UNDERSTANDING SMALL BUSINESS STRATEGY: A …mcast.edu.mt:8223/rfm/source/Papers/ARizzo/Understanding Small... · UNDERSTANDING SMALL BUSINESS STRATEGY: A GROUNDED THEORY ... Understanding

UNDERSTANDING SMALL BUSINESS STRATEGY:A GROUNDED THEORY STUDY ON SMALL FIRMS

IN THE E.U. STATE OF MALTA

ALEXANDER RIZZO* and HEATHER FULFORDCentre for EntrepreneurshipAberdeen Business School

Robert Gordon University, Scotland*[email protected]

The common argument for the small business is that there simply is no strategy;that small businesses react heuristically to events, guided by the whims andpassions of the owner-manager. Strategy, however, can be looked at from abehavioural perspective, as opposed to the more normative strategic planningschools that small firms rarely abide by. This concept of strategy as ‘behaviour’encompasses the actions of the owner-manager, the context of the small firm, andthe consequences of the actions taken. It looks at strategy as part deliberate andpart emergent, allowing for the inclusion of both external influences and internaldecision making. Grounded theory research on small firms in Malta has in factshown strategy to be a dynamic phenomenon, one that can be viewed as a set ofdefined pathways between identifiable life cycle states. The paper shall outlinethe research findings that have identified five distinct patterns of small firmstrategic behaviour, each with its own unique trajectory and performance impli-cations. Understanding which strategic pathway a small firm belongs toallows for a comprehensive insight into the firm’s competitive behaviour, anda prediction of the consequences of that behaviour.

Keywords: Strategy; patterns of strategic behaviour; small firm; entrepreneurship;typology; grounded theory; trajectory; orientation.

INTRODUCTION: PUTTING SMALL BUSINESSSTRATEGY INTO PERSPECTIVE

Research on organizational strategy has been prominent for large firms(Mintzberg, 2007; Rauch et al., 2009; Smith et al., 1989), as well as forpublic sector entities (Andrews et al., 2006), but there has been relatively

Journal of Enterprising CultureVol. 20, No. 3 (September 2012) 287–332DOI: 10.1142/S0218495812500136

287

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

http://dx.doi.org/10.1142/S0218495812500136

less emphasis on business strategy within small firms (Aragón-Sánchez andSánchez-Marín, 2005). The main reason is that the formal strategic man-agement procedures that apply to large organizations are, more often thannot, irrelevant to the small firm. The owner-manager will have little re-source capacity for tasks such as formal strategic planning, and willfunction more on intuition, experience and instinct (McCarthy, 2003).Research on strategy for small firms is understandably limited, com-pounded by the fact that small business owners are busy people that areunder considerable pressure, often unsympathetic to requests fromresearchers for some of their time (Curran and Blackburn, 2001). Not-withstanding the evident gap in the literature, the importance of small firmsto a nation’s economy is well known. The National Statistics Office in theE.U. member state of Malta has identified no fewer than 30,000 small firmsthat were operational in the latter half of this last decade; 96% of theseregistered up to 9 full-time employees and the remaining 4% registered 10to 49 full-time employees. These small firms provide over 65% of em-ployment, 38.7% of the economy’s value added and 17% of investmentswithin the private sector in Malta. A contribution to the research in this areawould be a significant enhancement to the existing academic literature.Further knowledge on how small firms apply strategic decision-makingto enhance their performance would thus be welcomed by managementpractitioners and academics alike.

The purpose of this research has thus been to study patterns of strategicbehaviour for small firms within a wide range of industries, and in a smallisland state. The aim of the study was to explore and understand the variousdimensions of small firm strategic behaviour, and how the resulting beha-viours of the firm relate to organizational performance. A postpositivist,constructivist knowledge claim has been adopted in the research. As astrategy of enquiry, grounded theory has been applied. This has allowed foran analysis of both structure and process, an aspect that is essential whenstudying dynamic patterns of behaviour. Data were gathered through the in-depth interviews of the owner-managers of 67 small firms with less than 50full time employees. Methods triangulation was applied on one particularconstruct; that of organizational performance, through the analysis of netasset value fluctuations of the firms in question over time. Patton arguesthat this form of triangulation provides additional research rigour, where“qualitative and quantitative data can be fruitfully combined to elucidatecomplementary aspects of the same phenomenon” (2002 p. 558).

MAXqda2007 was used as a tool to integrate, manage and aid in thestudy of the large quantity of data obtained. A typology of patterns of

A. Rizzo & H. Fulford

288

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

strategic behaviour was sought, as well as the relationship between thevarious patterns and the performances of the small firms. The audience tothe research is four-fold; the academic community, local policy makers,private stakeholders, and the small business owner-managers themselves.The text that follows encapsulates three themes: Firstly, the existing liter-ature relevant to small business strategy shall be discussed and a conceptualmodel shall be proposed; Following this, an overview shall be carried outon the grounded theory research methodology that was deployed; Finally,an analysis of the research findings shall be effected, and a typology forsmall business strategic behaviour presented.

STRATEGY: THE WIDER PERSPECTIVE

The literature on business strategy takes on a somewhat bewildering seriesof directions, and has been the subject of numerous texts and studies withdiverging contexts and conceptualizations. A few of the more prominentstrategy viewpoints are as follows: Strategy as a unique and valuable po-sition (Porter, 1996); Strategy as ‘stances’ (Andrews et al., 2006); Strategyas a ‘map’ (Kaplan and Norton, 2000). Generic strategies (Porter, 1980);Growth strategies (McKelvie and Widlund, 2010); Strategy as a formalizedplan of action (Chandler, 1962), of the design and implementation of thatplan (Thompson and Strickland, 1998); Strategy as ‘intent’ (Prahalad andHamel, 1990); Strategy as an outcome of unique resource configurations(Aragón-Correa et al., 2008; Barney, 1986; Peteraf, 1993); Strategy as apattern (Mintzberg, 2007; Mintzberg and Waters, 1985; Hambrick, 1983);Strategy as ‘practice’ (Whittington, 1996), and so on. The various theoriesdiverge to such an extent that Mintzberg et al. (1998) document no fewerthan ten different strategy schools (such as the design school, the planningschool, etc.). Together with this issue of diverging strategy viewpointscomes a second problem that biases the direction being adopted by presentsmall business researchers. Mintzberg, Ahlstrand and Lampel sum this upin their observation that “there is a terrible bias in today’s managementliterature towards the current, the latest, the hottest” (1998 p. 8). One onlyhas to see the proliferation of literature on entrepreneurial orientation (e.g.Huang and Tsai, 2009; Kreiser, 2011; Simsek et al., 2010) or small busi-ness growth (e.g. Leitch et al., 2010; Littunen and Niittykangas, 2010;McKelvie and Widlund, 2010) to appreciate how the academic communitytends to focus overtly on the more popular, current research streams. Onresearching the small enterprise, Curran and Blackburn put forward a

Understanding Small Business Strategy

289

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

sensible piece of advice, observing that “research on the small enterprise isabout creative, new ways of thinking about the small enterprise that willenhance our understanding of how it functions” (2001 p. 30).

The existing literature may serve to define strategy, but is somewhatincomplete in prescribing how to understand small business strategy. In amore practical manner, the question remains as to how to observe, measureand understand the strategies undertaken by small businesses, if these in-deed exist. Various literatures have put forward two arguments; that smallbusiness strategy is simply an instinctive reaction to a dominant environ-ment, and that the entrepreneurial owner-manager and the small businessare really one and the same, hence by understanding the entrepreneur onealso understands the business. However, as argued by Curran and Black-burn (2001), a small business does not mean a simple business, and com-plex and subtle actions and interactions will continuously take place withinthe small firm and in its dealings with the environment. Small businessstrategy may indeed exist, but may be a far cry from the formal strategizingand planning that Chandler (1962) had associated earlier on with larger,more bureaucratic firms.

A solution lies in viewing strategy from an entirely different perspective,this time a behavioural one. Mintzberg (1978) and Hambrick (1983) depictstrategy as a ‘pattern in a stream of decisions, guiding a firm in its align-ment with the environment, and shaping policy and procedure’. Min-tzberg (2007, p. 1) observes; “so what better way to study strategies, andthe processes by which they develop, than to uncover patterns in organi-zations and investigate their origins”. Mintzberg adds a clarification bystating that the approach would not really be one of studying streams ofdecisions but of actions, as these are the traces most clearly left behind byorganizations, and would also incorporate the deliberate and emergentdecision-making processes that will have taken place. The understandingof strategy as a pattern in a stream of actions allows for some importantsolutions. Firstly, it bypasses completely the problem of measuring strategyby looking for rigid strategy formulations in the shape of plans, documentsor grand schemes. Secondly, it allows strategy to be understood as actingalong a deliberate — emergent continuum, where “real-world” strategieswill be somewhere in between (Mintzberg, 2007, p. 6), that is, neitherfully deliberate nor fully emergent. Patterns observed will incorporateboth deliberate actions, as well as emerging reactions, allowing for theexternal environment to be fully incorporated into the picture. Thirdly, thedynamics of strategic behaviour can now be taken into consideration.Longitudinal studies have shown that organizations may, and often will,


290

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

change their strategic behaviours over time and in accordance to necessity(e.g. Mintzberg, 1978). This is especially true for the small firm where itsmore limited resource base will allow it to do so more freely.

COALIGNMENT BETWEEN THE OWNER-MANAGER,THE SMALL FIRM, AND THE BUSINESS ENVIRONMENT

The concept of understanding patterns of strategic behaviour as a dynamiccoalignment between the owner-manager, the firm and the environment isnot a new one. For example, Entrialgo (2002) provides a tripartite coa-lignment model encompassing three constructs; firm strategy, owner-man-ager characteristics, and performance, positing that “it is the coalignmentbetween managerial attributes and organizational strategy that affectsperformance” (2002 p. 262). This does mean, however, that the owner-manager, the firm and the business environment have first to be understoodseparately, before attempts are made to integrate the various dimensions atplay. The following text shall do just that; look at the entrepreneurialcharacteristics of the owner-manager, the entrepreneurial orientation of thefirm, and the perceived business environment. Following this, a modelintegrating the three constructs shall be proposed.

Understanding the entrepreneurial characteristics of the owner-manageris a vital requisite, one with strong strategy ramifications due to the in-fluence these characteristics have on decision making. To achieve this, onemust delve into the cognitive processes that drive the owner-manager in hisor her entrepreneurial (or sometimes more conservative) behaviour. Re-search on entrepreneurship suggests two broad categories of factors thatinfluence how individuals discover, and act upon, opportunities. Theseare: 1) the possession of information adequate to identify an opportunity;and 2) the cognitive properties necessary to evaluate it (Shane and Ven-kataraman, 2000). These authors argue that the cognitive entrepreneurialmindset engages in less counterfactual thinking, is less likely to experienceregret over failed opportunities, and is less susceptible to inaction inertia.Cognitions are described as “all processes by which sensory input istransformed, reduced, elaborated, stored, recovered and used” (Mitchell etal., 2002, p. 96). Busenitz and Lau argue that, due to an often small or-ganization size, entrepreneurs have “a very complex decision-makingcontext, a context where simplifying biases and heuristics can have greatdeal of utility in enabling entrepreneurs to make decisions in a timelymanner” (1996 p. 30). This implies, however, that the higher (or lower)


291

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

resulting entrepreneurial behaviour is grounded in core values, values thatwill not change easily. Under this argument it would be very difficult tomake an entrepreneur out of a non-entrepreneur, an issue strongly sup-ported by Miles and Snow (1978). This would mean that the small businessowner-manager who does not have entrepreneurial characteristics willsimply not have the entrepreneurial aptitude required to take hold of con-ceptual, abstract and often tacit information, and to act upon this infor-mation. A separate train of thought to that of the cognitive school, albeitwith identical conclusions, is that of Edelson’s (1988) psychodynamicapproach. Edelson applies the psychological concept of ‘life issues’; issuesthat have been ingrained into the individual’s persona over many years andthat tend to remain relatively constant over her lifespan. The author uses thetheme of ‘multiple determination’, in that “strategy will be chosen thateventuates in the gratification of the greatest number of wishes” or issues(1988 p. 112).

