The impact of market orientation on small firm performance: a configurational approach

PurposeIn this study, the authors examine the influence of market orientation on small firms' performance. The authors theorize that the association between market orientation and small firm performance provides an incomplete picture in a competitive environment. The application of configuration approach which involves simultaneous consideration of market orientation, strategic flexibility and competition intensity is crucial to examine driver of firm performance.Design/methodology/approachThe sample of the research study consists of 272 small firms from an emerging economy, India. Ordinary least squares regression has been used to investigate the hypothesized relationships.FindingsThe authors noted that the three-way interaction between market orientation, strategic flexibility and competition intensity elucidates variance in small firm performance over and above a contingency model and a direct relationship.Research limitations/implicationsThe findings contribute to the existing literature by exhibiting the effect of market orientation on firm performance. The configuration model suggests that small firms can outperform competitors in a lower competitive environment if they have high market orientation and high strategic flexibility investment. To leverage market opportunities and achieve better firm performance, small firms’ owners should analyze the usefulness of current capabilities in a changing competitive environment concurrently and align market orientation to those conditions.Originality/valueThe strategic management and marketing literature suggests that relationship between market orientation and performance is ambiguous. The findings offer insights to managers regarding the appropriate use of strategic flexibility in leveraging the benefits of market orientation in a highly competitive environment. Furthermore, by collecting data from the context of an emerging economy, India, the authors attempt to strengthen the applicability of market orientation in different contexts.

A Theoretical Approach Exploring Knowledge Transmission Across Generations in Family SMEs

This paper explores, by adopting a theoretical approach, if and how the knowledge sharing process between the generations involved in business succession is actually accomplished. This paper also highlights the negative consequences of overlooking knowledge sharing process. In spite of existing previous empirical findings, this paper suggests that small firm dimensions and everyday side-by-side working activities do not ensure effective knowledge sharing processes. Finally, this paper also provides insights in order to shift from the 'how' of the knowledge sharing process to the 'why' this process fails, suggesting both cognitive and cultural explanations.

Private firm performance: do women directors matter?

Purpose This paper aims to examine the relationship between board gender diversity and private firm performance. Design/methodology/approach The authors test the association between board gender diversity and private firm performance by estimating pooled multivariate regressions using an unbalanced panel data set of 115,253 firm-year observations. Findings The authors find that younger, less busy and local women directors enhance private firm performance. Firms with 40% or more women directors report triple the economic benefits compared to boards with at least 20% women directors. Considering firm size, women directors significantly increase small firm profitability, and the effect is more pronounced for high-risk firms. Greater board gender diversity enhances small firm performance as the monitoring role of women directors benefits the firm even in the presence of busy men directors. Consistent with the agency theory framework, the authors find that women directors improve small firm profitability in the presence of agency costs. Research limitations/implications Due to the lack of availability of data about private firms, many factors are not directly observable. The analysis uses accounting-based performance measures that may be subject to managerial discretion. Nevertheless, the authors report highly significant results using cash-based performance measures that substantiate the overall findings. Practical implications The results of the present study point to the need for private firms to increase board gender diversity and consider women director busyness, age, nationality and firm size when making board director appointments. Originality/value This study adds to the scarce existent literature investigating private firms. The results contribute to the understanding of gender-diverse boards as well as the attributes of women directors that enhance private firm performance.

Small firm coopetition – the missing links: coopetitive tension, balance and value

Purpose This paper aims to explore small firm perceptions of coopetition, focusing on coopetitive tension, balance and value appropriation realised in dyadic relationships, not considered holistically in previous research. Design/methodology/approach The authors use seven cases of small firms as the empirical foundation of this study and analysed data thematically. Findings The findings show that precursors to coopetitive tension in dyads influence friction in these relationships, as firms seek to achieve balance. Balance is dynamic as firms continuously appraise their positions to determine the benefits realised from coopetition. The extent to which firms act cooperatively or competitively is influenced by their perception of fair value appropriation for sustained coopetitive relationships. Research limitations/implications Because of the research design findings are not generalisable but provide insight into small firm coopetitive relational dynamics. Future research should explore how industry differences influence firms’ perceived precursors to coopetitive tension and value appropriation based on boundary conditions. Practical implications Small firms can proactively address coopetitive tension by developing relationships with potential partner firms through trialling smaller projects and increasing awareness of how their competitive or cooperative behaviours might influence the actions of their counterpart. Originality/value This study advances a theoretical framework integrating coopetitive tension, balance and value appropriation, as opposed to earlier fragmented approaches. The framework reveals that precursors to coopetitive tension are continuously appraised as firms act in cooperative or competitive ways. These interactions imply that firms will take a position of balance that provides complementary benefits.

Towards the Underlying Theories of Small Firm Growth: A Literature Review

As a pre-condition for the economic growth of a country, the concept of firm growth has emerged as a critical strategic issue for small businesses from the strategic management perspective. While some literature reviews have been conducted on small firm growth, a comprehensive review of theories emphasizing the association of intangible resources with the growth of small firms has not been conducted. This study aims to provide a literature review of extant theoretical perspectives of small businesses literature. For the review, materials are collected and extracted from various online databases, and results are analysed using classifier variables. Five theories of firm growth, namely, the resource-based theory, knowledge-based theory, dynamic capabilities theory, upper echelon theory and resource-dependency theory, are selected to review, associating the present research aim. The theories are compared using key attributes and outcomes. A clear direction towards an optimum theory to underpin the small firms’ growth has been provided from a resource-management perspective. By validating various theoretical perspectives to explain small business growth, the present study provides first-hand insights for managers to formulate strategies and creates a cornerstone for future empirical studies.