprises in regional Australia," Australian Economic Papers, Wiley Blackwell, vol. 60(3), pages 496-519, September.
    6. Fatima Alfa Tahir & Fatimah Usman Inuwa, 2019. "Empirical Investigation of the Factors Affecting Micro, Small and Medium Scale Enterprises Performance in Borno State, Nigeria," International Business Research, Canadian Center of Science and Education, vol. 12(4), pages 30-39, April.
    7. Adrian Hauser & Fabian Eggers & Stefan Güldenberg, 2020. "Strategic decision-making in SMEs: effectuation, causation, and the absence of strategy," Small Business Economics, Springer, vol. 54(3), pages 775-790, March.

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