There is also, however, the dynamic nature of entrepreneurial behaviour,a concept that confuses researchers seeking stable, unwavering entrepre-neurial characteristics. This concept had already surfaced many years ago inarguments placed by Miles and Snow (1978) that entrepreneurial owner-managers can act conservatively, but conservative owner-managers cannotact entrepreneurially (at least not with a significant level of success). Carrolland Mosakowski (1987) provide an argument that is far different fromthe usual static cross-sectional perspective, in that individuals will showentrepreneurial behaviour at various possible points in time, and in accor-dance to historic/background issues, social structures, personal character-istics, and changing circumstances. The authors observe that “there hasbeen a strong reliance on the assumption that entrepreneurship is associ-ated with some stable set of individual characteristics. There is littleappreciation of the possible transitory nature of the entrepreneur’s status”(1987 p. 571). This concept of unidirectional entrepreneurial behaviour,with owner-managers being able to act within, or below, their level ofentrepreneurial aptitude, is one that has been significantly ignored in theliterature.

Conversely, there are strong counter-arguments that the firm, and not theindividual running the firm, should be the focus of analysis when trying tounderstand business behaviour. One of the most popular descriptions offirm entrepreneurial behaviour is that of Miller (1983), who defines firmbehaviour through three constructs; risk acceptance, innovativeness andproactive behaviour. This focus on ‘firm behaviour’ as opposed to that ofthe ‘entrepreneur’ takes up further momentum with texts such as that


292

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

of Lumpkin and Dess (1996) and Borch et al. (1999). Resource-basedtheory is also used to substantiate the argument, as this considers the in-tegration of human, physical and organizational resource strengths withinthe firm. Borch, Huse and Senneseth in fact concede that “we haveconsidered competitive strategies as firm behaviour more than isolatedcharacteristics or decisions of the entrepreneur/manager” (1999 p. 66).Lumpkin and Dess use the term entrepreneurial orientation (EO) to describefirm strategic behaviour as consisting of the processes, practices and de-cision-making that are characterized by five dimensions (as opposed toMiller’s three). These are autonomy, innovativeness, risk taking, proac-tiveness, and competitive aggressiveness. Lumpkin and Dess build uponChild’s (1972) arguments of strategic choice to enact these behaviours,positing that entrepreneurial orientation “reflects the organizational pro-cesses, methods, and styles that firms use to act entrepreneurially”. Acomplementary argument to the concept of EO is that of psychologicalreductionism. The term signifies the action of deriving events occurring atone level of the organization from those occurring at another, possibly amore simple and fundamental level. In this context it is inferring firmbehaviour from the owner-manager behaviour. Kimberly (1979, p. 443)posits that “there is considerable controversy among organizational the-orists about the advisability of attributing organizational outcomes to theparticular characteristics of particular individuals. Sociologists label suchattribution psychological reductionism. They argue that organizationalanalysis is most fruitfully pursued apart from the considerations of indi-vidual personalities and motivations”. The separate literature streams onEO, resource-based theory, and psychological reductionism pose the sameargument; that the behaviour of the firm must be understood separatelyfrom the behaviour of the owner-manager running the firm.

The coalignment concept also includes a third dimension to that of theowner-manager and the firm; the competitive environment within whichthe firm operates. Understandably, the business environment external tothe firm is one of an interaction of a complex medley of variables, so muchso that “the external environment, for example, can be operationally definedin terms of forces or elements that are too numerous to incorporate in aspecific sense in a single model” (Covin and Slevin, 1991 p. 20). Theliterature on small firms and their environments is no more conclusive. Asargued by Miles et al. (2000, p. 64) “relatively little is known about howsmall firms respond to environmental dynamism, both structurally andstrategically”. Hambrick (1981b, p. 253) argues that “organizations are‘embedded’ in their environments, but often loosely so. They have some


293

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

leeway for navigating…Organizations may pursue strategies seemingly atodds with the environment because of the values and internal politicalprocesses of their dominant coalitions or because of their assessments oftheir relative strengths and weaknesses”. The concept of environmentaluncertainty, or perceived environmental uncertainty, may provide some-what of an answer to understanding how the business environmentimpacts upon the business, and on the decision-making behaviour ofthe owner-manager. This concept of perceived environmental uncertaintyis a common one within the literature on strategy and organizationalbehaviour (e.g. Freel, 2005; Hendrick, 2003; Jauch and Kraft, 1986;Yasai-Ardekani and Haug, 1997). The logic is that it is not the environ-mental conditions that count, but how they are perceived and acted uponby the organization. This perceived uncertainty ultimately impacts uponthe organization’s design and its very actions. This is in agreement withKisfalvi’s (2002, p. 492) observation that “the subjective ways that stra-tegists in general obtain and interpret information about their firm and itsenvironment are crucial for strategy formation”. The concept of envi-ronment perception was observed by McCarthy when researching smallfirms; “the charismatic entrepreneurs were visionary in the sense that theywere able to predict market trends and visualize new product opportu-nities… In contrast to the charismatic entrepreneur, the pragmatic entre-preneur seemed to make a more realistic assessment of the marketplace:the goal was to set up a business that would have a good chance ofsucceeding” (2003 p. 161, p. 163).

A CONCEPTUAL MODEL FOR THE STRATEGIC DECISIONMAKING BEHAVIOUR OF THE SMALL FIRM

The literature on owner-manager cognitive behaviour and the literature onthe behaviour of the firm can ultimately be integrated to put forward amodel for how the small firm may perceive, and react to, the externalenvironment. Building particularly upon Jauch and Kraft’s (1986) envi-ronmental uncertainty model and Busenitz and Lau’s (1996) entrepreneurialcognition model, Figure 1 is proposed as a conceptual model explaininghow the small firm interacts with the external environment. The parsimo-nious model depicts the objective external environment as a sequence ofpluses and minuses, signifying the positive and negative factors that mayimpact on the small firm in a particular context. In line with the previouslydescribed cognitive-heuristic behaviour, owner-managers will perceive the


294

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

objective environment in different ways, depending on their conservative—entrepreneurial philosophical mindset. This, in turn, is contingent upon thecore values and life issues that determine how the owner-manager willperceive (and react to) the world around her. Also, Nadkarni andBarr (2008) put forward an important argument about the direct influencethat the objective environment has on strategic actions taken by top man-agement. This concept of ‘deterministic logics’ is shown as a dashed line inFigure 1, and represents the direct influence of “environments as concrete,hard, measurable and determinant” (2008 p. 1398). The authors argue thatthis deterministic influence on strategic actions will be felt outside of, andin inclusion to, the subjective perception of the environment. This meansthat a particularly negative objective environment could act to sway thedecisions taken by owner-managers, possibly towards initiatives that nowappear to have more beneficial opportunity costs.

The objective environment is influenced by external environmentaloccurrences, and will also be capable of directly affecting the firm’s per-formance outcomes, particularly due to the size and resource limitations

Objective Environment

Strategic Decision Making

(in line with firm resources)

Performance & Business Outcomes

EntrepreneurialConservative

ExternalEnvironmental Influences+ + + + + ++ +

_ _ _ _ _ _ _ _ _

- - + - + - + + - +Management Philosophy

Perceived Environment

Figure 1. Interaction of the Owner-Manager, the Firm and the External Environment.


295

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

of the small firm. According to the management philosophy, the owner-manager will perceive the objective environment as being more aggressiveand full of threats, or munificent and full of opportunities. Indeed, as arguedby Miles, Covin and Heeley, “this characterization of strategic posturealong the conservative-to-entrepreneurial dimension has been well ac-cepted in the strategic management and small firm management litera-tures” (2000 p. 65). Strategic decisions will be made and, in line with thefirm’s resource base and its own strengths and weaknesses, will influenceperformance outcomes. The performance outcomes will, in turn, impactupon further strategic decisions, upon the owner-manager’s perceptions,and even upon the objective environment (say in the case of a firmlaunching a successful new product or service). A spiral of momentum canbe envisaged, with the more entrepreneurial firms building momentum inperception–action–performance–perception towards new products/services/challenges, as would the more conservative firms towards more efficiency-based goals. This is in no way to say that the environment does not matter,but that a more optimistic perception of the environment will result indifferent strategic decisions being taken as compared to a more pessimisticview of that same environment.

In summary, a conceptual model has been put forward in Figure 1 thatbuilds from the divergent literature streams that focus on the owner-man-ager, the firm, and the environment, to put forward a coalignment model toexplain the decision-making behaviour of the small firm. A clarification isrequired here, as the forthcoming empirical research does not aim to proveor disprove the model postulated in Figure 1, but aims to support it throughthe research findings that were obtained. The debate on how the existingacademic literature interacts with the empirical research is one that isprominent in the various grounded theory schools, being strongly influ-enced by the epistemological outlook of the researcher. At one extremeGlaser (1978, 1998) argues against introducing the literature until all re-search is complete, taking a positivist, almost mathematical approach to-wards grounded theory that is largely influenced by Lazersfeld’s (1958)logic on latent structural patterns. At the other extreme authors such asCharmaz (2006, 2008) and Bryant (2002) advocate a more reflexive andconstructivist stance, postulating that “bringing the literature into thewriting not only demonstrates scholarliness but also allows for extending,validating and refining knowledge in the field” (Strauss and Corbin, 1998p. 52). In the research in question it is this constructivist philosophy thathas been adopted. Fundamental to this philosophy is the concept of ab-duction, described by authors such as Reichertz (2010) and Kelle (2005,


296

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

2007) to be the process of modifying and combining various elements ofprevious knowledge into new and insightful configurations, guided andenhanced by the empirical data. In other words, existing researcherknowledge, strengthened (as opposed to being tainted) by the literature,serves to enhance the research process and the quality and depth of theensuing research findings. This logic is well applied to the concept ofstrategy by Mir and Watson (2001) through their ‘flashlight in the dark’metaphor, in that a knowledgeable and informed researcher will better di-rect his/her focus (the flashlight) to expose and understand the complexstrategy construct. The following text will take on two stages. Firstly thegrounded research method that was applied shall be described. Followingthis the empirical research shall be interpreted to put forward a typology forsmall business strategic behaviour, one that is consonant with the modeldepicted in Figure 1.

THE METHODOLOGY: A GROUNDED THEORY APPROACH

The research method adopted is that of grounded theory research.Grounded theory is not a qualitative technique, but is a general method thatcan be used on any kind or mix of data, and is particularly useful withqualitative data (Glaser, 1998, p. 40). A number of requirements set thescene for the choice of method to be made. First of all the main objectivewas to observe and build a typology of the most common patterns ofstrategic behaviour, for small firms in a small island state. Relating thevarious patterns of behaviour to performance implications was also animportant parameter. A fundamental requisite was to induce a model ofstrategic behaviour from data pertaining to the substantive area of enquiry(small firm strategic behaviour), and not deduce and test a conceptualframework established from prior literature. It was felt that this wouldprovide a unique understanding of the phenomenon in question, that is, amodel grounded in the data and providing an understanding not available intraditional models.

