SME Performance: A Case for Internal Consistency

  • Timothy L. Pett Wichita State University
  • James A. Wolff Wichita State University

Abstract

We develop the theoretical arguments for a contingent path relationship among variables representing the environment, capabilities, strategic orientation, and firm performance. The premise underpinning our study is that internal consistency or fit among contingent relationships yields higher performance levels. Structural equation modeling allows for the statistical examination of multiple relationships simultaneously to test our hypotheses. We find support for the notion that internally consistent paths lead to higher levels of performance for a sample of 181 mid-western small and medium-sized manufacturing firms. A discussion of the implications for these findings with respect to managerial practice and future research is provided.

Downloads

Download data is not yet available.

References

Acs, Z.J. &Yeung, B. (1999). Conclusion. In Acs, Z.J. & Yeung, B. (Eds) Small and Medium-Sized Enterprises in the Global Economy, 164-173. University of Michigan Press: Ann Arbor, MI.

Anderson, J. C, & Gerbing, D. W. (1988). Structural equation modeling in practice: A review and recommended two-step approach. Psychological Bulletin, 103(3), 411-423.

Anderson, O. (1993). On the internationalization process of firms: A critical analysis. Journal of International Business Studies, 24(2), 209-231.

Astley, W.G. and Van de Ven, A.H. (1983). Central perspectives and debates in organization theory. Administrative Science Quarterly, 28, 245-273.

Barkema, H., Bell, J., & Pennings, J. (1996). Foreign entry, cultural barriers and learning. Strategic Management Journal, 17(2), 151-166.

Barney, J.B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17, 99-120.

Bedeian, A.G. (1990). Choice and determinism: A comment. Strategic Management Journal, 11, 571-573.

Bilkey, WJ. & Tesar, G. (1977). The export behavior of smaller-sized Wisconsin manufacturing firms. Journal of International Business Studies, 8(Spring/Summer), 93-98.

Buckley, P.J. & Mirza, H. (1997). Introduction. In Buckley, P.J., Campos, J., Mirza, H. and White, E. (Eds) International Technology Transfer by Small and Medium-Sized Enterprises: Country Studies, 1-5. Macmillan: London.

Campbell, A. J. (1996). The effects of internal firm barriers on the export behavior of small firms in a free trade environment. Journal of Small Business Management 34, 50-58.

Chaganti, R., Chaganti, R. and Mahajan, V. (1989). Profitable small business strategies under different types of competition, Entrepreneurship Theory and Practice, 13(1), 21-35.

Chandler, G. & Hanks, S. (1994). Market attractiveness, resource-based capabilities, venture performance and venture performance. Journal of Business Venturing, 9, 331-349.

Covin, J.G. (1991). Entrepreneurial vs. conservative firms: A comparison of strategies and performance. Journal of Management Studies, 25(5), 439-462.

Covin, J.G. & Covin, T.J. (1990). Competitive aggressiveness, environmental context, and small firm performance. Entrepreneurship Theory and Practice, 14(Summer), 35-50.

Covin, J. G. & Slevin, D. P. (1989). Strategic management of small firms in hostile and benign environments. Strategic Management Journal, 10(1), 75-87.

Fornell, C. and Larcker, D. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marking Research, 18(February), 39-50.

Galbraith, J.R. and Kazanjian, R. (1986), Strategy Implementation: Structure, Systems and Process (2nd edition), New York: West.

Gamier, G. (1982). Comparative export behavior of small Canadian firms in the printing and electrical industries. In M.R. Czinkota & G. Tesar (Eds), Export Management: An International Context, 113-131. New York: Praeger.

Hambrick, D., Geletkanycz, M., & Fredrickson, J. (1993). Top executive commitment to the status quo: Some tests of its determinants. Strategic Management Journal, 14(6), 401-418.

Hrebiniak, L.G. and Joyce, W.F. (1985). Organizational adaptation: Strategic choice and environmental determinism. Administrative Science Quarterly, 30, 336-349.

Iansiti, M. (1995). Shooting the rapids: Managing product development in turbulent environments. California Management Review, 38(1), 37-58.

