Small Businesses as Captive Companies: Business Strategy and Firm Performance Among U.S. Auto Suppliers

Authors

  • Aaron A. Buchko Bradley University

Abstract

Small business firms frequently are in the position of a "captive" company--a firm  whose operations are undertaken for the benefit of some more powerful organization. This places unique demands on the planning and strategy activity. An empirical study of business strategy and firm performance in a sample of small auto supplier firms (N = 67) found  significant differences in the business strategies  of  high-performing firms   when  compared  to the  business strategies  of low-performing  firms.   The  nature  of  these  differences  is presented ,  and  implications for  the formulation  of effective business strategies in captive small businesses are discussed.

References

Anderson, C. R., & Paine, F. T". 0975). PIMS: A reexamination. Academy of Management Journal , 3, 602-612. ,

Anderson, C. R., & Zeitharnl, C. P. (1984). Stage of the product life cycle, business strategy, and business performance. Academy of Management Journal, 27, 5-24.

Buzzell , R. D., & Gale, B. T. ( ill87). The PIMS principles: Linking strategy to performance. New Yori<: Free Press.

Carr, C. (1988). Strategy alternatives for vehicle component manufacturers. Long Range Planning , 21 , 86-97.

Clari<, K.B. (1989). Project scope and project performance: The effect of pans strategy and supplier involvement on product development. Management Science, 35 , 1247-1263.

Dess, G., & Robinson, R. B., Jr. (1984). Measuring organizational performance in the absence of objective measures. Strategic Management Journal, 5 , 265-273.

ELM International (1988). The ELM guide to U .S . automobile sourcing . Lansing, Ml: ELM International.

Frazier, G. (1983). On the measurement of inter firm power in channels of distribution. Journal of Marketing Research , 20 , 158-166.

Frazier, G. L., Gill , J. D., & Kale, S. H. (1989). Dealer dependence levels and reciprocal actions in a channel of distribution in a developing country. Journal of Marketing , 53, 50-69.

Hayden, C. (1986). The handbook of strategic expertise. New York: Free Press. Heaney, K . (1989). Supplier shakeout. Automotive News, June 12, 1989, E30-E32.

Heaney, K. (1988). The supply world gets smaller. Automotive News, July 18, 1988, E2-E4. Hitt, M., & ireland, D. (1981 ). Corporate distinctive competence, strategy, industry, and performance. Strategic Management Journal, 6, 273-293.

Hofer, C. W. ( 1975). Toward a contingency theory of business strategy. Academy of Management Journal , 18 , 784-810.

Hofer, C. W., & Schendel, D. (1978). Strategy formulation: Analytical concepts. St. Paul, MN: West Publishing.

Huber, G. P., & Power, J. D. (1985). Retrospective reports of strategic-level managers. Strategic Management Journal, 6 , 171-180.

Mintzberg, H. (1988). The 5 P's of planning. In J .B. Quinn, H. Mintzberg, & R. M. James (Eds.), The strategy process (pp. 13-iO). New York: Prentice-Hall.

Motor Vehicle Manufacturers Association (1989). MVM A motor vehicle facts & figures '88. Detroit, Ml: Motor Vehicle Manufacturers Association.

Moyer, R. (1982). Strategic planning for the small firm. Journal of Small Business Management, 20, 3, 8- I 4.

Orpen, C. (1985). The effects of long-range planning on small business performance: A further examination. Journal of Small Business Management , 23, 1 , 16-23.

Pfeffer, J .. & Salancik, G. R. ( 1978). The external control of organizations. New York: Harper and Row.·

Plumb, S. E. (1989, July). Suppliers surveyed: How close is too close? Ward's Auto World , pp. 51-58.

Porter, M. E. (1980). Competitive strategy. New York: Free Press. Porter, M. E. (1985). Competitive advantage. New York: Free Press.

Robinson, R. B. Jr., & Pearce, J. A. II (1988). Planned patterns of strategic behavior and their relationship to business-unit performance. Strategic Management Journal , 9 , 43-60.

Robinson, R. B. Jr., Pearce, J. A. II, Vozikis, G. S., & Mescon, T. S. (1984). The relationship between stage of development and small firm planning and performance. Journal of Small Business Management , 22 , 2, 45-52.

Sapienza, H. J., Smith, K. G., & Gannon, M. J. (1988). Using subjective evaluations of organizational performance in small business research. American Journal of Small Business, 12 , 3, 45-53.

Stoner, C., & Fry, F. (1987). Strategic planning in the small business. Cincinnati: South-Western Publishing Company. Targets for Excellence. (1987). Detroit, MI: General Motors Corp.

'The 1990 Business Week 1000". Business Week, April 13, 1990. Thompson, J. D. (1967). Organizations in action. New York: McGraw-Hill.

Unni, V. K. (1981 ). The role of strategic planning in small businesses. Long Range Planning , 14, 54-58.

VanHoom, T. P. (1979). Strategic planning in small and medium-sized com panies. Long Range Planning , 12, 84-91.

Venkatraman, N., & Ramanujam, V. (1986). Measurement of business performance in strategy research: A comparison of approaches. Academy of Management Review, JO , 421-434.

Welsh, J. A., & White, J. F. (1981 ). A small business is not a little big business. Harvard Business Review, 59, 4, 18-32.

Downloads

Published

1992-01-17

Issue

Section

Articles

How to Cite

Small Businesses as Captive Companies: Business Strategy and Firm Performance Among U.S. Auto Suppliers. (1992). Journal of Small Business Strategy (archive Only), 3(1), 31-44. https://libjournals.mtsu.edu/index.php/jsbs/article/view/427