The main, salient characteristics of the research settings were as follows:Small business owner-managers would often be ready to make themselvesavailable for interviewing, provided the interviews were not too long(Curran and Blackburn, 2001), were non-intrusive, and did not demandconfidential details on products or services that the firms had some formof competitive advantage on. The small geographical area of the Islandmade travelling to participants, for all the different industry types, a


297

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

straightforward affair. Most important of all, the method to be chosen had toallow for an understanding of the critical competitive actions taken byowner-managers, the context to these actions, and the consequences of theactions. This had to include a time component, that is, how the actions,context and conditions changed or adapted over time, and as the firmsevolved. Grounded theory essentially has three advantages not found inother methods of enquiry: Its emphasis is on theory development andbuilding, not just description; It is strong in the concept of verificationthrough the tireless process of comparative analysis, coding, and categorysaturation; Finally, it aims at building a parsimonious model within thesubstantive area of enquiry, and not solely a dense description of a phe-nomenon. This will be shown to be a vital requirement if applicability of theresearch findings is to be achieved. To these three advantages one may adda fourth; the emerging theory should be rich in both structure and process.Process research looks at the actions and activities leading to and sup-porting strategic decisions, that is, the examining of “how” strategy isformed (Ketchen et al., 1996). Structure incorporates both conditions andconsequences to a phenomenon, meaning not only “what” has been de-cided, but also “what” were the conditions or reasons for the decision.Strauss and Corbin wisely observe that “process and structure are inex-tricably linked, and unless one understands the nature of their relationship(both to each other and to the phenomenon in question), it is difficult totruly grasp what is going on” (1998 p. 127).

Different schools exist within grounded theory, boasting differentknowledge claims, different strategies of enquiries, and alternative meth-odological implementations (Bryant, 2002; Morse et al., 2008). Theknowledge claim relevant to this research is one of postpositivism, or asCurran and Blackburn (2001, p. 41) would call it, a non-positivist ap-proach. This claim brings with it a number of assertions: That completelyvalue-free inquiry is impossible but that objectivity can be maximizedthrough rigour, impartiality and consistency (Patton, 2002); That theresearcher’s unfolding interests shape the content of the research but not themethod (Denzin and Lincoln, 2008); That the resulting theory is an inter-pretation of a complex world, a rendering of reality as seen through the eyesof the informed researcher (Charmaz, 2006).

The concept of constant comparison, carefully coding and analysinginterview after interview, was applied as the basis of the grounded theoryresearch, serving two purposes not unlike reliability and validity techniquesused in quantitative research. The systematic coding of transcribed inter-views allowed for the building of categories that were based on the codes,


298

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

and that reflected the repeated emergence of core concepts in the data.These categories will subsequently be shown to be the underlying dimen-sions for a model of small business strategic behaviour. Further researchserved to validate the categories, as these would constantly emerge assignificant, and research was only deemed to be complete when theoreticalsaturation of the categories was evident. Memos were compiled throughoutthe research to explain the inter-relationships of the various categories,as well as their corresponding themes. One particular category thatemerged, that of firm performance, was also measured objectively throughanalysis of the financial records of the small businesses in a technique thatPatton (2002) describes as ‘methods triangulation’. Net asset value fluc-tuations over the most recent five-year period were calculated, highlightingthe growth or contraction of the firms in question. These quantitative datawere integrated into the ongoing study through additional memoing.Grounded theory research allows for this integration of quantitative andqualitative data as, in the words of Glaser (1998, p. 8), “all is data”. In fact,the founders of grounded theory (Glaser and Strauss, 1967, p. 18), explainthis data integration very well by arguing that “in many instances, bothforms of data are necessary — not quantitative used to test qualitative, butboth used as supplements, as mutual verification and, most important forus, as different forms of data on the same subject…”. Through this con-tinuous process of coding, comparison, and memoing, a model graduallyemerged, one that was rigorously grounded in the data. Researcher in-volvement in the process served to provide a contribution to the richness ofthe model, as well as the strength of analysis and interpretation of theresearch process.

Of the 67 firms that were researched, 64 were small limited liabilities, 2firms were small in size but were legal partnerships, and 1 firm had madethe transition from limited liability to sole trader within the research period.This mix allowed for the main focus to remain on small limited liabilitieswhilst allowing for an element of comparison to the strategic behaviours ofalternative business types and sizes. Three generic industries within thestate of Malta were studied; that of manufacturing (constituting 10% of the30,000 or so small businesses in Malta), retail (38%), and general services(52%). Malta is classified as a country that is making a gradual transitionfrom an investment-driven economy to an innovation-driven economy;ranking 52nd out of 133 countries measured in the year 2009–10Global Competitiveness Index (World Economic Forum). In 2010 the Eu-ropean Innovation Scoreboard confirmed that Malta was a ‘moderateinnovator’, with an above-average rate of improvement in innovativeness


299

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

(6% compared to an average 2%). The country’s economic strengths wereidentified as being in the areas of the availability of finance with which tocarry out innovations, and the economic rewards of innovation in terms ofemployment, export and sales. A main driver in the improvement in Malta’sinnovation performance has been from intellectual property rights gener-ated as a throughput in the innovation process. Innovation weaknessesinclude a lack of highly skilled, educated workers, entrepreneurial effortsand collaboration between firms, and the actual take up of innovationamong companies in Malta. Small firms in Malta provide over 38% of theeconomy’s value added and 65% of private sector employment.

In-depth interviews were carried out on the owner-managers of the 67small businesses ranging in size from 1 to 49 full-time employees. Asshown in the following Figure 2, a sequence of different sampling methodswas adopted to allow for increasing converge on the core themes and theirinter-relationships. The interviews on the chosen firms took place over athree year period from 2007 to early 2010. Either the owner/primaryshareholder of the firm was interviewed, or alternatively the most seniormanager, who would be expected to reflect the true strategic nature of thefirm (Aragón-Sánchez and Sánchez-Marín, 2005; Wiklund and Shepherd2005). The in-depth interviews were digitally taped and transcribed by the

Figure 2. The Grounded Theory Process as Applied to the Research.


300

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

researcher. The lengthy transcribing involved repeatedly listening to therecording, as spooling in transcribing is inevitable. Meanings becameclearer, emergence of themes took place, and areas of focus were clarified.The transcribing in fact turned out to be a vital initial stage of theorygeneration as this was where many category relationships became initiallyevident. Within grounded theory the methods of sampling, data collection,coding, constant comparative analysis and further sampling take place as anintegrated, interactive process with blurred boundaries and evolvingobjectives (Elliott and Lazenbatt, 2005).

The first stage of the sampling strategy (see Figure 2) consisted of alimited set of convenience samples, totaling five in all. The five businessowner-managers were all well known to the researcher, were highlyknowledgeable of their respective businesses and industries, had very goodcommunication and conceptualization abilities, and were enthusiastic aboutparticipating in the research. These first interviews served a number ofpurposes. One outcome was the provision of five in-depth interviews thatwere instructive, informative and of excellent quality. A second outcomewas a fine tuning of a prompt sheet and a refining of the interviewmechanisms and tactics. A third outcome was the opportunity to trial outdifferent approaches towards the level of structuring of the prompts utilized.Following the initial set of five convenience samples, a second batch ofinterviews was carried out in what Hood (2007) would define to be pur-poseful sampling. The objective of this second batch of around 25 parti-cipants was somewhat different to that of the initial convenience sample.The aim was to further extend the range of categories that had alreadyemerged until a point in which no new categories were emerging, that is,saturation of the category set. Purposeful sampling has an objective dif-ferent to that of theoretical sampling (Charmaz, 2006) in that it lookstowards fixed dimensions, fixed quotas and not theoretical concerns.

The third phase of interviews covered some 37 participants (as again, theboundary for where purposeful sampling ended and the third samplingstrategy commenced was far from clear), and was based upon a theoreticalsampling strategy. In theoretical sampling one looks for participants whoknow about particular parts of a problem, and then piece together what theycollectively know (Rubin and Rubin, 2005, p. 64). Hood (2007) definestheoretical sampling as an approach towards choosing respondents that willallow categories to become saturated, and allow the theory to be complete.Glaser and Strauss (1967, p. 45) describe theoretical sampling as “theprocess of data collection for generating theory whereby the analyst jointlycollects, codes, and analyses his data and decides what data to collect next


301

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

and where to find them, in order to develop his theory as it emerges”. Moreexplicitly, Morse (2007) compares theoretical sampling to the work of adetective; looking for clues, sifting and sorting, and filtering out the irrel-evant data to ultimately create a plausible case. The researcher seeks par-ticipants who have particular experiences and knowledge of the conceptsunder investigation.

THE CODING PARADIGM

Grounded theory research holds another advantage over other researchmethods; data collection and data analysis take place concurrently, withthe outcome of the analysis being subsequently used to refine and redirectthe data collection process. Analysis is effectively carried out by coding thedata, and tirelessly comparing coded excerpts with other coded segmentsthat consist of events, themes, concepts and/or important characteristics.The two underlying criteria for coding are ‘fit’ and ‘relevance’ (Charmaz,2006, p. 54). A code must fit the empirical world under review and provideinsights into a corresponding category. It must have relevance in that it addsinterpretation to a growing understanding of the phenomenon in question.In the research in question, four coding methods were applied, althoughonce again the technique was more emergent than deliberate, and withblurred, ill-defined boundaries. The initial coding technique applied to thefirst 15 research cases was that of in vivo coding, aiming at “capturing theparticipants’ words as representative of a broader concept in the data”(Birks and Mills, 2011 p. 93). From this initial in vivo exercise, a long listof text extracts appeared as a form of initial category set, in fact, a long listfor each of the 15 cases analyzed. These 15 lists were carefully cross-correlated by mapping out common themes and concepts, and subsequentlygrouped into clusters of concepts with similar meaning.

At around this point in the research, where initial categories and sub-categories start to emerge, the researcher must decide whether or not toadopt a pre-established coding paradigm. This is an issue of contention,with Glaser (1998) arguing strongly against, Corbin and Strauss (2008)arguing in favour, and authors such as Bryant and Charmaz (2007) andKelle (2007) allowing for the adoption of a paradigm but not in a mecha-nistic fashion. These authors’ argument is that the paradigm must fit thedata, and not the data forced to fit the paradigm. The approach ultimatelyadopted in this research was to apply the Strauss and Corbin coding par-adigm, that is, the ‘Conditional and Consequential Matrix’ (Corbin and


302

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

Strauss, 2008; Strauss and Corbin, 1998). The reason for this was that theparadigm fit very well to the category schema that was developing as anoutcome of the initial in vivo coding. The Conditional/Consequential Ma-trix consists of a relationship between content and process through theidentification of three conceptual pillars; context and conditions, actionsand interactions, and consequences and outcomes. The Matrix is little morethan an outline framework identifying contextual, consequential and pro-cess based parameters. It is defined by Kelle (2005) to be a heuristicframework of low empirical content, this lack of empirical content givingthe framework a flexibility that allows a variety of empirical phenomena tobe portrayed though it. It does, however, bias the researcher into focusingupon the areas of context, actions and consequences, and coding dataaround them. It encourages the researcher to look at the unfolding anddynamic interaction between structure (context/conditions and con-sequences/outcomes) and process (actions and reactions to the context/conditions, and ultimately shaping consequences/outcomes). This focus is aresult of the micro-sociological theory underlying the Matrix, and is basedupon symbolic interactionism. Subsequently, in this research, the long listsof in vivo codes were sorted into the three main categories of context/conditions, actions/interactions, and consequences/outcomes. Names weregiven to the different subcategories in each category, resulting in a finalcategory schema shown in Appendix A.

