Academic journal article The Journal of New Business Ideas & Trends

The Configuration of Entrepreneurial Strategy in Chinese Small Textile Manufacturing Firms

Academic journal article The Journal of New Business Ideas & Trends

The Configuration of Entrepreneurial Strategy in Chinese Small Textile Manufacturing Firms

Article excerpt

Abstract

Purpose - This paper examines the interrelationships among functional area activities in their associatioii with enti'epreneurial strategy in a progressive textile manufacturing vidustry in China.

Design/methodology/approach - The research is based on a sample of 248 small businesses in a textile manufacturing industry in Shaoxing, China. A questionnaire survey of owner s/manag er s in the industry was carried out at a conference of the Shaoxing Textile Industry Association. Partial Least Square was used to analyze the data.

Findings - The findings suggest that the pattern by which functional area activities that comprise entrepreneurial strategy are organized are similar in several respects to such stmtegies in Western economies. Networking features prominently alongside market-based activities of customer retention management and technology as determinants of enti'epreneurial strategy in the Chinese textile manufacturing vidustry. The study also found that activities in these three functional areas mediate the association between other functional area activities such as HRM, operations, planning, and finance and enti'epreneurial stmtegy.

Research limitations/implications - Genei'alization of the findings is limited by the examination of small businesses in one industry sector. Future research is required to assess the application of the findings to other industry sectors.

Practical implications - In a social-based system where relationships are important, the development and maintenance of network ties as well as attention to customers and innovation are ci'itical to pursuit of entrepreneurial sti'ategy.

Originality/value - The study contributes to the limited existing knowledge on enti'epreneurial sti'ategy among small businesses operating in China.

Keywords: entrepreneurship, strategy, networking, functional activities, innovation, China

JEL Classifications: L53; Rll

PsycINFO Classifications: 3000

FoR Code: 1503

Introduction

There is a large body of literature that deals with the meaning of strategy (Bhalla et al., 2009). Strategy has been described as a set of actions (Hill and Jones, 2012), as management's competitive moves and approaches (Thompson et al., 2012), and as the direction and scope of an organization over the long term (Johnson et al., 2008) that guide managers to compete successfully and to grow and improve the organization. Through its strategy, an organization is able to configure its resources and competencies to gain competitive advantage and achieve above average return in the changing environment in which it operates. Henry Mintzberg, an influential management scholar defined strategy as a plan, ploy, pattern, position and perspective (1987). He also argued that none of these descriptions takes precedence over the others. However, the two descriptions often used in the literature and on which this paper is based are pattern of interrelated activities and ploy for outwitting competitors. In the strategic management literature, these have given rise to various strategy archetypes or postures. Common among these are Miles and Snow's (1978) four strategy types: analyzers, prospectors, defenders, and reactors; and Porter's (1980) generic strategies of cost leadership, differentiation, focused cost leadership, and focused differentiation.

In the entrepreneurial and small business literatures, proactive or entrepreneurial strategies and reactive or conservative strategies feature prominently (Miller and Friesen, 1983; Covin, 1991; Chenhall and Morris, 1995; Kotey and Meredith, 1997; Gray, 1997; Covin et al., 2006). Entrepreneurial strategy, defined as comprising innovation, risk-taking and proactiveness, result in superior performance to conservative strategies (Miller and Friesen, 1983; Covin and Slevin, 1989; Covin et al., 2006; Rauch et al., 2009), the latter characterized by risk avoidance, imitation and reactive responses to opportunities and threats (Kotey and Meredith, 1997). …

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