Jaffe, E., Pasternak, D.H. & Nebenzahl, I. (1988). The export behavior of small Israeli manufacturers. Journal of Global Marketing, 2(2), 27-49.

Johansen, J. & Vahlne, J.E. (1977). The internationalization process of the firm: A model of knowledge development and increasing foreign commitments. Journal of International Business Studies, 8(1), 23-32.

Kaynak, E., Ghauri, P.N. & OlofssonBredenlow, T. (1987). Export behavior of Swedish firms. Journal of Small Business Management, 25(2), 26-32.

Koh, A.C. (1989). An evaluation of the current marketing practices of United States firms. Developments in Marketing Science, 12, 198-203.

Kyriakopoulos, K. & de Ruyter, K. (2004). Knowledge stocks and information flows in new product development. Journal of Management Studies, 41(8), 1469-1498.

Lau, T. Man, T. W. Y. & Chow, I. (2004). Organizational capabilities and performance of SMEs in dynamic and stable environments. Entrepreneurship and Innovation, November, 221-229.

Lawless, M.W. and Finch, L.K. (1989). Choice and determinism: A test of Hrebiniak and Joyce's framework on strategy-environment fit. Strategic Management Journal, 10, 351-365.

Leonidou, L.C. and Katsikeas, CS. (1996). The Export Development Process: An Integrative Review of Empirical Models. Journal of International Business Studies, 27(3), 517-551.

Marlin, D., Lamont, B.T. and Hoffman, JJ. (1994). Choice situation, strategy, and performance: A reexamination. Strategic Management Journal, 15(3), 229-239.

McDougal, P.P., Shane, S. & Oviatt, B.M. (1994). Explaining the formation of international new ventures: The limits of theories from international business research. Journal of Business Venturing, 9, 469-487.

Moon, J. & Lee, H. (1990). On the internal correlates of export stage development: An empirical investigation in the Korean electronics industry. International Marketing Review, 7, 16-26.

Porter, M.E. (1980). Competitive Strategy. New York: Free Press.

Qian, G. & Li, L. (2003). Profitability of small- and medium-sized enterprises in High-tech industries: The case of the biotechnology industry. Strategic Management Journal, 24, 881-887.

Reuber, A.R. & Fisher, E. (1997). The influence of the management teams international experience on the internationalization behaviors of SMEs. Journal of International Business Studies, 28, 807-825.

Romano, CA. (1990). Identifying factors which influence product innovation: A case study approach. Journal of Management Studies, 27(1), 75-95.

Swierczek, F.W. & Ha, T.T. (2003). Entrepreneurial orientation, uncertainty avoidance and firm performance. Entrepreneurship and Innovation, February, 46-58.

Venkatraman, N. (1989). The concept of fit in strategy research: Toward verbal and statistical correspondence. Academy of Management Review, 14(3), 423-444.

Verhees, F.J.H.M. & Meulenberg, M.T.G. (2004). Market orientation, innovativeness, product innovation, and performance in small firms. Journal of Small Business Management, 2(2), 134-154.

Wolff, JA. & Pett, T.L. (2000). Internationalization of small firms: An examination of export competitive patterns, firm size and export performance. Journal of Small Business Management, 38(2), 34-47.

Wolff, JA. & Pett, T.L. (2006). Small firm performance: Modeling the role of product and process improvement. Journal of Small Business Management, 44(2), 268-284.

Zahra, S.A. & George, G. (1999). Manufacturing strategy and new venture performance: A comparison of independent and corporate ventures in the biotechnology industry. The Journal of High Technology Management Research, 10(2), 313-345.

Zahra, SA. & Nielsen, A. (2002). Sources of capabilities, integration and technology commercialization. Strategic Management Journal, 23, 377-398.
Published
2007-01-20
How to Cite
PETT, Timothy L.; WOLFF, James A.. SME Performance: A Case for Internal Consistency. Journal of Small Business Strategy, [S.l.], v. 18, n. 1, p. 1-16, jan. 2007. ISSN 2380-1751. Available at: <https://libjournals.mtsu.edu/index.php/jsbs/article/view/84>. Date accessed: 15 june 2019.
Section
Articles