Following the initial in vivo coding and draft category building, threefurther coding techniques were applied to the 67 cases, including thosecases chosen initially for the in vivo coding. The first of these techniqueswas open coding, applied to the first 25 or so cases by matching the texts ofthese cases to the draft category schema that was developing. In this codingactivity every text extract that demanded coding had to be carefully mat-ched to the draft category schema, and related to the correct category orproperty. Conceptual overlaps between categories and between propertieshad to be resolved, and as a result, the category schema was further de-veloped and refined. As more and more of this comparison work tookplace, less fine tuning to the category schema was necessary. Saturation wasgradually approaching. This exercise had a two-fold objective; verificationof the category schema that was emerging, and further enhancement of theconceptual depth of the categories through development of the propertiesand dimensions of the various categories.

Following this open coding, first focused coding and then axial codingwere sequentially applied to the remaining cases. Focused coding consistsof a more directional, selective, and conceptual coding exercise “using the


303

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

most significant and/or frequent earlier codes to sift through large amountsof data” (Charmaz, 2006, p. 57). Focused coding will generally result inlarger code segments than open coding, but serves the important stage ofgrounding the model in more conceptual depth, often visible through thememos that accompany this coding stage. The fourth and final codingtechnique utilized was that of axial coding, which is the process of relatingcategories to subcategories along the lines of their properties and dimen-sions so as to further build category — subcategory relationships. Rela-tionships and interactions between structure (context/conditions andconsequences/outcomes) and process (actions and reactions) were givenenhanced meaning since “by relating process to structure, one is, in fact,connecting categories” (Strauss and Corbin, 1998 p. 168). Thus, towardsthese final analytic stages a category — subcategory — property set hadbeen established (see Appendix A), together with a clear understanding ofthe dynamic interaction between the various categories, subcategories andproperties. This compilation of a category schema resolves a main stum-bling block within the research as “the strategy taxonomist faces anenormous challenge just in deciding exactly what should be classified i.e.which dimensions best operationalize the strategy construct” (Thomas andVenkatraman, 1988 p. 552).

The forthcoming text shall apply the category schema to two incrementalstages of analysis. The first stage is the identification of a set of life cyclestates that the small firms were seen to adopt. The second stage is a study ofthe common pathways that the small firms followed as they moved betweenthis limited set of life cycle states. A typological approach shall be adopted,as in the words of Hambrick; “since strategy is by essence a dynamicphenomenon, it would seem fruitful, even essential, for researchers toemphasize the classification of strategic pathways” (1984, p. 33). Thisapproach is similar to one well known in marketing, where Kotler andArmstrong (2008) apply a Product Life Cycle concept by identifying a setof six life cycle states (introduction, birth, growth, shake-out, maturity,decline), and then maps out common patterns of movement between thesestates (such as the style, fashion, fad and scalloped).

RESEARCH FINDINGS: IDENTIFICATIONOF A SET OF STRATEGIC LIFE CYCLE STATES

There is often a blind expectation that firms progress rigidly through abirth, growth, maturity, decline sequence of evolvement (for an example


304

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

see Smith et al., 1989). Hanks et al. dispute this, describing life cycle statesas more than just birth-growth-maturity-decline stages, but as a “uniqueconfiguration of variables relating to organization context and structure”(1993 p. 7). Life cycle stages are described by McMahon (2001, p. 202) as“markers or signposts for the pathways”. In other words, once the stagesare successfully identified then it is possible to map out the more dynamicpathways of strategic behaviour that show how the organizations move inbetween these stages over time. A vital link into how life cycle theory canbe used to understand the dynamic strategic pathways is provided by Hankset al., who reason that “if organizations evolve through a sequence ofstages, as theorized, then in a cross section of organizations, several stagesshould be represented” (1993 p. 13). What this means is if a snap shot istaken of, say, the present strategic behaviours of the small firms, this willdivulge all the possible life cycle states, that can subsequently be used asmarkers to map out the trajectories of the firms as they change in behaviourover time. This analytic approach was indeed adopted; the first step was tolargely ignore the wealth of data on the past context-actions-consequencesof the firms, focusing on their most recent behaviours and compiling ataxonomy of these behaviours. This provided four distinct groupings offirms, summarized in Table 1, and signifying all the different life cyclestates that the firms could possibly adopt over time. These are outlinedbelow:

The first life cycle state is that of a Small Business Orientation (SBO),explaining the ‘recent’ strategic behaviour of 13 of the 67 small businesses.These were the smallest in size with an average of some 7 employees, andwith a dominant coalition size averaging solely 1.23 (meaning on averageone owner-manager). Firms here were in retraction, with a limited resourcebase and little evidence of growth. Focus was placed on survival through ahighly conservative specialization on one core product or service. Slightlylarger in size were 34 firms in a state of Functional Efficiency Orientation(FEO). With an average firm size of 15 employees and an average dominantcoalition of 1.5, these firms were highly focused towards a limited range ofproducts or services. Slow growth was supported by a specialization withinone particular industry, and sustained through the still-somewhat conser-vative behaviour and skills-base of the owner-manager/s. A higher level ofentrepreneurial behaviour was observed for the 14 firms that demonstrateda Related Diversification Orientation (RDO). These firms were in a higherstate of growth, using a two-staged approach of first grounding the firm in acore engineering process and then launching additional, related products/services as off-shoots. Finally, 6 firms were observed to be in a state of


305

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

Table1.

Predominantcharacteristicsof

thestrategiclifecyclestates.

Cha

racteristics

SBO

State

FEO

State

RDO

State

UDO

State

Num

berof

Firms

1334

146

Local

Industry

Conditio

nsIncreasing

industry

com-

petitiveness.Supply

exceedingdemand.

In-

creasingly

adversecon-

ditio

ns.Changing

consum

erpatternsand

behaviours.

Astrong

owner-manager

awarenessandknow

l-edge

oftheparticular

industry

condition

s.Often

nichemarkets.

Strongcustom

erfocus/

loyalty.

Industries

rangingfrom

matureandhighly

sat-

urated,to

youngerand

with

potentialfor

grow

th.Owner-man-

agerscarefulnotto

enterinto

industries

aliento

theirexpertise,

butshow

ingstrong

en-

trepreneurialbehaviour

whenwith

intheirareas.

Industry

notyetmatching

thefirm

s’competitive

strides.Firmspredom

i-nantly

ingrow

thstage,

channeledtowards

build

ingcompetitive

strength

throughprod-

uct,processdiversifica-

tionandresource

acquisition.

Local Environmental

Conditio

ns

Little

governmentalsup-

port.Economic

down-

turn

increasingly

being

felt.

Unfavourableleg-

islatio

nandgovernment

directives.

Aheightened

awareness

andpreoccupationto-

wards

government’s

contributio

nto

thepar-

ticular

industry,wheth-

eradequately

competitiveconditions

werebeingprovided.

Ahigh

energy

towards

evolving

thebusiness

further,with

theexpec-

tatio

nthat

localgov-

ernm

entshould

assist

farmore.

Allfirm

sworking

inthe

marginbutstrugglingin

anenvironm

entnoton

parwith

theirentrepre-

neurialefforts.Govern-

mentandconsum

erunaw

areanduncaring

offirm

s’attemptsat

creatin

gnew

business.


306

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

Table1.

(Contin

ued)

Cha

racteristics

SBO

State

FEO

State

RDO

State

UDO

State

Num

berof

Firms

1334

146

GlobalInfluences

Increase

inforeigncom-

petitiveness.

Adispersedfocuson

vari-

ousglobal

factorssuch

aschanging

technolo-

gies

andincreasing

for-

eign

competitiveness.

Adispersedfocuson

vari-

ousglobal

factorssuch

aschanging

technolo-

gies

andincreasing

for-

eign

competitiveness.

Increase

inforeigncom-

petitiveness.Economic

challenges.

Owner-manager

Configuratio

nUsually

oneperson.(Mean

1.23)

Predominantlyoneor

two

persons.(M

ean1.5)

Predominantly

oneor

two

persons.(M

ean1.43)

Twoor

morepersons.

(Mean2.33)

Owner-manager

Philosophy

Ranging

from

highly

conservativ

eto

entrepreneurial.

Ranging

from

conservativ

eto

entrepreneurial.

Ranging

from

entrepre-

neurialto

highly

entrepreneurial.

Highlyentrepreneurial.

Owner-manager

Attributes,

Skills,Exper-

tiseandQuali-

ficatio

ns

Widerangeof

skillsand

qualifications

evident.

Highlyseasoned

and

experiencedow

ner-

managers.Many

owner-managersnear

retirem

entage.

Stronggroundingin

the

particular

industry.

Com

petenciesacquired

allow

owner-managers

toexcelin

whatthey

do.Verystrong

and

determ

ined

values,

beliefs.Various

ages.

Widerangeof

skills,

experiences,qualifica-

tions.Strongdriveto-

wards

additio

nal

skillingandCPD.High

determ

inationand

drive,

senseof

control,

decisiveness,vision.

Innovativ

e,proactive

mindsets.

Mostprofessional

andac-

adem

ically

qualifiedof

allorientations.More

aggressive,determ

ined,

competitiveandinno-

vativ

ein

behaviour.

Highdriveandself

motivationevident.


307

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

Table1.

(Contin

ued)

Cha

racteristics

SBO

State

FEO

State

RDO

State

UDO

State

Num

berof

Firms

1334

146

Focusof

Strategic

Actions

Matureanddecline/refo-

cusstages.Actions

to-

wards

retrenchment,

efficiency

maxim

iza-

tion,

costreductionand

control.

Firmscouldbe

ingrow

th,

maturity

oreven

de-

cline.

Strategic

actio

nstakenby

firm

smainly

aimed

atstrengthening

theirFEO

posture.

Mainlyin

grow

thandma-

turity.Strategic

actio

nsfocusedon

build

ing

competencies,net-

works,access

tonew

markets,build

ingbar-

riersto

entry,enhancing

characteristicsof

main

product/service.

Firmsin

grow

thstage.

Organic

grow

thwith

know

ledgeandre-

source

basedactio

nsshow

ingfirm

srein-

ventingthem

selves

and

actin

goutsidethe

boundaries

ofthefirm

.

BusinessStance

Adopted

byFirm

Low

risk

propensity.Low

levelsof

innova-

tiveness.Little

proac-

tivebehaviour.One

mainarea

offocus.

Often

arefuge

orhi-

bernationscenario.

Anefficiency

orproduc-

tivity

-orientedphilo

so-

phy.Innovativ

enessand

proactivenessdrives

limitedtowards

anar-

row

productrange.

Cautio

usdiversification

into

technologies

and

productm

arketsthatare

relatedto

thecore

areas

ofbusiness

operation.

Unrelated

diversification

into

new

avenues,areas

ofexpertise,

industries

andmarkets.Highin-

novativ

enessand

proactiveness.

Engineering

StanceAdop-

tedby

Firm

Intrinsicow

ner-manager

know

ledgeof

core

pro-

cesses.Threatof

tech-

nology

obsolescence.

Highlyfocusedtowards

alim

itedrangeof

pro-

ducts/services.Eith

erhighly

routinised

orhighly

specialized.

Twostaged

approach

ofgroundingthefirm

ina

core

engineeringpro-

cess

andthen

launching

additio

nal,relatedac-

tivities

asoff-shoots.

Synergies

sought.

Owner-managersheavily

involved

increatin

gand

sustaining

diversified

valueadding

activ

ities

that

aredependenton

theirinnovativ

eness,

know

ledge,

entrepre-

neurialflair.


308

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

Table1.

(Contin

ued)

Cha

racteristics

SBO

State

FEO

State

RDO

State

UDO

State

Num

berof

Firms

1334

146

Resource-Based

StanceAdop-

tedby

Firm

Dedicated

butlim

itedre-

source

base.Often

high

opportunity

costsof

operations.

