Academic journal article Journal of Small Business Management

Competitive Dynamics among Service SMEs

Academic journal article Journal of Small Business Management

Competitive Dynamics among Service SMEs

Article excerpt

In an effort to further our understanding of competitive dynamics, the three constructs of firm specialization, environmental munificence, and rivalry intensity are examined in relation to financial performance in service-intensive Small and Medium-Sized Enterprises (SMEs). Using a sample of physician organizations, direct and interaction relationships are empirically examined using multivariate regression analyses. Findings confirm a three-way interaction that exists among these factors in relationship to overall performance; this supports a more complex, configurations approach to competitive dynamics research, particularly among service-intensive SMEs.

Introduction

Competitive dynamics are the actions and counteractions taken by firms visa-vis their rivals (Fosfuri and Giarratana 2009; Canina, Enz, and Harrison 2005; Smith, Ferrier, and Ndofor 2001). Following Schumpeter (1934), research in competitive dynamics has recognized the importance of the "competitive context," which advocates that "firm performance is not simply a function of the strategies and actions a firm undertakes but it must be understood relative to the strategies and actions of rivals" (Smith, Ferrier, and Ndofor 2001, pp. 319). In other words, organizations are innately interdependent.

Taking such an interdependence perspective and drawing on diverse streams of research, there have been numerous studies examining various aspects of the competitive context in relation to firm performance (e.g., Fosfuri and Giarratana 2009; Chen and Miller 1994; Smith et al. 1991). However, limitations in previous competitive dynamics research include a lack of specificity in a variety of industries and inadequate use of multiple theoretical perspectives (Smith, Ferrier, and Ndofor 2001). Acknowledging these limitations, we take a multicontingency and configurational perspective to consider two classic strategic positioning decisions managers must make regarding their respective organizations: product/service selection given the customer target and choice of geographic location (Baum and Haveman 1997; Baum and Singh 1994). These interrelated decisions primarily depend on the organizational leader's performance expectations regarding the relationships between three specific factors: (1) the economic characteristics (i.e., resource availability) of the firm's environment, (2) the number and type of products/services the firm offers, and (3) the rivalry intensity of the firm's industry (Mazz.eo 2002). Though each of these factors is intuitively related to firm performance and has been examined in previous literature, only a limited amount of research has examined them together or accounted for possible interactions (e.g., McGahan and Silverman 2006; Mintzberg 1978). Accordingly, it is beneficial to continue to examine the interdependencies that may exist between strategic and geographic positioning, particularly in industries that are more dependent on these key decisions for success (Smith, Ferrier, and Ndofor 2001). For instance, understanding the interdependencies between strategy and geography is particularly important in service-intensive industries because competition is generally localized and services must often be delivered directly to the consumer.

Specifically accounting for strategic and geographic positioning choices, previous research has shown particular attention to the lodging industry and issues surrounding differentiation and agglomeration (e.g., Canina, Enz, and Harrison 2005; Kalnins and Chung 2004; Chung and Kalnins 2001; Baum and Haveman 1997; Baum and Mezias 1992). Understandably, most of these studies have used an organizational ecology perspective (e.g., Baum and Oliver 1996; Romanelli 1989), placing primary emphasis on founding rates and organizational survival (e.g., Baum and Oliver 1996). However, by their very nature, population ecology studies are often limited in that they consider the population as the unit of analysis and therefore largely remove the organization itself as the focal point of study (Lomi 1995). …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.