Strongfocuson

skilling

andHR

structuring,

allowingfirm

tospe-

cializein

itscore

activ

-ities.Physicalresources

dedicatedto

efficiency

enhancem

ents.

Physicalresourcesvaried

greatly

intype,cost.

Control

strongly

exer-

cisedby

owner-man-

agerson

costs,

employee

skilling,

em-

ployee

performance

and

thedirect

employee

task.

Moderateto

high

technol-

ogyfirm

swith

awide

configurationof

physi-

calresources.HR

with

high

technological

levelsof

expertise,

skills.Flatterstructures,

centralized.

Organizational

Perform

ance

Turnover.Survival.Per-

sonalsatisfaction.

Financial

criteriasuch

asincrease

insales,profits

andincrease

inasset

value.

Wider

varietyof

measures.

Achieving

asizeable

custom

erportfolio

,turnover,profits,ROI.

Mostelusive.

Twomain

complem

entary

mea-

sures:grow

thin

reven-

ues/profits

andin

the

achievem

entof

further

competencies.

Firm

Size

(Average

Employee

Count)

7.2

15.3

18.3

34.3


309

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

Unrelated Diversification Orientation (UDO). These were the largest, at anaverage of 34 employees, and had the largest dominant coalition size atover two persons per firm. The businesses here were using core skills andresource basis to enter industries and product/services alien to those initiallystarted in.

THE DYNAMICS OF SMALL BUSINESS STRATEGY:ADDING THE TRAJECTORY PERSPECTIVE

Following this exercise to define a typology of life cycle states, the analysistook on a longitudinal stance to look into the earlier actions-contexts-consequences that the firms had experienced over time. The detailedinterviews carried out provided a wealth of information on how the firmsdeveloped over time, and as their competitive conditions evolved.Grounded theory research is particularly suited for this form of analysis,looking for changing ‘clusters’ of actions-context-consequences, that in-deed should conform to the life cycle states identified earlier on. Groundedtheorists Corbin and Strauss explain this concept of shifting patterns ofactions-context-consequences very well, positing that “conditions andconsequences usually exist in clusters and can associate or covary in dif-ferent ways, both to each other and to the related inter/action. Further-more, with time and the advent of contingencies, the clusters of conditionsand consequences can either change or rearrange themselves so that thenature of relationships or associations that exist between them and theinter/actions also changes” (2008 p. 92). The approach of mapping com-mon trajectories of movements between the life cycle states also abides byMintzberg’s (2007) logic of strategy as a pattern in a stream of decisions,guiding a business in its alignment with the environment, and shapingpolicy and practice. Defining and grouping the more common trajectoriesalso falls in line with Hambrick’s (1984) advice to strategists to look to-wards groupings of strategic pathways as opposed to building typologies onstatic strategic stances (such as Porter’s [1980] generic strategies and Milesand Snow’s [1978] typology of Prospectors, Defenders, Analyzers andReactors).

The analysis into the context, actions and consequences within which thefirms competed over time showed a limited number of pathways of com-mon strategic behaviour, that is, five trajectories in all. A parsimoniousmodel was constructed to be able to depict these five trajectories. Themodel, shown in the following Figures 3 to 7, depicts a series of loops that


310

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

the small firms adopted to some extent or another. The Y-Axis of the modelmeasures the firms’ propensity for growth, ranging from low to highgrowth. This ‘propensity’ includes not only the actual growth of the firms,but their willingness and intent to grow. Both the objective net asset valuefluctuations and the subjective owner-manager descriptions contributed tothis measure. The X-Axis shows a continuum ranging from low diversifi-cation to high diversification. The four life cycle states (SBO, FEO, RDO,and UDO) were mapped onto this continuum in appropriate sequence. Thefive strategic pathways, or trajectories, are described in the following text,with further details on the categories that are described being provided inAppendix A.

The first trajectory is that of a controlled focus, highlighted by a greyloop in Figure 3 above. This is an “efficiency-oriented” form of strategicbehaviour that was observed for 15 of the 67 firms under study, entering itfrom either an SBO or FEO life cycle state. Firms would oscillate within afinal FEO state, changing in size as new projects came in and market sharesgrew or shrunk. Firms were predominantly service-based and operating inlocal markets, explaining the fact that these firms were amongst the smallestby way of net asset value growth (just 2% in the final years), and ofemployee count (average of 12 employees). Owner-managers would havecreated a business based on their core skills and experience, and wouldbuild and sustain barriers of entry through specialization, enhanced effi-ciency drives, and through controlled niche markets. These owner-man-agers were in their element, doing what they knew how to do best, and what

Controlled Focus Trajectory

Contained Growth Trajectory

Dynamic Growth Trajectory

Retrenchment Trajectory

Others

Small Business

Orientation(SBO)

Functional Efficiency

Orientation(FEO)

Related Diversification

Orientation(RDO)

Unrelated Diversification

Orientation(UDO)

Strategic States

Propensity for Growth








Low

High

Figure 3. The Controlled Focus Trajectory.


311

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

they enjoyed doing. The following quote from the owner-manager of asmall I.T. consultancy firm demonstrates this logic:

We lost some of those contracts so obviously I had to get ridof some people. And then you start re-inventing yourself.It’s like you’re embryonic again. Sometimes you have toreinvent a new wheel. You have to say “what’s happeninghere? Let’s start off a new product, let’s change this type ofsoftware, let’s go to our existing client and offer them somenew technology”.

Dominant coalition size was generally either one or two owner-managersworking closely together. As competition increased, the owner-managerswould look towards enhanced specialization and increased quality drives towin and sustain customers. Often, owner-managers would opt to losecustomers that wanted a cheaper product than lose out on their establishedreputations for quality of service. An important statistic was the age of thesefirms, as they were the youngest of all (average 14 years). Tying with thisstatistic was the fact that the oldest of these firms had the closest owner-manager — firm strategic fit. In other words the moderately conservativemanagement philosophy matched this rather static FEO life cycle state;owner-managers had no motivation to move out of the state and into a stateof further growth. Younger firms in the cohort sometimes had owner-managers with more entrepreneurial traits, this hinting that these firmscould, in the future, adopt a different, growth oriented trajectory.

The engineering and resource-based stances that were visible for thecontrolled focus firms supported this business stance. Routinised and spe-cialized engineering functions were focused on a core process or activity,often the same activity that the owner-manager would have specialized in,in the first place. Resource basis were complementary to the engineeringfunction. Human resources were skilled, dedicated and experienced.Physical resources were geared towards efficiencies based on standardiza-tion and repetition. Structures were flat but centralized towards one powersource; that of the owner-manager/s. Organizational resources showedmechanized procedures and a culture based upon a belief of providing ahigh level of customer service. The following quote comes from a smallengineering firm providing a higher level of customized, well-stockedtooling to the shipping industry:

There are others, but they do not have the materials. We getit specifically. We have just got in some specialized material.


312

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

We have many types of material. Materials with a certificate.Nobody else will get them as they are expensive. But wedo…If you want a good piece of work for your clients.

Subjective performance measures quoted were mainly the achieving of asatisfactory turnover and achieving customer satisfaction. In conclusion,these were firms with a mission; that of proliferating in what they did best,even if this meant stagnation in growth. A recipe for growth was alsoevident in the firms that had a mismatch between the management phi-losophy and the firm’s conservative stance. In other words, moving out ofthe FEO life cycle state and into a RDO or UDO state was indeed possible(if so desired, that is). Two growth trajectories, to be discussed, will explorethis scenario.

The second trajectory to be discussed is one of the two growth trajec-tories; that of contained growth. In Figure 4 below this would be seen byfirms gradually moving out of SBO and FEO life cycle states, and into anRDO life cycle state. 13 of the 67 firms followed this trajectory. Firmswould then maintain their position by cycling within this moderately en-trepreneurial RDO state. Contained growth firms were usually run by oneowner-manager, sometimes two, with an average firm age of 21 years. NAVgrowth was positive, at 49% over the most recent 5 years. The strategyadopted by owner-managers was to first ground the firm in a core engi-neering process/activity (whilst in the FEO state), and then launch addi-tional but related activities that were complementary to this core process.This approach also served to build and sustain a loyal customer base due to





Others

Small Business

Orientation(SBO)


Orientation(FEO)


Orientation(RDO)


Orientation(UDO)

Strategic States









Low

High

Figure 4. The Contained Growth Trajectory.


313

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

the synergies that the related activities/products brought about, and actuallyallowed the firms to be more selective in their choice of customers.The following quote demonstrates how a small importer of agriculturalequipment diversified both horizontally and vertically:

Our business has grown an average of seven to ten percentevery year, for the last twenty years at least. Not necessarilyin the same area of what was our core business, so becauseof the nature and the size of the island, because of ourgenerally small catchment area, we have diversified andhence the increase in turnover is usually attributed to newproduct lines and new investments. When I say diversified, Igeared up our company to concentrate more on areas relatedto the water industry…anything to do with irrigation, firesystems, hot water systems….

The experience and skills of these owner-managers were seen to be inexcess to those of the previously described controlled focus cohort. Therewas a greater level of strategic fit between the management philosophy andthe firm’s entrepreneurial stance. This meant that more entrepreneurialowner-managers were managing these moderately more entrepreneurialfirms. However, similarly to the case of the previous controlled focus tra-jectory, there were also owner-managers that demonstrated entrepreneurialtraits in excess to the RDO life cycle state that these firms had entered. Thesmall size of the dominant coalition (more often one person than two) madetwo major growth constraints somewhat difficult to overcome. These wereorganizational momentum and owner-manager skills/knowledge limita-tions. A larger dominant coalition shall be shown to be an effective way ofcircumnavigating these difficulties.

Again, and as expected, the engineering and resource stances supportedthe business stance adopted by these firms. Often the engineering stanceshowed firms that were capable of moving up and down the industry valuechain, vertically integrating to an extent. This allowed them to provideproducts/services that were complementary to the initial, core area ofexpertise. There would be a wider range of complementary resourceendowments, such as multi-skilling of human resources, more profes-sionally set up physical resources, and more synergies in the organizationalresources. Customer-based performance measures became more important,such as building up and sustaining a loyal customer base through a dif-ferentiated product and strong brand identity. More select customersdemanded a more inclusive or specialized product, and were ready to pay


314

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

a premium for this. Positive NAV growth supported this approach, anddemonstrated how the firms could successfully thrive by adopting thisparticular trajectory. To summarize, firms following this trajectory hadfound a formula that served them well. The modest diversification was arisk mitigating measure, yet allowed for access to niche markets that re-quired a more complete, diversified product. Firms could survive indefi-nitely in this trajectory, constantly expanding upon related activities andproducts/services. They could also move into a more aggressive trajectory,or backwards through a more conservative trajectory, as will be discussed.

The third trajectory that firms adopted is the repositioning trajectory,highlighted in Figure 5 below. The largest cohort of firms (19 of the 67)followed this expansion — contraction trajectory that is a good demon-stration of how the life cycle states (SBO, RDO, etc.) cannot be used inisolation to describe the dynamics of small firm strategic behaviour. Firmswould have started their journey in a more conservative FEO state, movinginto a more entrepreneurial RDO state (or even a highly entrepreneurialUDO state), only to reposition themselves into a FEO (or RDO) state. Soalthough the final state is the same as that of firms following a controlledfocus trajectory, the repositioning trajectory (and the motivators behind it)are largely different. Repositioning firms were the oldest of all (average ageat 28) and had a relatively high NAV growth. The firms were run by eitherone or two owner-managers (average of 1.53). The logic of the trajectory isone of an initially focused competitiveness, with subsequent drives to ex-pand and diversify into either related or unrelated products/services and





Others

Small Business

Orientation(SBO)


Orientation(FEO)


Orientation(RDO)


Orientation(UDO)

Strategic States









Low

High

Figure 5. The Repositioning Trajectory.


315

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

industries, but then an even later decision to contract back into a functionalefficiency state. The obvious question is why would a small firm dedicateprecious resources and expose itself to a higher risk scenario, only to revertback to its initial competitive state? Analysis of the firms in questionshowed three distinct reasons. A few of the firms had acted entrepreneur-ially, but beyond the more conservative philosophy of their owner-managers. The strategic mismatch was felt, and owner-managers hastilyre-focused on their core competencies. Arguably firms may fail here due tothe exposure to harsh competition and a difficulty to operate at thisheightened entrepreneurial state with a limited dominant coalition. A sec-ond situation existed; highly entrepreneurial owner-managers that werefaced with very adverse competitive conditions, and saw no alternative butto (temporarily) refocus on their initial, core competencies. The third sit-uation was unexpected, but most interesting. The persons managing thisthird sub-group were no longer owner-managers, but professional managerspulled in to run the business in an efficient, albeit systematic, manner. Theentrepreneurial persons that had created the firms in the first place werenow refocusing elsewhere, and required stability in the initial business andthe benefits that this would provide towards their new incentives. Thefollowing quote demonstrates this logic of expansion followed by a con-trolled management approach:

The group is always looking towards new investments toexpand and grow. As a family they have always preferred toleave the profits within the company, and invest them. Wehave a number of businesses that serve the same markets indifferent ways. They complement each other. One servicewould open up to the opportunity of another service. I havebeen with the company for 13 years. I came in as anaccounts clerk. Today I am a senior manager in the firm. Iam responsible for 40 people in one of the subsidiaries.

As evident, there were a number of different motivators for the reposi-tioning firms to act the way they did, inducing them to redirect their en-gineering and resource-based stances to their initial configuration.Subjective performance descriptions provided by owner-managers weresomewhat generic, looking towards stability measured by sales/turnover,efficiency in operations, and effectiveness in launching projects. The ob-jective NAV figures provided a more in-depth picture. The high averageNAV and age of the firms showed businesses that had accumulated wealthover time, and now were retracting to a form of competition that they felt


316

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

secure in. NAV growth took on two distinct patterns. The firms that wereforced into repositioning due to competitive conditions had a lower NAVgrowth, at some 30% over a five-year period. Firms that had professionalmanagers pulled in were experiencing more scattered, but steeper NAVgrowths, at an average increase of 50% over a five-year period. Possiblythis was a motivator for the initial entrepreneur of these firms to apply his/her skills elsewhere, whilst seeking a guaranteed continuation, stability andfinancial support from the initial firm.

The fourth trajectory is that of dynamic growth (shown in Figure 6below), a path taken by only 6 of the 67 firms. Most dynamic growth firmsstarted off from a FEO state, passing through the RDO state, and into adynamic UDO state. This meant that the firms were competing in industriesand product/markets that were unrelated to their initial areas of expertise,and with engineering and resource-based stances that were focused towardsdifferent products/services in different industries and different markets.Firms were the second youngest, but the largest by far by way of employeecount (average of 34 employees) and NAV growth (at 99% in the last5 years). The firms also had the largest dominant coalition (average2.33 persons), and it has previously been argued that it is this coalitionsize that allows firms in a UDO state to compete so aggressively andeffectively. Owner-managers were highly skilled, experienced, and aca-demically qualified, and the businesses were generally in mid to high-technology industries. The dominant coalition team would be heavilyfocused towards creating value and then aggressively maintaining the





Others

Small Business

Orientation(SBO)


Orientation(FEO)


Orientation(RDO)


Orientation(UDO)

Strategic States









Low

High

Figure 6. The Dynamic Growth Trajectory.


317

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

engineering stance and resource base required to sustain that value. This isalso the trajectory that boasted the best level of strategic fit between theowner-manager philosophy, the entrepreneurial behaviour of the firm, andthe competitive environment. In fact, Thomas and Ramaswamy (1996)empirically observe that a strategy — manager match provides a greaterimpact on performance than a host of other variables such as firm age, sizeand industry conditions. However, a tacit factor that the in-depth interviewsdivulged was in how the members of this larger owner-manager coalitioninteracted. The entrepreneurial behaviour of the coalition was observed tobe a teamwork-based approach, with one member acting more entrepre-neurially and other members acting more mechanistically. High risk, pro-active behaviour was very often seen, but it was sometimes conditioned bythe limitations placed by different coalition members. There appeared to bea very effective combination whereby part of the dominant coalition wouldbe working towards entrepreneurially creating value, whilst the other partwould focus on building the stabilities required to sustain that value created.The following extract from a 42-man service firm demonstrates this logic:

We are two people, myself and my brother. My brother ismuch more adventurous than I am. So he is capable of goinginto a piece of business more with his eyes closed. And thenI, and my assistant general manager, we obviously look atthe pros and cons of this piece of work. So we seem tocomplement each other. I am a bit more cautious, obviously,because I look after the finances and other things, and I willknow exactly what expenses are on the way.

Figure 6 shows the dynamic growth trajectory to oscillate from any priorstrategic state, ending up in the largest trajectory loop. Firms could take ontwo possible alternatives from this point onwards. They could either growbeyond the remits of a small business (i.e. employing more than 49employees, thus effectively looping out of the window shown in Figure 6).Alternatively, firms could be directed by their owner-managers to adopt asubsequent repositioning trajectory, either due to a refocus by the initialentrepreneur, or as a temporary measure due to increasingly adversecompetitive conditions.

The final, fifth trajectory is the complete opposite of the above dynamicgrowth trajectory, and has been named the retrenchment trajectory. Asshown in Figure 7, the 14 firms that following this trajectory either entereda SBO state from an earlier FEO state, or alternatively would always haveexisted within this SBO state. These firms were amongst the smallest by


318

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

way of employee count (average of 7 employees) and in NAV growth, butnearly the oldest with an average age of 27 years. The firms also had thesmallest size of dominant coalition, with usually just one member. NAVgrowth was the lowest of all, even negative for some firms. Subjectiveperformance targets mentioned were the obtaining of stable revenues,survival and personal satisfaction. These were the kind of firms entering the“contaminated” lifestyle state, a competitive stance that is often lookedupon by researchers as a failed, or inconsequential, form of entrepreneurialbehaviour. The following quote from a 2-man HR consultancy firmdemonstrates this survival logic:

So I wanted to do my work without having people whocould check up and go into my business. I am reducingwork, always reducing. I had got a license from the gov-ernment to do this work…as an employment agency as thisrequires a license. You cannot just say that you are an em-ployment agency, you need a license from the government.And this license costs some 250 Maltese pounds. You haveto see if it is worth paying. If you stop paying it you can getit back but it would be a hassle. And the day after you lose itwork would come in.

The grounded theory research, however, uncovered some interestingnuances for this strategic trajectory. There were, in fact, three predominantsituations inducing a firm to follow a retrenchment trajectory. Firstly, there





Others

Small Business

Orientation(SBO)


Orientation(FEO)


Orientation(RDO)


Orientation(UDO)

Strategic States









Low

High

Figure 7. The Retrenchment Trajectory.


319

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

were a few firms that purposely chose to exist within a SBO state, here onewould find a close match between the static SBO state and the highlyconservative nature of the owner-manager. Owner-managers that operatedsmall firms on a part-time basis would be expected to fall within thiscategory. There would also be situations where a more entrepreneurialowner-manager would be faced with a competitive environment of (per-ceived) insurmountable odds. A highly negative objective environmentwould sway the more optimistic behaviour of an entrepreneur into aretrenched, conservative behaviour. The third situation is one of hiberna-tion, where more entrepreneurial owner-managers were easing back in theanticipation of inducting a new owner-manager (often a family member)into the business. The SBO state was, in this case, a temporary life cyclestate. The various rationales for following a retrenchment trajectory dem-onstrate why this form of strategic behaviour should not be taken as aseparate “hobby-oriented” form of business behaviour, or as Miller (1983)would call it; that of a “simple” firm.

CONCLUSION

The five trajectories of small business strategic behaviour that were ob-served demonstrate a dynamic coalignment between the owner-manager,the situation of the firm, and the context within which the firm competes.Findings complement the conceptual model that had been outlined earlieron in Figure 1. Key to this coalignment is the changing configuration of thedominant coalition, inducing a changing management philosophy thatallows the dominant coalition to adapt to the evolving situation of the firm,as well as to its evolving context. The coalition could act more entrepre-neurially or more conservatively if the need demanded, say if opportunitycosts dictated limiting the investment of time and resources within thecompany in favour of some other venture. Not only were changes in en-trepreneurial-conservative behaviours observed, but also changing team-based coalition structures that influenced the management philosophiesdominant within the coalition of owner-managers running the businesses.This concept is not entirely new in the literature, and indeed Ling, Zhao andBaron argue that “organizations move through different stages over time,with each stage posing unique challenges to the organization and requiringdifferent management philosophies and approaches” (2007 p. 674). It is theidentification of these stages that has been a main theme in this paper,followed by the mapping of the most common pathways between the


320

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

stages. Performance implications for each pathway were clearly mappedout. This logic follows Farjoun’s definition of strategy as the “coordinationof the firm’s major goals and actions, in time and space, that continuouslyco-align the firm with its environment” (2002 p. 570). A substantive modelfor small business strategic behaviour has thus been outlined in Figure 3(and following figures), at a level of mid-range theory that defines a phe-nomenon within a particular environment. Merton (1957) and Glaser andStrauss (1967) argue that theories of middle range and well grounded inempirical reality are likely to be the most fruitful kind, as opposed to verynarrow or very grand theories. The utilization of grounded theory as aresearch methodology has provided an important advantage in this study ofdynamic patterns of strategic behaviour. In fact, grounded theorists Straussand Corbin posit that “examining data for how action/interaction changesover time and space and in response to contingencies forces an analyst tolook for patterns” (1998 p. 168). This form of pattern analysis has beenunfortunately uncommon in the literature (see Dainty et al., 2000 for awelcome change), although the more recent literatures on strategic con-sistency (see Lamberg et al., 2009) and strategic flexibility (see Zhou andWU, 2010) do acknowledge the concept of dynamic alignment of the firm.

Two avenues for refinement and further research are seen. Firstly, the useof grounded theory research and the application of a trajectory-based ty-pology have allowed for strong elements of description and prediction, butof limited generalizability. Further research on small firms in differentcompetitive settings would allow for refinement and additional develop-ment of the category schema and trajectory-based typology, possibly ele-vating the model from one of mid-range theory to that of grand theory.What this means is that the typology model would then be applicable to thecase of small firms within any particular industry setting, and not just thatof a small island state. Secondly, a continuation of the research is possiblein a study of ‘patterns within patterns’, focusing on the functional and eventactical strategies that support the firm’s more integrative business strategy.In similar vein to the arguments placed earlier on for business-level strategy,formulated plans will rarely exist at lower, functional levels of small firms,but patterns of successful (or unsuccessful) functional-to-business-levelstrategy coalignment may indeed be observed.

Two brief examples are provided: In the first, take a situation where asmall firm is following a repositioning trajectory, with the initial owner-managers investing elsewhere and employing a more conservative managerto guide the firm in a stable manner. This manager would best adopt a low-risk approach of indirect globalization (see Matlay and Fletcher, 2000),


321

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

directing the firm’s established goods/services towards foreign niche mar-kets, as opposed to a more aggressive direct globalization strategy thatwould diversify into different areas within the industry’s value chain. Asecond hypothetical example looks at workplace stress, taking the situationof a small firm that is following a dynamic growth trajectory. This implies adynamic firm with 30-plus employees, with owner-managers heavily in-volved in value creation and hands-on implementation, and aggressivelydiversifying into unrelated, high-technology industries. Workplace stress isa key human resource management issue, leading to job dissatisfaction,premature burnout, increased turnover, and a lowering of performance. As“people suffer stress when they believe they lack the resources to deal withdifficult events” (Avey et al., 2009 p. 680), aligning employee profiles withthe established dynamic profile of the firm would be imperative. Also,motivating existing staff through techniques such as positive psychologicalcapital (Luthans et al., 2008) would allow them to build the confidence totake on challenges, optimism in their capabilities of success, and be able toreact and redirect their efforts when the need demands. The coalitioncharacteristics of the dynamic growth owner-manager team would be wellsuited to assist employees to build these characteristics. The more dogmaticcomponent of the dominant coalition could take on the task of building upthe skills of the employees, whilst the more entrepreneurial componentcould focus on continuously enhancing employee knowledge and aware-ness of the dynamic challenges facing the organization. Thus, by under-standing the strategic trajectory that the firm is following, and matchingthis to functional or tactical business moves, the owner-manager of thesmall firm can achieve that much-elusive strategic fit that is truly dynamicin nature.


322

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

Appendix A. Category Schema

Table A.1. Structure Category: Context and Conditions.

Sub Category Properties Brief Description

Historic Start-UpSituation

Resource AdvantagePositional AdvantageCombined Resource and

Positional Advantage

Companies with a resource advan-tage would have acquired a viableresource base in days where costswere low and the price of land andplant relatively cheap. Positionaladvantage was obtained by indi-viduals capitalizing on building anearly brand name, establishingimportant networks and businesschannels, and taking up a promi-nent position in a seedling indus-try where practically nocompetition would yet exist.

Relevant Industry Particular AttributesLabour MarketSeasonalityTechnical TrendsIndustry CompetitivenessThe Client/Market

The relevant industry consists ofparticular characteristics that areidiosyncratic to the industry inquestion, such as the impact of thelabour market on the competitive-ness of the industry, fluctuations intechnology use or development,the attractiveness/unattractiveness,stability, dynamism or munifi-cence of the industry, the quantityand characteristics of competitors,particular industry barriers ofentry, competitors within differentlevels of the value chain, particularcompetitor behaviours and atti-tudes, market characteristics, seg-mentation, trends, fluctuations,and details of the client such astype, style, attitudes, behavioursand needs.

Local Environment Temporal EventsThe CustomerSources of FinanceGovernment Actions/

InterventionsLocal Trends/AttributesLocal Economy/Stability

The local environment looks at themore immediate, regional contextof the small firm such as particulartemporal events, problems, hap-penings within the local scenario,general consumer trends andbehaviours tying down to the


323

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

Table A.1. (Continued )


culture of the region, sources ofcapital and operational finance,government incentives, schemes,regulations and decisions that im-pact upon the business, character-istics such as favoritism, clickism,local patterns of behaviour andlifestyles, and local environmentalfactors such as the effect of localeconomic fluctuations.

Global Environment Technological/Environmental Trends

Foreign CompetitionGlobal Economy/

StabilityForeign Investment/

MarketsCost of Energy/Materials

The global environment looks atmacro environmental factors suchas global technological trends,global competition, the cost offuel/energy, foreign investment,the effect of the global economyon the local economy, telecom-munication developments, envi-ronmental issues, communication/transportation trends, low cost la-bour, threats of entry of globalcompetitors into the Maltese sce-nario, threat of work being takenoutside the Island, and the impor-tation of low cost products.

Owner-ManagerCharacteristics

Owner-Manager TaskKnowledge of IndustryWork/Life ExperienceQualifications and SkillsPhilosophy/Values

Various psychological (e.g. values,work attitude) and observable (e.g.experience, education) character-istics of the owner-manager wereidentified, such as values, visionand particular work attitude, qua-lifications, skills and knowledgebase, previous work and social lifeexperiences both inside and out-side the firm, an intrinsic knowl-edge of the particular industry, andthe exact details of the owner-managers task, that is, what he/shedid within the firm.


324

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

Table A.2. Process Category: Strategic Actions and Reactions.


Initial Behaviour Changing ManagementResponsibilities

Planning/Scanning ActionsActions Regarding Products/

ServicesStrategic Moves and Positions

Adopted

Changing patterns of actions wereobserved at various stages of thesmall firms’ evolvement. The pre-dominant clusters of actions/reac-tions to changing context andconsequence were named ‘initial,forming, mature, decline and loop’behaviour to differentiate betweenthem. The objective of separatingthe clusters was to allow for moredistinct observations to be made ofhow actions/reactions changedover time, and not to seek a rigidbirth-growth-maturity-declinedevelopment cycle. For each clus-ter, the following actions/reactionswould be observed, to one extentor another.

Forming Behaviour Changing ManagementResponsibilities



Adopted

Changing Management Responsibili-ties looks at shifts taking placewithin the dominant coalition,such as actions being taken tore-establish the members of thedominant coalition or a move toemploy new senior management.

Mature Behaviour Changing ManagementResponsibilities



Adopted

Planning and Scanning Activitiesregards actions taken towardsplanning, both financial andstrategic, as well as scanningactivities towards the environment.

Decline/RefocusBehaviour

Changing ManagementResponsibilities



Adopted

Actions Regarding Products andServices regards particular actionsand moves taken towards new orenhanced products and services, aswell as steps towards productdiversification.


325

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.



Loop-Within-a-Loop Behaviour

Changing ManagementResponsibilities



Adopted

Strategic Moves and Positions Adop-ted looks at strategic moves andactions taken, and includes mar-keting moves, networking actions,suppliers/customers adopted, andparticular projects, investmentsand expansions implemented bythe small firm.

Table A.3. Structure Category: Consequences and Outcomes.


OrganizationalPerfor-mance

CompetenciesStakeholder SatisfactionBrand Name/Brand GrowthEfficiency/Cost ControlQuality Standards AchievedTargets and KPI’s AchievedEmployee CountRevenues/Profits/SalesNet Asset Value Fluctuations

Performance was observed to be a multi-dimensional concept, consisting ofcompetencies and capabilities acquiredby the firm, stakeholder satisfactionachieved, brand names acquired, pro-ducts ‘owned’ by the firm, new pro-ducts launched after internaldevelopment, dominance in a particu-lar field or market, efficiency achieve-ments and cost reductions/controls,quality standards achieved, strategicand operational targets met, fluctuatingemployee count, revenue fluctuations,profit values, return on investment,balance sheet values and net assetvalue fluctuations.

EngineeringStance

Mode of OperationTechnology/RationaleProduct PermutationsRoutineness andInnovativeness

The engineering stance looks at the or-ganizational process of transforminginputs into outputs, of creating value-adding mechanisms and of the variouscombinations and permutations bywhich the organization carries out itsbusiness. It consists of the mode ofoperation, technology, complexity,dimensions, and level of standardiza-tion of the predominant work taskswithin the firm.


326

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

References

Andrews, R., Boyne, G. and Walker, R. (2006). Strategy content and organizational per-formance: An empirical analysis, Public Administration Review, 66(1):52–63.



Resource-BasedStance

Human Resource BasePhysical Resource BaseOrganizational Resource Base

The resource-based stance is a multi-di-mensional construct that consists ofthree properties: The human resourcebase looks into employee qualifica-tions, skills, education, autonomy, theparticular management style, and theorganizational structures deployed.The physical resource base consists ofthe tangible, intangible and financialresources owned by the small firm. Theorganizational resource base consistsof systems, processes, standards, levelof service, the more intangible aspectssuch as the organization’s culture, aswell as networks, associations,company — supplier, and company —

client liaisons that are formed.Business

StanceRisk PropensityInnovative BehaviourProactive/AggressiveBehaviour

Three predominant entrepreneurial traitswere observed: Innovation consists ofnew ideas and creative processes,aiming at the creation of new products,services and processes, and is looked atfrom two angles; product-market in-novation and technological innovation.Proactiveness refers to the taking ofnew initiatives by anticipating andpursuing new opportunities and mar-kets. It relates to first-mover advantageand to the aggressiveness throughwhich an entrepreneurial organizationcompetes. Risk-taking consists of theorganization’s willingness to engage inrisky ventures, as well as manage-ment’s propensity to adopt bold, asopposed to cautious behaviour.


327

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

Aragón-Correa, J. A. et al. (2008). Environmental strategy and performance in small firms:A resource-based perspective, Journal of Environmental Management, 86(1):88–103.

Aragón-Sánchez, A. and Sánchez-Marín, G. (2005). Strategic orientation, managementcharacteristics, and performance: A study of Spanish SME’s, Journal of SmallBusiness Management, 43(3):287–308.

Avey, J. B., Luthans, F. and Jensen, S.M. (2009). Psychological capital: A positive re-source for combating employee stress and turnover, Human Resource Management,48(5):677–693.

Barney, J. B. (1986). Strategic factor markets: Expectations, luck, and business strategy,Management Science, 32(10):1231–1241.

Birks, M. and Mills, J. (2011). Grounded Theory. A Practical Guide. London. SAGEPublications.

Borch, O., Huse, M. and Senneseth, K. (1999). Resource configuration, competitivestrategies, and corporate entrepreneurship: An empirical examination of small firms,Entrepreneurship, Theory and Practice, 24(1):49–71.

Bryant, A. (2002). Grounding systems research: Re-establishing grounded theory, Pro-ceedings of the 35th Hawaii International Conference on System Sciences.

Bryant, A. and Charmaz, K. eds. (2007). The Sage Handbook of Grounded Theory. LosAngeles: SAGE Publications.

Busenitz, L. W. and Lau, C. (1996). A cross-cultural cognitive model of new venturecreation, Entrepreneurship Theory and Practice, 20:25–39.

Carroll, G. R. and Mosakowski, E. (1987). The career dynamics of self-employment,Administrative Science Quarterly, 32(4):570–589.

Chandler, A. (1962). Strategy and Structure: Chapters in the History of AmericanIndustrial Enterprise. Cambridge: MIT Press.

Charmaz, K. (2006). Constructing Grounded Theory. A Practical Guide Through Quali-tative Analysis. London: SAGE Publications.

Charmaz, K. (2008). Grounded theory in the 21st century: Applications for advancingsocial justice studies. In: N.K. DENZIN and Y.S. LINCOLN, eds, Strategies ofqualitative enquiry. Los Angeles: SAGE Publications. pp. 203–241.

Child, J. (1972). Organizational structure, environment and performance: The role ofstrategic choice, Sociology, 6(1):1–22.

Corbin, J. and Strauss, A. (2008). Basics of Qualitative Research. Techniques and Proceduresfor Developing Grounded Theory. 3rd Edition. Los Angeles: SAGE Publications.

Covin, J. G. and Slevin, D. (1991). A conceptual model of entrepreneurship as firmbehaviour, Entrepreneurship Theory and Practice, 16(1):7–25.

Curran, J. and Blackburn, R.A. (2001). Researching the Small Enterprise. London: SAGEPublications.

Dainty, A. R., Bagilhole, B. M. and Neale, R. H. (2000). A grounded theory of women’scareer under-achievement in large UK construction companies, Construction Man-agement and Economics, 18(2):239–250.

Denzin, N. K. and Lincoln, Y. S., eds. (2008). Strategies of Qualitative Inquiry.3rd Edition. Los Angeles: SAGE Publications.

Edelson,M. (1988).Psychoanalysis: ATheory in Crises. Chicago: University of Chicago Press.Elliott, N. and Lazenbatt, A. (2005). How to recognize a ‘quality’ grounded theory re-

search study, Australian Journal of Advanced Nursing, 22(3):48–52.


328

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

Entrialgo, M. (2002). The impact of the alignment of strategy and managerial character-istics on Spanish SME’s, Journal of Small Business Management, 40(3):260–270.

Farjoun, M. (2002). Towards an organic perspective on strategy, Strategic ManagementJournal, 23(7):561–594.

Freel, M. S. (2005). Perceived environmental uncertainty and innovation in small firms,Small Business Economics, 25(1):49–64.

Glaser, B. G. (1978). Theoretical Sensitivity: Advances in the Methodology of GroundedTheory. Mill Valley, CA: The Sociology Press.

Glaser, B. G. (1998). Doing Grounded Theory: Issues and Discussions. Mill Valley, CA:The Sociology Press.

Glaser, B. G. and Strauss, A. L. (1967). The Discovery of Grounded Theory. Chicago:Aldine.

Hambrick, D. C., (1981a). Strategic awareness within top management teams, StrategicManagement Journal, 2(3):263–279.

Hambrick, D. C., (1981b). Environment, strategy and power within top managementteams, Administrative Science Quarterly, 26(2):253–275.

Hambrick, D. C. (1983). Some tests of the effectiveness and functional attributes of Milesand Snow’s strategic types, Academy of Management Journal, 26(1):5–26.

Hambrick, D. C. and Mason, P. (1984). Upper echelons: The organization as a reflection ofits top managers, Academy of Management Review, 9(2):193–206.

Hanks, S. H. et al. (1993). Tightening the life-cycle construct: A taxonomic study ofgrowth stage configurations in high-technology organizations, EntrepreneurshipTheory and Practice, 18(2):197–212.

Hendrick, R. (2003). Strategic planning environment, process and performance in publicagencies: A comprehensive study of departments in Milwaukee, Journal of PublicAdministration Research and Theory, 13(4):491–519.

Hood, J. C. (2007). Orthodoxy vs. power: The defining traits of grounded theory. In: A.BRYANT and K. CHARMAZ (Eds.), The Sage Handbook of Grounded Theory. LosAngeles: SAGE Publications. pp. 151–164.

Huang, L. J. and Tsai, M. (2009). Entrepreneurial orientation and firm performance: The roleof knowledge creation process, Industrial Marketing Management, 38(4):440–449.

Jauch, L. R. and Kraft, K. L. (1986). Strategic management of uncertainty, Academy ofManagement Review, 11(4):777–790.

Kaplan, R. S. and Norton, D. P. (2000). Having trouble with your strategy? Then map it,Harvard Business Review, September- October, pp. 1–11.

Kelle, U., (2005). “Emergence” vs. “forcing” of empirical data? A crucial problem of“grounded theory” reconsidered, Forum: Qualitative Social Research 6(2):Art.27.

Kelle, U. (2007). The development of categories: Different approaches in grounded theory.In: A. BRYANT and K. CHARMAZ (Eds.), The Sage Handbook of GroundedTheory. Los Angeles: SAGE Publications. pp. 191–213.

Ketchen Jr., D. J., Thomas, J. and McDaniel Jr., R. (1996). Process, content and context:Synergistic effects on organizational performance, Journal of Management,22(2):231–257.

Kimberly, J. R. (1979). Issues in the creation of organizations: Initiation, innovation, andinstitutionalization, Academy of Management Journal, 22(3):437–457.


329

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

Kisfalvi, V. (2002). The entrepreneur’s character, life issues, and strategy making. A fieldstudy, Journal of Business Venturing, 17(5):489–518.

Kotler, P. and Armstrong, G. (2008). Principles of Marketing. 12th Edition. New Jersey:Pearson, Prentice Hall.

Kreiser, P. M. (2011). Entrepreneurial orientation and organizational learning: The impactof network range and network closure, Entrepreneurship Theory and Practice,35(5):1025–1050.

Lamberg, J., et al. (2009). Competitive dynamics, strategic consistency, and organizationalsurvival, Strategic Management Journal, 30(1):45–60.

Lazersfeld, P. E. and Wagner, T. Jr. (1958). Academic Mind. New York: Free Press.Leitch, C. M., Hill, F. M. and Neergaard, H. (2010). Entrepreneurial and business growth

and the quest for a comprehensive theory: Tilting at windmills? EntrepreneurshipTheory and Practice, 34(2):249–260.

Ling, Y., Zhao, H. and Baron, R. A. (2007). Influence of founder-CEOs’ personal valueson firm performance: Moderating effects of firm age and size, Journal of Manage-ment, 33(5):673–696.

Littunen, H. and Niittykangas, H. (2010). The rapid growth of young firms during variousstages of entrepreneurship, Journal of Small Business and Enterprise Development,17(1):8–31.

Lumpkin, G. T. and Dess, G. G. (1996). Clarifying the entrepreneurial orientation con-struct and linking it to performance, Academy of Management Review, 21(1):135–172.

Luthans, F. et al. (2008). Supportive climate and organizational success: The mediatingrole of psychological capital, Journal of Organizational Behaviour, 29(2):219–238.

Matlay, H. and Fletcher, D. (2000). Globalization and strategic change: Some lessons fromthe UK small business sector, Strategic Change, 9(7):437–449.

McCarthy, B. (2003). The impact of the entrepreneur’s personality on the strategy for-mation and planning process in SME’s, The Irish Journal of Management, 24(1):154–171.

McKelvie, A. and Widlund, J. (2010). Advancing firm growth research: A focus on growthmode instead of growth rate, Entrepreneurship Theory and Practice, 34(2):261–288.

McMahon, R. G. P. (2001). Deriving and empirical development taxonomy formanufacturing SMEs using data from Australia’s business longitudinal survey, SmallBusiness Economics, 17(3):197–212.

Merton, R. K. (1957). Social Theory and Social Structure. Glencoe: Free Press.Miles, M. P., Covin, J. G. and Heeley, M. B. (2000). The Relationship between envi-

ronmental dynamism and small firm structure, strategy, and performance, Journal ofMarketing Theory and Practice, 8(2):63–74.

Miles, R. E. and Snow, C. (1978). Organizational Strategy, Structure and Process. NewYork: McGraw Hill Book Company.

Miller, D. (1983). The correlates of entrepreneurship in three types of firms, ManagementScience, 29(7):770–791.

Mintzberg, H. (1978). Patterns in strategy formation, Management Science, 24(9):934–948.

Mintzberg, H. (1994). The Rise and Fall of Strategic Planning. New York: The Free Press.


330

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

Mintzberg, H. (2007). Tracking Strategies. Toward a General Theory. Oxford. UniversityPress.

Mintzberg, H. and Waters, J. A. (1985). Of strategies, deliberate and emergent, StrategicManagement Journal, 6(3):257–272.

Mintzberg, H., Ahlstrand, B. and Lampel, J. (1998). Strategy Safari. A Guided TourThrough the Wilds of Strategic Management. New York: The Free Press.

Mir, R. and Watson, A. (2001). Critical realism and constructivism in strategy research:Towards a synthesis, Strategic Management Journal, 22(12):1169–1173.

Mitchell, R. K. et al. (2002). Toward a theory of entrepreneurial cognition: Rethinking thepeople side of entrepreneurship research, Entrepreneurship Theory and Practice,Winter, pp. 93–104.

Morse, J. M. (2007). Sampling in grounded theory. In: A. BRYANT and K. CHARMAZ(Eds.), The Sage Handbook of Grounded Theory. Los Angeles: SAGE Publications.pp. 229–244.

Morse, J. M. et al. (2008). Developing Grounded Theory: The Second Generation. Cali-fornia: Left Coast Press.

Nadkarni, S. and Barr, P. S. (2008). Environmental context, managerial cognition, andstrategic action: An integrated view, Strategic Management Journal, 29(13):1395–1427.

Patton, M. Q. (2002). Qualitative Research Evaluation Methods. 3rd edition. California:SAGE Publications.

Peteraf, M. (1993). The cornerstones of competitive advantage: A resource-based view,Strategic Management Journal, 14(3):179–191.

Porter, M. (1980). Competitive Strategy. Techniques for Analyzing Industries and Com-petitors. New York: The Free Press.

Porter, M. (1996). What is strategy? Harvard Business Review, 74(6):59–78.Prahalad, C. K. and Hamel, G. (1990). The core competence of the corporation, Harvard

Business Review, 68(3):79–91.Rauch, A. et al. (2009). Entrepreneurial orientation and business performance: An as-

sessment of past research and suggestions for the future, Entrepreneurship Theoryand Practice, May, pp. 761–787.

Reichertz, J. (2010). Abduction: The logic of discovery of grounded theory, Forum:Qualitative Social Research, 11(1):Art.13.

Rizzo, A. (2011). Strategic orientation and organizational performance of small firms inMalta: A grounded theory approach. DBA Thesis: Robert Gordon University.

Rubin, H. J. and Rubin, I. S. (2005). Qualitative Interviewing. The Art of Hearing Data.2nd edition. Thousand Oaks: SAGE Publications.

Shane, S. and Venkataraman, S. (2000). The promise of entrepreneurship as a field ofresearch, Academy of Management Review, 25(1):217–226.

Simsek, Z., Heavey, C. and Veiga, J. F. (2010). The impact of CEO core self-evaluation onthe firm’s entrepreneurial orientation, Strategic Management Journal, 31(1):110–119.

Smith, K. G., Guthrie, J. P. and Chen, M. T. (1989). Strategy, size and performance,Organization Studies, 10(1):63–81.

Smith, K. G., Mitchell, T. R. and Summer, C. E. (1985). Top level management prioritiesin different stages of the organizational life cycle, Academy of Management Journal,28(4):799–820.


331

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

Strauss, A. and Corbin, J. (1998). Basics of Qualitative Research. Techniques and Pro-cedures for Developing Grounded Theory. London: SAGE Publications.

Thomas, A. S. and Ramaswamy, K. (1996). Matching managers to strategy: Further testsof the Miles and Snow typology, British Journal of Management, 7(3):247–261.

Thomas, H. and Venkatraman, N. (1988). Research on strategic groups: Progress andprognosis, Journal of Management Studies, 25(6):537–555.

Thompson Jr. A. A. and Strickland III, A. J. (1998). Strategic Management: Concepts andCases. 10th Edition. Massachusetts, McGraw Hill.

Whittington, R. (1996). Strategy as practice, Long Range Planning, 29(5):731–735.Wiklund, J. and Shepherd, D. (2005). Entrepreneurial orientation and small business

performance: A configurational approach, Journal of Business Venturing, 20(1):71–91.

Yasai-Ardekani, M. and Haug, R. S. (1997). Contextual determinants of strategic planningprocesses, Journal of Management Studies, 34(5):729–767.

Zhou, K. Z. and WU, F. (2010). Technological capability, strategic flexibility, and productinnovation, Strategic Management Journal, 31(5):547–561.


332

J. E

nter

pris

ing

Cul

ture

201

2.20

:287

-332

. Dow

nloa

ded

from

ww

w.w

orld

scie

ntif

ic.c

omby

92.

251.

107.

45 o

n 02

/21/

13. F

or p

erso

nal u

se o

nly.

Documents

UNDERSTANDING SMALL BUSINESS STRATEGY: A …mcast.edu.mt:8223/rfm/source/Papers/ARizzo/Understanding Small... · UNDERSTANDING SMALL BUSINESS STRATEGY: A GROUNDED THEORY ... Understanding